Buckeye Technologies Inc. (NYSE:BKI) today announced second quarter net income of $46.3 million or $1.18 per share compared to a loss of $125.0 million or ($3.23) per share in the same period last year. Second quarter earnings included net income of $37.5 million, or $0.96 per share, from alternative fuel mixture credits (AFMC) earned during the quarter. During the same quarter of the prior year, the Company’s results included a $127.6 million ($3.30 per share) after-tax loss related to a non-cash goodwill impairment charge. Net sales were $183 million for the second quarter of fiscal 2010 compared to $185 million in the second quarter of fiscal 2009.

Excluding income from AFMC, adjusted net income was $8.8 million, or $0.22 per share versus second quarter fiscal 2009 adjusted net income (excluding non-cash goodwill impairment) of $2.6 million, or $0.07 per share. This $0.15 per share increase in earnings compared to the same quarter a year ago was largely due to increased shipment volume, which was up about 9%, and the resulting improvement in capacity utilization. Also contributing to improved earnings were significantly lower raw material costs and other cost reductions at our cotton specialty plants, and reduced interest expense.

Adjusted earnings of $0.22 per share in the just completed quarter were up $0.11 (+100%) compared to the $0.11 earned in the first quarter excluding the impact of AFMC. This improvement in earnings was driven by a significant rebound in our specialty fibers business. Product mix improved as we shifted volume out of the viscose staple fiber market back into our traditional niche markets like casings, tire cord and ethers due to improving demand in those markets. We also benefited from higher viscose staple fiber and fluff pulp pricing, improving volumes at our cotton specialty plants and lower cotton linter costs compared to the first quarter.

Chairman and Chief Executive Officer John B. Crowe said, “We are encouraged by the improving trends in our business, as evidenced by the strong rebound in earnings versus the first quarter and our first year over year gains since the July-September quarter of 2008. We are benefitting from improved demand, a better mix, rising fluff pulp prices and lower interest expense. We continued to reduce our debt during the second quarter to $290 million, with a target of $275 million by the end of our fiscal year in June. We also completed the redemption of $35 million of our 8.5% 2013 senior notes on January 4th using available cash and borrowings on our bank revolver, which we expect to generate annual interest savings of about $2.4 million per year going forward at current interest rates. The Buckeye organization continues to focus on growing sales, reducing costs and maintaining tight control on working capital.”

Buckeye has scheduled a conference call for January 27, 2009 at 11:00 a.m. ET to discuss second quarter fiscal year 2010 results. Those interested in listening by telephone may dial in at (877) 719-9786 within the United States. International callers should dial (719) 325-4761. Supplemental material for the call will be available on the Company’s website at www.bkitech.com or at www.streetevents.com.

Buckeye, a leading manufacturer and marketer of specialty fibers and nonwoven materials, is headquartered in Memphis, Tennessee, USA. The Company currently operates facilities in the United States, Germany, Canada, and Brazil. Its products are sold worldwide to makers of consumer and industrial goods.

Certain matters discussed in this press release may constitute forward-looking statements within the meaning of the federal securities laws that involve risks and uncertainties, including but not limited to economic, competitive, governmental, and technological factors affecting the Company’s operations, financing, markets, products, services and prices, and other factors. For further information on factors which could impact the Company and the statements contained herein, please refer to public filings with the Securities and Exchange Commission.

*This release includes certain financial information not derived in accordance with generally accepted accounting principles (“GAAP”). The non-GAAP measures used are “adjusted operating income,” “adjusted net income,” and “adjusted earnings per share” and are equal to net income, operating income and earnings per share excluding income from alternative fuel mixture credits and goodwill impairment. The Company believes that the presentation of these non-GAAP measures provides information that is useful to investors as it allows for a more meaningful comparison of these financial measures to prior periods, but this information should not be considered a substitute for any measures derived in accordance with GAAP. The Company manages its business units by financial measures which exclude these two items. Operating income and earnings per share targets for our all-employee bonus and at-risk compensation also exclude the benefit of alternative fuel mixture credits and the goodwill impairment charge.