
                                                      Media Contact:
                                                      -------------
                                                      Gordon R. Manuel
                                                      864-282-9448

                                                      Analyst Contact:
                                                      --------------- -
                                                      Duane A. Owens
                                                      864-282-9488

FOR IMMEDIATE RELEASE
WEDNESDAY, OCTOBER 26, 2005

                      BOWATER ANNOUNCES THIRD QUARTER 2005
                                FINANCIAL RESULTS

GREENVILLE, SC - Bowater Incorporated (NYSE: BOW) reported a net loss of $16.0
million, or $0.28 per diluted share, on sales of $872.9 million for the third
quarter of 2005. These results compare with a net loss of $18.1 million, or
$0.32 per diluted share, on sales of $834.0 million in the third quarter of
2004. Before special items, the net loss for the third quarter of 2005 was $9.5
million, or $0.17 per diluted share, compared with the 2004 third quarter net
loss before special items of $1.8 million, or $0.03 per diluted share. Third
quarter 2005 special items, net of tax, consisted of a $6.1 million gain related
to asset sales and a $12.6 million loss resulting from currency changes
primarily related to the appreciation of the Canadian dollar. In addition to
those special items, the company had a $3.7 million (or $0.06 per share) charge
related to a tax adjustment. Before the gain on asset sales, operating income
was $35.1 million, which is within the range indicated in the company's
announcement dated October 4. Operating income was $45.0 million, including the
gain on asset sales.


<TABLE>
<CAPTION>
                              FINANCIAL HIGHLIGHTS
                     (In millions, except per-share amounts)

                                                               Three Months Ended               Nine Months Ended
                                                                  September 30,                   September 30,
                                                         ------------------------------- --------------------------------
                                                               2005            2004             2005           2004
                                                         ------------------------------- --------------------------------
<S>                                                      <C>            <C>              <C>            <C>
 Sales                                                   $     872.9    $     834.0      $   2,607.4    $    2,367.3
 Net loss                                                $     (16.0)   $     (18.1)     $     (18.7)   $      (51.9)

 Loss per diluted share (in accordance with GAAP)        $     (0.28)   $     (0.32)     $     (0.33)   $      (0.91)
 Special items, net of tax (per diluted share):
    Sale of assets (gain) loss                                 (0.11)         (0.01)           (0.34)          (0.07)
    Foreign exchange (gain) loss                                0.22           0.30             0.10            0.13
    Asset impairment                                            -              -                0.13              -
                                                         ------------------------------- --------------------------------
 Loss per share excluding special items                  $     (0.17)   $     (0.03)     $     (0.44)    $     (0.85)
                                                         ------------------------------- --------------------------------
</TABLE>



                                     (more)


<PAGE>


     "Bowater's  product pricing has improved  throughout the year," said Arnold
M. Nemirow,  Chairman,  President and Chief Executive Officer. "However, we have
experienced  significant  cost  pressures,   especially  third  quarter  energy,
chemicals and  distribution  costs,  which were  partially  related to Hurricane
Katrina,  and the strong Canadian  dollar.  We do expect market  fundamentals to
continue to support Bowater's improved fourth quarter pricing."

     As  previously  announced,  the company has  initiated  an $80 million cost
reduction  program  which  will be  fully  implemented  by the end of  2006.  In
addition to this program,  the company  intends to sell certain  assets that are
expected to generate  net  proceeds in excess of $300 million over the same time
period. The assets consist mostly of North American timberlands.

     Bowater's  average  transaction price for newsprint rose $13 per metric ton
in the third  quarter  compared to the second  quarter.  Inventory  increased by
13,400 metric tons, primarily as a result of disruptions in export shipments due
to the recent hurricanes.  The company curtailed 56,000 metric tons of newsprint
production in the third quarter. Of the curtailment,  approximately  20,000 tons
was related to a 19 day outage at the Thunder Bay,  Ontario  newsprint mill as a
result of high wood fiber and energy costs. In the fourth  quarter,  the company
expects to curtail  approximately  53,000 metric tons  representing  maintenance
outages  and the  continued  idling of a machine at  Thunder  Bay.  The  company
informed its North  American  customers  of a $35 per metric ton price  increase
effective October 1.

     Consumption of coated  mechanical  papers in North America  continues to be
strong.  Bowater's  average  transaction  price for coated and specialty  papers
increased $30 per short ton compared to the second quarter,  while the company's
average  operating costs increased $19 per ton,  primarily as a result of rising
energy related costs and the strong Canadian  dollar.  Due to escalating  energy
costs,  the company  announced in the fourth quarter  various freight and energy
surcharges for its coated and specialty grades.

     Bowater's  average  transaction  price for market  pulp  decreased  $28 per
metric  ton  compared  to the  second  quarter of 2005,  while  operating  costs
increased $6 per ton. The company  curtailed  19,000  metric tons of market pulp
due to maintenance  outages in the third quarter and expects a similar amount in
the fourth quarter.  The company informed its North American  customers of a $20
per metric ton price increase on softwood grades effective October 1.

         The company's average transaction price for lumber decreased $24 per
thousand board feet compared to the second quarter of 2005. During the quarter,
the company paid countervailing and antidumping duties of approximately $7.8
million.

     Bowater will release  third  quarter  financial  results  before the market
opens on Wednesday,  October 26, 2005. A management conference call will be held
to discuss  these  financial  results at 10:00 a.m. EDT,  October 26, 2005.  The
conference call number is 800-288-8967 or 612-234-9960 (international). The call
will also be broadcast via the Internet.  Interested  parties may connect to the
Bowater website at www.bowater.com,  then follow the on-screen  instructions for
access  to the call  and  related  information.  A  replay  of the call  will be
available  from 1:30 p.m.  EDT on  Wednesday,  October  26,  through  Wednesday,
November  2,  on  the  website  or  by  dialing   800-475-6701  or  320-365-3844
(international) and using the access code 798866.

                                     (more)


<PAGE>



     Bowater  Incorporated,  headquartered  in  Greenville,  SC,  is  a  leading
producer of newsprint and coated  mechanical  papers.  In addition,  the company
makes uncoated mechanical papers,  bleached kraft pulp and lumber products.  The
company has 12 pulp and paper mills in the United States, Canada and South Korea
and 12 North  American  sawmills  that  produce  softwood  lumber.  Bowater also
operates two facilities that convert a mechanical base sheet to coated products.
Bowater's  operations  are  supported  by  approximately  1.4  million  acres of
timberlands owned or leased in the United States and Canada and 30 million acres
of timber  cutting  rights in  Canada.  Bowater  is one of the  world's  largest
consumers of recycled  newspapers and magazines.  Bowater common stock is listed
on the New York Stock  Exchange,  the  Pacific  Exchange  and the  London  Stock
Exchange.  A special class of stock  exchangeable  into Bowater  common stock is
listed on the Toronto Stock Exchange (TSX: BWX).

     All amounts are in U.S. dollars.

     Statements in this news release that are not reported  financial results or
other historical information are "forward-looking statements" within the meaning
of the Private  Securities  Litigation  Reform Act of 1995.  They  include,  for
example, statements about our business outlook, assessment of market conditions,
strategies, future plans, future sales, prices for our major products, inventory
levels, capital spending and tax rates. These forward-looking statements are not
guarantees of future  performance.  They are based on management's  expectations
that involve a number of business  risks and  uncertainties,  any of which could
cause actual results to differ  materially from those expressed in or implied by
the  forward-looking  statements.  The risks and  uncertainties  relating to the
forward-looking  statements in this news release  include those  described under
the caption  "Cautionary  Statement  Regarding  Forward-Looking  Information" in
Bowater's  annual report on Form 10-K for the year ended  December 31, 2004, and
from time to time, in Bowater's  other filings with the  Securities and Exchange
Commission.  Information about industry or general economic conditions contained
in this press  release is derived  from third  party  sources  that the  company
believes  are  widely  accepted  and  accurate;  however,  the  company  has not
independently verified this information and cannot assure its accuracy.


                                      # # #

<PAGE>



                      BOWATER INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS
                (Unaudited, in millions except per share amounts)


<TABLE>
<CAPTION>
                                                                Three Months Ended                      Nine Months Ended
                                                                  September 30,                           September 30,
                                                       -------------------------------------    -----------------------------------
                                                             2005                2004                2005               2004
<S>     <C>    <C>    <C>    <C>    <C>    <C>
                                                       -----------------    ----------------    ----------------   ----------------
Sales                                                   $ 872.9                    $  834.0         $    2,607.4       $   2,367.3

Cost of sales, excluding depreciation, amortization
    and cost of timber harvested                          630.5                       586.9              1,880.6            1,731.7
Depreciation, amortization and cost of timber
    harvested                                              82.5                        83.0                245.9              254.1
Distribution costs                                         83.8                        85.2                256.1              241.6
Selling and administrative expense                         41.0                        39.9                121.0              108.7
Asset impairment (2)                                          -                           -                 11.9                  -
Net gain on fixed assets and land sales                     9.9                         1.7                 30.7                5.9
                                                       -----------------    ----------------    ----------------   ----------------
       Operating income
                                                           45.0                        40.7                122.6               37.1

Other expense (income):
    Interest income                                        (1.0)                       (1.1)                (3.2)              (3.2)
    Interest expense, net of capitalized interest          50.0                        48.4                149.5              146.5
    Foreign exchange loss (gain)                            1.8                         1.2                  3.6               (0.1)
    Other, net                                             (2.7)                       (2.5)                (7.4)              (6.3)
                                                       -----------------    ----------------    ----------------   ----------------
                                                           48.1                        46.0                142.5              136.9
                                                       -----------------    ----------------    ----------------   ----------------
Loss before income taxes and minority interests            (3.1)                       (5.3)               (19.9)             (99.8)

Provision for income tax expense (benefit)                 14.5                        12.0                  1.1              (44.7)
Minority interests in the net income (loss) of
subsidiaries                                               (1.6)                        0.8                 (2.3)              (3.2)
                                                       -----------------    ----------------    ----------------   ----------------
Net loss                                                $ (16.0)                $     (18.1)         $     (18.7)        $    (51.9)
                                                       =================    ================    ================   ================

Basic loss per common share: (1)
    Net loss per share                                  $(0.28)                 $     (0.32)         $     (0.33)        $    (0.91)
                                                       =================    ================    ================    ==============
   Average common shares outstanding (1)                  57.4                         57.2                 57.4               57.2
                                                       =================    ================    ================    ==============
Diluted loss per common share: (1)
    Net loss per share                                 $ (0.28)                 $     (0.32)         $     (0.33)        $    (0.91)
                                                       =================    ================    ================    ==============
   Average common and common equivalent shares
     outstanding (1)                                      57.4                         57.2                 57.4               57.2
                                                       =================    ================    ================    =============
</TABLE>



<PAGE>



                      BOWATER INCORPORATED AND SUBSIDIARIES
                     (Unaudited, in millions of US dollars)

<TABLE>
<CAPTION>
Consolidated Balance Sheet                                                September 30,               December 31,
                                                                              2005                         2004
<S>     <C>    <C>    <C>    <C>    <C>    <C>
                                                                   ----------------------------    -----------------------------
Current assets
    Cash and cash equivalents                                       $        23.3                             $   29.7
    Accounts receivable, net                                                432.9                                377.0
    Inventories                                                             353.3                                327.9
    Other current assets                                                    104.1                                168.1
                                                                   ----------------------------    -----------------------------
        Total current assets                                                913.6                                902.7
                                                                   ----------------------------    -----------------------------
Timber and timberlands                                                      186.2                                186.2
Fixed assets, net                                                         3,125.3                              3,301.1
Goodwill                                                                    828.2                                828.2
Other assets                                                                233.5                                240.7
                                                                   ----------------------------    -----------------------------
                                                                    $     5,286.8                            $ 5,458.9
                                                                   ============================    =============================
Current liabilities:
    Current installments of long-term debt                          $        20.6                            $    14.0
    Short-term bank debt                                                     27.0                                 73.0
    Accounts payable and accrued liabilities                                496.7                                458.4
    Dividends payable                                                        11.2                                 11.2
                                                                   ----------------------------    -----------------------------
        Total current liabilities                                           555.5                                556.6
                                                                   ----------------------------    -----------------------------
Long-term debt, net of current installments                               2,403.0                              2,427.9
Pension, other postretirement benefits and other long-term
    liabilities                                                             494.9                                495.2
Deferred income taxes                                                       354.8                                403.4
Minority interests in subsidiaries                                           68.3                                 68.5
Shareholders' equity                                                      1,410.3                              1,507.3
                                                                   ----------------------------    -----------------------------
                                                                    $     5,286.8                          $   5,458.9
                                                                   ============================    =============================
</TABLE>


<TABLE>
<CAPTION>
                                                                                        Nine Months Ended
Consolidated Cash Flow                                                                    September 30,
                                                                   -------------------------------------------------------------
                                                                              2005                             2004
                                                                   ----------------------------    -----------------------------
<S>                                                                 <C>
Cash flows from operating activities                                  $     143.3                            $      85.7
                                                                   ----------------------------    -----------------------------
Cash flows from (used for) investing activities:
    Cash invested in fixed assets, timber and timberlands                   (89.6)                                 (60.3)
    Disposition of fixed assets, including timber and
                timberlands                                                  33.7                                   10.3
                                                                   ----------------------------    -----------------------------
                                                                            (55.9)                                 (50.0)
                                                                   ----------------------------    -----------------------------
Cash flows from (used for) financing activities:
    Cash dividends, including minority interests                            (34.4)                                 (34.6)
    Financing activities, net                                               (61.3)                                 (10.5)
    Stock options exercised                                                   1.9                                    5.1
                                                                   ----------------------------    -----------------------------
                                                                            (93.8)                                 (40.0)
                                                                   ----------------------------    -----------------------------
Net decrease in cash and cash equivalents                                                                   $       (4.3)
                                                                     $       (6.4)
                                                                   ============================    =============================

</TABLE>



<PAGE>



BOWATER INCORPORATED AND SUBSIDIARIES
Notes to the Press Release and Unaudited Consolidated Financial Statements

(1)  For the  calculation  of basic and diluted loss per share for the three and
     nine months ended  September 30, 2005 and 2004, no  adjustments to net loss
     are  necessary.  The effect of dilutive  securities  is not included in the
     computation for the three and nine months ended September 30, 2005 and 2004
     to prevent antidilution.

(2)  During the three months ended June 30, 2005, Bowater decided to permanently
     shut the older, higher cost No. 1 line at Benton Harbor. This shut resulted
     in a one-time non-cash asset impairment of $11.9 million.

(3)  A reconciliation of certain  financial  statement line items reported under
     generally  accepted  accounting  principles  ("GAAP") to earnings  reported
     before  special  items is  presented  below.  We believe  that this measure
     allows  investors  to more  easily  compare  our  on-going  operations  and
     financial  performance  from  period  to  period.  This  measure  is not as
     complete  as GAAP  earnings;  consequently,  investors  should rely on GAAP
     earnings.  In addition to GAAP earnings,  we use the other measures that we
     disclose in order to provide perspective on our financial performance.




                      Three Months Ended September 30, 2005
                (unaudited, in millions except per share amounts)

                          Adjustment for Special Items
<TABLE>
<CAPTION>
                                                                                 Land sales                             GAAP as
                                                                     GAAP as       & fixed    Foreign    Asset       adjusted for
                                                                    reported       assets     exchange   Impairment Special items
                                                                  -------------- ------------ ---------- ---------- ---------------
<S>     <C>    <C>    <C>    <C>
Operating income (loss)                                             $  45.0       $   (9.9)   $     -    $    -        $   35.1
Other expense (income):
  Interest income                                                      (1.0)             -          -         -            (1.0)
  Interest expense, net of capitalized interest                        50.0              -          -         -            50.0
  Foreign exchange loss (gain)                                          1.8              -       (1.8)        -               -
  Other, net                                                           (2.7)             -          -         -            (2.7)
                                                                  -------------- ------------ ---------- ---------- ---------------
                                                                       48.1              -       (1.8)        -            46.3
                                                                  -------------- ------------ ---------- ---------- ---------------
Income (loss) before income taxes and minority interests               (3.1)          (9.9)       1.8         -           (11.2)
Provision for income tax expense (benefit) (a)                         14.5           (3.8)     (11.2)        -            (0.5)
Minority interests in the net income (loss)subsidiaries                (1.6)             -        0.4         -            (1.2)
                                                                  -------------- ------------ ---------- ---------- ---------------
Net income (loss)                                                   $ (16.0)      $   (6.1)    $ 12.6     $   -        $   (9.5)
                                                                  -------------- ------------ ---------- ---------- ---------------
Diluted shares                                                         57.4           57.4       57.4         -            57.4
                                                                  -------------- ------------ ---------- ---------- ---------------
EPS                                                                 $ (0.28)       $ (0.11)     $ .22     $   -        $  (0.17)
                                                                  -------------- ------------ ---------- ---------- ---------------
Effective tax rate (a)                                               -467.7%          38.4%    -622.2%        -            4.5%
                                                                  -------------- ------------ ---------- ---------- ---------------
</TABLE>

(a)  The provision  for income tax expense for the three months ended  September
     30, 2005  includes a net tax expense  adjustment  of $3.7 million (or $0.06
     per share) for tax rate adjustments and settlements. After considering this
     adjustment, our effective tax rate, as adjusted for special items, would be
     37.5%.




<PAGE>


                      Three Months Ended September 30, 2004
                (unaudited, in millions except per share amounts)

                          Adjustment for Special Items
<TABLE>
<CAPTION>
                                                                                 Land sales                             GAAP as
                                                                     GAAP as       & fixed    Foreign    Asset       adjusted for
                                                                    reported       assets     exchange   Impairment Special items
                                                                  -------------- ------------ ---------- ---------- ---------------
<S>                                                                <C>
Operating income (loss)                                             $  40.7         $   (1.7)   $     -    $    -      $     39.0
Other expense (income)
  Interest income                                                      (1.1)               -          -         -            (1.1)
  Interest expense, net of capitalized interest                        48.4                -          -         -            48.4
  Foreign exchange loss (gain)                                          1.2                -       (1.2)        -               -
  Other, net                                                           (2.5)               -          -         -            (2.5)
                                                                  -------------- ------------ ---------- ---------- ---------------
                                                                       46.0                -       (1.2)        -            44.8
                                                                  -------------- ------------ ---------- ---------- ---------------
Income (loss) before income taxes and minority interests               (5.3)            (1.7)       1.2         -            (5.8)
Provision for income tax expense (benefit)                             12.0             (0.8)     (15.8)        -            (4.6)
Minority interests in the net income (loss) of subsidiaries             0.8                        (0.2)                      0.6
                                                                  -------------- ------------ ---------- ---------- ---------------
Net income (loss)                                                   $ (18.1)          $ (0.9)   $  17.2    $    -         $  (1.8)
                                                                  -------------- ------------ ---------- ---------- ---------------
Diluted Shares                                                         57.2             57.2       57.2         -            57.2
                                                                  -------------- ------------ ---------- ---------- ---------------
EPS                                                                 $ (0.32)         $ (0.01)   $  0.30    $    -         $ (0.03)
                                                                  -------------- ------------ ---------- ---------- ---------------
Effective tax rate                                                   -226.4%            47.1%    1316.7%                     79.3%
                                                                  -------------- ------------ ---------- ---------- ---------------

</TABLE>

<PAGE>

               Nine Months Ended September 30, 2005
     (unaudited, in millions except per share amounts)

                Adjustment for Special Items
<TABLE>
<CAPTION>
                                                                                  Land sales                          GAAP as
                                                                    GAAP as        & fixed    Foreign    Asset      adjusted for
                                                                    reported       assets     exchange   Impairment Special items
                                                                 --------------- ------------ ---------- ---------- --------------
<S>                                                               <C>

Operating income (loss)                                           $  122.6         $  (30.7)    $    -    $  11.9      $  103.8
Other expense (income):
  Interest income                                                     (3.2)               -          -          -          (3.2)
  Interest expense, net of capitalized interest                      149.5                -          -          -          149.5
  Foreign exchange loss (gain)                                         3.6                -       (3.6)         -              -
  Other, net                                                          (7.4)               -          -          -           (7.4)
                                                                 --------------- ------------ ---------- ---------- --------------
                                                                     142.5                -       (3.6)         -          138.9
                                                                 --------------- ------------ ---------- ---------- --------------
Income (loss) before income taxes and minority interests             (19.9)           (30.7)       3.6       11.9          (35.1)
Provision for income tax expense (benefit)                             1.1            (11.3)      (1.8)       4.5           (7.5)
Minority interests in the net income (loss) of subsidiaries           (2.3)               -       (0.1)         -           (2.4)
                                                                 --------------- ------------ ---------- ---------- --------------
Net income (loss)                                                 $  (18.7)        $  (19.4)    $  5.5    $   7.4       $  (25.2)
                                                                 --------------- ------------ ---------- ---------- --------------
Diluted shares                                                         57.4             57.4      57.4       57.4           57.4
                                                                 --------------- ------------ ---------- ---------- ---------------
EPS                                                               $  (0.33)        $  (0.34)  $   0.10    $  0.13       $  (0.44)
                                                                 --------------- ------------ ---------- ---------- ---------------
ffective tax rate                                                     -5.5%           36.8%     -50.0%      37.8%          21.4%
                                                                 --------------- ------------ ---------- ---------- ---------------

</TABLE>
                      Nine Months Ended September 30, 2004
                (unaudited, in millions except per share amounts)

                          Adjustment for Special Items
<TABLE>
<CAPTION>
                                                                                 Land sales                            GAAP as
                                                                    GAAP as        & fixed    Foreign    Asset       adjusted for
                                                                    reported       assets     exchange   Impairment Special items
                                                                 --------------- ------------ ---------- ---------- ---------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>
Operating income (loss)                                             $ 37.1        $   (5.9)    $   -      $   -        $    31.2
Other expense (income):
  Interest income                                                     (3.2)              -         -          -             (3.2)
  Interest expense, net of capitalized interest                      146.5               -         -          -            146.5
  Foreign exchange loss (gain)                                        (0.1)              -       0.1          -                -
  Other, net                                                          (6.3)              -         -          -             (6.3)
                                                                 --------------- ------------ ---------- ---------- ---------------
                                                                     136.9               -       0.1          -            137.0
                                                                 --------------- ------------ ---------- ---------- ---------------
Income (loss) before income taxes and minority  interests            (99.8)           (5.9)     (0.1)         -           (105.8)
Provision for income tax expense (benefit)                           (44.7)           (2.1)     (7.4)         -           (54.2)
Minority interests in the net income (loss) of  subsidiaries          (3.2)                      0.1                       (3.1)
                                                                 --------------- ------------ ---------- ---------- ---------------

Net loss                                                           $ (51.9)      $    (3.8)    $ 7.2     $    -         $ (48.5)
                                                                 --------------- ------------ ---------- ---------- ---------------
Diluted Shares                                                        57.2            57.2      57.2          -            57.2
                                                                 -------------- ------------- ---------- ---------- ---------------


EPS                                                             $    (0.91)      $   (0.07)    $0.13     $    -         $ (0.85)
                                                                 -------------- ------------- ---------- ---------- ---------------
 Effective tax rate                                                  44.8%           35.6%    7400.0%                     51.2%
                                                                 -------------- -------------- ---------- ---------- ---------------

</TABLE>
A schedule of historical  financial  and operating  statistics is available
upon request and on Bowater's web site (www.bowater.com).



