Buckeye Technologies Inc. (NYSE:BKI) today announced third quarter net income of $19.3 million or $0.49 per share compared to net income of $4.3 million or $0.11 per share in the same period last year. Third quarter earnings included net income of $4.2 million, or $0.11 per share, from alternative fuel mixture credits (AFMC) recognized during the quarter, which was partly offset by after-tax costs relating to restructuring and early retirement of debt totaling $2.5 million, or $0.07 per share. In addition, income tax expense for the quarter was reduced by $7.4 million, or $0.19 per share for energy investment tax credits earned to-date on progress expenditures for our Foley Energy Independence project, of which $6.6 million or $0.17 per share was related to prior period expenditures. We expect to continue to receive investment tax credits over the next several years based on planned spending on energy projects at our Foley mill. Net sales were $191 million for the third quarter of fiscal 2010, up 11% versus net sales of $172 million in the third quarter of fiscal 2009.

Adjusted net income* for the quarter was $11.0 million, or $0.28 per share versus third quarter fiscal 2009 adjusted net income $4.3 million, or $0.11 per share. “Adjusted net income” is a “non-GAAP financial measure” as defined by SEC rules that adjusts net income for AFMC, investment tax credits on prior period expenditures, restructuring and early debt retirement costs and is reconciled in the table below. This $0.17 per share increase in adjusted earnings per share* compared to the same quarter a year ago was largely due to increased shipment volume, which was up about 19%, and the resulting improvement in capacity utilization. The impact of lower selling prices was offset by lower input costs. Also contributing $0.06 to this improvement in adjusted net income was a 46% reduction in interest expense versus the same quarter a year ago largely due to the reduction in long-term debt, which has come down by $115 million over the past twelve months. This was partly offset by a higher tax rate (-$0.04).

Adjusted earnings per share of $0.28 in the just completed quarter were up $0.06 compared to the $0.22 earned in the second quarter. Adjusted operating income* improved by $2.7 million, accounting for $0.04 of this improvement and reduced interest expense added another $0.01. Operating income for Specialty Fibers was up $4.1 million as increased selling prices due to strong demand in most of our markets more than offset higher costs for energy (driven primarily by cold weather) and transportation during the quarter. Operating income for Nonwovens was down $1.2 million as margins were compressed due to rising fluff pulp costs.

Chairman and Chief Executive Officer John B. Crowe said, “In spite of a slow start in January and February due to the cold weather, our third quarter was a good quarter. Our markets remain very strong and should continue to be so for the near term. Gross margin for the quarter improved to 17.4% of sales, which is the highest level achieved since the October-December quarter of 2007. We generated free cash flow* of $18.2 million during the quarter, enabling us to reduce our debt to $273.5 million and meet our fiscal year-end debt goal one quarter early. We have established a new target to reduce long-term debt below $250 million by the end of our fiscal year in June. We also completed the redemption of an additional $25 million of our 8.5% 2013 senior notes on April 19th using borrowings on our bank revolver, which will reduce the remaining notes outstanding to $140 million and further reduce interest costs going forward. Average selling prices of our products are expected to improve further in the fourth quarter. Also, in the near term, operational reliability and procurement of cotton linters will be the keys to building on the current quarter’s success.”

Buckeye has scheduled a conference call for April 28, 2009 at 11:00 a.m. ET to discuss third quarter fiscal year 2010 results. Those interested in listening by telephone may dial in at (800) 967-7138 within the United States. International callers should dial (719) 325-2306. 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.

* 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”, “adjusted earnings per share” and “free cash flow” The first three are equal to net income, operating income and earnings per share excluding income from alternative fuel mixture credits, investment tax credits on prior period expenditures, restructuring, and early debt retirement costs. We define “free cash flow” as net cash provided by operating activities less net cash used in investing activities.

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 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. Free cash flow is provided because it is widely used by investors as a valuation and liquidity measure in our industry.

This press release contains forward-looking statements within the meaning of the federal securities laws and is intended to qualify for the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995. “Forward-looking statements” generally can be identified by the use of forward-looking terminology such as “assumptions,” “target,” “guidance,” “outlook,” “plans,” “projection,” “may,” “will,” “would,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “potential,” or “continue (or the negative or other derivatives of each of these terms or similar terminology). The “forward-looking statements” include, without limitation, statements regarding the economic outlook for the Company and the demand for its products, the receipt of future investment tax credits and debt reduction goals. These statements are based on management’s estimates and assumptions with respect to future events and financial performance and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results could differ materially from those projected as a result of certain factors. A discussion of factors that could cause results to vary is included in the Company’s Annual Report on Form 10-K and other period filings with the Securities and Exchange Commission.