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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2002
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Commission file number: 33-60032
Buckeye Technologies Inc.
incorporated pursuant to the Laws of Delaware
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Internal Revenue Service-- Employer Identification No. 62-1518973
1001 Tillman Street, Memphis, TN 38112
901-320-8100
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No ____
As of January 30, 2003, there were outstanding 36,973,478 Common Shares of the
Registrant.
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INDEX
BUCKEYE TECHNOLOGIES INC.
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ITEM
PART I - FINANCIAL INFORMATION
1. Financial Statements (Unaudited):
Condensed Consolidated Statements of Operations for the Quarter Ended December 31, 2002 and
2001; Six Months Ended December 31, 2002 and 2001...................................... 3
Condensed Consolidated Balance Sheets as of December 31, 2002 and June 30, 2002............. 4
Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2002
and 2001............................................................................... 5
Notes to Condensed Consolidated Financial Statements........................................ 6
2. Management's Discussion and Analysis of Financial Condition and Results of Operations....... 9
3. Quantitative and Qualitative Disclosures About Market Risk.................................. 13
4. Controls and Procedures......................................................................... 13
PART II - OTHER INFORMATION
4. Submission of Matters to a Vote of Security Holders......................................... 14
6. Exhibits and Reports on Form 8-K............................................................ 14
SIGNATURES 15
CERTIFICATIONS 16
2
PART I - FINANCIAL INFORMATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Quarter Ended Six Months Ended
December 31 December 31
------------------------------ ----------------------------
2002 2001 2002 2001
------------------------------ ----------------------------
Net sales.............................................. $153,146 $155,708 $309,571 $310,865
Cost of goods sold..................................... 131,351 136,772 267,395 271,884
------------------------------ ----------------------------
Gross margin........................................... 21,795 18,936 42,176 38,981
Selling, research and administrative expenses.......... 8,837 8,480 17,780 17,101
------------------------------ ----------------------------
Operating income....................................... 12,958 10,456 24,396 21,880
Net interest expense and amortization of debt costs.... 11,683 12,550 23,809 23,380
Foreign exchange, amortization of intangibles and other 928 (55) 1,018 521
------------------------------ ----------------------------
Income (loss) before income taxes and
cumulative effect of change in accounting........ 347 (2,039) (431) (2,021)
Income tax benefit..................................... (193) (1,191) (452) (1,185)
------------------------------ ----------------------------
Income (loss) before cumulative effect of
change in accounting............................ 540 (848) 21 (836)
Cumulative effect of change in accounting
(net of tax of $0)............................. - - - (11,500)
------------------------------ ----------------------------
Net income (loss)...................................... $ 540 $ (848) $ 21 $ (12,336)
============================== ============================
Earnings (loss) per share before cumulative effect of
change in accounting
Basic earnings (loss) per share........... $ 0.01 $(0.02) $ 0.00 $ (0.02)
Diluted earnings (loss) per share......... $ 0.01 $(0.02) $ 0.00 $ (0.02)
Cumulative effect of change in accounting
Basic earnings (loss) per share........... $ - $ - $ - $ (0.33)
Diluted earnings (loss) per share......... $ - $ - $ - $ (0.33)
Earnings (loss) per share
Basic earnings (loss) per share........... $0.01 $(0.02) $ 0.00 $ (0.36)
Diluted earnings (loss) per share.......... $0.01 $(0.02) $ 0.00 $ (0.36)
Weighted average shares for basic earnings per share... 36,965 34,674 36,957 34,558
Effect of dilutive stock options....................... - - 16 -
------------------------------ ----------------------------
Adjusted weighted average shares for diluted earnings
per share........................................ 36,965 34,674 36,973 34,558
============================== ============================
See accompanying notes.
3
PART I - FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
December 31 June 30
2002 2002
------------------------------
Assets
Current assets:
Cash and cash equivalents.................................... $ 32,255 $ 56,006
Cash, restricted............................................. 3,375 3,375
Short-term investments....................................... 8,863 8,863
Accounts receivable - net.................................... 96,501 98,152
Inventories.................................................. 146,079 145,103
Deferred income taxes........................................ 30,180 29,653
------------------------------
Total current assets................................ 317,253 341,152
Property, plant and equipment..................................... 916,767 905,545
Less accumulated depreciation..................................... (300,687) (277,793)
------------------------------
616,080 627,752
Goodwill, net..................................................... 115,865 120,399
Intellectual property and other, net.............................. 46,229 46,070
------------------------------
Total assets........................................ $1,095,427 $1,135,373
==============================
Liabilities and stockholders' equity
Current liabilities:
Accounts payable............................................. $ 26,108 $ 33,789
Accrued expenses............................................. 40,114 47,832
Current portion of capital lease obligations................. 560 793
Current portion of long-term debt............................ 49,410 22,000
------------------------------
Total current liabilities........................... 116,192 104,414
Long-term debt............................................... 624,555 675,396
Deferred income taxes........................................ 82,011 79,295
Capital lease obligations.................................... 2,997 3,029
Other liabilities............................................ 19,714 19,579
Stockholders' equity.............................................. 249,958 253,660
------------------------------
Total liabilities and stockholders' equity..... $1,095,427 $1,135,373
==============================
See accompanying notes
4
PART I - FINANCIAL INFORMATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Six Months Ended
December 31
-------------------------------------------
2002 2001
-------------------------------------------
Operating activities
Net income (loss)................................................. $ 21 $ (12,336)
Adjustments to reconcile net income to net cash provided by operating
activities:
Cumulative effect of change in accounting.................. - 11,500
Depreciation and depletion................................. 23,060 22,015
Amortization .............................................. 2,931 2,053
Other, net................................................. 2,371 2,595
Changes in operating assets and liabilities:
Accounts receivable.................................... 2,218 6,199
Inventories............................................ (28) (21,301)
Prepaid expenses and other assets...................... 1,733 (884)
Accounts payable and other current liabilities......... (16,681) (8,418)
-------------------------------------------
Net cash provided by operating activities......................... 15,625 1,423
Investing activities
Purchases of property, plant and equipment........................ (11,196) (24,752)
Other............................................................. (427) (635)
--------------------------------------------
Net cash used in investing activities............................. (11,623) (25,387)
Financing activities
Proceeds from exercise of stock options........................... - 3,605
Net borrowings (payments) under revolving lines of credit......... (4,923) 41,033
Net payments on long term debt.................................... (22,000) (22,208)
Payments for debt issuance costs.................................. (671) -
Payments on capital lease obligations............................. (264) -
Other............................................................. - 2,433
-------------------------------------------
Net cash provided by (used in) financing activities............... (27,858) 24,863
Effect of foreign currency rate fluctuations on cash.............. 105 (283)
-------------------------------------------
Increase (decrease) in cash and cash equivalents.................. (23,751) 616
Cash and cash equivalents at beginning of period.................. 56,006 12,932
-------------------------------------------
Cash and cash equivalents at end of period........................ $ 32,255 $13,548
===========================================
See accompanying notes.
5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands)
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
of Buckeye Technologies Inc. and its subsidiaries (the Company) have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and six months ended December 31,
2002 are not necessarily indicative of the results that may be expected for the
year ended June 30, 2003. All significant intercompany accounts and transactions
have been eliminated in consolidation. For further information and a listing of
the Company's significant accounting policies, refer to the financial statements
and notes thereto included in the Company's annual report on Form 10-K for the
year ended June 30, 2002. Certain amounts in the 2001 financial statements have
been reclassified to conform with the 2002 financial statement presentation.
NOTE B -- CHANGE IN ACCOUNTING
Under the guidelines of SFAS 142, the Company has completed its initial
impairment assessments of the carrying value of goodwill. In the assessment of
the carrying value of goodwill, the Company developed its best estimate of
operating cash flows over the period approximating the remaining life of the
business' long-lived assets.
Based on this assessment, effective July 1, 2001, the Company reduced
its goodwill by $11,500 in its small single site converting business, which was
purchased as part of the Merfin acquisition in 1997. There was no tax benefit
recorded as a result of the reduction in the carrying value of the goodwill. The
low growth rate in the converting business did not support its goodwill on a
discounted basis. Under SFAS 142, the impairment adjustment recognized at
adoption of the new rules was reflected as a cumulative effect of accounting
change in the 2002 consolidated statement of operations. Impairment adjustments
recognized after adoption, if any, are required to be recognized as operating
expenses.
NOTE C -- RESTRUCTURING COSTS
During the year ended June 30, 2002, the Company entered into a
restructuring program. The program was designed to deliver cost reductions
through reduced overhead expenses. The cost recorded during the year ended June
30, 2002, comprised mainly of severance and other employee benefit costs, was
$1,605.
Involuntary termination benefits of $1,519 have been paid, leaving an
accrual of $86 at December 31, 2002. Payments related to the restructuring
program are expected to be completed during the current fiscal year. As a result
of the restructuring, approximately 200 positions have been eliminated. All
costs of the program were reported in the statements of operations under
restructuring and impairment costs. The nonwovens and cotton operations in North
America and Europe are impacted by this cost reduction program. As part of this
restructuring, the Company closed engineering offices located in Finland.
6
NOTE D -- RECENTLY ISSUED ACCOUNTING STANDARDS
On December 31, 2002, the Financial Accounting Standards Board issued
Statement No. 148, Accounting for Stock-Based Compensation - Transition and
Disclosure (SFAS 148). SFAS 148 amends SFAS 123, Accounting for Stock-Based
Compensation, to provide alternative methods of transition to SFAS 123's fair
value method of accounting for stock-based employee compensation. SFAS 148 also
amends the disclosure provisions of SFAS 123 and APB Opinion No. 28, Interim
Financial Reporting, to require disclosure in the summary of significant
accounting policies of the effects of an entity's accounting policy with respect
to stock-based employee compensation on reported net income and earnings per
share in annual and interim financial statements. The adoption of SFAS 148
disclosure requirements will not have an effect on the Company's Consolidated
Financial Statements. The Company does not intend to adopt the fair value method
of accounting for stock-based employee compensation.
In November 2002, the Financial Accounting Standards Board issued
Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others (the
Interpretation). The Interpretation will significantly change current practice
in the accounting for, and disclosure of, guarantees. The Interpretation
requires certain guarantees to be recorded at fair value as those terms are
defined in SFAS 5, Accounting for Contingencies. The Company does not expect the
adoption of the Interpretation to have a significant financial impact on its
Consolidated Financial Statements.
NOTE E -- INVENTORIES
The components of inventory consist of the following:
December 31 June 30
2002 2002
-----------------------------
(In thousands)
Raw materials......................... $ 38,379 $ 36,902
Finished goods........................ 83,649 84,906
Storeroom and other supplies.......... 24,051 23,295
-----------------------------
$146,079 $145,103
=============================
NOTE F -- DEBT
Interest Rate Swap - In May 2001, the Company entered into an interest
rate swap on $100 million of 8% fixed rate notes payable maturing in October
2010. The swap converts interest payments from a fixed rate to a floating rate
of LIBOR plus 1.97%. This arrangement qualifies as a fair value hedge under SFAS
No. 133 Accounting for Derivative Instruments and Hedging Activities. As such,
the net effect from the interest rate swap is recorded as part of interest
expense. The swap agreement settles quarterly until maturity in October 2010.
During the quarters ended December 31, 2002 and 2001, the swap reduced the
Company's interest expense by $1.1 million and $0.9 million, respectively. Based
upon current interest rates for similar transactions, the fair value of the
interest rate swap agreement resulted in an asset and a corresponding increase
in debt of $6.2 million at December 31, 2002 and $2.6 million at June 30, 2002.
7
As of December 31, 2002, the Company has guaranteed the following debt
to third parties entered into by its subsidiaries: a secured credit facility in
Canada of $12.7 million, a German credit facility of $5.8 million of which none
is outstanding and a $1.0 million bank loan to a U.S. subsidiary.
NOTE G -- COMPREHENSIVE INCOME
The components of comprehensive income consist of the following:
Three Months Ended Six Months Ended
December 31 December 31
--------------------------------------------------------------
2002 2001 2002 2001
--------------------------------------------------------------
(In thousands) (In thousands)
Net income (loss)............................... $ 540 $ (848) $ 21 $ (836)
Foreign currency translation adjustments - net.. 9,838 (4,373) (3,870) (922)
----------------------------- ----------------------------
Comprehensive income (loss)..................... $10,378 $(5,221) $(3,849) $(1,758)
============================= ============================
The change in the foreign currency translation adjustment is primarily
due to fluctuations in the exchange rate of the US dollar against the euro of
$6,101 and $2,919, the Brazilian real of $1,702 and $(4,589) and the Canadian
dollar of $2,035 and $(2,200) for the three and six months ended December 31,
2002, respectively.
8
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Critical Accounting Policies
The preparation of Buckeye's financial statements requires estimates,
assumptions and judgements that affect the Company's assets, liabilities,
revenues and expenses. The Company bases these estimates and assumptions on
historical data and trends, current fact patterns, expectations and other
sources of information it believes are reasonable. Actual results may differ
from these estimates under different conditions. For a full description of the
Company's critical accounting policies, see Management's Discussion and Analysis
in the 2002 Annual Report on Form 10-K.
Results of Operations
Net sales for the quarter ended December 31, 2002 were $153.1 million
compared to $155.7 million for the same period in 2001, a decrease of $2.6
million or 1.7%. Net sales for the six month period ended December 31, 2002 were
$309.6 million compared to $310.9 million for the same period in the prior
fiscal year a decrease of $1.3 million or 0.4%. The decrease in net sales for
both the three and six month periods was primarily due to lower sales prices for
cotton cellulose products.
Operating income for the quarter ended December 31, 2002 was $13.0
million compared to $10.5 million for the same period in 2001, an increase of
$2.5 million or 23.8%. Operating income for the six months ended December 31,
2002 was $24.4 million (7.9% of net sales) compared to $21.9 million (7.0% of
net sales) for the same period in the prior fiscal year, an increase of $2.5
million or 11.4%. Cotton raw material costs have fallen to more normal levels
and the Company has reduced its cotton sales prices in an effort to regain
volume lost during the raw material and sales price run-up during calendar year
2001.
Net interest expense and amortization of debt costs for the quarter
ended December 31, 2002 were $11.7 million compared to $12.6 million for the
same period in 2001. The decrease of $0.9 million was due primarily to lower
debt levels and lower interest rates in 2002. Net interest expense and
amortization of debt costs were $23.8 million for the six months ended December
31, 2002 compared to $23.4 million for the same period of the prior fiscal year.
This increase was primarily due to $1.7 million of interest capitalization in
2001, which was nearly offset by lower debt levels and lower interest rates in
2002.
Foreign exchange, amortization of intangibles and other for the
quarters ended December 31, 2002 and 2001 were $0.9 million and $(0.1) million,
respectively. This unfavorable variance primarily results from the settlement of
a contract dispute and recognizing lower foreign currency gains during the
quarter ended December 31, 2002 versus the prior year. Foreign exchange,
amortization of intangibles and other for the six months ended December 31, 2002
were $1.0 million compared to $0.5 million for the six months ended December 31,
2001. This unfavorable variance was primarily due to the settlement of a
contract dispute and the impact of a natural gas forward contract, partially
offset by higher foreign currency gains in 2002.
9
The Company's income tax benefit differs from the amount computed by
applying the statutory federal income tax rate of 35% to income (loss) before
income taxes due to the following:
Three Months Ended Six Months Ended
December 31 December 31
--------------------------------------------------------------
2002 2001 2002 2001
--------------------------------------------------------------
(In thousands) (In thousands)
Expected tax expense (benefit) at 35% $ 121 $ (714) $ (151) $ (707)
Foreign, state and other (64) 81 (1) 80
Research and development credits (250) - (300) -
Canadian rate reduction - (558) - (558)
----------------------------- ----------------------------
$(193) $(1,191) $ (452) $(1,185)
============================= ============================
Effective July 1, 2001, the Company adopted SFAS No. 142, Goodwill and
Other Intangible Assets, which established new accounting and reporting
requirements for goodwill and other intangible assets as described in our
critical accounting policies. Based on the assessment, effective July 1, 2001,
the Company has reduced its goodwill by $11.5 million in the converting
business, which was purchased as part of the Merfin acquisition in 1997. There
was no tax benefit recorded as a result of the reduction in the carrying value
of the goodwill.
Financial Condition
Cash Flow
Cash provided by operating activities of $15.6 million for the six
months ended December 31, 2002 was $14.2 million higher than the same period in
the prior year. This improved cash flow was primarily due to flat inventory
levels in 2002 versus an increase in inventories in the same period in the prior
year, partially offset by the timing of certain payments in 2002. Cash provided
from operations and cash on hand financed capital expenditures of $11.2 million
and debt repayments of $27.2 million during the six months ended December 31,
2002. The $13.6 million reduction in capital expenditures versus the same period
in 2001 is attributable to the completion of construction of the large airlaid
nonwovens machine at the Gaston plant during the first quarter of fiscal 2002.
EBITDA and Net Debt information are included below as additional means
of evaluating the Company's financial condition, liquidity and its ability to
satisfy rating agency and creditor requirements. The Company incurs significant
noncash charges, including depreciation and amortization, related to the
material capital assets utilized in its operations. EBITDA is a central measure
used in the Company's compliance with debt covenants related to its credit
facility. This measure should not be considered as a superior alternative to net
income, operating income, cash flow from operations, or any other operating or
liquidity performance measure as defined by generally accepted accounting
principles (GAAP) in the United States. EBITDA, as defined by the revolving
credit facility (earnings before interest, taxes, depreciation and amortization,
goodwill accounting change and nonrecurring charges) for the three and six
months ended December 31, 2002, respectively, was $24.4 million and $48.2
million compared to $22.5 million and $44.2 million for the same periods in
2001. The increase in EBITDA in 2002 reflects an increase in operating income
primarily due to lower raw material and production costs.
10
Liquidity and Capital Resources
The Company has the following major sources of financing: revolving
credit facility, receivables based credit facility and senior subordinated
notes. The Company's revolving credit facility and senior subordinated notes
contain various covenants. At December 31, 2002, the Company was in compliance
with such covenants and believes it will remain in compliance throughout fiscal
year 2003.
Revolving Credit Facility - The Company amended its Revolving Credit
Facility on August 20, 2002. This amendment eliminated the requirement that the
Company sell additional equity. In addition, the banks consented to Buckeye's
immediate prepayment of the $22 million note due on October 1, 2002 to
UPM-Kymmene. This note was paid on August 21, 2002, thereby reducing the
Company's interest expense for the six months ended December 31, 2002. The
Company has borrowed the entire availability on its $215 million Revolving
Credit Facility.
Receivables Based Credit Facility - On September 3, 2002, the Company
amended its $30 million receivables based credit facility. The amendment extends
the maturity from December 4, 2002 to December 4, 2003 and reduces the interest
rate to one-week LIBOR plus 0.75%. At December 31, 3002, the Company had unused
borrowing availability of $15.0 million on its receivables based credit
facility.
Senior Subordinated Notes - The Company's fixed charge coverage ratio
(as defined in the subordinated note indentures) is below 2:1. As specified in
those indentures, the Company's debt is now limited to a "Permitted
Indebtedness" limitation (also defined in the indentures), until the ratio again
equals or exceeds 2:1. Under the "Permitted Indebtedness" limitation, the
Company is limited to, but able to maintain, its current borrowings under the
revolving credit facility. In addition, the Company has a $25 million basket (as
defined in the 1995 Indenture) that can be used for any new indebtedness. At
December 31, 2002, $5.0 million of this basket was used on borrowings from the
receivables based credit facility.
While there can be no assurances, the Company believes that operating
results will continue to improve and fixed charges will continue to decline on a
rolling four-quarter basis. Thus, the Company expects to exceed the 2:1 ratio by
the end of fiscal year 2003. While there can be no assurances, the Company
believes that its cash flow from operations along with current cash, cash
equivalents and short-term investments, combined with available external
financing, will be sufficient to fund capital expenditures (expected to not
exceed $35 million for this fiscal year), working capital and service all debt
requirements for the foreseeable future.
Shelf Registration - On March 15, 2002, the Company filed a Form S-3
shelf registration statement. The shelf registration statement allows the
Company to issue various types of securities, including common stock, preferred
stock and debt securities, from time to time, up to an aggregate of $300
million. The Company filed the registration statement to gain additional
flexibility in accessing capital markets for general corporate purposes. This
S-3 registration statement became effective on April 18, 2002. The Company
currently has no plans to issue additional securities.
11
Interest Rate Swap - In May 2001, the Company entered into an interest
rate swap on $100 million of 8% fixed rate notes maturing in October 2010. The
swap converts interest payments from a fixed rate to a floating rate of LIBOR
plus 1.97%. This arrangement qualifies as a fair value hedge under SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities. As such, the net
effect from the interest rate swap is recorded as part of interest expense. The
swap agreement settles quarterly until maturity in October 2010. During the
quarters ended December 31, 2002 and 2001, the swap reduced the Company's
interest expense by $1.1 million and $0.9 million, respectively. Based upon
current interest rates for similar transactions, the fair value of the interest
rate swap agreement was recorded as an asset and a corresponding increase in
debt of $6.2 million at December 31, 2002 and $2.6 million at June 30, 2002.
Total debt, including the $6.2 million debt recorded for the interest
rate swap agreement discussed above, at December 31, 2002 was $677.5 million, a
reduction of $23.7 million from June 30, 2002. During the quarter, the Company
reclassified its Canadian loan (maturing September 30, 2003), its final payment
to UPM-Kymmene (due October 1, 2003) and its receivables based credit facility
(maturing December 4, 2003) to current liabilities. It is the Company's intent
to extend both the Canadian loan and the receivables based credit facility for
one year.
The Company holds a significant amount of cash, cash equivalents and
short-term investments due to the "Permitted Indebtedness" limitations described
above in the section on Senior Subordinated Notes. Net debt, defined as debt and
capital lease obligations, net of the interest rate swap, cash and cash
equivalents, restricted cash and short-term investments, was $626.8 million at
December 31, 2002. Net debt at December 31, 2002 was $3.6 million lower than at
June 30, 2002 and $41.0 million lower than the $667.8 million of net debt at
December 31, 2001. Net debt is not a measure that is defined by GAAP and is
provided as supplemental information to facilitate an understanding of the
Company's financial condition.
Forward-Looking Statements
Except for the historical information contained herein, the matters
discussed in this Form 10-Q are forward-looking statements that involve risks
and uncertainties that could cause actual results to differ materially,
including but not limited to, economic, competitive, governmental, and
technological factors affecting the Company's operations, financing, markets,
products, services, prices, and other factors. The Company undertakes no
obligation to publicly release the result of any revisions to these
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events. For additional
factors that could impact future results, please see the Company's 2002 Annual
Report on Form 10-K on file with the Securities and Exchange Commission.
12
Item 3. Quantitative and Qualitative Disclosures About Market Risk
No material changes occurred during the quarter to information
previously provided in the Company's Report on Form 10-K for the period ended
June 30, 2002.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures. The Company's chief
executive officer and chief financial officer have evaluated the effectiveness
of the design and operation of the Company's disclosure controls and procedures
(as defined in Exchange Act Rule 13a-14(c)) as of a date within 90 days of the
filing date of this quarterly report. Based on that evaluation, the chief
executive officer and chief financial officer have concluded that the Company's
disclosure controls and procedures are effective to ensure that material
information relating to the Company and the Company's consolidated subsidiaries
is made known to such officers by others within these entities, particularly
during the period this quarterly report was prepared, in order to allow timely
decisions regarding required disclosure.
Changes in Internal Control. There have not been any significant
changes in the Company's internal controls or in other factors that could
significantly affect these controls subsequent to the date of their evaluation.
13
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On November 7, 2002, the Company held its Annual Meeting of
Stockholders. At the meeting, George W. Bryan and R. Howard Cannon were each
re-elected as Class I directors to hold office for a three-year term or until
their successors are elected and qualified. For Mr. Bryan, 33,471,468 votes were
cast in favor and 1,112,313 votes were withheld. For Mr. Cannon, 34,173,026
votes were cast in favor and 410,755 were withheld.
Following the election, the Company's Board of Directors consisted of
Red Cavaney, R. Howard Cannon, Robert E. Cannon, David B. Ferraro, Henry F.
Frigon, Samuel M. Mencoff, and George W. Bryan.
The stockholders also ratified the appointment of Ernst & Young LLP as
the Company's independent auditors. 32,706,523 votes were cast in favor of the
ratification, 1,875,016 were cast against and 2,242 votes abstained.
Item 6. Exhibits and Reports on Form 8-K
(a) Listing of Exhibits
99.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
signed by Robert E. Cannon, the Chief Executive Officer of
Buckeye Technologies Inc. on January 30, 2003.
99.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
signed by Gayle L. Powelson, the Chief Financial Officer of
Buckeye Technologies Inc. on January 30, 2003.
(b) Reports on Form 8-K
During the quarter ended December 31, 2002, the following reports were
filed on Form 8-K:
- Report dated October 2, 2002 announcing the conference call
regarding operating results for the quarter ended September 30, 2002.
14
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Buckeye technologies inc.
By: /S/ ROBERT E. CANNON
----------------------------------
Robert E. Cannon, Chief Executive Officer
Date: January 30, 2003
By: /S/ GAYLE L. POWELSON
----------------------------------
Gayle L. Powelson, Senior Vice President, Chief Financial Officer
Date: January 30, 2003
15
Certification of Chief Executive Officer
Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
I, Robert E. Cannon, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Buckeye
Technologies Inc. ("Buckeye");
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly
report; and
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results
of operations and cash flows of Buckeye as of, and for, the
periods presented in this quarterly report.
4. Buckeye's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for Buckeye
and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to Buckeye, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of Buckeye's disclosure controls
and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. Buckeye's other certifying officer and I have disclosed, based on
our most recent evaluation, to Buckeye's auditors and the audit
committee of Buckeye's board of directors (or persons performing
the equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect Buckeye's
ability to record, process, summarize and report financial data
and have identified for Buckeye's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in Buckeye's
internal controls; and
6. Buckeye's other certifying officer and I have indicated in this
quarterly report whether there were significant changes in
internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most
recent evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.
Date: January 30, 2003
/S/ ROBERT E. CANNON
---------------------------------------
Chairman of the Board
and Chief Executive Officer
16
Certification of Chief Financial Officer
Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
I, Gayle L. Powelson, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Buckeye
Technologies Inc. ("Buckeye");
2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light
of the circumstances under which such statements were made,
not misleading with respect to the period covered by this
quarterly report; and
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report,
fairly present in all material respects the financial
condition, results of operations and cash flows of Buckeye as
of, and for, the periods presented in this quarterly report.
4. Buckeye's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and
15d-14) for Buckeye and have:
(a) designed such disclosure controls and procedures to ensure
that material information relating to Buckeye, including
its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the
period in which this quarterly report is being prepared;
(b) evaluated the effectiveness of Buckeye's disclosure
controls and procedures as of a date within 90 days prior
to the filing date of this quarterly report (the
"Evaluation Date"); and
c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation
Date;
5. Buckeye's other certifying officer and I have disclosed, based
on our most recent evaluation, to Buckeye's auditors and the
audit committee of Buckeye's board of directors (or persons
performing the equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect Buckeye's
ability to record, process, summarize and report financial
data and have identified for Buckeye's auditors any
material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role
in Buckeye's internal controls; and
6. Buckeye's other certifying officer and I have indicated in
this quarterly report whether there were significant changes
in internal controls or in other factors that could
significantly affect internal controls subsequent to the date
of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material
weaknesses.
Date: January 30, 2003
/S/ GAYLE L. POWELSON
-------------------------------
Senior Vice President,
Chief Financial Officer
17