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Buckeye Announces January – March Quarter Results

Buckeye Technologies Inc. (NYSE:BKI) today announced earnings for the January – March quarter of 11 cents per share compared to 26 cents per share in the same period last year due to reduced demand and associated production downtime in the Specialty Fibers segment resulting from the global economic downturn. This was 4 cents per share better than earnings for the October-December period excluding the impact of a goodwill impairment charge which reduced earnings by $3.30 per share in that quarter.

Net sales of $171.6 million for the quarter were down 15% compared to the same quarter a year ago, with sales in the Specialty Fibers segment down 18% and sales in the Nonwoven Materials segment only off 2%. Specialty Fibers sales were negatively impacted by reduced demand for cotton specialty fibers, wood specialty fibers used in automotive applications, and fluff pulp. Net sales for the quarter were down 7% compared to the October-December quarter, primarily driven by reduced sales from our Memphis cotton cellulose plant.

Chairman and Chief Executive Officer John B. Crowe said, “While not satisfied with our overall results, we were pleased that underlying earnings improved compared to the October-December quarter in spite of a drop in sales revenue. We continued to take market downtime at our Foley, Memphis and Americana plants during the quarter to match production to shipment demand, and effective May 1st, we will further reduce staffing at our Memphis cotton cellulose plant in order to match capacity to reduced demand levels for products supplied by this plant. On the average, selling prices were comparable to the preceding quarter, as the impact of the January 1st price increases on our high-end wood specialty fibers products was offset by lower prices for fluff pulp and other products. We started to see some significant reductions in raw materials, energy and transportation costs during the quarter and we believe that chemical costs peaked during the January – March quarter. Our Nonwoven materials segment also reported higher shipment volumes and improved operating income compared to the October-December quarter.”

Mr. Crowe went on to say, “We made progress toward our 2009 debt reduction goal, as we generated $12.2 million in free cash flow during the quarter, reduced our debt by $2.7 million and added $9.5 million to our cash balance. Also, during the month of April we have received $25.4 million in refunds related to the alternative fuels credit covering the period between February 12th and April 14th. We recognized no benefit related to this credit in the January-March quarter. We continue to believe that the Company is in much better condition to weather this downturn as compared with previous downturns because of the improvements in our balance sheet and cost structure.”

Buckeye has scheduled a conference call for Wednesday morning, April 29, at 11:00 a.m. ET to discuss third quarter performance. Persons interested in listening by telephone may dial in at (877) 719-9804 within the United States. International callers should dial (719) 325-4781. Supplemental material for the call will be available on the Company’s website at or at

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 measure used is “free cash flow” and is equal to net cash provided by operating activities less net cash used in investing activities. The Company believes that the presentation of this non-GAAP measure provides information that is useful to investors as it indicates more clearly and concisely the amount of cash generated by operations that remains available for payment of debt, share repurchase or dividends after funding capital expenditures, but this information should not be considered a substitute for any measures derived in accordance with GAAP. The Company manages cash flows available for debt pay down by measuring “free cash flow” and includes this measure in all-employee bonus and at-risk compensation bonus targets.

Net Cash provided by Operating Activities



Net Cash used in Investing Activities



Free Cash Flow



(In thousands, except per share data)
Three Months EndedNine Months Ended
March 31, 2009December 31, 2008March 31, 2008March 31, 2009March 31, 2008
Net sales $ 171,635 $ 184,665 $ 201,865 $ 577,593 $ 610,186
Cost of goods sold 147,765 161,533 167,664 495,253 493,351
Gross margin23,87023,13234,20182,340116,835
Gross margin as a percentage of sales13.9%12.5%16.9%14.3%19.1%
Selling, research and administrative expenses 10,601 11,266 11,470 34,077 34,740
Amortization of intangibles and other 465 471 468 1,405 1,390
Goodwill impairment - 138,008 - 138,008 -
Restructuring costs - - - - 96
Operating income12,804(126,613)22,263(91,150)80,609
Net interest expense and amortization of debt costs (7,206 ) (7,469 ) (7,814 ) (22,113 ) (25,495 )
Early extinguishment of debt - 401 - 401 (535 )
Foreign exchange and other 100 213 313 (518 ) 51
Income (loss) before income taxes5,698(133,468)14,762(113,380)54,630
Income tax expense (benefit) 1,412 (8,484 ) 4,340 (1,532 ) 16,845
Net income (loss)$4,286$(124,984)$10,422$(111,848)$37,785
Earnings (loss) per share $ 0.11 $ (3.23 ) $ 0.27 $ (2.89 ) $ 0.97
Diluted earnings per share $ 0.11 $ (3.23 ) $ 0.26 $ (2.89 ) $ 0.96

Weighted average shares for basic earnings per share

38,672 38,670 39,011 38,682 38,902

Weighted average shares for diluted earnings per share

38,765 38,670 39,372 38,682 39,360

(In thousands)
March 31December 31June 30
Current assets:
Cash and cash equivalents $ 18,879 $ 8,491 $ 10,393
Accounts receivable, net 111,953 108,111 127,521
Inventories 101,507 115,548 110,254
Deferred income taxes and other 11,174 11,186 11,530
Total current assets 243,513 243,336 259,698
Property, plant and equipment, net 516,947 522,785 555,708
Goodwill 2,425 2,425 163,622
Intellectual property and other, net 25,372 26,088 30,197
Total assets$788,257$794,634$1,009,225
Liabilities and stockholders' equity
Current liabilities:
Trade accounts payable $ 28,194 $ 33,678 $ 49,157
Accrued expenses 42,448 42,892 50,451
Current portion of capital lease obligations - - 358
Short-term debt - - 207
Total current liabilities 70,642 76,570 100,173
Long-term debt 388,563 391,311 393,910
Deferred income taxes 50,729 48,531 57,963
Other liabilities 24,646 25,430 27,622
Stockholders' equity 253,677 252,792 429,557
Total liabilities and stockholders' equity$788,257$794,634$1,009,225

(In thousands)
Three Months EndedNine Months Ended
March 31, 2009December 31, 2008March 31, 2008March 31, 2009March 31, 2008
Net income (loss)$4,286$(124,984)$10,422$(111,848)$37,785

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation 11,824 12,026 12,670 36,593 38,079
Amortization 634 613 540 1,886 1,666
Early extinguishment of debt - (401 ) - (401 ) 535
Loss on goodwill impairment - 138,008 - 138,008 -
Deferred income taxes 1,828 (7,934 ) 3,133 (4,761 ) 13,591
Loss on disposal of equipment 217 507 230 891 794
Provision for bad debts 263 17 (52 ) 253 (62 )
Excess tax benefit from stock based compensation - - - - (44 )
Other 154 (327 ) 408 218 956
Change in operating assets and liabilities
Accounts receivable (4,783 ) 16,705 (541 ) 6,797 (1,316 )
Inventories 13,467 (8,540 ) (10,550 ) 4,086 (13,955 )
Other assets 866 181 (1,356 ) 1,189 (1,020 )
Accounts payable and other liabilities (7,485 ) (19,387 ) 11,684 (23,100 ) 3,714
Net cash provided by operating activities21,2716,48426,58849,81180,723
Purchases of property, plant & equipment (8,994 ) (13,929 ) (12,513 ) (34,005 ) (31,205 )
Other (98 ) (50 ) (118 ) (171 ) (253 )
Net cash used in investing activities(9,092)(13,979)(12,631)(34,176)(31,458)
Net borrowings (payments) under line of credit (2,655 ) 3,773 (17,796 ) (114 ) 64,204
Payments on long term debt and other - (5,253 ) (101 ) (5,358 ) (113,918 )
Payments for debt issuance costs - - - - (1,401 )
Excess tax benefit from stock based compensation - - - - 44
Purchase of treasury shares - - - (494 ) -
Net proceeds from sale of equity interests - - - - 5,742
Net cash used in financing activities(2,655)(1,480)(17,897)(5,966)(45,329)
Effect of foreign currency rate fluctuations on cash 864 (985 ) 1,209 (1,183 ) 2,109
Increase (decrease) in cash and cash equivalents10,388(9,960)(2,731)8,4866,045
Cash and cash equivalents at beginning of period8,49118,45123,56610,39314,790
Cash and cash equivalents at end of period$18,879$8,491$20,835$18,879$20,835

(In thousands)
Three Months EndedNine Months Ended
SEGMENT RESULTSMarch 31, 2009December 31, 2008March 31, 2008March 31, 2009March 31, 2008
Specialty Fibers
Net sales$123,853$137,739$150,928$426,571$434,837
Operating income (a)10,86111,33922,20742,27170,295
Depreciation and amortization (b)7,7938,0608,49224,20124,664
Capital expenditures7,78911,85510,98129,74127,369
Nonwoven Materials
Net sales$57,210$56,841$58,157$179,913$201,753
Operating income (a)2,9121,5061,2387,94814,529
Depreciation and amortization (b)3,5773,4973,79111,11912,264
Capital expenditures8661,5581,2983,2022,742
Net sales$(9,428)$(9,915)$(7,219)$(28,891)$(26,403)
Operating loss (a)(969)(139,458)(1,182)(141,369)(4,215)
Depreciation and amortization (b)9199408542,6782,542
Capital expenditures3395162341,0621,094
Net sales$171,635$184,665$201,865$577,593$610,187
Operating income (a)12,803(126,613)22,263(91,150)80,609
Depreciation and amortization (b)12,28912,49713,13737,99839,470
Capital expenditures8,99413,92912,51334,00531,205
(a) The corporate segment includes operating elements such as segment eliminations, amortization of intangibles, impairment of long-lived assets, charges related to restructuring, unallocated at-risk compensation and unallocated stock-based compensation for executive officers and certain other employees. We have reclassified the at-risk compensation and stock based compensation from the specialty fibers and nonwovens segments for previous periods for comparability. Corporate net sales represents the elimination of intersegment sales included in the specialty fibers reporting segment.
(b) Depreciation and amortization includes depreciation, depletion and amortization of intangibles.
Three Months EndedNine Months Ended
ADJUSTED EBITDAMarch 31, 2009December 31, 2008March 31, 2008March 31, 2009March 31, 2008
Income tax expense1,412(8,484)4,340(1,532)16,845
Interest expense6,9797,2717,73121,48325,138
Amortization of debt costs262261259785829
Early extinguishment of debt-(401)-(401)535
Depreciation, depletion and amortization12,28912,49713,13837,99839,469
Asset impairments-138,008-138,008-
Non cash charges3615222301,091794
Adjusted EBITDA$25,589$24,690$36,120$85,584$121,395
We calculate EBITDA as earnings before cumulative effect of change in accounting plus interest expense, income taxes and depreciation and amortization. Adjusted EBITDA further adjusts EBITDA by adding back the following items: asset impairment charges, non-cash charges and other (gains) losses. You should not consider adjusted EBITDA to be an alternative measure of our net income, as an indicator of operating performance; or our cash flow, as an indicator of liquidity. Adjusted EBITDA corresponds with the definition contained in our US revolving credit facility, established on July 25, 2007, and it provides useful information concerning our ability to comply with debt covenants. Although we believe adjusted EBITDA enhances your understanding of our financial condition, this measure, when viewed individually, is not a better indicator of any trend as compared to other measures (e.g., net sales, net earnings, net cash flows, etc.).


Buckeye Technologies Inc.
Steve Dean, 901-320-8352
Senior Vice President and Chief Financial Officer
Daryn Abercrombie, 901-320-8908
Investor Relations

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