Resolute Forest Products
AbitibiBowater announces Fourth Quarter and Full Year 2007 Financial Results
ABH (TSX, NYSE)
    US$

               Affirms Success of Recent Price Increases and
                    Provides Update on Refinancing Plans

    MONTREAL, Feb. 28 /CNW Telbec/ - AbitibiBowater Inc. today reported a net
loss for the fourth quarter 2007 of $250 million, or $5.09 per diluted share,
on sales of $1,491 million. These results compare with a net income of
$107 million, or $3.58 per diluted share, on sales of $861 million for the
fourth quarter of 2006.
    For the full year 2007, the Company reported a net loss of $490 million,
or $14.11 per diluted share. This compares with a net loss of $138 million, or
$4.64 per diluted share, for 2006. Sales in 2007 totaled $3.9 billion, up
11% from 2006 sales of $3.5 billion.
    The Company's 2007 fourth quarter and year-end results reflect the full
quarter and year-end results for Bowater Incorporated and the results for
Abitibi-Consolidated Inc. for the period following its combination with
Bowater on October 29, 2007. The Company's fourth quarter and year-end results
for 2006 include only Bowater results.
    Fourth quarter 2007 special items, net of tax, consisted of the following
items: a $53 million gain relating to foreign currency changes and asset
sales, a $130 million loss related to asset closures, $27 million severance
and merger-related costs and a $31 million charge related to tax adjustments.
Excluding these special items, the net loss for the quarter would have been
$115 million, or $2.34 per diluted share. A reconciliation of these non-GAAP
measures is contained in Note 11 to this release.
    During the first quarter of 2008, AbitibiBowater has removed almost
one million metric tons of high-cost capacity in line with its previously
announced Phase 1 comprehensive review of operations, while also making
significant inroads on its cost synergy target of $375 million from the
combination of Abitibi-Consolidated and Bowater.
    "While markets for wood products remain challenging, market conditions for
pulp and paper products are improving significantly and we are pleased with
our ongoing progress to make our Company a more globally competitive
organization," stated John W. Weaver, Executive Chairman. "Our recently
announced agreement with Catalyst Paper, to sell our Snowflake, Arizona
newsprint mill for approximately $180 million, including retained working
capital, is another important milestone. We remain committed to our debt
reduction target of $1 billion over the next three years."
    The Company has been actively engaged in its Phase 2 comprehensive review
of operations since the merger was completed and expects that an announcement
regarding its decisions will be forthcoming during the second quarter of 2008.
The Company is focused on further cost reductions and manufacturing platform
improvements in both the paper and wood products segments.
    "Since our Phase 1 announcement, we have been working with our employees,
unions, governments and communities in an effort to address the challenges
that we face today. We are operating in a rapidly changing business
environment and we will take the necessary steps to position AbitibiBowater
for the future," said David J. Paterson, President and Chief Executive
Officer. "In order to remain a competitive, viable supplier and provide our
stakeholders with appropriate returns, we must significantly improve the
margins for our products. Our recently announced price increases were a
successful step."
    The Company also announced today that it has successfully amended
Bowater's credit facilities. The amendments permit, among other things, an
intercompany restructuring of the ownership of the Company's Catawba, South
Carolina mill in order to permit additional debt financing by Bowater and/or
the Company. Among other liquidity needs that must be addressed, the Company's
Abitibi-Consolidated subsidiary has second quarter debt maturities of
approximately $200 million due April 1 and $150 million due June 20 that have
not yet been refinanced. The Company confirmed that it has been reviewing
multiple financing alternatives to develop additional liquidity for the
remainder of 2008 and 2009. The Company cautioned that continued negative
conditions in the credit and capital markets, as well as the difficult
industry operating environment, are challenging its ability to obtain such
financing and that there can be no assurance that either the Company,
Abitibi-Consolidated or Bowater could obtain such financing on terms
satisfactory to the Company.

    SEGMENT DETAIL

    Coated Papers

    Earnings for the coated papers segment for the fourth quarter increased $2
million from the third quarter to $15 million. The Company's average
transaction price for coated papers increased $52 per short ton during the
quarter, while average operating costs increased $39 per short ton. Operating
costs were higher in the fourth quarter due to a major maintenance outage. The
Company has implemented the December $60 per short ton price increase.

    Market Pulp

    Earnings for the market pulp segment of $30 million for the fourth quarter
were flat compared to the third quarter. The average market pulp transaction
price for the Company increased $16 per metric ton. Average operating costs
increased $18 per metric ton, compared to the third quarter due to maintenance
related outages. The Company has announced price increases of $20 to $30 per
metric ton, depending upon the grade, in the fourth quarter of 2007 and first
quarter of 2008.

    Newsprint

    For the fourth quarter, the newsprint segment had a loss of $52 million,
compared to a loss of $40 million for the third quarter. The Company's average
transaction price increased $12 per metric ton. Average operating costs
decreased $19 per metric ton, compared to the third quarter. The strengthening
of the Canadian dollar in the fourth quarter increased costs, compared to the
third quarter, by about $20 million. The Company has informed its North
American newsprint customers of price increases totaling $120 per metric ton
to be implemented in six equal monthly installments beginning in January 2008.

    Specialty Papers

    The specialty papers segment had a loss of $56 million, compared to a loss
of $20 million for the third quarter. The Company's average transaction price
increased $30 per short ton during the quarter, while average operating costs
increased $43 per short ton, primarily as a result of the strengthening
Canadian dollar during the quarter. The Company is implementing previously
announced price increases for various grades of specialty papers.

    Wood Products

    For the fourth quarter, the wood products segment had a loss of
$53 million, compared to a loss of $11 million for the third quarter. The
average transaction price for the Company decreased $13 per thousand board
feet, while average operating costs increased $54 per thousand board feet
compared to the third quarter due primarily to a lower of cost or market
adjustment. The Company has announced curtailments of 1.3 billion board feet
at facilities in the provinces of Quebec and British Columbia during the first
quarter of 2008.

    Form 10-K Filing

    The Company also announced today that it will not be filing its 2007 Form
10-K Annual Report on February 29 due to the additional time needed to report
results representing the first period of combined operations of
Abitibi-Consolidated and Bowater since the completion of their combination in
the fourth quarter of 2007. The Company is working to complete its Form 10-K
as soon as possible and expects to file it within the time period
automatically permitted by the extension (i.e., not later than March 17,
2008.)

    Earnings Conference Call

    Management will hold a conference call to discuss these financial results
today, February 28, 2008 at 10:00 a.m. Eastern time. The conference call
number is 1-866-898-9626 or 514-868-1042. A webcast of the call will be
available at www.abitibibowater.com. Interested parties may follow the
on-screen instructions for access to the webcast and related information. A
replay of the call will be available on AbitibiBowater's website.

    About AbitibiBowater

    AbitibiBowater produces a wide range of newsprint and commercial printing
papers, market pulp and wood products. It is the eighth largest publicly
traded pulp and paper manufacturer in the world. Following the required
divestiture agreed to with the U.S. Department of Justice, AbitibiBowater will
own or operate 27 pulp and paper facilities and 35 wood products facilities
located in the United States, Canada, the United Kingdom and South Korea.
Marketing its products in more than 90 countries, the Company is also among
the world's largest recyclers of newspapers and magazines, and has more
third-party certified sustainable forest land than any other company in the
world. The Company's shares trade under the stock symbol ABH on both the New
York Stock Exchange and the Toronto Stock Exchange.

    Forward-Looking Statements

    Statements in this news release 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. They include,
for example, statements about our efforts to reduce costs, increase revenues
and reduce debt, the closures of certain of our paper and sawmills, intentions
to increase export shipments of newsprint, our ability to realize targeted
synergies from the combination of Abitibi-Consolidated Inc. and Bowater
Incorporated, the anticipated timing and progress of integration efforts
related to the combination, planned capital expenditures, our ability to meet
our $1 billion debt reduction target, efforts to improve overall financial
flexibility and the Company's liquidity position, in particular our efforts to
restructure our debt by obtaining new financing for Abitibi's approximately
$350 million of senior note obligations that are due in the second quarter of
2008 and comply with various covenants under our lending agreements, as well
as the effect of recently implemented price increases, our competitive
position generally within our industry, our ability to maintain and improve
customer service levels, our financial performance and our business outlook,
our assessments of market conditions and our strategies for achieving our
goals generally. Forward-looking statements may be identified by the use of
forward-looking terminology such as the words "will," "would," "could," "may,"
"expect," "believe," "anticipate," and other terms with similar meaning
indicating possible future events or potential impact on the business or
stockholders of AbitibiBowater.
    The reader is cautioned not to place undue reliance on these
forward-looking statements, which are not guarantees of future performance.
These statements are based on management's current assumptions, beliefs and
expectations, all of which involve a number of business risks and
uncertainties that could cause actual results to differ materially. These
risks and uncertainties include, but are not limited to, our ability to obtain
additional new financing on terms satisfactory to the Company or at all, the
condition of the U.S. credit markets generally, worsening industry conditions
and further growth in alternative media, our ability to realize announced
price increases, our ability to obtain timely contributions to our cost
reduction initiatives from our unionized and salaried employees, the continued
strength of the Canadian dollar against the U.S. dollar, and the costs of raw
materials such as energy, chemicals and fiber. In addition, with respect to
forward-looking statements relating to the combination of Abitibi-Consolidated
and Bowater, the following factors, among others, could cause actual results
to differ materially from those set forth in the forward-looking statements:
the risk that the businesses will not be integrated successfully or that the
improved financial performance, product quality and product development will
not be achieved; the risk that other combinations within the industry or other
factors may limit our ability to improve our competitive position; the risk
that the cost savings and other expected synergies from the combination may
not be fully realized or may take longer to realize than expected; and
disruption from the transaction making it more difficult to maintain
relationships with customers, employees or suppliers. Additional factors are
detailed from time to time in AbitibiBowater's filings with the Securities and
Exchange Commission (SEC) and the Canadian securities regulatory authorities,
including those factors to be contained in the Company's Annual Report on Form
10-K for the year ended December 31, 2007 (when filed), and those contained in
the Company's Quarterly Report on From 10-Q for the quarterly period ended
September 30, 2007 and in the Company's registration statement on Form S-3
filed with the SEC on October 29, 2007, each under the caption "Risk Factors."
All forward-looking statements in this news release are expressly qualified by
information contained in the Company's filings with the SEC and the Canadian
securities regulatory authorities. AbitibiBowater disclaims any obligation to
update or revise any forward-looking information.



                               ABITIBIBOWATER INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
               (Unaudited, in millions except per share amounts)

                                     Three Months Ended       Year Ended
                                        December 31,         December 31,
                                   --------------------  --------------------
                                     2007(1)    2006(1)    2007(1)    2006(1)
                                   ---------  ---------  ---------  ---------
                                             (Restated)            (Restated)
    Sales                           $ 1,491    $   861    $ 3,876    $ 3,530
    Costs and expenses:
      Cost of sales, excluding
       depreciation, amortization
       and cost of timber
       harvested(2)                   1,293        654      3,206      2,683
      Depreciation, amortization
       and cost of timber harvested     157         80        396        323
      Distribution costs                168         84        410        334
      Selling and administrative
       expenses                         113         47        258        174
      Closure costs, impairment
       and other related
       charges(2)                       123          6        123        253
      Arbitration award(3)                -          -         28          -
      Lumber duties refund(4)             -        (92)         -        (92)
      Net gain on disposition
       of assets(5)                      (5)       (31)      (145)      (186)
                                   ---------  ---------  ---------  ---------
    Operating (loss) income            (358)       113       (400)        41
                                   ---------  ---------  ---------  ---------
    Other income (expense):
      Interest income(4)                  3         14          9         18
      Interest expense                 (114)       (47)      (256)      (196)
      Foreign exchange gain (loss)       35         11         (2)         9
      Other, net                          4         10          -         17
                                   ---------  ---------  ---------  ---------
                                        (72)       (12)      (249)      (152)
                                   ---------  ---------  ---------  ---------
    (Loss) income before income
     taxes, minority interests
     and cumulative effect of
     accounting change                 (430)       101       (649)      (111)

    Income tax benefit
     (provision)(6)                     177         10        158        (19)
    Minority interests, net
     of tax(5)                            3         (4)         1         (5)
                                   ---------  ---------  ---------  ---------
    (Loss) income before cumulative
     effect of accounting change       (250)       107       (490)      (135)
    Cumulative effect of accounting
     change, net of tax(7)                -          -          -         (3)
                                   ---------  ---------  ---------  ---------
    Net (loss) income                $ (250)     $ 107     $ (490)    $ (138)
                                   ---------  ---------  ---------  ---------
                                   ---------  ---------  ---------  ---------

    Basic (loss) income per
     common share:(8)
      (Loss) income before
       cumulative effect of
       accounting change            $ (5.09)    $ 3.59   $ (14.11)   $ (4.55)
      Cumulative effect of
       accounting change,
       net of tax                         -          -          -      (0.09)
                                   ---------  ---------  ---------  ---------
      Net (loss) income per share   $ (5.09)    $ 3.59   $ (14.11)   $ (4.64)
                                   ---------  ---------  ---------  ---------
                                   ---------  ---------  ---------  ---------
    Average number of basic
     shares outstanding(8)             49.1       29.8       34.7       29.8
                                   ---------  ---------  ---------  ---------
                                   ---------  ---------  ---------  ---------
    Diluted (loss) income
     per common share:(8)
      (Loss) income before
       cumulative effect of
       accounting change            $ (5.09)    $ 3.58   $ (14.11)     (4.55)
      Cumulative effect of
        accounting change,
        net of tax                        -          -          -      (0.09)
                                   ---------  ---------  ---------  ---------
      Net (loss) income per share   $ (5.09)    $ 3.58   $ (14.11)   $ (4.64)
                                   ---------  ---------  ---------  ---------
                                   ---------  ---------  ---------  ---------

    Average number of diluted
     shares outstanding(8)             49.1       29.9       34.7       29.8
                                   ---------  ---------  ---------  ---------
                                   ---------  ---------  ---------  ---------


                               ABITIBIBOWATER INC.
                          CONSOLIDATED BALANCE SHEETS
                      (Unaudited, in millions of dollars)


                                                 December 31,    December 31,
                                                     2007 (1)        2006
                                               --------------  --------------
    Assets
    Current assets:
      Cash and cash equivalents                  $       195     $        99
      Accounts receivable, net                           756             444
      Inventories, net                                   906             350
      Assets held for sale(9)                            184              19
      Other current assets                               121              47
                                               --------------  --------------
        Total current assets                           2,162             959
                                               --------------  --------------
    Timber and timberlands                                58              61
    Fixed assets, net                                  5,739           2,878
    Goodwill                                             781             590
    Other intangible assets, net                       1,234               -
    Other assets                                         825             158
                                               --------------  --------------
      Total assets                               $    10,799     $     4,646
                                               --------------  --------------
                                               --------------  --------------

    Liabilities and shareholders' equity
    Current liabilities:
      Accounts payable and accrued liabilities   $     1,201     $       431
      Short-term bank debt                               589               -
      Current installments of long-term debt             364              15
      Liabilities associated with assets
       held for sale(9)                                   19               -
                                               --------------  --------------
        Total current liabilities                      2,173             446
                                               --------------  --------------
    Long-term debt, net of current installments        4,695           2,252
    Pension and other postretirement
     benefit obligations                                 946             653
    Other long-term liabilities                          274              90
    Deferred income taxes                                660             313
    Minority interests in subsidiaries                   150              59
    Commitment and contingencies
    Shareholders' equity                               1,901             833
                                               --------------  --------------
      Total liabilities and
       shareholders' equity                      $    10,799     $     4,646
                                               --------------  --------------
                                               --------------  --------------


                            ABITIBIBOWATER INC.
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                    (Unaudited, in millions of dollars)

                                                         Year Ended
                                                        December 31,
                                               ------------------------------
                                                     2007 (1)           2006
                                               --------------  --------------
    Cash flows from operating activities:
    Net loss                                     $      (490)    $      (138)
    Adjustments to reconcile net loss to
     net cash from operating activities:
      Cumulative effect of accounting
       change, net of tax(7)                               -               3
      Share-based compensation                            14               6
      Depreciation, amortization and cost
       of timber harvested                               396             323
      Closure costs, impairment and other
       related charges(2)                                100             249
      Deferred income taxes                              (95)             25
      Minority interests, net of tax(5)                   (1)              5
      Pension contributions, net of pension
       benefit costs                                     (92)            (41)
      Net gain on disposition of assets(5)              (145)           (186)
      Gain on extinguishment of debt                       -             (13)
      Gain on translation of foreign-currency
       denominated debt                                  (29)             (1)
      Changes in working capital:
        Accounts receivable                               99             (34)
        Inventories                                       (1)             20
        Income tax receivables and payables                -             (21)
        Accounts payable and accrued liabilities          56              (2)
      Other, net                                         (59)            (13)
                                               --------------  --------------
        Net cash (used in) provided by
         operating activities                           (247)            182
                                               --------------  --------------
    Cash flows from investing activities:
    Cash invested in fixed assets,
     timber and timberlands                             (128)           (199)
    Disposition of assets, including timber
     and timberlands                                     197             332
    Cash acquired in the Combination with                116               -
     Abitibi
    Cash received in monetization of financial
     instruments(10)                                      24               -
    Direct acquisition costs related to the
     Combination with Abitibi(1)                         (35)              -
    Other investing activities, net                        3              (3)
                                               --------------  --------------
      Net cash provided by investing activities          177             130
                                               --------------  --------------
    Cash flows from financing activities:
    Cash dividends                                       (49)            (46)
    Short-term financing                                 263             370
    Short-term financing repayments                      (33)           (432)
    Repurchases and payments of long-term debt           (15)           (135)
                                               --------------  --------------
      Net cash provided by (used for)
       financing activities                              166            (243)
                                               --------------  --------------

    Net increase in cash and cash equivalents             96              69

    Cash and cash equivalents at
     beginning of year                                    99              30
                                               --------------  --------------
    Cash and cash equivalents at end of year     $       195     $        99
                                               --------------  --------------
                                               --------------  --------------


                               ABITIBIBOWATER INC.
              Notes to the Press Release and Unaudited Consolidated
                         Financial Statement Information

    (1) On October 29, 2007, pursuant to a Combination Agreement and
        Agreement and Plan of Merger, dated as of January 29, 2007,
        Abitibi-Consolidated Inc. ("Abitibi") and Bowater Incorporated
        ("Bowater") became wholly-owned subsidiaries of AbitibiBowater (the
        "Combination"). The Combination has been accounted for in accordance
        with the provisions of Statement of Financial Accounting Standards
        No. 141, Business Combinations. Bowater is deemed to be the
        "acquirer" of Abitibi for accounting purposes, and AbitibiBowater is
        deemed to be the successor to Bowater for purposes of U.S. securities
        laws and regulations governing financial reporting. Therefore, our
        Press Release and unaudited Consolidated Financial Statement
        Information, including related notes, reflect the results of
        operations and financial position of Bowater for the periods before
        October 29, 2007 and those of both Abitibi and Bowater for periods
        beginning on and or after October 29, 2007.

        As a result of the Combination, each issued and outstanding common
        share of Bowater was converted into a 0.52 share of AbitibiBowater
        common stock. Each issued and outstanding exchangeable share of
        Bowater Canada Inc. (a wholly-owned subsidiary of Bowater now named
        AbitibiBowater Canada Inc.) was changed into 0.52 of an
        AbitibiBowater Canada Inc. exchangeable share. Each issued and
        outstanding common share of Abitibi (other than the Abitibi common
        shares exchanged for exchangeable shares of AbitibiBowater Canada
        Inc.) was transferred to AbitibiBowater in exchange for a
        0.06261 share of AbitibiBowater common stock. We retroactively
        restated all share-related information in the Press Release and
        unaudited Consolidated Financial Statement Information, and related
        notes, for all periods before the Combination to reflect the Bowater
        exchange ratio of 0.52.

        In order to apply purchase accounting, the purchase price of
        $1.4 billion was allocated to the identifiable assets acquired and
        liabilities assumed based on their relative fair values.  The
        purchase price allocation is subject to refinement for a period up to
        a year from the date of purchase to allow for the finalization of the
        gathering and review of all pertinent information. We have allocated
        the excess of purchase price over the net assets acquired in the
        Combination based on our preliminary estimates of the fair value of
        assets acquired and liabilities assumed as follows:

        (in millions)
        -------------
        Cash                                                     $       116
        Accounts receivable                                              411
        Inventories                                                      554
        Assets held for sale                                             200
        Prepaids and other current assets                                 69
        Fixed assets                                                   3,211
        Goodwill                                                         191
        Other intangible assets                                        1,274
        Other non-current assets                                         340
                                                                 ------------
          Total assets acquired in the Combination                     6,366
                                                                 ------------
        Accounts payable and accrued liabilities                         695
        Short-term bank debt                                             371
        Current installments of long-term debt                           342
        Liabilities associated with assets held for sale                  17
        Long-term debt, net of current installments                    2,454
        Pension and other postretirement benefit obligations             646
        Other non-current liabilities                                    272
        Deferred income taxes                                            184
                                                                 ------------
          Total liabilities assumed in the Combination                 4,981
                                                                 ------------

        Fair value of net assets acquired in the Combination     $     1,385
                                                                 ------------
                                                                 ------------

        In connection with the review and approval of the transaction by the
        Canadian government, AbitibiBowater agreed, among other things, for a
        period of three years after closing, to maintain its headquarters in
        Montreal, Canada; to maintain at least five Canadians on its Board of
        Directors; and to apply for listing of its common stock on the
        Toronto Stock Exchange (TSX). In connection with the review and
        approval of the transaction by the U.S. Department of Justice (the
        "DOJ"), AbitibiBowater agreed, among other things, to divest one
        newsprint mill, Abitibi's mill in Snowflake, Arizona. As a result,
        the assets and liabilities of our Snowflake mill have been recorded
        at fair value less costs to sell in assets held for sale and
        liabilities associated with assets held for sale, respectively.

        We will be permanently closing Abitibi's Belgo, Quebec facility; Fort
        William, Ontario facility; and Lufkin, Texas facility and
        indefinitely idling Abitibi's Mackenzie, British Columbia facility,
        which includes the paper mill and two sawmills directly supporting
        the paper mill operations. In accordance with guidance provided in
        Emerging Issues Task Force No. 95-3, Recognition of Liabilities in
        Connection with a Purchase Business Combination, we included the
        costs to involuntarily terminate or relocate employees and the cost
        of certain contractual obligations, including environmental and asset
        retirement obligations, associated with these mill closures in
        liabilities assumed in the Combination and they did not impact our
        Consolidated Statement of Operations. Additionally, the purchase
        price allocated to the fixed assets of these mills has been lowered
        due to the announced permanent closures and indefinite idlings.

    (2) Immediately following the Combination, we began a comprehensive
        strategic review of our operations to reduce costs and improve our
        profitability. On November 29, 2007, we announced the results of the
        initial phase of our comprehensive review, which included a decision
        to reduce our newsprint and commercial papers production capacity by
        approximately one million metric tons per year during the first
        quarter of 2008. The reductions include the permanent closure of our
        Dalhousie, New Brunswick facility, as well as the indefinite idling
        of our Donnacona, Quebec facility. Additionally, we will permanently
        close paper machine no. 3 at our Gatineau, Quebec facility. Long-
        lived asset impairment charges ($100 million) and severance and
        termination costs ($23 million) were recorded in Closure Costs,
        Impairment and Other Related Charges in our Consolidated Statement of
        Operations. Inventory write-downs of $7 million were recorded in Cost
        of Sales. As disclosed in note 1, a number of Abitibi's facilities
        were permanently closed or indefinitely idled in connection with this
        comprehensive strategic review, with the associated costs included in
        liabilities assumed in the Combination and did not impact our
        Consolidated Statement of Operations. We plan to announce the results
        of the second phase of our comprehensive strategic review in the
        second quarter of 2008.

        In 2006, we recorded closure, impairment and other related charges of
        $253 million. We recorded a long-lived asset impairment charge of
        $19 million associated with the closure of paper machine no. 3 at our
        Thunder Bay facility and a goodwill impairment charge of $200 million
        associated with our Thunder Bay reporting unit. These charges were
        primarily due to the continued decline of North American newsprint
        consumption and a reorganization of our operations and reporting
        units in the third quarter of 2006. Also in 2006, we recorded long-
        lived asset impairment charges of $30 million associated with the
        closure of our Benton Harbor operations, our Ignace sawmill and our
        Girardville sawmill and $4 million of lease costs, contract
        termination costs and severance associated with the closure of our
        Benton Harbor operations. Inventory write-downs of $2 million were
        recorded in Cost of Sales.

    (3) On September 7, 2007, Bowater Canadian Forest Products Inc. ("BCFPI")
        received a decision in an arbitration related to the 1998 sale to
        Weyerhaeuser Company ("Weyerhaeuser") of Bowater's former pulp and
        paper facility in Dryden, Ontario. BCFPI and Weyerhaeuser had been
        arbitrating a claim regarding the cost of certain environmental
        matters related to the mill. The arbitrators awarded Weyerhaeuser
        approximately $43 million, including interest. As a result of the
        arbitrators' decision, which is binding upon Bowater and not subject
        to appeal, we recorded a pre-tax charge of $28 million during the
        year ended December 31, 2007. We had previously established a reserve
        of $15 million in connection with these environmental matters at the
        time of the sale.

    (4) On October 12, 2006, an agreement regarding Canada's softwood lumber
        exports to the United States became effective. The agreement provides
        for a return of a portion of the duties imposed by the United States.
        Through September 30, 2006, we paid duties totaling approximately
        $113 million. On November 10, 2006, Bowater received a refund of
        $104 million, including interest of $12 million, from Export
        Development Corporation (EDC), which purchased our rights associated
        with the refund of the duties. The amount of the refund represents
        substantially all of the funds that we expect to receive under the
        terms of our agreement with EDC.

    (5) During the fourth quarter of 2007, we sold approximately 14,300 acres
        of timberlands primarily located in Tennessee and Canada, and during
        the year ended December 31, 2007, we sold approximately 133,600 acres
        of timberlands primarily located in Tennessee and Canada. Since we
        recorded Abitibi's timberlands at fair value (see note 1), a gain of
        $15 million on the sale of these 10,500 acres of timberlands did not
        impact our Consolidated Statement of Operations. One of our
        consolidated subsidiaries, which is owned 49% by a minority interest,
        sold approximately 25,000 acres of the 133,600 acres and recorded a
        pre-tax gain on the sale of land of $23 million during the year ended
        December 31, 2007. During 2006, we sold approximately 535,200 acres
        of timberlands primarily located in Tennessee and Canada. In 2006, we
        also sold our Dégelis and Baker Brook sawmills.

    (6) During the fourth quarter and year ended December 31, 2007, income
        tax benefits and tax credits of $65 million and $136 million,
        respectively, arising primarily from operating losses at certain
        Canadian operations were entirely offset by tax charges to increase
        our tax valuation allowance. During the fourth quarter and year ended
        December 31, 2006, income tax benefits and credits of $27 million and
        $47 million, respectively, were entirely offset by tax charges to
        increase the tax valuation allowance. On January 1, 2007, we adopted
        FASB Interpretation No. 48, Accounting for Uncertainty in Income
        Taxes -- An Interpretation of FASB Statement No. 109 ("FIN 48").
        FIN 48 clarifies the accounting for the uncertainty in income taxes
        recognized by prescribing the threshold a tax position is required to
        meet before being recognized in the financial statements. As a result
        of the implementation of FIN 48, we decreased our liability for
        unrecognized tax benefits by $2 million, which was accounted for as a
        decrease to our January 1, 2007 retained deficit balance. The
        reduction represents the cumulative effect of adoption on prior
        periods.

    (7) The adoption of SFAS No. 123R, Share-Based Payment, resulted in a
        cumulative effect adjustment, net of tax, of $3 million, or $0.09 per
        diluted share, in 2006.

    (8) For the calculation of basic and diluted loss per share for the three
        months and years ended December 31, 2007 and 2006, no adjustments to
        net loss are necessary. The effect of dilutive securities is not
        included in the computation for the three months ended December 31,
        2007 and the years ended December 31, 2007 and 2006 as the effect
        would be anti-dilutive.

    (9) Earlier this month, we announced that we had signed a definitive
        agreement for the sale of Abitibi's Snowflake, Arizona mill for cash
        consideration of $161 million, excluding working capital of
        $19 million that we will retain after the sale. We are required to
        sell this mill under the terms of a settlement agreement with the
        DOJ, pursuant to which the DOJ approved the Combination. We expect
        the sale to be finalized in the second quarter of 2008. Additionally,
        our Fort William, Ontario facility, our Price sawmill and some of our
        timberlands are being held for sale at December 31, 2007.

    (10)Abitibi's foreign exchange instruments were in a substantial gain
        positions at the date of the Combination due to the strengthening of
        the Canadian dollar against the U.S. dollar. In November 2007, the
        Board authorized the monetization of Abitibi's forward exchange and
        zero cost tunnel contracts. Since we recorded Abitibi's derivative
        instruments at fair value, the gain on the monetization of these
        instruments did not impact our Consolidated Statement of Operations.

    (11)A reconciliation of certain financial statement line items reported
        under generally accepted accounting principles ("GAAP") to our use of
        non-GAAP measures of operating income (loss), net loss and loss per
        share reported before special items is presented in the tables below.
        We believe that these measures allow investors to more easily compare
        our ongoing operations and financial performance from period to
        period. These non-GAAP measures should be considered in addition to
        and not as a substitute for measures of financial performance
        prepared in accordance with GAAP. Consequently, investors should rely
        on GAAP operating loss, net loss and loss per share. Non-GAAP
        measures included in our press release include:

        Operating income (loss) before special items - is defined as
        operating loss from our Consolidated Statements of Operations
        adjusted for special items. Internally, the Company uses a non-GAAP
        operating income (loss) measure as an indicator of a segment's
        performance and excludes closure costs, impairment and other related
        charges, severance and merger-related costs, gains on dispositions of
        assets, arbitration award and other discretionary charges or credits
        from GAAP operating income. Therefore, this non-GAAP presentation is
        consistent with our internal presentation. This non-GAAP measure
        should be used in addition to and not as a substitute for operating
        loss provided in AbitibiBowater's Consolidated Statement of
        Operations. We believe that this non-GAAP measure is useful because
        it is consistent with our internal presentation and performance
        analysis and allows investors to more easily compare our ongoing
        operations and financial performance from period to period.

        Net loss before special items - is defined as net loss from our
        Consolidated Statements of Operations adjusted for the special items
        discussed above plus foreign exchange losses, the impact of the
        adoption of new accounting standards, net of tax, and the adjustment
        for tax charges that have been taken against the income tax benefits
        arising primarily from operating losses at certain of certain of our
        Canadian operations (refer to Note 6 above). The adjustment for these
        items is consistent with our internal presentation, and the tax
        adjustment is provided for our investors to reflect a more
        appropriate effective tax rate. This non-GAAP measure should be used
        in addition to and not as a substitute for net loss provided in our
        consolidated statement of operations. We believe that this non-GAAP
        measure is useful because it is consistent with our internal
        presentation and allows investors to more easily compare our ongoing
        operations and financial performance from period to period.

        Loss per share (EPS) before special items - is defined as diluted EPS
        calculated based on the net loss before special items. This non-GAAP
        measure should be used in addition to and not as a substitute for our
        loss per share calculated in accordance with GAAP as provided in the
        Consolidated Statements of Operations. We believe that this non-GAAP
        measure is useful because it is consistent with our internal
        presentation and allows investors to more easily compare our EPS from
        ongoing operations and financial performance from period to period.


    -------------------------------------------------------------------------
    Three Months Ended
     December 31, 2007                  Operating          Net
    (unaudited, in millions except          (loss)       (loss)
     per share amounts)                    income       income           EPS
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    GAAP as reported                    $    (358)   $    (250)   $    (5.09)

    Adjustments for special items:
      Sale of assets                           (5)          (3)        (0.06)
      Severance and merger-related
       costs                                   38           27          0.55
      Closure costs, impairment and
       other related charges                  130          130          2.65
      Foreign exchange                          -          (50)        (1.02)
      Tax adjustments                           -           31          0.63

    GAAP as adjusted for
     special items                      $    (195)   $    (115)   $    (2.34)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Three Months Ended
     December 31, 2006                  Operating          Net
    (unaudited, in millions except          (loss)       (loss)
     per share amounts)                    income       income           EPS
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    GAAP as reported                    $     113    $     107    $     3.58

    Adjustments for special items:
      Sale of assets                          (31)         (19)        (0.64)
      Lumber duties refund                    (92)        (101)        (3.38)
      Closure costs, impairment and
       other related charges                    8            8          0.27
      Severance                                 5            3          0.10
      Foreign exchange                          -          (27)        (0.90)
      Tax adjustments                           -           14          0.47

    GAAP as adjusted for special
     items                              $       3    $     (15)   $    (0.50)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Year Ended December 31, 2007        Operating          Net
    (unaudited, in millions except          (loss)       (loss)
     per share amounts)                    income       income           EPS
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    GAAP as reported                    $    (400)   $    (490)   $   (14.11)

    Adjustments for special items:
      Sale of assets                         (145)         (93)        (2.68)
      Arbitration award                        28           28          0.80
      Severance and merger-related costs       85           64          1.84
      Closure costs, impairment and
       other related charges                  130          130          3.75
      Foreign exchange                          -           11          0.32
      Tax adjustments                           -           83          2.39

    GAAP as adjusted for special items  $    (302)   $    (267)   $    (7.69)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Year Ended December 31, 2006        Operating          Net
    (unaudited, in millions except          (loss)       (loss)
     per share amounts)                    income       income           EPS
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    GAAP as reported                    $      41    $    (138)   $    (4.64)

    Adjustments for special items:
      Sale of assets                         (186)        (116)        (3.89)
      Lumber duties refund                    (92)        (101)        (3.38)
      Closure costs, impairment and
       other related charges                  255          244          8.19
      Severance                                16           11          0.37
      Adoption of new accounting standard       -            3          0.09
      Foreign exchange                          -           (7)        (0.23)
      Tax adjustments                           -           40          1.34

    GAAP as adjusted for special items  $      34    $     (64)   $    (2.15)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    A schedule of historical financial and operating statistics is available
upon request and on AbitibiBowater's web site (www.AbitibiBowater.com).
For further information:
For further information: For Investors: Duane Owens, Vice President and
Treasurer, (864) 282-9488; For Media: Seth Kursman, Vice President,
Communications and Government Affairs, (514) 394-2398,
seth.kursman@abitibibowater.com