Buckeye Technologies Inc. (NYSE:BKI) today announced fourth quarter net income of $46.5 million or $1.20 per share. Fourth quarter earnings included net income of $39.6 million, or $1.02 per share, from alternative fuel mixture credits for the period from February 12, 2009 through June 30, 2009. Net sales were $177 million for the fourth quarter compared to $215 million in the fourth quarter of fiscal 2008.

Excluding income from alternative fuel mixture credits, adjusted net income was $6.8 million, or $0.18 per share versus fourth quarter fiscal 2008 net income of $9.3 million, or $0.24 per share. This $0.06 per share decrease in earnings, compared to last year, was driven by reduced operating income (-$0.10 per share after tax) due primarily to the economic downturn which has reduced shipment volumes and resulted in unfavorable grade mix changes in our specialty fibers segment. The impact of reduced operating income was partially offset by a lower effective tax rate (+$0.04). While overall selling prices were lower, primarily driven by declines in fluff pulp prices, this was more than offset by lower input prices for raw materials, energy and transportation costs net of an increase in chemical costs.

Compared to the third quarter, sales rose 3.1% and adjusted operating income excluding the alternative fuel mixture credits rose 11.5%. This improvement was driven by higher shipment volumes and lower input costs. This was partially offset by lower selling prices and mix.

Total debt declined by $61.1 million to $327.5 million during the quarter, of which $38.0 million was due to the alternative fuel mixture credit and $23.1 million was due to strong cash flow from operations and reduced capital spending. This allowed us to use the available borrowing capacity on our bank credit facility to retire all of our outstanding $110 million in senior subordinated debt on July 31. Our nearest term debt maturity is now July 2012, when our $200 million revolving credit facility matures. This move is expected to yield significant interest savings, beginning in August, as we have replaced 8.0% fixed rate bonds with variable interest rate borrowings on our bank revolver with current interest rates of about 1.6% (LIBOR + 1.25%). As of July 31, total debt was $310 million and availability on our bank revolver was $85 million.

Net sales for the fiscal year were $755 million, down 8.6% compared to record sales of $826 million in fiscal 2008. Net income for the fiscal year was a loss of $65 million or $1.69 per share, which included a non-cash goodwill impairment charge of $3.30 per share from the second quarter and income from alternative fuel mixture credits of $1.02 per share in the fourth quarter. Excluding these two special items, total fiscal year adjusted net income was $22.6 million, or $0.58 per share, compared to $47.1 million, or $1.20 per share in fiscal 2008.

Chairman and Chief Executive Officer John B. Crowe said, “Our fiscal year ending June 30th, brought to a close a very different and unique year for Buckeye. A first quarter with record sales of $221 million, the challenges of the global economic downturn beginning in the second quarter, the significant goodwill impairment write-down and the alternative fuel mixture credits made FY09 an adventure. Comparing the fourth quarter this year to the same period last year is a comparison of two different worlds and certainly different market dynamics. During the just completed quarter, we continued to run to order and, therefore, we again took significant market downtime at our Memphis and Americana cotton fibers facilities. However, our wood fibers operation ran at full capacity and our nonwovens facilities ran at rates we would consider strong based on the last several years. While not satisfied with our overall annual results, we are pleased that our underlying quarterly earnings improved compared to the previous quarter. Particularly pleasing was the improvement in sales revenue and strong cash we generated from operations in addition to the cash generated from the alternative fuel mixture credits. Over the last several years, we have made significant progress generating cash to reduce debt and improve our balance sheet. Reducing debt by $61MM in the last quarter and retirement of the $110MM of 2010 bonds at the end of July were significant milestones for the Company. Our top priorities continue to be generating free cash flow and paying down debt. We have been successful doing just that.”

Buckeye has scheduled a conference call for Wednesday morning, August 5, at 10:00 a.m. ET to discuss fourth quarter and fiscal year performance. Persons interested in listening by telephone may dial in at (888) 297-0339 within the United States. International callers should dial (719) 325-2113. 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.