Resolute Forest Products
Abitibi-Consolidated Reports Q3 Results

    (in C$, unless otherwise noted)

    MONTREAL, Nov. 6 /CNW Telbec/ - Abitibi-Consolidated Inc., a wholly-owned
subsidiary of AbitibiBowater Inc. (NYSE, TSX: ABH), today reported third
quarter 2007 net earnings of $54 million, or 12 cents a share, compared to a
loss of $48 million, or 11 cents, a share in the third quarter of 2006. For
the nine-month period ending September 30, 2007, the company recorded net
earnings of $132 million, or 30 cents a share, compared to net earnings of
$76 million, or 17 cents a share, for the same nine-month period last year.
    Although not a GAAP measure, the third quarter results before the impact
of specific items would have been a loss of $126 million, or 28 cents per
share, compared to a loss of $54 million, or 12 cents a share, in the third
quarter of 2006 (see Table 3 of MD&A).
    The quarter's results included the following after-tax specific items: a
gain of $168 million on translation of foreign currencies, the positive impact
of a $24 million gain on the disposal of a portion of the company's
timberlands located in Georgia and South Carolina, as well as a $7 million
expense related to the recently completed merger with Bowater Incorporated.
    In the third quarter of 2007, the company posted an operating loss of
$85 million before specific items, compared to an operating profit of
$10 million in the third quarter of 2006. The Newsprint, Commercial Printing
Papers and Wood Products segments had operating losses of $19 million,
$38 million and $28 million respectively.
    Before specific items, the $95 million reduction in operating results in
the third quarter of 2007 was mainly attributable to lower prices in the
company's three segments, the unfavourable impact of a stronger Canadian
dollar and the devaluation of finished products inventories.-------------------------------------------------------------------------
    Q3 vs. Q2 2007 Summary
    -------------------------------------------------------------------------
    - Sales of $999 million vs. $1.06 billion ($1.18 billion in Q3 2006)
    - EBITDA of $21 million vs. $42 million ($120 million in Q3 2006)
    - U.S. newsprint prices lower by approximately US$23 per tonne
    - Newsprint costs lower by $42 per tonne
    - Demand for uncoated groundwood papers continues to improve
    - Due to a year-over-year decrease of nearly 31% in U.S. housing starts,
      the company reduced its wood products production during the third
      quarter.
    -------------------------------------------------------------------------

    "The results for the quarter are a reflection of the challenging market
conditions and impact of the Canadian dollar. Our merger with Bowater is a
first step in meeting these challenges," said John W. Weaver,
Abitibi-Consolidated Inc. President and Chief Executive Officer. "Now that the
merger has closed, we are moving swiftly to fully integrate the company and
implement our new business priorities," added Weaver.

    Investor Call

    A conference call hosted by management to discuss quarterly results will
be held today at 10:00 a.m. (Eastern). The call will be webcast at
www.abitibibowater.com, under the "Investors" section. A slide presentation to
be referenced on the call will also be made available in the same section
prior to the call. Participants not able to listen to the live conference call
can access a replay along with the slide presentation, both of which will be
archived online.
    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 31 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 80 countries, the company is 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" (including,
within the meaning of the Private Securities Litigation Reform Act of 1995).
They include, for example, statements about our ability to realize synergies
from the combination of Abitibi-Consolidated Inc. and Bowater Incorporated,
the anticipated timing of and the progress of integration efforts related to
the combination, and our business outlook, strategies and assessment of market
conditions. Forward-looking statements may be identified by the use of
forward-looking terminology such as the words "expect", "will", "believe",
"anticipate" and other terms with similar meaning indicating possible future
events or actions or potential impact on the business or stockholders of
AbitibiBowater.
    These forward-looking statements are not guarantees of future performance.
They are based on management's 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, negative industry conditions and further growth in
alternative media, actions of competitors, Canadian dollar exchange rates, the
demand for higher margin coated and uncoated mechanical paper, 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 anticipated 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 transaction 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 listed from time to time in
AbitibiBowater's filings with the Securities and Exchange Commission and the
Canadian securities regulatory authorities, including those factors contained
in the company's registration statement on Form S-3 filed on October 29, 2007,
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 Securities and Exchange Commission and the Canadian
securities regulatory authorities. AbitibiBowater disclaims any obligation to
update or revise these forward-looking statements.


    Abitibi-Consolidated Inc.
    Management's Discussion and Analysis (MD&A)
    Third Quarter Report to Shareholders
    November 6, 2007


    KEY EVENT
    ---------

    Abitibi-Consolidated Inc. and Bowater Incorporated to combine
    -------------------------------------------------------------

    On January 29, 2007, Abitibi-Consolidated Inc. (the Company) and Bowater
Incorporated (Bowater) announced a definitive agreement to combine in an
all-stock merger of equals. The combined company will be called AbitibiBowater
Inc. (AbitibiBowater). The combination has been approved unanimously by the
Board of Directors of both companies, which received fairness opinions from
their respective financial advisors.
    On July 17, 2007, the two companies announced the executive team to lead
the new company, pending approval of the combination and appointment by the
Board of AbitibiBowater.
    On October 23, 2007, the Company and Bowater announced that they reached
an agreement with the United States Department of Justice allowing the
completion of the combination of the two companies. Under the terms of the
agreement, which was signed and filed the same day in the U.S. Federal
District Court in Washington, D.C., the companies agreed to divest one
newsprint mill, Abitibi-Consolidated's mill in Snowflake, Arizona. The
Snowflake mill has an annual capacity of approximately 375,000 tonnes. Scotia
Capital Inc. has been retained as exclusive financial advisor for the sale of
the Snowflake mill and related assets. The combination has now received all
necessary regulatory approvals, including those from the Canadian Competition
Bureau, the Federal Minister of Industry under the Investment Canada Act, the
Québec Superior Court, the U.S. Department of Justice, as well as the
necessary approvals from shareholders of both Abitibi-Consolidated and
Bowater.
    On October 23, 2007, the two companies announced the expected composition
of the new Board of Directors for AbitibiBowater, following the combination of
Abitibi-Consolidated and Bowater subject to the appointment of directors
following the completion of the combination.
    On October 29, 2007, the two companies announced the completion of the
combination. The combination creates a new leader in publication papers.
AbitibiBowater would have realized, on a pro forma basis, revenues of
approximately US$8 billion in 2006, making it the 3rd largest publicly traded
paper and forest products company in North America and the 8th largest in the
world.

    HIGHLIGHTS
    ----------

    $54 million net earnings in the third quarter of 2007
    -----------------------------------------------------

    Abitibi-Consolidated reported net earnings of $54 million, or 12 cents a
share, in the third quarter ended September 30, 2007, compared to a loss of
$48 million, or 11 cents a share, in the same quarter of 2006. For the
nine-month period ended September 30, 2007, the Company recorded net earnings
of $132 million, or 30 cents a share, compared to net earnings of $76 million,
or 17 cents a share, in the same period last year.

    To view Abitibi-Consolidated Inc. charts (Highlights) please click
    here:
    http://files.newswire.ca/653/highlights.doc

    Table 1: Summary of financial information (in millions of dollars,
             except per share amounts)

                                                 As per financial statements
                                       --------------------------------------
                                           Third Quarter   Nine-month period
                                       ------------------ -------------------
                                          2007      2006      2007      2006
                                       -------- --------- --------- ---------
    Sales                              $   999   $ 1,181   $ 3,131   $ 3,671
    EBITDA                                 N/A       N/A       N/A       N/A
    Operating profit (loss)                (57)        2      (124)       91
    Net earnings (loss)                     54       (48)      132        76
      $ per share                         0.12     (0.11)     0.30      0.17

                                                     Before specific items(1)
                                       --------------------------------------
                                           Third Quarter   Nine-month period
                                       ------------------ -------------------
                                          2007      2006      2007      2006
                                       -------- --------- --------- ---------
    Sales                              $   999   $ 1,181   $ 3,131   $ 3,671
    EBITDA                                  21       120       133       450
    Operating profit (loss)                (85)       10      (188)      119
    Net earnings (loss)                   (126)      (54)     (332)     (119)
      $ per share                        (0.28)    (0.12)    (0.75)    (0.27)

    Note (1) Non-GAAP measures


    Sales were $999 million in the three-month period ending September 30,
2007, compared to $1,181 million in the same period last year. The Company
recorded an operating loss of $57 million during the quarter, compared to an
operating profit of $2 million for the third quarter of 2006. Sales were
$3,131 million for the nine-month period ending September 30, 2007, compared
to $3,671 million in the same period last year. The operating loss was
$124 million, compared to an operating profit of $91 million in the first nine
months of 2006.

    SPECIFIC ITEMS IMPACTING RESULTS AND NON-GAAP MEASURES
    ------------------------------------------------------

    The Company's operating results include specific items that are not
related to normal operating activities and make the comparison of results
difficult from period to period. Abitibi-Consolidated compares its performance
as well as those of its business segments before specific items, based on
EBITDA, operating profit (loss), net earnings (loss), net earnings (loss) per
share and other such measures. Specific items include gain or loss on
translation of foreign currencies, mill closure and other elements, asset
write offs or write downs, income tax adjustments related to the finalization
of prior-year audits, impact of changes in income tax legislation and other
items that do not relate to normal operating activities. Operating profit
(loss) before specific items, net earnings (loss) before specific items, net
earnings (loss) per share before specific items and other such measures before
specific items, such as EBITDA, are not measures prescribed by the Canadian
Generally Accepted Accounting Principles (GAAP). The Company believes this is
useful supplemental information, as it provides an indication of performance
and comparative trends, excluding these specific items. However, readers
should be cautioned that this information should not be confused with or used
as an alternative to measures prescribed by Canadian GAAP.

    Specific items impacting operating profit (loss)
    ------------------------------------------------

    In the third quarter of 2007, operating profit (loss) was positively
impacted by specific items for a total of $28 million, compared to a negative
impact of $8 million in the same quarter last year.

    Third quarter 2007

    Mill closure and other elements include $9 million of expenses related to
the combination with Bowater, announced during the first quarter. The merger
expenses were allocated to the Company's Newsprint, Commercial Printing Papers
and Wood Products segments for $5 million, $3 million and $1 million,
respectively. Newsprint operating results were positively impacted by a
$40 million gain on disposal of a portion of the Company's timberlands located
in the states of Georgia and South Carolina, and negatively impacted by
$1 million of mill closure elements related to a previously closed mill.
Commercial Printing Papers operating results were negatively impacted by
$2 million of mill closure and other elements mainly due to the indefinite
idling of the Company's Fort William paper mill located in Thunder Bay,
Ontario.

    Third quarter 2006

    Specific items for the third quarter of 2006 have been adjusted to take
into consideration a $7 million countervailing duty (CVD) and anti-dumping
duty (AD) credit related to the lumber dispute settlement reached in April of
2006 and finalized in the fourth quarter of 2006. In the third quarter of
2006, the Company accounted for a provision of $1 million for mill closure and
other elements related to the Selling, General and Administrative expenses
(SG&A) restructuring announced in the first quarter of 2006. The restructuring
charges impacted the Commercial Printing Papers segment.

    Table 2 highlights the impact of the above specific items on operating
results by segment.

    Table 2: Operating profit (loss) (in millions of dollars)

                                                 As per financial statements
                                       --------------------------------------
                                           Third Quarter   Nine-month period
                                       ------------------ -------------------
                                          2007      2006      2007      2006
                                       -------- --------- --------- ---------
    Newsprint                          $    15   $    40   $    46   $   145
    Commercial Printing Papers             (43)       (5)      (87)      (24)
    Wood Products                          (29)      (33)      (83)      (30)
                                       -------- --------- --------- ---------
                                      ($    57)  $     2  ($   124)  $    91

                                                     Before specific items(1)
                                       --------------------------------------
                                           Third Quarter   Nine-month period
                                       ------------------ -------------------
                                          2007      2006      2007      2006
                                       -------- --------- --------- ---------
    Newsprint                         ($    19)  $    40  ($    39)  $   146
    Commercial Printing Papers             (38)       (4)      (68)      (21)
    Wood Products                          (28)      (26)      (81)       (6)
                                       -------- --------- --------- ---------
                                      ($    85)  $    10  ($   188)  $   119
    Note (1) Non-GAAP measures


    Other specific items impacting net earnings (loss)
    --------------------------------------------------

    Other than specific items covered in the previous section, in the third
quarter of 2007, Abitibi-Consolidated recorded an after-tax gain on
translation of foreign currencies of $168 million, mainly from the stronger
Canadian currency at the end of the quarter, compared to the U.S. dollar, in
which most of the Company's long-term debt is denominated, and negative income
tax adjustments of $3 million.
    In the third quarter of 2006, Abitibi-Consolidated recorded a positive
income tax adjustment of $12 million, relating to the conclusion of prior
years' federal audits.

    Table 3: Impact of specific items (in millions of dollars, except
             per share amounts)
                                                   Third Quarter
                                       --------------------------------------
                                              2007                2006
                                       ------------------ -------------------
                                        Before     After    Before     After
                                           Tax       Tax       Tax       Tax
                                       -------- --------- --------- ---------
    Net earnings (loss) as reported
     in the financial statements                 $    54            ($    48)
        $ per share                                 0.12               (0.11)

    Specific items:
      Impacting operating profit (loss)
       (as per Table 2)                    (28)      (15)        8         6
      Loss (gain) on translation of
       foreign currencies                 (200)     (168)        -         -
      Transfer of Augusta timberlands
       (Minority interest)                   -         -         -         -
      Financial expenses                     -         -         -         -
      Income tax expense (recovery)                    3                 (12)
                                                ---------           ---------
    Net earnings (loss) excluding
     specific items(1)                          ($   126)           ($    54)
        $ per share(1)                             (0.28)              (0.12)


                                                  Nine-month period
                                       --------------------------------------
                                              2007                2006
                                       ------------------ -------------------
                                        Before     After    Before     After
                                           Tax       Tax       Tax       Tax
                                       -------- --------- --------- ---------
    Net earnings (loss) as reported
     in the financial statements                 $   132             $    76
       $ per share                                  0.30                0.17

    Specific items:
      Impacting operating profit (loss)
       (as per Table 2)                    (64)      (47)       28        20
      Loss (gain) on translation of
       foreign currencies                 (468)     (401)     (141)     (118)
      Transfer of Augusta timberlands
       (Minority interest)                   -         9         -         -
      Financial expenses                     3         2         -         -
      Income tax expense (recovery)                  (27)                (97)
                                                ---------           ---------
    Net earnings (loss) excluding
     specific items(1)                          ($   332)           ($   119)
       $ per share(1)                              (0.75)              (0.27)

    Note (1) Non-GAAP measures


    RESULTS BEFORE SPECIFIC ITEMS
    -----------------------------

    As specific items have been covered in the previous section, the following
comparisons and analyses will only focus on the Company's performance related
to normal operating activities and, as compared to the same quarter of the
previous year.

    Consolidated results before specific items
    ------------------------------------------

    Before specific items, the $95 million reduction in operating results in
the third quarter of 2007 is mainly attributable to lower prices in the
Company's three business segments, as well as the unfavourable impact of a
stronger Canadian dollar, partly offset by lower cost of products sold in the
Newsprint segment. The results in the third quarter of 2007 were also
negatively impacted by $13 million of finished products inventory devaluation
to its realizable value. Newsprint, Commercial Printing Papers and Wood
Products segments were impacted by $2 million, $5 million and $6 million,
respectively.

    Table 4: Consolidated results before specific items(1)
             (in millions of dollars, except per share amounts)

                                    Fav/(unfav) variance due to
                          Third  ----------------------------------    Third
                        Quarter           Foreign                    Quarter
                           2007   Volume exchange   Prices    Costs     2006
                        -------- -------- -------- -------- -------- --------
    Sales               $   999 ($    61)($    41)($    80) $     -  $ 1,181
    Cost of products
     sold                   828       51        9        -        9      897
    Distribution costs      115        6        6        -        3      130
    CVD, AD and other
     duties                   3        -        -        -       (3)       -
    SG&A                     32        -        -        -        2       34
                        -------- -------- -------- -------- -------- --------
    EBITDA(1)           $    21 ($     4)($    26)($    80) $    11  $   120
    Amortization            106        -        1        -        3      110
                        -------- -------- -------- -------- -------- --------
    Operating profit
     (loss)            ($    85)($     4)($    25)($    80) $    14  $    10
    Financial expenses       81                                           86
    Other expenses            6                                            8
    Income tax expense
     (recovery)             (48)                                         (38)
    Non-controlling
     interests               (2)                                          (8)
                        --------                                     --------
                        --------                                     --------
    Net earnings
     (loss)            ($   126)                                    ($    54)
      $ per share         (0.28)                                       (0.12)

    Note (1) Non-GAAP measures


    When comparing the average exchange rate in the third quarter of 2007 to
the same period in 2006, the Canadian dollar was 7.3% (2.5% for nine months)
stronger compared to the U.S. dollar. The Company estimates that this had an
unfavourable impact of approximately $35 million ($38 million year-to-date) on
its operating results, compared to the same period last year. The Company's
hedging program was favourable by $10 million ($20 million unfavourable
year-to-date) mainly due to a positive contribution of $17 million ($26
million year-to-date) in the third quarter of 2007, compared to $7 million
          ($46 million year-to-date) in the third quarter of 2006. Other
currency exchange rates had a positive impact of $1 million ($7 million
year-to-date). Sequentially, the Canadian dollar was 5.1% stronger than the
U.S. dollar, negatively impacting the Company's operating results by $20
million in the third quarter compared to the second quarter of 2007.

    Segmented results before specific items
    ---------------------------------------

    Newsprint

    In the Newsprint segment, the $59 million reduction in operating results
before specific items is mainly due to lower North American selling prices and
the unfavourable impact of a stronger Canadian dollar, partly offset by lower
cost of products sold.

    To view Abitibi-Consolidated Inc. charts (Newsprint) please click
    here:
    http://files.newswire.ca/653/newsprint.doc

    Table 5: Newsprint operating results before specific items(1)
             (in millions of dollars)

                                   Fav/(unfav) variance due to
                          Third  -----------------------------------   Third
                        Quarter           Foreign                    Quarter
                           2007   Volume exchange   Prices    Costs     2006
                        -------- -------- -------- -------- -------- --------
    Sales               $   536 ($    12)($    20)($    62) $     -  $   630
    EBITDA(1)                38       (2)      (8)     (62)      11       99
    Amortization             57        -        1        -        1       59
    Operating profit
     (loss)                 (19)      (2)      (7)     (62)      12       40

    Note (1) Non-GAAP measures


    The Company's newsprint shipments in the third quarter of 2007 were
830,000 tonnes, compared to 848,000 tonnes in the third quarter of 2006. The
reduction in shipments was attributable to lower average basis weight and
sales volume in North America.
    At the end of the third quarter of 2007, the Company's newsprint
inventories were approximately 30,000 tonnes higher than at the end of the
third quarter 2006 and approximately 70,000 tonnes higher than at the end of
December 2006. The increase is mainly due to inventory build-up required for
higher international sales, with inventory destined to North America remaining
at low levels.
    Year-over-year, the average newsprint price in the U.S. for the third
quarter of 2007 was US$91 per tonne lower. In Europe, newsprint prices have
increased, compared to the same quarter last year. During the third quarter of
2007, the average newsprint price in the U.S. decreased by approximately
US$23 per tonne, compared to the previous quarter as a result of the continued
market weakness in North America. In July of 2007, the Company announced a
price increase of US$25 per tonne in the United States, effective September 1,
2007. The increase is expected to be fully implemented in November.
    On a per tonne basis, cost of products sold for newsprint in the third
quarter of 2007 was $20 lower than in the same quarter of 2006. The decrease
in costs was mainly due to lower employee benefit costs and the stronger
Canadian dollar, reducing costs in Canadian dollars of the Company's U.S.
mills. This was partly offset by higher recycled fibre prices and the
devaluation of finished goods inventory to realizable value for $2 million.
    According to the Pulp and Paper Products Council (PPPC), total U.S.
newsprint consumption was down by 9.6% in the third quarter of 2007, compared
to the third quarter of 2006, as daily publishers' advertising volume and
circulation continued on a downward trend. In the third quarter of 2007, total
industry inventory decreased by 44,000 tonnes, compared to an increase of
37,000 tonnes in the third quarter of 2006. North American newsprint
production declined by 6.7% in the third quarter of 2007 compared to the same
period in 2006. In the third quarter of 2007, the operating rate of the North
American industry was 92%, compared to 94% in the same period of 2006.
    The Company expects 2007 worldwide newsprint demand to decline slightly.
Regions such as Eastern Europe, Latin America and Non-Japan Asia are expected
to deliver positive growth, offset by declining demand in North America, Japan
and Western Europe.

    Commercial Printing Papers

    In the Commercial Printing Papers segment, the $34 million increase in
operating loss before specific items is mainly due to a stronger Canadian
dollar and lower selling prices.

    To view Abitibi-Consolidated Inc. charts (Printing) please click
    here:
    http://files.newswire.ca/653/commercial.doc

    Table 6: Commercial Printing Papers operating results before specific
             items(1) (in millions of dollars)

                                     Fav/(unfav) variance due to
                          Third  -----------------------------------   Third
                        Quarter           Foreign                    Quarter
                           2007   Volume exchange   Prices    Costs     2006
                        -------- -------- -------- -------- -------- --------
    Sales               $   335 ($    20)($    17)($    14) $     -  $   386
    EBITDA(1)                 -       (3)     (15)     (14)      (2)      34
    Amortization             38        -        -        -        -       38
    Operating profit
     (loss)                 (38)      (3)     (15)     (14)      (2)      (4)

    Note (1) Non-GAAP measures


    The Company's shipments of commercial printing papers totalled 424,000
tonnes in the third quarter of 2007, compared to 446,000 tonnes in the third
quarter of 2006. On February 25, 2007, Abitibi-Consolidated indefinitely idled
its 145,000-tonne Fort William paper mill, which remained idled for the whole
quarter. In addition, the Company took market-related downtime at two of its
commercial printing paper mills, equivalent to 14,000 tonnes of production in
the third quarter of 2007.
    The previously announced US$60 per short ton price increase for ABICAL®
grades did not materialize but during the third quarter of 2007,
Abitibi-Consolidated announced price increases of US$60 per short ton for each
of its ABIOFFSET™ and ABICAL® grades, all effective October 1. Compared
to the third quarter of 2006, the Company's average prices in U.S. dollars for
all Commercial Printing Paper grades was 4.5% lower.
    On a per tonne basis, cost of products sold for commercial printing papers
in the third quarter of 2007 was $10 higher than in the same quarter of 2006.
The cost increase was due to the devaluation of finished goods inventory to
realizable value for $5 million. Lower production volume as a result of
market-related downtime and an unfavourable product mix was offset by lower
employee benefit costs and lower input usage.
    According to the PPPC, North American demand for uncoated groundwood
papers increased by 2.6% in the third quarter of 2007, compared to the same
period of 2006. The increase in demand was driven by a higher demand for
glossy and directory grades.
    The outlook for uncoated groundwood papers demand remains positive. Demand
growth in hi-gloss and directory grades is expected to be offset by a decline
in demand for standard grades. Hi-gloss demand is recovering from the previous
year's decline.

    Wood Products

    In the Wood Products segment, the $2 million increase in operating loss
before specific items is mainly due to lower selling prices.

    To view Abitibi-Consolidated Inc. charts (Wood Products) please click
    here:
    http://files.newswire.ca/653/wood.doc

    Table 7: Wood products operating results before specific items(1)
             (in millions of dollars)

                                    Fav/(unfav) variance due to
                          Third  -----------------------------------   Third
                        Quarter           Foreign                    Quarter
                           2007   Volume exchange   Prices    Costs     2006
                        -------- -------- -------- -------- -------- --------
    Sales               $   128 ($    29)($     4)($     4) $     -  $   165
    EBITDA(1)               (17)       1       (3)      (4)       2      (13)
    Amortization             11        -        -        -        2       13
    Operating profit
     (loss)                 (28)       1       (3)      (4)       4      (26)

    Note (1) Non-GAAP measures


    Sales volume in the third quarter of 2007 totalled 362 million board feet
(MBf), compared to 439 MBf for the same period in 2006. Average selling prices
in Canadian dollars for the third quarter of 2007 were 6% lower than in the
same quarter of 2006, as a result of lower U.S. dollar lumber prices.
    During the third quarter of 2007, the Company idled its two sawmills in
British-Columbia for one week, two sawmills in Québec for the entire quarter
and reduced production shifts in certain other sawmills, resulting in a total
removal of 41 MBf of production. The temporary closures were mainly
attributable to deteriorated wood products' market conditions as well as high
production costs. In addition, most of the Québec sawmills were shut down for
two weeks due to the normal summer vacation period.
    On a per thousand board feet basis, cost of products sold for wood
products in the third quarter of 2007 was $15 lower than in the third quarter
of 2006. This was primarily due to lower wood costs, mainly related to the
idling of the higher cost sawmills, partly offset by lower production related
to downtime and the devaluation of finished goods inventory to realizable
value for $6 million.
    In the United States, housing starts decreased by 30.8% from an annual
rate of 1.721 million units during September of 2006 to 1.191 million units in
September of 2007. During the third quarter of 2007, average U.S. dollar
lumber prices (f.o.b. Great Lakes) increased by 7% for 2x4 Stud and decreased
by 2% for 2x4 Random Length, compared to the same period of 2006.
Sequentially, average U.S. dollar lumber prices (f.o.b. Great Lakes) decreased
by 1% for 2x4 Stud and increased by 3% for 2x4 Random Length, compared to the
second quarter of 2007.

    BALANCE SHEET
    -------------

    As at September 30, 2007, total long-term debt amounted to $3,615 million
for a ratio of net debt to total capitalization of 0.587, compared to
$3,864 million for a net debt to total capitalization ratio of 0.592 as at
December 31, 2006. The reduction in the Company's long-term debt is
attributable to the strengthening of the Canadian dollar.
    During the third quarter of 2007, the Company finalized ancillary legal
documentation related to an amendment to its bank credit agreement. The
amendment allows the necessary steps for the integration of
Abitibi-Consolidated with Bowater. With the amendment, Facility A was revised
to     $510 million from $550 million and Facility B remained at $200 million.
    On July 27, 2007, DBRS changed its rating on the Company from BB (low)
Under Review with Positive Implications to BB (low) Under Review with Negative
Implications. On August 1, 2007, Fitch Rating downgraded the ratings of the
Company from B+ to B-. The outlook remained negative.
    Net funded debt to capitalization ratio, calculated as per the
requirements of the Company's revolving credit facilities, amounted to 57.3%
at the end of September 2007 and is in compliance with the covenants of the
said facilities. The interest coverage ratio covenant has been waived until
the end of the second quarter of 2008. AbitibiBowater, on behalf of the
Company, is currently in negotiation with financial institutions to refinance
those revolving credit facilities and the related covenants are part of the
negotiations.
    As at September 30, 2007, the outstanding balance of the Company's
securitization programs, in Canadian dollars, was $339 million, compared to
$433 million as at December 31, 2006.

    Valuation of assets and liabilities, and the combination with Bowater

    As at September 30, 2007, the Company reviewed its impairment test on the
indefinitely idled Lufkin, Texas paper mill. The test was performed, in the
fourth quarter of 2006, under the assumption that the mill would restart
producing lightweight coated paper under a partnership structure. Given that
alternative scenarios could not be discussed with the new management of
AbitibiBowater due to competition restrictions, this scenario is considered by
the Company's management as being the most likely in the context of
Abitibi-Consolidated as a stand alone company. Therefore, the Company
concluded that the recognition of an impairment charge was not required, as
the estimated undiscounted cash flows exceeded the $212 million book value.
Given the inherent imprecision and corresponding importance of the key
assumptions used in the impairment test, it is possible that changes in future
conditions, including the merger of Abitibi-Consolidated and Bowater, may lead
management to use different key assumptions, which could result in a material
change in the book value of these assets.
    Goodwill is subject to an annual test performed during the fourth quarter
of each year. The Company has initiated its annual goodwill impairment test
based on consistent assumptions compared to the previous year. Different
preliminary scenarios have been prepared to evaluate the risk and
sensitivities of impairment. The calculations have not been finalized but
based on current assumptions the excess of the fair value over book value is
significantly lower compared to the test made the previous year, particularly
in the Commercial Printing Papers segment. As at September 30, 2007, goodwill
for the Commercial Printing Papers segment amounted to $439 million and
goodwill for the Newsprint segment amounted to $854 million. In the event that
the final evaluation of the Commercial Printing Papers segment results in a
valuation that is lower than its carrying value, this segment would have to
record an impairment charge related to its goodwill. With the completion of
the combination between the Company and Bowater in the fourth quarter of 2007,
all assets and liabilities of the Company, including goodwill, will be
reassessed and evaluated at their fair market value.
    Other consolidated balance sheet elements such as future income taxes have
also been tested in the context of Abitibi-Consolidated as stand alone and the
Company concluded that no devaluation was required.

    LIQUIDITY AND CAPITAL RESOURCES
    -------------------------------

    Cash used for operating activities totalled $206 million for the third
quarter ended September 30, 2007, compared to $61 million in the corresponding
period of 2006. The increase in cash used is mainly due to the lower operating
results. The increase of $104 million in operating working capital is mainly
due to the reduction in trade and tax payables.
    Capital expenditures were $30 million ($71 million year-to-date) for the
three-month period ended September 30, 2007, compared to $39 million
($107 million year-to-date) in the corresponding period last year. On March 8,
2007, Abitibi-Consolidated announced an investment of $84.3 million in a new
biomass energy generator to be located at its Fort Frances, Ontario, pulp and
paper mill. The Company's net contribution to this project is expected to be
$61.8 million. Construction began in early June of 2007, and the generator is
anticipated to be in operation during the fall of 2008. The equipment will use
renewable, cost-effective fuel from wood waste to generate steam and
45.5 Megawatts (MW) of electricity for the mill which should eliminate
approximately 90% of its current greenhouse gas emissions. The new biomass
boiler will burn mill-generated wood waste and primary sludge, as well as
harvest slash from woodland operations and wood waste from area sawmills. This
project is expected to positively impact the mill's manufacturing costs by
approximately $26 million annually.
    The Company intends to limit its capital expenditure program in 2007 to
approximately $125 million of which approximately $15 million is estimated to
be for the biomass energy generator at Fort Frances.
    At the end of September 2007, the Company had drawn $295 million on the
$710 million credit facilities. As at September 30, 2007, cash and cash
equivalents amounted to $96 million, a reduction of $107 million compared to
December 31, 2006. Excluding any amount drawn on the credit facilities, the
Company has $336 million of debt maturing in 2008. AbitibiBowater is currently
in negotiation with financial institutions to refinance those debts before
their maturities.

    SHARES OUTSTANDING
    ------------------

    As at September 30, 2007, the number of shares outstanding remained
constant at 440 million, compared to the end of the same period in 2006. There
were 14.7 million options outstanding at the end of September 2007, compared
to 14.5 million as at the end of December 2006.

    OTHER NOTEWORTHY EVENT
    ----------------------

    With respect to the disposal of Abitibi-Consolidated's 55,000 acres of
timberlands located in Georgia and South Carolina, as at the end of the third
quarter of 2007, the Company had closed the sale of 101 tracts totalling
38,054 acres for net proceeds of US$91.8 million. The Company expects to
complete the sale before the end of the first quarter of 2008. Total net
proceeds are now expected to be in excess of US$125 million.

    SELECTED QUARTERLY INFORMATION
    ------------------------------

    Table 8: Summary of quarterly results (in millions of dollars, except
             otherwise noted)

                                          2007                     2006
                             ----------------------------  ------------------
                                 Q-3       Q-2       Q-1       Q-4       Q-3
                             --------  --------  --------  --------  --------
    Sales                    $   999   $ 1,064   $ 1,068   $ 1,180   $ 1,181
    Operating profit
     (loss) from continuing
     operations                  (57)      (20)      (47)      236         2
    Operating profit
     (loss) from continuing
     operations before
     specific items(1)           (85)      (64)      (39)       17        10
    Earnings (loss) from
     continuing operations        54       148       (70)      (22)      (48)
    Earnings (loss) from
     continuing operations
     per share                  0.12      0.34     (0.16)    (0.05)    (0.11)
    Net earnings (loss)           54       148       (70)      (22)      (48)
    Net earnings (loss)
     per share                  0.12      0.34     (0.16)    (0.05)    (0.11)
    Exchange rates
     (CDN$1= US$):
    Average noon rate          0.957     0.911     0.854     0.878     0.892


                                               2006                2005
                                       ------------------  ------------------
                                           Q-2       Q-1       Q-4       Q-3
                                       --------  --------  --------  --------
    Sales                              $ 1,253   $ 1,237   $ 1,310   $ 1,355
    Operating profit
     (loss) from continuing
     operations                             48        41      (352)        8
    Operating profit
     (loss) from continuing
     operations before
     specific items(1)                      57        52        15        49
    Earnings (loss) from
     continuing operations                 157       (33)     (345)       95
    Earnings (loss) from
     continuing operations
     per share                            0.36     (0.08)    (0.79)     0.22
    Net earnings (loss)                    157       (33)     (355)       99
    Net earnings (loss)
     per share                            0.36     (0.08)    (0.81)     0.23
    Exchange rates
     (CDN$1= US$):
    Average noon rate                    0.891     0.866     0.852     0.832

    Note (1) Non-GAAP measures


    CHANGES IN ACCOUNTING POLICIES
    ------------------------------

    Financial instruments, hedges and comprehensive income
    ------------------------------------------------------

    In January 2005, the CICA published the following three new sections of
the CICA Handbook: Section 3855, Financial Instruments - Recognition and
Measurement, Section 3865, Hedges, and Section 1530, Comprehensive Income.
Together, these standards introduced new requirements for the recognition and
measurement of financial instruments, hedge accounting and comprehensive
income that are, for the most part, harmonized with standards issued by the
U.S. Financial Accounting Standards Board. These new recommendations have been
adopted by the Company for the fiscal year beginning on January 1, 2007.
    These new recommendations did not have a significant impact on the
Company's financial position, earnings or cash flows, but require presenting
two new statements entitled "Comprehensive Income (Loss)" and "Changes in
Shareholders' Equity". More information on the above changes is presented in
Note 1 of the Company's interim consolidated financial statements.

    Accounting changes
    ------------------

    In 2006, the CICA issued Section 1506, Accounting Changes, of the
Handbook. This standard establishes criteria for changing accounting policies,
together with the accounting treatment and disclosure of changes in accounting
policies and estimates, and correction of errors. The Company applied this
standard as of January 1, 2007.

    DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS
    --------------------------------------------------------

    In the quarter ended September 30, 2007, the Company did not make any
significant changes in, nor take any significant corrective actions regarding
its internal controls or other factors that could significantly affect such
internal controls. The Company's CEO and CFO periodically review the Company's
disclosure controls and procedures for effectiveness and conduct an evaluation
each quarter. As of the end of the third quarter, the Company's CEO and CFO
were satisfied with the effectiveness of the Company's disclosure controls and
procedures.

    OVERSIGHT ROLE OF AUDIT COMMITTEE
    ---------------------------------

    The Audit Committee reviews, with Management and the external auditor, the
Company's quarterly MD&A, and related consolidated financial statements and
approves the release to shareholders. Management and the internal auditor of
the Company also periodically present to the Committee a report of their
assessment of the Company's internal controls and procedures for financial
reporting. The external auditor periodically prepares a report for Management
on internal control weaknesses noted, if any, identified during the course of
the auditor's annual audit, which is reviewed by the Audit Committee.

    FORWARD-LOOKING STATEMENTS
    --------------------------

    Certain statements contained in this MD&A and in particular the statements
contained in various outlook sections, constitute forward-looking statements.
These forward-looking statements relate to the future financial condition,
results of operations or business of the Company. These statements may be
current expectations and estimates about the markets in which
Abitibi-Consolidated operates and management's beliefs and assumptions
regarding these markets. These statements are subject to important risks and
uncertainties, which are difficult to predict and assumptions, which may prove
to be inaccurate. The results or events predicted in the forward-looking
statements contained in this MD&A may differ materially from actual results or
events. In particular, forward-looking statements do not reflect the potential
impact of any merger, acquisitions or other business combinations or
divestitures that may be announced or completed after such statements are
made. In addition, the following factors relating to the business combination
of Abitibi-Consolidated and Bowater under AbitibiBowater, 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; 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 combination making it more
difficult to maintain relationships with customers, employees or suppliers.
Additional factors that could cause Abitibi-Consolidated's results, or those
of AbitibiBowater, to differ materially from those described in the
forward-looking statements can be found in the periodic reports filed by
AbitibiBowater, Abitibi-Consolidated and Bowater with the SEC and the Canadian
securities regulatory authorities and available at the SEC's internet site
(http://www.sec.gov) and on SEDAR (http://www.sedar.com). The Company
disclaims any intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events, or
otherwise.

    Abitibi-Consolidated Inc.
    Consolidated Statements of Earnings (Loss)

                                    Three months ended     Nine months ended
                                  September  September  September  September
                                         30         30         30         30
    (unaudited)                        2007       2006       2007       2006
    (in millions of Canadian
    dollars, unless otherwise noted)      $          $          $          $
    -------------------------------------------------------------------------

    Sales                               999      1,181      3,131      3,671
    -------------------------------------------------------------------------

    Cost of products sold, excluding
     amortization                       828        897      2,529      2,722
    Distribution costs                  115        130        353        388
    Countervailing, anti-dumping and
     other duties                         3          7          9         26
    Selling, general and
     administrative expenses             32         34        103        100
    Mill closure and other
     elements (note 3 and note 4)       (28)         1        (60)        13
    Amortization of plant and
     equipment                          102        106        308        319
    Amortization of intangible
     assets                               4          4         13         12
    -------------------------------------------------------------------------
    Operating profit (loss)             (57)         2       (124)        91
    Financial expenses (note 7)          81         86        253        253
    Gain on translation of foreign
     currencies                        (200)         -       (468)      (141)
    Other expenses                        6          8         19         22
    -------------------------------------------------------------------------
    Earnings (loss) before the
     following items                     56        (92)        72        (43)
    Income tax recovery (note 8)          -        (52)       (80)      (145)
    Share of earnings from
     investments subject to
     significant influence                -          -          1          1
    Non-controlling interests            (2)        (8)       (21)       (27)
    -------------------------------------------------------------------------
    Net earnings (loss)                  54        (48)       132         76
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Per common share (in dollars,
     basic and diluted)
      Net earnings (loss)              0.12      (0.11)      0.30       0.17
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted average number of
     common shares outstanding
     (in millions)                      440        440        440        440
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Consolidated Statements of Comprehensive Income (Loss)

                                    Three months ended     Nine months ended
                                  September  September  September  September
                                         30         30         30         30
    (unaudited)                        2007       2006       2007       2006
    (in millions of Canadian dollars)     $          $          $          $
    -------------------------------------------------------------------------

    Net earnings (loss)                  54        (48)       132         76
    Other comprehensive income
     (loss), net of income taxes
      Foreign currency translation
       adjustment                       (81)         1       (192)       (45)
      Reclassification to earnings
       of losses on derivatives
       designated as cash flow
       hedges(a)                         (8)         -         (9)         -
      Change in unrealized gains on
       derivatives designated
       as cash flow hedges(b)            27          -         55          -
    -------------------------------------------------------------------------
    Comprehensive income (loss)          (8)       (47)       (14)        31
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (a) Net of $3 million of income taxes in the three months ended
        September 30, 2007, and of $4 million in the nine months ended
        September 30, 2007 (2006 - nil).
    (b) Net of $13 million of income taxes in the three months ended
        September 30, 2007, and of $25 million in the nine months ended
        September 30, 2007 (2006 - nil).

    See accompanying Notes to consolidated financial statements


    Abitibi-Consolidated Inc.
    Consolidated Statements of Cash Flows

                                    Three months ended     Nine months ended
                                  September  September  September  September
                                         30         30         30         30
    (unaudited)                        2007       2006       2007       2006
    (in millions of Canadian dollars)     $          $          $          $
    -------------------------------------------------------------------------

    Operating activities
    Net earnings (loss)                  54        (48)       132         76
    Amortization                        106        110        321        331
    Future income taxes                  (5)       (52)       (89)      (141)
    Gain on translation of foreign
     currency long-term debt           (210)         -       (535)      (156)
    Employee future benefits, excess
     of funding over expense             (8)       (36)       (45)       (54)
    Non-cash mill closure and
     other elements (note 3)              -          -         (9)         -
    Gain on disposal of
     assets (note 2)                    (40)         -        (71)         -
    Net gain on dilution resulting
     from units issued by a
     subsidiary (note 4)                  -          -        (33)         -
    Non-controlling interests             2          8         21         27
    Other non-cash items                 (1)         -          -         (3)
    -------------------------------------------------------------------------
                                       (102)       (18)      (308)        80
    Changes in non-cash operating
     working capital components        (104)       (43)      (113)      (196)
    -------------------------------------------------------------------------
    Cash flows used in operating
     activities                        (206)       (61)      (421)      (116)
    -------------------------------------------------------------------------

    Financing activities
    Increase in long-term debt           20        190        633        478
    Repayment of long-term debt           -        (71)      (335)      (257)
    Dividends paid to shareholders        -          -          -        (22)
    Dividends and cash
     distributions paid to
     non-controlling interests           (4)       (13)       (16)       (31)
    Net proceeds on issuance of
     units by a subsidiary (note 4)       -          -         37          -
    -------------------------------------------------------------------------
    Cash flows generated by
     financing activities                16        106        319        168
    -------------------------------------------------------------------------

    Investing activities
    Additions to property, plant
     and equipment                      (30)       (39)       (71)      (107)
    Additions to intangible assets        -          -          -         (3)
    Cash distributions from
     entities subject to
     significant influence                1          -          3          -
    Receipt of note receivable            -          -          -         10
    Net proceeds on disposal of
     assets (note 2)                     55          3         97          4
    Cash subject to restriction
     (note 4)                            (2)         -        (24)         -
    Other                                 1          -          -          2
    -------------------------------------------------------------------------
    Cash flows generated by (used
     in) investing activities            25        (36)         5        (94)
    -------------------------------------------------------------------------
    Increase (decrease) in cash
     and cash equivalents during
     the period                        (165)         9        (97)       (42)
    Foreign currency translation
     adjustment                          (7)         -        (10)         -
    Cash and cash equivalents,
     beginning of period                268         16        203         67
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period                       96         25         96         25
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying Notes to consolidated financial statements


    Components of the changes in
     non-cash operating working
     capital
      Accounts receivable               (21)       (23)        38        (21)
      Inventories                        11        (39)        16        (43)
      Prepaid expenses                    -          1        (18)       (21)
      Accounts payable and accrued
       liabilities                      (94)        18       (149)      (111)
                                     -------------------  -------------------
                                       (104)       (43)      (113)      (196)
                                     -------------------  -------------------
    Cash outflows (inflows) during
     the period related to
      Interest on long-term debt         79         73        245        232
      Income taxes                        3         (1)        10          1
                                     -------------------  -------------------
                                         82         72        255        233
                                     -------------------  -------------------

    Abitibi-Consolidated Inc.
    Consolidated Balance Sheets

                                                        September   December
                                                               30         31
    (unaudited)                                              2007       2006
    (in millions of Canadian dollars)                           $          $
    -------------------------------------------------------------------------
    ASSETS

    Current assets
    Cash and cash equivalents                                  96        203
    Accounts receivable                                       370        362
    Inventories                                               653        683
    Prepaid expenses                                           71         53
    Future income taxes                                        30         70
    -------------------------------------------------------------------------
                                                            1,220      1,371

    Timberlands held for sale (note 2)                         11          -
    Property, plant and equipment (note 5)                  3,583      3,984
    Intangible assets                                         447        460
    Employee future benefits                                  381        328
    Future income taxes                                       278        322
    Other assets (note 4)                                     181        200
    Goodwill (note 6)                                       1,293      1,297
    -------------------------------------------------------------------------
                                                            7,394      7,962
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities
    Accounts payable and accrued liabilities (note 9)         626        785
    Long-term debt due within one year                        336         72
    -------------------------------------------------------------------------
                                                              962        857

    Long-term debt                                          3,279      3,792
    Employee future benefits                                  158        162
    Future income taxes                                       523        629
    Non-controlling interests                                  73         71

    Shareholders' equity
    Capital stock                                           3,518      3,518
    Contributed surplus                                        43         40
    Deficit                                                  (745)      (843)
    Accumulated other comprehensive loss (note 13)           (417)      (264)
    -------------------------------------------------------------------------
                                                            2,399      2,451
    -------------------------------------------------------------------------
                                                            7,394      7,962
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying Notes to consolidated financial statements


    Abitibi-Consolidated Inc.
    Consolidated Statements of Changes in Shareholders' Equity

                                    Three months ended     Nine months ended
                                  September  September  September  September
                                         30         30         30         30
    (unaudited)                        2007       2006       2007       2006
    (in millions of Canadian dollars)     $          $          $          $
    -------------------------------------------------------------------------

    Capital stock
    -------------------------------------------------------------------------
    Common shares, beginning and
     end of period                    3,518      3,518      3,518      3,518
    -------------------------------------------------------------------------
    Contributed surplus
    Contributed surplus, beginning
     of period                           42         37         40         34
    Stock options                         1          2          3          5
    -------------------------------------------------------------------------
    Contributed surplus, end
     of period                           43         39         43         39
    -------------------------------------------------------------------------
    Deficit
    Deficit, beginning of period       (799)      (773)      (843)      (875)
    Transition adjustment on
     adoption of Financial
     Instruments standards, net
     of taxes (note 1)                    -          -        (34)         -
    Net earnings                         54        (48)       132         76
    Dividends declared                    -          -          -        (22)
    -------------------------------------------------------------------------
    Deficit, end of period             (745)      (821)      (745)      (821)
    -------------------------------------------------------------------------
    Accumulated other comprehensive
     loss, net of taxes
    Accumulated other comprehensive
     loss, beginning of period         (355)      (322)      (264)      (276)
    Transition adjustment on
     adoption of Financial
     Instruments standards (note 1)       -          -         (7)         -
    Other comprehensive loss
     for the period                     (62)         1       (146)       (45)
    -------------------------------------------------------------------------
    Accumulated other comprehensive
     loss, end of period               (417)      (321)      (417)      (321)
    -------------------------------------------------------------------------
    Total shareholders' equity,
     end of period                    2,399      2,415      2,399      2,415
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Total of deficit and accumulated other comprehensive loss amounts to
$1,162 million as of September 30, 2007 ($1,142 million as of September 30,
2006).

    See accompanying Notes to consolidated financial statements


    Abitibi-Consolidated Inc.
    Consolidated Business Segments
    (unaudited)
    (in millions of Canadian dollars, unless otherwise noted)

                                                        Additions
                                             Operating         to
    Three months ended               Amorti-    profit    capital      Sales
     September 30, 2007    Sales     zation   (loss)(1)  assets(2)    volume
    -------------------------------------------------------------------------
                               $          $          $          $

    Newsprint                536         57         15         12        830
                                                                   thousands
                                                                   of tonnes
    Commercial printing
     papers                  335         38        (43)        10        424
                                                                   thousands
                                                                   of tonnes
    Wood products(3)         128         11        (29)         8        362
                                                                    millions
                                                                    of board
                                                                        feet
    -------------------------------------------------------------------------
                             999        106        (57)        30
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Three months ended
     September 30, 2006
    -------------------------------------------------------------------------
    Newsprint                630         59         40         22        848
                                                                   thousands
                                                                   of tonnes
    Commercial printing
     papers                  386         38         (5)         9        446
                                                                   thousands
                                                                   of tonnes
    Wood products(3)         165         13        (33)         8        439
                                                                    millions
                                                                    of board
                                                                        feet
    -------------------------------------------------------------------------
                           1,181        110          2         39
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                        Additions
                                             Operating         to
    Nine months ended                Amorti-    profit    capital      Sales
     September 30, 2007    Sales     zation   (loss)(1)  assets(2)    volume
    -------------------------------------------------------------------------
                               $          $          $          $

    Newsprint              1,682        174         46         43      2,436
                                                                   thousands
                                                                   of tonnes
    Commercial printing
     papers                1,030        114        (87)        19      1,238
                                                                   thousands
                                                                   of tonnes
    Wood products(3)         419         33        (83)         9      1,193
                                                                    millions
                                                                    of board
                                                                        feet
    -------------------------------------------------------------------------
                           3,131        321       (124)        71
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Nine months ended
     September 30, 2006
    -------------------------------------------------------------------------
    Newsprint              1,929        178        145         56      2,581
                                                                   thousands
                                                                   of tonnes
    Commercial printing
     papers                1,142        117        (24)        34      1,327
                                                                   thousands
                                                                   of tonnes
    Wood products(3)         600         36        (30)        20      1,479
                                                                    millions
                                                                    of board
                                                                        feet
    -------------------------------------------------------------------------
                           3,671        331         91        110
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) Specific items affecting:

                           Mill closure and
                             other elements
                         -------------------
                            Mill               CVD, AD       SG&A      Total
    Three months ended   closure  Other ele- and other      expen-  specific
     September 30, 2007    costs    ments(4)  duties(5)     ses(6)     items
    -------------------------------------------------------------------------
                               $          $          $          $          $

    Newsprint                  1        (35)         -          -        (34)
    Commercial printing
     papers                    2          3          -          -          5
    Wood products              -          1          -          -          1
    -------------------------------------------------------------------------
                               3        (31)         -          -        (28)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Three months ended
     September 30, 2006
    -------------------------------------------------------------------------
    Newsprint                  -          -          -          -          -
    Commercial printing
     papers                    -          1          -          -          1
    Wood products              -          -          7          -          7
    -------------------------------------------------------------------------
                               -          1          7          -          8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                           Mill closure and
                             other elements
                         -------------------
                            Mill               CVD, AD       SG&A      Total
    Nine months ended    closure  Other ele- and other      expen-  specific
     September 30, 2007    costs    ments(4)  duties(5)     ses(6)     items
    -------------------------------------------------------------------------
                               $          $          $          $          $
    Newsprint                  2        (86)         -         (1)       (85)
    Commercial printing
     papers                   21         (1)         -         (1)        19
    Wood products              -          4         (2)         -          2
    -------------------------------------------------------------------------
                              23        (83)        (2)        (2)       (64)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Nine months ended
     September 30, 2006
    -------------------------------------------------------------------------
    Newsprint                  1          6          -         (6)         1
    Commercial printing
     papers                    -          6          -         (3)         3
    Wood products              -          -         26         (2)        24
    -------------------------------------------------------------------------
                               1         12         26        (11)        28
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (2) Capital assets include property, plant and equipment and intangible
        assets.
    (3) Wood products sales exclude inter-segment sales of $40 million for
        the three months ended September 30, 2007 ($37 million for the three
        months ended September 30, 2006) and $118 million for the the nine
        months ended September 30, 2007 ($125 million for the nine months
        ended September 30, 2006).
    (4) Other elements include early retirement program, labour force
        reductions, gain on sale of timberlands, net gain on dilution
        resulting from units issued by a subsidiary and expenses related to
        the Abitibi-Consolidated Inc. and Bowater Incorporated merger.
    (5) Credit related to adjustment to the settlement of the lumber dispute.
    (6) Related to prior years capital tax adjustment included in selling,
        general and administrative expenses.
                                                        September   December
                                                               30         31
                                                             2007       2006
    Total assets                                                $          $
    -------------------------------------------------------------------------
    Newsprint                                               4,051      4,358
    Commercial printing papers                              2,603      2,742
    Wood products                                             740        862
    -------------------------------------------------------------------------
                                                            7,394      7,962
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Abitibi-Consolidated Inc.
    Notes to Consolidated Financial Statements
    September 30, 2007
    (unaudited)
    (in millions of Canadian dollars, unless otherwise noted)


    1. Summary of significant accounting policies

    These interim consolidated financial statements of Abitibi-Consolidated
Inc. (the "Company"), expressed in Canadian dollars, are prepared in
accordance with Canadian Generally Accepted Accounting Principles ("GAAP"),
with the exception that their disclosures do not conform in all material
respects to the requirements of GAAP for annual financial statements. They
should be read in conjunction with the latest annual financial statements.
    These consolidated financial statements are prepared using the same
accounting principles and application thereof as the consolidated financial
statements for the year ended December 31, 2006, except for the following:

    Accounting changes

    On January 1, 2007, the Company adopted the Canadian Institute of
Chartered Accountants ("CICA") Handbook Section 1506, Accounting Changes. This
standard establishes criteria for changing accounting policies, together with
the accounting treatment and disclosure of changes in accounting policies and
estimates, and correction of errors.

    Financial instruments

    On January 1, 2007, the Company adopted CICA Handbook Section 1530,
Comprehensive Income; Section 3855, Financial Instruments - Recognition and
Measurement and Section 3865, Hedges. These standards provide accounting
guidelines for recognition and measurement of financial assets, financial
liabilities and non-financial derivatives, and describe when and how hedge
accounting may be applied.
    The Company's adoption of these new Financial Instruments standards
resulted in changes in the accounting for financial instruments and hedges, as
well as the recognition of certain transition adjustments that have been
recorded in opening deficit or opening accumulated other comprehensive loss as
described below. The comparative interim consolidated financial statements
have not been restated other than for the foreign currency translation
adjustment, which is now disclosed within accumulated other comprehensive
loss. The principal changes in the accounting for financial instruments and
hedges due to the adoption of these accounting standards are described below.

    (a) Comprehensive income (loss)

    Comprehensive income (loss), established under CICA Section 1530, is
defined as the change in equity, from transactions and other events and
circumstances from non-owner sources, and is composed of the Company's net
earnings (loss) and other comprehensive income (loss). Other comprehensive
income (loss) refers to revenues, expenses, gains and losses that are
recognized in comprehensive income (loss), but excluded from net earnings
(loss), and include foreign currency translation gains and losses on the net
investment in self-sustaining operations and changes in the fair market value
of derivative instruments designated as cash flow hedges, all net of income
taxes. The components of comprehensive income (loss) are disclosed in the
interim consolidated statements of comprehensive income (loss).

    (b) Financial assets and financial liabilities

    Under the new standards, financial assets and financial liabilities are
initially recognized at fair value and are classified into one of these five
categories: held-for-trading, held-to-maturity investments, loans and
receivables, available-for-sale financial assets or other financial
liabilities. They are subsequently accounted for based on their classification
as described below. The classification depends on the purpose for which the
financial instruments were acquired and their characteristics. Except in very
limited circumstances, the classification is not changed subsequent to initial
recognition.

      Held-for-trading

      Financial instruments classified as held-for-trading are carried at
      fair value at each balance sheet date with the changes in fair value
      recorded in net earnings (loss) in the period in which these changes
      arise.

      Held-to-maturity investments, loans and receivables and other
      financial liabilities

      Financial instruments classified as loans and receivables, held-to-
      maturity investments and other financial liabilities are carried at
      amortized cost using the effective interest method. The interest income
      or expense is included in net earnings (loss) over the expected life of
      the instrument.

      Available-for-sale

      Financial instruments classified as available-for-sale are carried at
      fair value at each balance sheet date with the changes in fair value
      recorded in other comprehensive income (loss) in the period in which
      the changes arise. Securities that are classified as available-for-sale
      and do not have a readily available market value are recorded at cost.
      Available-for-sale securities are written down to fair value through
      earnings (loss) whenever it is necessary to reflect other-than-
      temporary impairment. Upon derecognition, all cumulative gain or loss
      is then recognized in net earnings (loss).

    As a result of the adoption of these new standards, the Company has
classified its cash and cash equivalents as held-for-trading. Accounts
receivable are classified as loans and receivables. The Company's investments
consist of equity accounted for investments which are excluded from the scope
of this standard. Accounts payable and accrued liabilities and long-term debt,
including interest payable are classified as other liabilities, all of which
are measured at amortized cost.

    (c) Derivatives and hedge accounting

      Embedded derivatives

      All derivative instruments are recorded in the consolidated balance
      sheets at fair value at each balance sheet date. Derivatives may be
      embedded in other financial instruments (the "host instrument"). Prior
      to the adoption of the new standards, such embedded derivatives were
      not accounted for separately from the host instrument. Under the new
      standards, embedded derivatives are treated as separate derivatives if
      their economic characteristics and risks are not clearly and closely
      related to those of the host instrument, the terms of the embedded
      derivative are the same as those of a stand-alone derivative, and the
      combined contract is not held for trading or designated at fair value.
      These embedded derivatives are measured at fair value at each balance
      sheet date with subsequent changes recognized in net earnings (loss) in
      the period in which the changes arise. The Company selected January 1,
      2003 as its transition date for embedded derivatives, which is the
      latest date that could be selected according to the accounting
      standard.

      Hedge accounting

      At the inception of a hedging relationship, the Company documents the
      relationship between the hedging instrument and the hedged item, its
      risk management objective and its strategy for undertaking the hedge.
      The Company also requires a documented assessment, both at hedge
      inception and on an ongoing basis, of whether or not the derivatives
      that are used in hedging transactions are effective in offsetting the
      changes attributable to the hedged risks in the fair values or cash
      flows of the hedged items. Under the new standards, all derivatives are
      recorded at fair value. These derivatives are recorded in accounts
      receivable or accounts payable. The method of recognizing fair value
      gains and losses depends on whether derivatives are held for trading or
      are designated as hedging instruments, and, if the latter, the nature
      of the risks being hedged. All gains and losses from changes in the
      fair value of derivatives not designated as hedges are recognized in
      the consolidated statements of earnings (loss). When derivatives are
      designated as hedges, the Company classifies them either as: (i) hedges
      of the change in fair value of recognized assets or liabilities or firm
      commitments (fair value hedges); or (ii) hedges of the variability in
      highly probable future cash flows attributable to a recognized asset or
      liability, or a forecasted transaction (cash flow hedges).

      Fair value hedge

      The Company has outstanding interest rate swap contracts, which it
      designates as a fair value hedge related to variations of the fair
      value of its long-term debt due to change in LIBOR interest rates.
      Changes in the fair value of derivatives that are designated and
      qualify as fair value hedging instruments are recorded in the
      consolidated statements of earnings (loss). A corresponding adjustment
      amounting to changes in the fair value of the assets, liabilities or
      group thereof that are attributable to the hedged risk is recorded as
      an adjustment of the hedged item and to earnings. Any gain or loss in
      fair value relating to the ineffective portion of the hedging
      relationship is recognized immediately in "Financial expenses" in the
      consolidated statements of earnings (loss). If a hedging relationship
      no longer meets the criteria for hedge accounting, the cumulative
      adjustment to the carrying amount of the hedged item is amortized to
      the consolidated statements of earnings (loss) based on a recalculated
      effective interest rate over the residual period to maturity, unless
      the hedged item has been derecognized in which case it is released to
      the statements of earnings (loss) immediately. Upon adoption of the new
      standards, the Company recorded a net increase in accounts payable of
      $37 million, and a decrease of $37 million in long-term debt.

      Cash flow hedge

      The Company has outstanding options and forward exchange contracts,
      which it designates as cash flow hedges of anticipated future revenue
      for a maximum period of two years. The amounts and timing of future
      cash flows are projected on the basis of their contractual terms and
      other relevant factors, including estimates of prepayments and
      defaults. The aggregate cash flows over time form the basis for
      identifying the effective portion of gains and losses on the
      derivatives designated as cash flow hedges of forecasted transactions.
      The effective portion of changes in the fair value of derivatives that
      are designated and qualify as cash flow hedges is recognized in
      comprehensive income (loss). Any gain or loss in fair value relating to
      the ineffective portion is recognized immediately in "Sales" in the
      consolidated statements of earnings (loss). Amounts accumulated in
      other comprehensive income (loss) are reclassified to the consolidated
      statement of earnings (loss) in the period in which the hedged item
      affects earnings. When a hedging instrument expires or is sold, or when
      a hedge no longer meets the criteria for hedge accounting, any
      cumulative gain or loss existing in other comprehensive income (loss)
      at that time remains in other comprehensive income (loss) until the
      forecasted transaction is eventually recognized in the consolidated
      statements of earnings (loss). When it is probable that a forecasted
      transaction will not occur, the cumulative gain or loss that was
      reported in other comprehensive income (loss) is immediately
      transferred to the statements of earnings (loss). Upon adoption of the
      new standards, the Company recorded an increase in accounts payable of
      $10 million, an increase of $3 million of future income tax assets, and
      an increase of $7 million net of taxes in accumulated other
      comprehensive loss.

    (d) Deferred financing fees

    Under the new standards, transaction costs related to the issuance or
acquisition of financial assets and liabilities (other than those classified
as held-for-trading) may be either all recognized into earnings (loss) as
incurred, or are recorded with the asset or liability to which they are
associated and amortized using the effective-interest rate method. Previously,
the Company had deferred these costs and amortized them over the life of the
related financial asset or liability.
    The Company elected to recognize all such costs into earnings (loss). As a
result, the Company wrote-off deferred financing costs of $39 million and
income taxes of $5 million, resulting in a $34 million adjustment to deficit
on January 1, 2007.
    The following table summarizes the transition adjustments required to
adopt the new standards:

                                                           Accumulated other
                                          Deficit         comprehensive loss
                                 ----------------------  --------------------
                                     Before      After     Before      After
                                        tax        tax        tax        tax
                                          $          $          $          $
    -------------------------------------------------------------------------
    Adoption of new accounting
     policies for:
      Deferred financing costs          (39)       (34)         -          -
      Cash flow hedges                    -          -        (10)        (7)
    -------------------------------------------------------------------------
                                        (39)       (34)       (10)        (7)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The fair value of financial instruments is determined using price quoted
on active markets, when available, and recognized valuation models using
observable market-based inputs.

    ACCOUNTING PRINCIPLES ISSUED BUT NOT YET IMPLEMENTED
    ----------------------------------------------------

    Financial instruments - disclosure and presentation

    In December 2006, the CICA published the following two sections of the
CICA Handbook: Section 3862, Financial Instruments - Disclosures and Section
3863, Financial Instruments - Presentation. These standards introduce
disclosure and presentation requirements that will enable financial
statements' users to evaluate, and enhance their understanding of the
significance of financial instruments for the entity's financial position,
performance and cash flows, and the nature and extent of risks arising from
financial instruments to which the entity is exposed, and how those risks are
managed.

    Capital disclosures

    In December 2006, the CICA published section 1535 of the Handbook, Capital
disclosures, which requires disclosure of both qualitative and quantitative
information that enables financial statements' users to evaluate the entity's
objectives, policies and processes for managing capital.

    Inventories

    In January 2007, the CICA published section 3031 of the Handbook,
Inventories, which prescribes the accounting treatment for inventories.
Section 3031 provides guidance on the determination of costs and its
subsequent recognition as an expense, and provides guidance on the cost
formulas used to assign costs to inventories.
    Those standards must be adopted by the Company for the fiscal year
beginning on January 1, 2008. While the Company is currently assessing the
impact of these new recommendations on its financial statements, it does not
expect the recommendations to have a significant impact on its financial
position, earnings or cash flows.

    2. Timberlands held for sale

    On February 23, 2007, the Company acquired all of the timberlands from its
52.5%-owned subsidiary located in Augusta, Georgia. This related-party
transaction was concluded at fair market value, and the partner's $9 million
share of the gain recorded by the subsidiary is presented in "Mill closure and
other elements" in the "Newsprint" segment, in the interim consolidated
statements of earnings. This gain, which is to be recognized by the Company's
minority shareholders in the subsidiary, has been recorded in "Non-controlling
interests" and, thus, the transaction has no impact on the "Net earnings" in
the consolidated statements of earnings.
    In the three months ended September 30, 2007, the Company sold
20,331 acres of timberlands for net proceeds of $53 million (US$50.5 million)
(38,054 acres of timberlands for net proceeds of $97 million (US$91.8 million)
in the nine months ended September 30, 2007). The Company expects to complete
the sale before the end of the first quarter of 2008. As the "held for sale"
classification criteria were met as at September 30, 2007, the timberlands,
with a book value of $11 million, are classified as such in the consolidated
balance sheets.

    3. Mill closure and other elements

    Three months ended September 30, 2007

    On February 25, 2007, the Company idled its Fort William, Ontario, paper
mill for an indefinite period of time, due to current market conditions and
high production costs. In the three months ended September 30, 2007, a charge
of $2 million of mill closure elements was recorded related to this idling, in
the "Commercial printing papers" segment, mainly for severance and other
labour-related costs. During the quarter, the Company also recorded a charge
of $1 million related to a previously closed mill, which was recorded in the
"Newsprint" segment.
    During the quarter, the Company recorded a gain of $40 million on the
disposal of timberlands and $9 million of costs related to the announced
merger of the Company and Bowater Incorporated ("Bowater"). The "Newsprint",
"Commercial printing papers" and "Wood products" segments were impacted by a
credit of $35 million, a charge of $3 million and a charge of $1 million,
respectively.

    Three months ended September 30, 2006

    In the three months ended September 30, 2006, the Company recorded a
charge of $1 million of labour force reductions in the "Commercial printing
papers" segment.

    Nine months ended September 30, 2007

    The idling of the Fort William paper mill resulted in a charge of
$20 million of mill closure elements, mainly for severance and other
labour-related costs in the nine months ended September 30, 2007. During this
period, the Company also recorded a charge of $3 million of mill closure
elements. The mill closure elements included in the "Newsprint" and
"Commercial printing papers" segments were charges of $2 million and $21
million, respectively.
    In the nine months ended September 30, 2007, the Company recorded a gain
of $71 million on the disposal of timberlands, a net gain on dilution of
$33 million resulting from units issued by a subsidiary (see note 4),
$29 million of costs related to the announced merger of the Company and
Bowater, a $1 million charge of early retirement program and labour force
reductions, and the partner's $9 million share of the gain recorded by the
subsidiary upon the sale of all its timberlands to the Company. The other
elements included in the "Newsprint", "Commercial printing papers" and "Wood
products" segments were a credit of $86 million, a credit of $1 million and a
charge of $4 million, respectively.

    Nine months ended September 30, 2006

    In the nine months ended September 30, 2006, the Company recorded a charge
of $1 million of mill closure elements, which was included in the "Newsprint"
segment.
    In the first three quarters of 2006, the Company recorded a charge of
$13 million of early retirement program and labour force reductions, as well
as a $1 million compensation for reduction of cutting rights in British
Columbia. The "Newsprint" and "Commercial printing papers" segments include
$6 million and $6 million of other elements, respectively. There are no other
elements in the "Wood products" segment in the nine months ended September 30,
2006.

    4. Partnership in energy generation

    On April 1, 2007, the Company completed the transfer of its Ontario
hydroelectric assets and related water rights (the "Facilities") to its wholly
owned subsidiary called ACH Limited Partnership ("ACH LP"). On April 2, ACH LP
issued new units equivalent to a 25% interest of the partnership to the Caisse
de dépôt et placement du Québec (the "Caisse"), for gross proceeds of
$48 million. This transaction resulted in a net gain on dilution resulting
from units issued by a subsidiary of $33 million, after $11 million of
transaction costs ($32 million net of income taxes) recorded in "Mill closure
and other elements", of which $23 million is included in the "Newsprint"
segment and $10 million in the "Commercial printing papers" segment.
    The Caisse has also provided ACH LP with a 10-year unsecured 7.132% term
loan of $250 million, non recourse to the Company, to partially fund the
acquisition of the Facilities.
    ACH LP has also entered into an unsecured bank credit facility of
$15 million, for general business purposes. The facility matures on March 31,
2010 and is non recourse to the Company.
    The unsecured term loan and unsecured bank credit facility require ACH LP
to meet a specific financial ratio, which is met as at September 30, 2007.
    As of September 30, 2007, ACH LP had $24 million of restricted cash
recorded in "Other assets". Of this amount, $18 million will be used over the
next three years to realize a capital project related to the Facilities and
$6 million is required as reserves under the term loan credit agreement.

    5. Impairment of long-lived assets

    As at September 30, 2007, the Company reviewed the impairment test on the
indefinitely idled Lufkin, Texas paper mill. The test was performed in the
fourth quarter of 2006 under the assumption that the mill would restart
producing lightweight coated paper under a partnership structure. Given that
alternative scenarios could not be discussed with the new management of
AbitibiBowater due to competition restrictions, this scenario is considered by
the Company's management as being the most likely in the context of
Abitibi-Consolidated as a stand alone company. Therefore, the Company
concluded that the recognition of an impairment charge was not required, as
the estimated undiscounted cash flows exceeded the $212 million book value.
Given the inherent imprecision and corresponding importance of the key
assumptions used in the impairment test, it is possible that changes in future
conditions, including the merger of Abitibi-Consolidated and Bowater, may lead
management to use different key assumptions, which could result in a material
change in the book value of these assets.

    6. Goodwill

    Goodwill is subject to an annual impairment test performed during the
fourth quarter of each year. The Company has initiated its annual goodwill
impairment test based on consistent assumptions compared to the previous year.
Different preliminary scenarios have been prepared to evaluate the risk and
sensitivities of impairment. The calculations have not been finalized but
based on current assumptions the excess of the fair value over book value is
significantly lower compared to the test made the previous year, particularly
in the "Commercial Printing Papers" segment. As at September 30, 2007,
goodwill for the "Commercial Printing Papers" segment amounted to $439 million
and goodwill for the "Newsprint" segment amounted to $854 million. In the
event that the final evaluation of the "Commercial Printing Papers" segment
results in a valuation that is lower than its carrying value, this segment
would have to record an impairment charge to its goodwill. With the completion
of the combination between the Company and Bowater in the fourth quarter of
2007, all assets and liabilities of the Company, including goodwill, will be
reassessed and evaluated at their fair market value.

    7. Financial expenses
                                    Three months ended     Nine months ended
                                          September 30          September 30
                                       2007       2006       2007       2006
                                          $          $          $          $
    -------------------------------------------------------------------------
    Interest on long-term debt           80         81        248        237
    Amortization of deferred
     financing fees                       -          1          -          5
    Interest income                      (3)         -        (10)        (2)
    Other                                 4          4         15         13
    -------------------------------------------------------------------------
                                         81         86        253        253
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    8. Income tax recovery

    In the three months ended September 30, 2007, unfavourable tax adjustments
of $3 million are included in income tax recovery ($12 million of favourable
adjustments in the three months ended September 30, 2006, related to the
settlement of prior-years tax audits).
    In the nine months ended September 30, 2007, favourable income tax
adjustments of $27 million are included in income tax recovery, due to the
revision of prior-period tax provisions, to realized losses, to prospective
reductions in income tax rates and to unfavourable tax adjustments
($97 million in the nine months ended September 30, 2006, which is related to
the settlement of prior-years income tax issues and to the prospective
reduction in the Canadian federal income tax rate).
    The non-taxable portion of foreign exchange gains is taken into
consideration in the determination of the income tax recovery.

    9. Mill closure elements provision

    The following table provides a reconciliation of the mill closure elements
provision, which comprises, in most part, severance and other labour-related
costs and contractual obligations, for the periods:

                                    Three months ended     Nine months ended
                                          September 30          September 30
                                       2007       2006       2007       2006
                                          $          $          $          $
    -------------------------------------------------------------------------
    Mill closure elements
     provision, beginning of period      12         20          7         38
    Mill closure elements incurred
     during the period                    1          -         21          -
    Payments                             (3)        (2)       (18)       (20)
    -------------------------------------------------------------------------
    Mill closure elements provision,
     end of period                       10         18         10         18
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The Company expects to pay most of the balance of the provision for mill
closure elements within the next twelve months.

    10. Long-term debt

    The Company's bank credit facilities require that some specific financial
ratios be met. During July of 2007, the interest coverage ratio was waived
until the end of the second quarter of 2008. AbitibiBowater, on behalf of the
Company, is currently in negotiation with financial institutions to refinance
those revolving credit facilities and the related covenants are part of the
negotiations.

    11. Employee future benefits

    The following table provides total employee future benefit costs for the
periods:

                                    Three months ended     Nine months ended
                                          September 30          September 30
                                       2007       2006       2007       2006
                                          $          $          $          $
    -------------------------------------------------------------------------
    Defined contribution
     pension plans                        4          4         11         11
    Defined benefit pension plans
     and other benefits                  37         39        114        112
    -------------------------------------------------------------------------
                                         41         43        125        123
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    12. Future income taxes

    As at September 30, 2007, the Company had United States federal and state
net operating loss carry forwards of approximately US$1 billion. These loss
carry forwards expire at various dates until 2026. In the third quarter of
2007, the Company estimated its future taxable income as a stand alone company
and concluded that all deferred income tax assets would be used before their
expiry date.

    13. Accumulated other comprehensive loss

    The following table provides the components of "Accumulated other
comprehensive loss" in the consolidated balance sheets as at:

                                                        September   December
                                                               30         31
                                                             2007       2006
                                                                $          $
    -------------------------------------------------------------------------
    Foreign currency translation adjustment                  (456)      (264)
    Unrealized gains on derivative instruments
     designated as cash flow hedges, net of taxes              39          -
    -------------------------------------------------------------------------
                                                             (417)      (264)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    14. Subsequent events

    Abitibi-Consolidated Inc. and Bowater Incorporated merger

    On October 23, 2007, Abitibi-Consolidated Inc. ("Abitibi-Consolidated")
and Bowater entered into a settlement agreement with the U.S. Department of
Justice ("DOJ") in order to obtain regulatory approval of their all-stock
merger of equals which was announced on January 29, 2007. On October 29, 2007,
under the terms of the transaction, each common share of Abitibi-Consolidated
was exchanged for 0.06261 common share of AbitibiBowater Inc.
("AbitibiBowater"), and each Bowater common share was exchanged for 0.52
common share of AbitibiBowater. The exchange ratio resulted in 48% of
AbitibiBowater being owned by former Abitibi-Consolidated shareholders and 52%
of AbitibiBowater being owned by former Bowater shareholders.

    Snowflake facilities to be sold

    As part of the settlement agreement entered into with the DOJ, the Company
agreed to sell the Snowflake, Arizona facilities. The divestiture must be
completed within the time period provided for in the agreement, or a trustee
will be empowered to complete the sale. The book value of the net assets
related to the location as at September 30, 2007 was $166 million and will
qualify under the criteria of assets held for sale for presentation only in
the fourth quarter of 2007.

    15. Comparative figures

    Certain comparative figures presented in the consolidated financial
statements have been reclassified to conform to the current period
presentation.
For further information:
For further information: Investors, Duane Owens, (864) 282-9488,
duane.owens@abitibibowater.com; Media and Others, Seth Kursman, (514)
394-2398, seth.kursman@abitibibowater.com