News Releases

    • 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