================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------------
FORM 10-Q
------------------------------------------
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997
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Commission file number: 33-60032
BUCKEYE TECHNOLOGIES INC.
(formerly Buckeye Cellulose Corporation)
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 XX No
As of February 12, 1998, there were outstanding 18,402,646 Common Shares of the
Registrant.
================================================================================
-1-
<PAGE>
BUCKEYE TECHNOLOGIES INC.
INDEX
ITEM PAGE
- ---- ----
PART I - FINANCIAL INFORMATION
1. Financial Statements (Unaudited):
Condensed Consolidated Statements of Income for the Three Months
Ended December 31, 1997 and 1996; Six Months Ended December 31,
1997 and 1996 ............................................................3
Condensed Consolidated Balance Sheets as of
December 31, 1997 and June 30, 1997.......................................4
Condensed Consolidated Statements of Cash Flows for the Six Months
Ended December 31, 1997 and 1996..........................................5
Notes to Condensed Consolidated Financial Statements......................6
2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................................9
PART II - OTHER INFORMATION
4. Submission of Matters to a Vote of Security Holders......................11
6. Exhibits and Reports on Form 8-K.........................................11
SIGNATURES 12
-2-
<PAGE>
<TABLE>
<CAPTION>
BUCKEYE TECHNOLOGIES INC.
PART I - FINANCIAL INFORMATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except share data)
------------------- -------------------
Three Months Ended Six Months Ended
December 31 December 31
------------------- -------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales ...................................... $153,610 $142,992 $306,923 $269,506
Cost of goods sold ............................. 113,254 107,078 224,426 201,274
-------- -------- -------- --------
Gross margin ................................... 40,356 35,914 82,497 68,232
Selling, research and administrative expenses .. 10,136 9,086 21,508 16,861
-------- -------- -------- --------
Operating income ............................... 30,220 26,828 60,989 51,371
Net interest expense and amortization of debt costs 9,258 6,642 18,602 12,960
Other .......................................... 354 282 1,022 422
-------- -------- -------- --------
Income before income taxes ..................... 20,608 19,904 41,365 37,989
Income taxes ................................... 7,270 7,147 14,866 13,290
-------- -------- -------- --------
Net income ..................................... $ 13,338 $ 12,757 $ 26,499 $ 24,699
======== ======== ======== ========
Net income per share ........................... $ 0.72 $ 0.66 $ 1.42 $ 1.28
======== ======== ======== ========
Net income per share - assuming dilution ....... $ 0.69 $ 0.65 $ 1.38 $ 1.27
======== ======== ======== ========
</TABLE>
See accompanying notes.
-3-
<PAGE>
<TABLE>
<CAPTION>
BUCKEYE TECHNOLOGIES INC.
PART I - FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
-------------------------------
December 31 June 30
1997 1997
------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................ $ - $ 5,164
Short-term investments................... 2,900 2,900
Accounts receivable - net................ 81,535 79,703
Inventories.............................. 103,943 107,390
Deferred income taxes and other.......... 5,091 5,966
------------- -------------
Total current assets.............. 193,469 201,123
Property, plant and equipment................ 485,014 469,629
Less allowances for depreciation............. (104,593) (86,952)
------------- -------------
380,421 382,677
Goodwill..................................... 136,222 140,845
Deferred debt costs and other................ 10,346 12,819
------------- -------------
Total assets...................... $720,458 $737,464
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable........................... $23,048 $29,761
Accrued expenses........................... 41,524 49,830
Notes payable.............................. 2,511 3,440
------------- -------------
Total current liabilities......... 67,083 83,031
Noncurrent liabilities:
Long-term debt............................. 464,304 474,631
Accrued postretirement benefit obligation.. 14,683 14,208
Deferred income taxes...................... 30,680 29,846
Other liabilities.......................... 2,658 7,558
Stockholders' equity......................... 141,050 128,190
------------- -------------
Total liabilities and stockholders' equity. $720,458 $737,464
============= =============
</TABLE>
See accompanying notes.
-4-
<PAGE>
<TABLE>
<CAPTION>
BUCKEYE TECHNOLOGIES INC.
PART I - FINANCIAL INFORMATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
--------------------
Six Months Ended
December 31
--------------------
1997 1996
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income .............................................. $ 26,499 $ 24,699
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation ........................................ 18,532 14,559
Amortization and Other .............................. 4,548 3,548
Deferred income taxes ............................... 974 4,162
Changes in operating assets and liabilities:
Accounts receivable ............................... (794) 5,584
Inventories ....................................... 2,936 6,824
Other assets ...................................... 574 3,978
Accounts payable and other current liabilities .... (16,210) (14,737)
--------- --------
Net cash provided by operating activities ............ 37,059 48,617
INVESTING ACTIVITIES
Acquisition of businesses ............................... (3,869) (60,189)
Net purchases of property, plant and equipment .......... (23,084) (22,614)
Other ................................................... (44) (85)
-------- --------
Net cash used in investing activities ................... (26,997) (82,888)
FINANCING ACTIVITIES
Purchase of treasury shares ............................. (7,362) (53,344)
Proceeds from sale of equity interests .................. 1,219 19
Net borrowings under revolving line of credit ........... 25,006 (8,094)
Proceeds from long term debt ............................ -- 99,449
Principal payments on long term debt and other .......... (33,978) --
Payments for debt issuance costs ........................ -- (3,777)
--------- --------
Net cash provided by (used in) financing activities ..... (15,115) 34,253
Effect of foreign currency rate fluctuations on cash .... (111) 18
--------- --------
Increase (decrease) in cash and cash equivalents ........ (5,164) --
Cash and cash equivalents at beginning of period ........ 5,164 --
--------- --------
Cash and cash equivalents at end of period .............. $ -- $ --
========= ========
</TABLE>
See accompanying notes
-5-
<PAGE>
BUCKEYE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
of Buckeye Technologies Inc. (formerly Buckeye Cellulose Corporation) 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, 1997 are not necessarily indicative of
the results that may be expected for the year ended June 30, 1998. All
significant intercompany accounts and transactions have been eliminated in
consolidation and combination. 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, 1997.
NOTE B -- BUSINESS COMBINATION
On September 1, 1996, the Company acquired all of the issued and
outstanding stock of Alpha Cellulose Holdings, Inc. (Alpha). On May 28, 1997,
the Company's wholly owned subsidiary, Buckeye Acquisition Inc. (BAI), acquired
97.5% of the common shares of Merfin International Inc. (Merfin). On July 30,
1997, BAI acquired the remaining outstanding common shares of Merfin. These
transactions were as discussed and disclosed in the annual report. The
consolidated operating results of Alpha and Merfin have been included in the
consolidated statements of income from the respective date of acquisition.
The following unaudited pro forma results of operations assume that the
acquisitions of Alpha and Merfin occurred as of the beginning of the periods
presented.
<TABLE>
<CAPTION>
Six Months Ended
December 31
---------------------------
1997 1996
---------- ----------
(In thousands, except per
share data)
<S> <C> <C>
Net sales................................... $306,923 $306,172
Net income.................................. 26,499 18,253
Net income per share........................ 1.42 0.95
Net income per share - assuming dilution.... 1.38 0.94
</TABLE>
Pro forma results of operations for the six months ended December 31,
1996 include certain non-recurring charges incurred by Alpha prior to its
acquisition by the Company. These charges include acquisition related costs and
the excess of raw materials cost over replacement value and in the aggregate
reduced pro forma net income by $1.8 million or $0.09 per share.
The pro forma financial information is presented for information
purposes only and is not necessarily indicative of the operating results that
would have occurred had the business combinations been consummated as of the
above dates, nor is it necessarily indicative of future operating results.
-6-
<PAGE>
BUCKEYE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE C -- INVENTORIES
The components of inventory consist of the following:
<TABLE>
<CAPTION>
---------------------------
December 31 June 30
1997 1997
---------------------------
(In thousands)
<S> <C> <C>
Raw materials......................... $ 23,148 $ 25,409
Finished goods........................ 62,313 63,932
Storeroom and other supplies.......... 18,482 18,049
===========================
$103,943 $107,390
===========================
</TABLE>
NOTE D -- EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per
Share". SFAS No. 128 specifies the computation, presentation and disclosure
requirements for earnings per share (EPS) and became effective for both interim
and annual periods ending after December 15, 1997. All prior period EPS data has
been restated to conform with the provisions of SFAS No. 128. The following is a
reconciliation of the numerators and denominators used to calculate net income
per share in the Condensed Consolidated Statements of Income:
<TABLE>
<CAPTION>
------------------------ -------------------------
Three Months Ended Six Months Ended
December 31 December 31
------------------------ -------------------------
1997 1996 1997 1996
------------------------ -------------------------
<S> <C> <C> <C> <C>
NUMERATOR:
Net income for basic and dilutive earnings
per share ............................ $13,338,000 $12,757,000 $26,499,000 $24,699,000
DENOMINATOR:
Weighted average shares outstanding - used
for basic earnings per share ......... 18,630,300 19,252,813 18,669,398 19,251,404
Effect of dilutive options ............... 588,718 251,748 540,135 235,877
------------------------- -------------------------
Denominator for diluted earnings per share 19,219,018 19,504,561 19,209,533 19,487,281
Net income per share ..................... $ 0.72 $ 0.66 $ 1.42 $ 1.28
========================= ========================
Net income per share - assuming dilution.. $ 0.69 $ 0.65 $ 1.38 $ 1.27
========================= ========================
</TABLE>
During the three months ended December 31, 1997 and 1996 and the six
months ended December 31, 1997 and 1996, there were 4,728; 25,000; 2,364; and
16,168, respectively, of outstanding options which were not included in the
computation of diluted EPS because the options' exercise prices were greater
than the average market price of the common stock for the period.
-7-
<PAGE>
BUCKEYE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE E -- FOREIGN CURRENCY TRANSLATION
The Company's net investment in foreign operations is subject to
foreign currency translation gains and losses, which are included as a separate
component of stockholders' equity. The decline in the value of the Canadian
dollar, the Irish punt and the Deutsche mark as compared to the U.S. dollar has
resulted in an equity translation loss of $5.3 and $8.1 million for the three
and six months ended December 31, 1997, respectively.
NOTE F -- RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement
No. 130, "Reporting Comprehensive Income". This statement establishes
requirements for disclosure of comprehensive income and will become effective
for the Company's 1999 fiscal year, with reclassification of earlier financial
statements for comparative purposes. Comprehensive income generally includes
changes in stockholders' equity such as foreign currency translation gains and
losses. The Company is evaluating alternative formats for presenting this
information.
In June 1997, the Financial Accounting Standards Board issued Statement
No. 131, "Disclosures about Segments of an Enterprise and Related Information"
(SFAS 131). This statement establishes standards for disclosure about operating
segments in annual financial statements and selected information in interim
financial reports. It also establishes standards for related disclosures about
products and services, geographic areas and major customers. This statement
supercedes Statement of Financial Accounting Standards No. 14, "Financial
Reporting for Segments of a Business Enterprise". SFAS 131 will become effective
for the Company's 1999 fiscal year and requires that comparative information
from earlier years be restated to conform to the requirements of this standard.
The Company is evaluating the requirements of SFAS 131 and the effects, if any,
on the Company's current reporting and disclosures.
NOTE G -- SUBSEQUENT EVENTS
On January 21, 1998, the Board of Directors of the Company declared a
two-for-one stock split for shareholders of record as of February 10, 1998. The
stock split will be payable in the form of a stock dividend of one share of
common stock for each issued share of common stock. The stock split will be
payable on February 17, 1998. Earnings per share presented elsewhere herein have
not been adjusted to reflect this stock split.
The Company expects to hold a Special Meeting on April 7, 1998, for
shareholders of record on February 27, 1998, the purpose of which is to seek
approval of amendments to the Company's second restated and amended certificate
of incorporation, which will increase the number of authorized shares of Company
common and preferred stock.
On February 4, 1998, the Board of Directors of the Company authorized
the repurchase of an additional one million shares of common stock. The
repurchase authorization will be proportionally increased to reflect the
two-for-one stock split previously discussed. Repurchased shares, which may be
bought from time-to-time in open market or private transactions, will be held as
treasury stock. They will be available for general corporate purposes, including
the funding of employee benefit and stock related plans.
-8-
<PAGE>
BUCKEYE TECHNOLOGIES INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
Net sales for the three months ended December 31, 1997 were $153.6
million compared to $143.0 million for the same period in the prior fiscal year,
an increase of $10.6 million or 7.4%. Net sales for the six month period ended
December 31, 1997 were $306.9 million compared to $269.5 million for the same
period in the prior fiscal year, an increase of $37.4 million or 13.9%. The
increase for both the three and six month periods was primarily due to the
acquisition of two new businesses: Alpha on September 1, 1996 and Merfin on May
28, 1997.
Operating income for the three months ended December 31, 1997 was $30.2
million compared to $26.8 million for the same period in the prior fiscal year,
an increase of $3.4 million or 12.6%. Operating income for the six months ended
December 31, 1997 was $61.0 million compared to $51.4 million for the same
period in the prior fiscal year, an increase of $9.6 million or 18.7%. The
increase for both the three and six month periods is due to the higher sales
volume, discussed previously, plus lower raw material costs. It is partially
offset by higher selling, research and administrative costs in both periods. The
increase in selling, research and administrative expenses was $1.1 million for
the three month period and $4.6 million for the six month period ended December
31, 1997 compared to the same periods in the prior fiscal year. These increases
were the result of increased employment, primarily in product development, the
new business acquisitions, and the amortization of non-compete agreements
associated with Alpha.
Net interest expense and amortization of debt costs were $9.3 million
for the three months and $18.6 million for the six months ended December 31,
1997. This is a $2.6 million and $5.6 million increase, respectively, compared
to the same period of the prior fiscal year. This increase was due to higher
average debt balances, resulting from the acquisitions.
The Company's net income for the three month and six month period
ended December 31, 1997 was $13.3 million or $0.69 per share on a diluted basis,
and $26.5 million or $1.38 per share on a diluted basis, respectively, compared
to $12.8 million or $0.65 per share on a diluted basis and $24.7 million or
$1.27 per share on a diluted basis for the same periods of the prior year.
FINANCIAL CONDITION
- -------------------
Cash Flow
Cash provided by operating activities for the six months ended December
31, 1997 was $37.1 million. These funds were used, along with additional
borrowings from the credit facility, to repay certain Canadian bank, European
bank, and other loans and to acquire the remaining outstanding stock of Merfin.
During the six month period ended December 31, 1997, the Company repurchased
185,100 shares of common stock bringing the total shares repurchased to 774,600,
pursuant to a one million share repurchase plan in effect since August 1996.
Liquidity and Capital Resources
The Company believes that its cash flow from operations, together with
the borrowings available under its existing bank credit facility, will be
sufficient to fund capital expenditures (including environmental expenditures),
meet operating expenses, fund any common stock repurchases, and service all debt
requirements for the foreseeable future. At December 31, 1997, the Company had
unused borrowing capacity of approximately $78.3 million on its bank credit
facility.
-9-
<PAGE>
BUCKEYE TECHNOLOGIES INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (cont'd)
YEAR 2000 COMPLIANCE
- --------------------
The Company is dependent upon computerized information systems for all
phases of its operations including production, distribution, and accounting.
During the last three years, the Company has replaced substantially all
financial systems, giving the Company the benefit of new technology and
functionality while becoming year 2000 compliant. However, the financial systems
of recent acquisitions are still being assessed for year 2000 compliance. The
Company's suppliers, distributors, and customers may also have year 2000
problems which could affect the Company. The Company is in the process of
developing a plan to determine the impact of the year 2000 on its operations.
The Company is currently assessing the overall cost of year 2000 compliance.
However, the Company believes at present that the cost will not have a material
effect on its financial position, liquidity, or results of operations.
Management's estimate of the ultimate cost and completion of necessary
systems modification or replacement is based on numerous assumptions of future
events including continued availability of certain resources, third party
modification plans and other factors. However, there can be no guarantee that
these estimates will be achieved and actual results could differ materially from
those anticipated.
SUBSEQUENT EVENTS
- -----------------
On January 21, 1998, the Board of Directors of the Company declared a
two-for-one stock split for shareholders of record as of February 10, 1998. The
stock split will be payable in the form of a stock dividend of one share of
common stock for each issued share of common stock. The stock split will be
payable on February 17, 1998.
The Company expects to hold a Special Meeting on April 7, 1998, for
shareholders of record on February 27, 1998, the purpose of which is to seek
approval of amendments to the Company's second restated and amended certificate
of incorporation, which will increase the number of authorized shares of Company
common and preferred stock.
On February 4, 1998, the Board of Directors authorized the repurchase of
an additional one million shares of common stock. The repurchase authorization
will be proportionally increased to reflect the two-for-one stock split
discussed above. Repurchased shares, which may be bought from time-to-time in
open market or private transactions, will be held as treasury stock. They will
be available for general corporate purposes, including the funding of employee
benefit and stock related plans. The Company has nearly completed the one
million share repurchase program which has been in effect since August 1996. The
Board is, in essence, extending the Company's stock repurchase program.
-10-
<PAGE>
BUCKEYE TECHNOLOGIES INC.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Annual Meeting of Stockholders held on October 21,
1997, the following members were elected to the Board of Directors:
<TABLE>
<CAPTION>
Votes Votes
For Withheld
---------- --------
<S> <C> <C>
Red Cavaney................ 17,186,454 276,145
David B. Ferraro........... 17,312,135 275,988
</TABLE>
Following the election, the Company's Board of Directors consisted of
Mr. Cavaney, Mr. R. Howard Cannon, Mr. Robert E. Cannon, Mr. Ferraro, Mr. Henry
Frigon, Mr. Samuel Mencoff, and Mr. Harry Phillips.
The following proposals were approved at the Company's Annual Meeting:
<TABLE>
<CAPTION>
Votes Votes
Votes For Against Abstained
---------- --------- ----------
<S> <C> <C> <C>
Ratification of appointment of Ernst & Young LLP as
independent auditors .................................... 17,519,378 3,144 2,839
Amendment to change company name to Buckeye Technologies Inc. 17,422,101 100,983 2,277
Amendment to the Amended and Restated Certificate
of Incorporation to delete the provision requiring
cumulative voting in the election of directors of
the Company ............................................. 14,098,154 1,637,203 21,042
Amendment to the Amended and Restated Certificate of
Incorporation to require the affirmative vote of
the holders of at least 75% of the outstanding
shares of common stock of the Company, voting as a
single class, to approve the merger or consolidation
of the Company with or into any other entity other
than a subsidiary of the Company or the sale, lease,
exchange or disposition of all or substantially all
of the assets of the Company and its subsidiaries......... 13,226,121 2,520,590 9,688
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
1. Exhibit 3.1 Second Amended and Restated Certificate of Incorporation of the
Registrant, as amended through December 31, 1997.
2. Exhibit 27 Financial Data Schedule
3. The Company did not file any reports on Form 8-K during the three months
ended December 31, 1997.
-11-
<PAGE>
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/ DAVID B. FERRARO
------------------------------------------------------------------
David B. Ferraro, Director, President, and Chief Operating Officer
Date: February 13, 1998
By: /s/ DAVID H. WHITCOMB
------------------------------------------------------------------
David H. Whitcomb, Sr. Vice President-Finance
Date: February 13, 1998
-12-
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF BUCKEYE CELLULOSE CORPORATION
================================================================================
Adopted in accordance with
the provisions of Section 245 of
the General Corporation Law of
the State of Delaware
================================================================================
Robert E. Cannon, being the Chairman of the Board of Buckeye Cellulose
Corporation, a corporation organized on December 18, 1992 as Buckeye Specialties
Corporation, and existing under and by virtue of the General Corporation Law
State of Delaware (the "Corporation"), does hereby certify as follows:
1. That the Board of Directors of the Corporation, in accordance with
Sections 242 and 245 of the General Corporation Law of the State of Delaware,
adopted the resolution set forth below:
FURTHER RESOLVED, that the certificate of incorporation of the
Company is hereby amended and restated in its entirety as set forth in
Exhibit A, the Second Amended and Restated Certificate of
Incorporation, attached hereto and made a part hereof; provided, that
at any time prior to the effectiveness of the filing of the Second
Amended and Restated Certificate of Incorporation, the Board of
Directors shall be authorized to abandon such Second Amended and
Restated Certificate of Incorporation without further action by the
stockholders.
2. That the stockholders of the Corporation approved and adopted the
Second Amended and Restated Certificate of Incorporation in accordance with
Sections 242 and 245 of the General Corporation Law of the State of Delaware.
<PAGE>
3. The foregoing Second Amended and Restated Certificate of
Incorporation has been duly adopted pursuant to the provisions of Sections 242
and 245 of the General Corporation Law of the State of Delaware.
4. The Second Amended and Restated Certificate of Incorporation shall
be effective on November 1, 1997 at 12:01 a.m. Eastern Time (the "Effective
Time").
5. Notwithstanding the full adoption of the Second Amended and Restated
Certificate of Incorporation, the Second Amended and Restated Certificate of
Incorporation may be abandoned at any time prior to the Effective Time with the
Secretary of State of Delaware without further action by the stockholders.
IN WITNESS WHEREOF, the undersigned, being the Chairman of the Board
hereinabove named, for the purpose of amending and restating the Amended and
Restated Certificate of Incorporation of the Corporation pursuant to the General
Corporation Law of the State of Delaware, under penalties of perjury does hereby
declare and certify that this is the act and deed of the Corporation and the
facts stated herein are true, and accordingly has hereunto signed this Second
Amended and Restated Certificate of Incorporation this 28th day of October,
1997.
By:________________________________
Robert E. Cannon, Chairman
of the Board
<PAGE>
Exhibit A
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
BUCKEYE CELLULOSE CORPORATION
ARTICLE ONE
The name of the corporation is BUCKEYE TECHNOLOGIES INC.
ARTICLE TWO
The address of the corporation's registered office in the
State of Delaware is 1013 Centre Road, Wilmington, Delaware 19805- 1297, County
of New Castle. The name of its registered agent at such address is The
Prentice-Hall Corporation System, Inc. The registered office and/or registered
agent of the corporation may be changed from time to time by action of the board
of directors.
ARTICLE THREE
The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of the State of Delaware (the
"Delaware General Corporation Law").
ARTICLE FOUR
CAPITAL STOCK
(a) The total number of shares of common stock that the
corporation shall have authority to issue is 50,000,000, par value $.01 per
share (the "Common Stock"). The total number of shares of preferred stock that
the corporation shall have authority to issue is 5,000,000, par value $.01 per
share (the "Preferred Stock").
- 1 -
<PAGE>
(b) The Common Stock shall rank junior to the Preferred Stock
in right of payment of dividends and upon liquidation and is subject to all the
powers, rights, privileges, preferences and priorities of the Preferred Stock as
provided herein or in any resolution or resolutions adopted by the board of
directors pursuant to authority expressly vested in it by the provisions of
Paragraph (c) of this ARTICLE FOUR.
(c) Authority is hereby expressly vested in the board of
directors of the corporation, subject to the provisions of this ARTICLE FOUR and
to the limitations prescribed by law, to authorize the issuance from time to
time of one or more series of Preferred Stock. The authority of the board of
directors with respect to each series shall include, but not be limited to, the
determination or fixing of the following by resolution or resolutions adopted by
the affirmative vote of a majority of the total number of the directors then in
office:
(i) The designation of such series;
(ii) The dividend rate of such series, the conditions and
dates upon which such dividends shall be payable, the relation which such
dividends shall bear to the dividends payable on any other class or classes or
series of the corporation's capital stock, and whether such dividends shall be
cumulative or non-cumulative;
(iii) Whether the shares of such series shall be subject to
redemption for cash, property or rights, including securities of any other
corporation, by the corporation or upon the happening of a specified event, and,
if made subject to any such redemption, the times or events, prices, rates,
adjustments and other terms and conditions of such redemptions;
(iv) The terms and amount of any sinking fund provided for
the purchase or redemption of the shares of such series;
(v) Whether or not the shares of such series shall be
convertible into, or exchangeable for, at the option of either the holder or the
corporation or upon the happening of a specified event, shares of any other
class or classes or of any other series of the same or any other class or
classes of the corporation's capital stock, and, if provision be made for
conversion or exchange, the times or events, prices, rates, adjustments and
other terms and conditions of such conversions or exchanges;
(vi) The restrictions, if any, on the issue or reissue of any
additional Preferred Stock;
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<PAGE>
(vii) The rights of the holders of the shares of such series
upon the voluntary or involuntary liquidation, dissolution or winding up of the
corporation; and
(viii) The provisions as to voting, optional and/or other
special rights and preferences, if any, including, without limitation, the right
to elect one or more directors.
(d) On all matters submitted for a vote of the stockholders,
each holder of Common Stock shall be entitled to one vote for each share of
Common Stock held by such holder, except as otherwise required by law.
ARTICLE FIVE
The corporation is to have perpetual existence.
ARTICLE SIX
In furtherance and not in limitation of the powers
conferred by statute, the board of directors of the corporation is expressly
authorized to make, alter, amend, change, add to or repeal the by-laws of the
corporation.
ARTICLE SEVEN
Meetings of stockholders may be held within or without
the State of Delaware, as the by-laws of the corporation may provide. The books
of the corporation may be kept outside the State of Delaware at such place or
places as may be designated from time to time by the board of directors or in
the by-laws of the corporation. Election of directors need not be by written
ballot unless the by-laws of the corporation so provide.
ARTICLE EIGHT
(a) Subject to the rights of the holders of any series of
Preferred Stock, from and after the date on which the Common Stock of the
corporation is registered pursuant to the Securities Exchange Act of 1934, as
amended, (A) any action required or permitted to be taken by the stockholders of
the corporation must be effected at an annual or special meeting of stockholders
of the corporation and may not be effected in lieu thereof by any consent in
writing by such stockholders, and (B) special meetings of stockholders of the
corporation may be called only by the chairman
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<PAGE>
of the board, the president or the board of directors pursuant to a resolution
adopted by the affirmative vote of the majority of the total number of directors
then in office.
(b) A director of the corporation shall not in the absence
of fraud be disqualified by his office from dealing or contracting with the
corporation either as a vendor, purchaser or otherwise, nor in the absence of
fraud shall any transaction or contract of the corporation be void or voidable
or affected by reason of the fact that any director, or any firm of which any
director is a member, or any corporation of which any director is an officer,
director or stockholder, is in any way interested in such transaction or
contract; provided that at the meeting of the board of directors or of a
committee thereof having authority in authorizing or affirming such contract or
transaction, the existence of the interest of such director, firm or corporation
is disclosed or made known and such contract or transaction shall be approved by
a majority of directors not so interested or connected. Nor shall any director
be liable to account to the corporation for any profit realized by him from or
through any such transaction or contract of the corporation ratified or approved
as aforesaid, by reason of the fact that he or any firm of which he is a member,
or any corporation of which he is an officer, director or stockholder, was
interested in such transaction or contract. Directors so interested may be
counted when present at meetings of the board of directors or such committee for
the purpose of determining the existence of a quorum. Any contract, transaction
or act of the corporation or of the board of directors or of any committee
thereof (whether or not approved or ratified as hereinabove in this paragraph
provided) which shall be ratified by a majority in interest of a quorum of the
stockholders having voting power at any annual meeting or any special meeting
called for such purpose, shall be as valid and as binding as though ratified by
every stockholder of the corporation.
(c) The number of directors which shall constitute the whole
board shall be such as from time to time shall be fixed by resolution adopted by
affirmative vote of a majority of the board of directors except that such number
shall not be less than one (1) nor more than fifteen (15), the exact number to
be determined by resolution adopted by affirmative vote of a majority of the
board of directors. The directors of the corporation shall be divided into three
classes: Class I, Class II and Class III. Membership in such classes shall be as
nearly equal in number as possible. The term of office of the initial Class I
directors shall expire at the annual election of directors by the stockholders
of the corporation in 1996, the term of office of the initial Class II directors
shall expire at the annual election of directors by the stockholders of the
corporation in 1997, and the
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<PAGE>
term of office of the initial Class III directors shall expire at the annual
election of directors by the stockholders of the corporation in 1998, or
thereafter when their respective successors in each case are elected by the
stockholders and qualified, subject, however, to prior death, resignation,
retirement, disqualification or removal from office for cause. At each
succeeding annual election of directors by the stockholders of the corporation
beginning in 1996, the directors chosen to succeed those whose terms then expire
shall be identified as being of the same class as the directors they succeed and
shall be elected for a term expiring at the third succeeding annual election of
directors by the stockholders of the corporation, or thereafter when their
respective successors in each case are elected by the stockholders and
qualified. If the number of directors is changed, any increase or decrease shall
be apportioned among the classes so as to maintain the number of directors in
each class as nearly equal as possible, and any additional director of any class
elected to fill a vacancy resulting from an increase in such class shall hold
office for a term that shall coincide with the remaining term of that class, but
in no case will a decrease in the number of directors shorten the term of any
incumbent director.
Vacancies and newly created directorships resulting from any
increase in the number of directors may be filled only by (i) the stockholders
at an annual or special meeting of the corporation, as provided in the by-laws
or (ii) the affirmative vote of the majority of the board of directors then in
office, although less than quorum, or by a sole remaining director. Any director
elected to fill a vacancy not resulting from an increase in the number of
directors shall have the same remaining term as that of his predecessor.
Notwithstanding the foregoing, whenever the holders of any one
or more classes or series of Preferred Stock issued by the corporation shall
have the right, voting separately by class or series, to elect directors at an
annual or special meeting of stockholders, the election, term of office, filing
of vacancies and other features of such directorships shall be governed by the
terms of this Certificate of Incorporation applicable thereto, and such
directors so elected shall not be divided into classes pursuant to this Section
(c) of Article EIGHTH unless expressly provided by such terms.
Subject to the rights of any class or series of stock having a
preference over the Common Stock as to dividends or upon liquidation to elect
directors under specified circumstances, no director may be removed from office
without cause.
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<PAGE>
(d) Except to the extent prohibited by law, the board of
directors shall have the right (which, to the extent exercised, shall be
exclusive) to establish the rights, powers, duties, rules and procedures that
from time to time shall govern the board of directors and each of its members,
including without limitation the vote required for any action by the board of
directors, and that from time to time shall affect the directors' power to
manage the business and affairs of the corporation; and no by-law shall be
adopted by stockholders which shall impair or impede the implementation of the
foregoing.
(e) Any and all right, title, interest and claim in or to any
dividends declared by the corporation, whether in cash, stock or otherwise,
which are unclaimed by the stockholder entitled thereto for a period of six
years after the close of business on the payment date, shall be and shall be
deemed to be extinguished and abandoned; and such unclaimed dividends in the
possession of the corporation, its transfer agents or other agents or
depositories, shall at such time become the absolute property of the
corporation, free and clear of any and all claims of any persons whatsoever.
(f) The board of directors shall have power from time to time
to determine to what extent and at what times and places and under what
conditions and regulations the accounts and books of the corporation, or any of
them, shall be open to the inspection of the stockholders; and no stockholder
shall have any right to inspect any account or book or document of the
corporation, except as conferred by the laws of the State of Delaware, unless
and until authorized so to do by resolution of the board of directors or of the
stockholders of the corporation.
ARTICLE NINE
Sections (a), (c) and (d) of ARTICLE EIGHT and this ARTICLE
NINE of this Second Amended and Restated Certificate of Incorporation and
Section 11 of Article II and Sections 2, 3, 4 and 5 of Article III of the
by-laws of the corporation shall not be altered, amended or repealed by, and no
provision inconsistent therewith shall be adopted by, the stockholders without
the affirmative vote of the holders of at least 80% of the Common Stock, voting
together as a single class.
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<PAGE>
ARTICLE TEN
(a) Limitation of Liability.
(i) To the fullest extent permitted by the Delaware
General Corporation Law as it now exists or may hereafter be amended
(but, in the case of any such amendment, only to the extent that such
amendment permits the corporation to provide broader indemnification
rights than permitted prior thereto), no director of the corporation
shall be liable to the corporation or its stockholders for monetary
damages arising from a breach of fiduciary duty owed to the corporation
or its stockholders.
(ii) Any repeal or modification of the foregoing
paragraph by the stockholders of the corporation shall not adversely
affect any right or protection of a director of the corporation
existing at the time of such repeal or modification.
(b) Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is otherwise involved (including
involvement as a witness) in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she is or was a director or officer of the
corporation or, while a director or officer of the corporation, is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit plan
(hereinafter, an "indemnitee"), whether the basis of such proceeding is alleged
action in an official capacity as a director or officer or in any other capacity
while serving as a director or officer, shall be indemnified and held harmless
by the corporation to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
corporation to provide broader indemnification rights than permitted prior
thereto), against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA exercise taxes or penalties and amounts paid in
settlement) reasonably incurred or suffered by such indemnitee in connection
therewith and such indemnification shall continue as to an indemnitee who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the indemnitee's heirs, executors and administrators; provided,
however, that, except as provided in Section (c) of ARTICLE TEN with respect to
proceedings to enforce rights to
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<PAGE>
indemnification, the corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee only
if such proceeding (or part thereof) was authorized by the board of directors of
the corporation. The right to indemnification conferred in this Section (b) of
ARTICLE TEN shall be a contract right and shall include the right to be paid by
the corporation the expenses incurred in defending any such proceeding in
advance of its final disposition (hereinafter an "advance of expenses");
provided, however, that, if and to the extent that the Delaware General
Corporation Law requires, an advance of expenses incurred by an indemnitee in
his or her capacity as a director or officer (and not in any other capacity in
which service was or is rendered by such indemnitee, including, without
limitation, service to an employee benefit plan) shall be made only upon
delivery to the corporation of an undertaking (hereinafter an "undertaking"), by
or on behalf of such indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal (hereinafter a "final adjudication") that such
indemnitee is not entitled to be indemnified for such expenses under this
Section (b) of ARTICLE TEN or otherwise. The corporation may, by action of its
board of directors, provide indemnification to employees and agents of the
corporation with the same scope and effect as the foregoing indemnification of
directors and officers.
(c) Procedure for Indemnification. Any indemnification of a
director or officer of the corporation or advance of expenses under Section (b)
of this ARTICLE TEN shall be made promptly, and in any event within forty-five
(45) days (or, in the case of an advance of expenses, twenty (20) days), upon
the written request of the director or officer. If a determination by the
corporation that the director or officer is entitled to indemnification pursuant
to this ARTICLE TEN is required, and the corporation fails to respond within
sixty (60) days to a written request for indemnity, the corporation shall be
deemed to have approved the request. If the corporation denies a written request
for indemnification or advance of expenses, in whole or in part, or if payment
in full pursuant to such request is not made within forty-five (45) days (or, in
the case of an advance of expenses, twenty (20) days), the right to
indemnification or advances as granted by this ARTICLE TEN shall be enforceable
by the director or officer in any court of competent jurisdiction. Such person's
costs and expenses incurred in connection with successfully establishing his or
her right to indemnification, in whole or in part, in any such action shall also
be indemnified by the corporation. It shall be a defense to any such action
(other than an action brought to enforce a claim for the advance of expenses
where the undertaking required pursuant to Section (b) of this ARTICLE TEN, if
any, has
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<PAGE>
been tendered to the corporation) that the claimant has not met the standards of
conduct which make it permissible under the Delaware General Corporation Law for
the corporation to indemnify the claimant for the amount claimed, but the burden
of such defense shall be on the corporation. Neither the failure of the
corporation (including its board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
Delaware General Corporation Law, nor an actual determination by the corporation
(including its board of directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct. The procedure for indemnification of
other employees and agents for whom indemnification is provided pursuant to
Section (b) of this ARTICLE TEN shall be the same procedure set forth in this
Section (c) for directors or officers, unless otherwise set forth in the action
of the board of directors providing indemnification for such employee or agent.
(d) Service for Subsidiaries. Any person serving as a
director, officer, employee or agent of a Subsidiary shall be conclusively
presumed to be serving in such capacity at the request of the corporation.
(e) Reliance. Persons who after the date of the adoption of
this provision become or remain directors or officers of the corporation or who,
while a director or officer of the corporation, become or remain a director,
officer, employee or agent of a Subsidiary, shall be conclusively presumed to
have relied on the rights to indemnity, advance of expenses and other rights
contained in this ARTICLE TEN in entering into or continuing such service. The
rights to indemnification and to the advance of expenses conferred in this
ARTICLE TEN shall apply to claims made against an indemnitee arising out of acts
or omissions which occurred or occur both prior and subsequent to the adoption
hereof.
(f) Non-Exclusivity of Rights. The rights to indemnification
and to the advance of expenses conferred in this ARTICLE TEN shall not be
exclusive of any other right which any person may have or hereafter acquire
under this Certificate of Incorporation or under any statute, by-law, agreement,
vote of stockholders or disinterested directors or otherwise.
(g) Insurance. The corporation may purchase and maintain
insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee or agent of the
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<PAGE>
corporation or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against any expense, liability or loss asserted
against him or her and incurred by him or her in any such capacity, whether or
not the corporation would have the power to indemnify such person against such
expenses, liability or loss under the Delaware General Corporation Law.
ARTICLE ELEVEN
The corporation expressly elects to be governed by Section 203
of the Delaware General Corporation Law.
ARTICLE TWELVE
In addition to any other votes which may be required pursuant
to this Second Amended and Restated Certificate or otherwise, the authorization,
if any, required pursuant to the General Corporation Law of the State of
Delaware in connection with (a) any merger or consolidation of the corporation
with or into any other entity (unless such other entity is a Subsidiary of the
corporation), or (b) the sale, lease, exchange or disposition in a single
transaction or series of related transactions by the corporation or any
Subsidiary to an individual or entity (other than the corporation or any
Subsidiary of the corporation) of assets constituting all or substantially all
of the assets of the corporation and its Subsidiaries taken as a whole, shall
require the affirmative vote of at least 75% of the outstanding shares of Common
Stock of the corporation, voting as a single class. For purposes of this ARTICLE
TWELVE, "Subsidiary" shall mean any entity of which the corporation directly or
indirectly owns greater than 50% of the voting securities or other interests of
such entity. This ARTICLE TWELVE shall not be altered, amended or repealed by,
and no provision inconsistent herewith shall be adopted by, the stockholders
without the affirmative vote of the holders of at least 75% of the Common Stock
of the corporation, voting together as a single class.
ARTICLE THIRTEEN
The corporation reserves the right to amend, alter, change or
repeal any provision contained in this Second Amended and Restated Certificate
of Incorporation in the manner now or hereafter prescribed herein and by the
laws of the State of
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<PAGE>
Delaware, and all rights conferred upon stockholders herein are granted subject
to this reservation.
- 11 -
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<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> DEC-31-1997
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<RECEIVABLES> 82,978
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<INVENTORY> 103,943
<CURRENT-ASSETS> 193,469
<PP&E> 485,014
<DEPRECIATION> 104,593
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0
0
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<TOTAL-LIABILITY-AND-EQUITY> 720,458
<SALES> 306,923
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<TOTAL-COSTS> 245,934
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<NET-INCOME> 26,499
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