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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 11-K
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ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the six months ended July 1, 1998
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Commission file number: 33-60032
Alpha Cellulose Corporation Cash Option Thrift Plan
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Buckeye Technologies Inc.
1001 Tillman Street, Memphis, TN 38112
901-320-8100
Plan Number 002
Internal Revenue Service -- Employer Identification No. 62-1518973
July 1, 1998 and December 31, 1997
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<PAGE>
Audited Financial Statements
and Supplemental Schedules
Alpha Cellulose Corporation
Cash Option Thrift Plan
July 1, 1998 and December 31, 1997
with Report of Independent Auditors
<PAGE>
Alpha Cellulose Corporation
Cash Option Thrift Plan
Financial Statements
and Supplemental Schedules
July 1, 1998 and December 31, 1997
Contents
Report of Independent Auditors..............................................1
Statements of Net Assets Available for Benefits.............................2
Statement of Changes in Net Assets Available for Benefits...................4
Notes to Financial Statements...............................................5
Line 27d--Schedule of Reportable Transactions...............................9
<PAGE>
Report of Independent Auditors
Buckeye Investment Committee
We have audited the accompanying statements of net assets available for benefits
of the Alpha Cellulose Corporation Cash Option Thrift Plan as of July 1, 1998
and December 31, 1997, and the statement of changes in net assets available for
benefits for the six months ended July 1, 1998. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at July
1, 1998 and December 31, 1997 and the changes in net assets available for
benefits for the six months ended July 1, 1998 in conformity with generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedule of
reportable transactions for the six months ended July 1, 1998 is presented for
the purpose of additional analysis and is not a required part of the basic
financial statements but is supplemental information required by the Department
of Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This supplemental schedule is the
responsibility of the Plan's management. The fund information in the statements
of net assets available for benefits as of July 1, 1998 and December 31, 1997,
and the statement of changes in net assets available for benefits for the six
months ended July 1, 1998, is presented for purposes of additional analysis
rather than to present the net assets available for benefits and changes in net
assets available for benefits of each fund. The supplemental schedule and fund
information have been subjected to the auditing procedures applied in our audits
of the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
December 14, 1998
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<PAGE>
<TABLE>
<CAPTION>
Alpha Cellulose Corporation Cash Option Thrift Plan
Statement of Net Assets Available for Benefits, With Fund Information
Six months ended July 1, 1998
Non-Participant
Participant Directed Directed
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Cash
Management Growth Investment New Buckeye
Bond Fund Trust of Fund of Company Perspective SMALLCAP Stock Participant Unallocated
of America America America of America Fund World Fund Fund Loans Funds Total
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net assets
available
for benefits $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
====================================================================================================================
See accompanying notes.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Alpha Cellulose Corporation Cash Option Thrift Plan
Statement of Net Assets Available for Benefits, With Fund Information
Year ended December 31, 1997
Non-Participant
Participant Directed Directed
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Cash
Bond Management Growth Investment New
Fund of Trust of Fund of Company Perspective SMALLCAP Buckeye
America America America of Fund World Stock Participant Unallocated
America Fund Fund Loans Funds Total
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investments, at
fair value:
Shares in
registered
investment
companies $37,787 $ - $1,077,369 $2,201,302 $1,755,729 $1,185,588 $ - $ - $ - $6,257,775
Cash and cash
equivalents - 603,870 - - - - - - 45,007 648,877
Participant loans - - - - - - - 414,011 - 414,011
Common stock of
Buckeye
Technologies
Inc. - - - - - - 50,185 - - 50,185
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Net assets
available
for benefits $37,787 $603,870 $1,077,369 $2,201,302 $1,755,729 $1,185,588 $50,185 $414,011 $45,007 $7,370,848
================================================================================================================
See accompanying notes.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Alpha Cellulose Corporation Cash Option Thrift Plan
Statement of Changes in Net Assets Available for Benefits, With Fund Information
For the six months ended July 1, 1998
Non-Participant
Participant Directed Directed
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Cash
Bond Management Growth Investment New Buckeye
Fund of Trust of Fund of Company Perspective SMALLCAP Stock Participant Unallocated
America America America of America Fund World Fund Fund Loans Funds Total
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to net
assets attributed
to:
Investment income:
Net appreciation
(depreciation)
in fair value
of investments $ (750) $ (4,640) $ 141,770 $210,124 $282,367 $71,333 $ 779 $ - $ - $ 700,983
Interest and
dividend income 2,442 23,072 - 42,605 9,720 - - 15,654 - 93,493
Contributions:
Participants' 2,607 14,037 19,751 46,615 35,588 23,942 - - (32,261) 110,279
Employer's 1,085 7,067 11,780 27,276 22,160 15,551 - - (12,746) 72,173
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Total contributions 3,692 21,104 31,531 73,891 57,748 39,493 - - (45,007) 182,452
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Total additions 5,384 39,536 173,301 326,620 349,835 110,826 779 15,654 (45,007) 976,928
Deductions from net
assets attributed to:
Benefit payments 19,475 461,963 193,368 705,420 450,402 219,174 1,780 1,823 - 2,053,405
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Net increase
(decrease) prior to
transfer to
Buckeye Retirement
Plus Plan and
interfund transfers (14,091) (422,427) (20,067) (378,800) (100,567) (108,348) (1,001) 13,831 (45,007)(1,076,477)
Transfer to Buckeye
Retirement Plus
Plan (21,763) (806,951) (1,033,108)(1,609,479) (1,381,829) (881,172) (50,869) (509,200) - (6,294,371)
Interfund transfers,
net (1,933) 625,508 (24,194) (213,023) (273,333) (196,068) 1,685 81,358 - -
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Net (decrease) (37,787) (603,870) (1,077,369)(2,201,302) (1,755,729)(1,185,588) (50,185) (414,011) (45,007)(7,370,848)
Net assets available
for benefits:
Beginning of year 37,787 603,870 1,077,369 2,201,302 1,755,729 1,185,588 50,185 414,011 45,007 7,370,848
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End of year $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
==============================================================================================================
See accompanying notes.
</TABLE>
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<PAGE>
Alpha Cellulose Corporation Cash Option Thrift Plan
Notes to Financial Statements
July 1, 1998
1. Description of the Plan
Effective July 1, 1998, the Alpha Cellulose Corporation Cash Option Thrift Plan
(the Plan) merged with the Buckeye Retirement Plus Plan (Buckeye Plan). The
following description of the Plan provides only general information.
Participants should refer to the Buckeye Plan document for a more complete
description of the Buckeye Plan's provisions.
General
The Plan, as amended, is a defined contribution plan covering all employees of
Buckeye Lumberton Corporation (the Company), formerly Alpha Cellulose
Corporation, a subsidiary of Buckeye Technologies Inc. (the Plan Sponsor).
Employees are eligible to participate in the Plan effective January 1 or July 1
after the date on which the employee completes six months of service. The Plan
is subject to provisions of the Employee Retirement Income Security Act of 1974,
as amended (ERISA).
Contributions
Participants make contributions to the Plan by salary deductions of 2% to 15% of
their compensation, subject to certain Internal Revenue Code limitations. The
Company matches participant's contributions up to 5% of the participant's
compensation. Effective March 31, 1997, the Company may, at its discretion, make
special company contributions to be allocated to each active participant. A
participant's special company contribution account is immediately fully vested
and not subject to participant-directed decisions.
Participant's Accounts
Each participant's account is credited with the participant's contributions and
an allocation of (1) the Company's contribution and (b) Plan earnings and
appreciation in the value of investments. Forfeited balances of terminated
participants' nonvested accounts are used to reduce future contributions by the
Plan Sponsor.
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<PAGE>
Alpha Cellulose Corporation Cash Option Thrift Plan
Notes to Financial Statements (continued)
1. Description of the Plan (continued)
Vesting
Participants are immediately vested in their contributions and special company
contributions plus actual earnings thereon. Vesting in the Company contribution
portion of their accounts plus actual earnings thereon is based on the number of
years of continuous service according to the following schedule:
<TABLE>
<CAPTION>
Vesting
Years of Service Percentage
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<S> <C> <C>
Less than 3 0%
3 20
4 40
5 60
6 80
7 100
</TABLE>
Participant Loans
Participants may borrow from their fund accounts up to a maximum equal to the
lesser of 50 percent of their vested account balances or $50,000. Loan
transactions are treated as a transfer to (from) the investment funds from (to)
the Participant Loans Fund. The maximum loan term is five years. The loans are
secured by the balance in the participant's account and bear interest at prime
rate plus one percent. Principal and interest is paid through payroll
deductions.
Benefits
Participants are eligible to receive distributions from the Plan upon normal
retirement at age 65 or early retirement as defined, death, permanent disability
or termination of employment, if vested. The forms of payment available include
annuities, installments and single lump-sum payments.
Per amendment to the Plan, participants were allowed to elect in-service
distributions from a portion of their accounts prior to the merger of the Plan
with the Buckeye Plan.
Withdrawals During Employment
A participant may elect to withdraw the lesser of his salary reduction
contribution account balance or the amount necessary to satisfy a financial
hardship. The withdrawal shall be authorized only in the event of an "immediate
and heavy financial need" in an amount "necessary to satisfy the hardship," as
defined by the Internal Revenue Code (the IRC).
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<PAGE>
1. Description of the Plan (continued)
Administrative Costs
Administrative costs of the Plan are paid by the Company at its discretion, and
are not reflected in the Plan's financial statements.
2. Summary of Significant Accounting Policies
Basis of Accounting
The financial statements of the Plan are prepared using the accrual method of
accounting.
Investment Valuation and Income Recognition
Investments are stated at fair market value (based on quoted market prices),
with the change in the carrying value reported as the net change in unrealized
appreciation or depreciation in the aggregate fair value of investments.
Purchases and sales of investments are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Participant loans are valued at cost
which approximates fair value.
Participants who elect to invest in the Buckeye Stock Fund are assigned units.
Unit values are computed daily based on the market value of the assets in the
fund.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, and changes therein, and
disclosure of contingent assets and liabilities. Actual results could differ
from those estimates.
3. Investments
Participants may choose to invest their monies among the seven investment
options available which have varying degrees of risk.
4. Party-in-Interest Transactions
A special contribution to all eligible participants was made during 1997 to
purchase 5,420 shares of the Plan Sponsor's common stock.
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<PAGE>
5. Plan Termination
Although it has not expressed any intention to do so, the Company has the right,
at any time, to terminate the Plan by delivering to the Trustee and the
administrator written notice of such termination. Upon termination, all amounts
credited to the affected participants' accounts shall become 100% vested and
will not thereafter be subject to forfeiture, and all unallocated amounts shall
be allocated to the accounts of all participants in accordance with the plan
provisions.
6. Income Tax Status
The Internal Revenue Service has ruled on October 26, 1995, that the Plan is
designed in accordance with applicable sections of the Internal Revenue Code
(IRC) and, therefore, the related trust is not subject to tax under present
income tax law. The Plan has been amended since receiving the determination
letter. The Plan is required to operate in conformity with the IRC to maintain
its qualification. The plan administrator is not aware of any course of action
or series of events that have occurred that might adversely affect the Plan's
qualified status.
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<PAGE>
<TABLE>
<CAPTION>
Alpha Cellulose Corporation Cash Option Thrift Plan
EIN 56-1882960
Plan Number 002
Line 27d--Schedule of Reportable Transactions
Six months ended July 1, 1998
Current Value of Net
Purchase Selling Cost of Asset on Gain or
Identity of Party Involved Description of Asset Price Price Asset Transaction Date (Loss)
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<S> <C> <C> <C> <C> <C> <C>
Category (i) -single transactions in
excess of 5 percent of plan assets:
New Perspective Fund, Inc. 18,969 shares sold $ - $ 407,838 $ 370,368 $ 407,838 $ 37,470
Growth Fund of America 48,016 shares sold - 1,032,334 904,850 1,032,334 127,484
Cash Management Trust of America 459,274 units sold - 459,274 459,274 459,274 -
Cash Management Trust of America 806,951 units sold - 806,951 806,951 806,951 -
Cash Management Trust of America 1,917,026 units purchased 1,917,026 - 1,917,026 1,917,026 -
New Perspective Fund, Inc. 60,467 shares sold - 1,380,453 1,182,417 1,380,453 198,036
SMALLCAP World Fund 31,845 shares sold - 880,183 832,744 880,183 47,438
Investment Company of America 21,813 shares sold - 653,314 626,414 653,314 26,900
Investment Company of America 51,239 shares sold - 1,606,841 1,478,775 1,606,841 128,066
Category (iii)-series of transactions
in excess of 5 percent of plan assets:
Cash Management Trust of America 3,299,365 units purchased 3,299,565 - 3,299,565 3,299,465 -
Cash Management Trust of America 3,855,236 units sold - 3,855,236 3,855,236 3,855,236 -
Growth Fund of America 2,106 shares purchased 48,235 - 48,235 48,235 -
Growth Fund of America 60,017 shares sold - 1,267,339 1,125,603 1,267,339 141,734
Investment Company of America 18,520 shares purchased 592,835 - 592,835 592,835 -
Investment Company of America 97,861 shares sold - 3,004,180 2,794,141 3,004,180 210,041
New Perspective Fund, Inc. 6,587 shares purchased - 2,180,411 1,898,113 2,180,411 282,298
New Perspective Fund, Inc. 97,224 shares sold 143,385 - 143,385 143,385 -
SMALLCAP World Fund 3,909 shares purchased - 1,365,480 1,294,192 1,365,480 71,284
SMALLCAP World Fund 49,543 shares sold 108,608 - 108,608 108,608 -
There were no category (ii) or (iv) transactions.
</TABLE>
-9-
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Employee Benefits Committee for Buckeye Technologies Inc. has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ALPHA CELLULOSE CORPORATION CASH OPTION THRIFT PLAN
By: /s/ DAVID H. WHITCOMB
--------------------------------
David H. Whitcomb, Senior Vice President, Finance and Accounting
Date: December 21, 1998
ALPHA CELLULOSE CORPORATION CASH OPTION
THRIFT PLAN
Exhibit Index
Exhibit No. Description
23 Consent of Independent Auditors
<PAGE>
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8, Number 333-33621) pertaining to the Alpha Cellulose Corporation Cash Option
Thrift Plan of our report dated December 14, 1998 with respect to the financial
statements and schedules of the Alpha Cellulose Corporation Cash Option Thrift
Plan included in this Annual Report (Form 11-K) for the six months ended July 1,
1998.
/s/ ERNST & YOUNG LLP
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Ernst & Young LLP
Memphis, Tennessee
December 17, 1998
