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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 year ended December 31, 1997
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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
December 31, 1997 and 1996
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<PAGE>
Audited Financial Statements
and Supplemental Schedules
Alpha Cellulose Corporation
Cash Option Thrift Plan
December 31, 1997 and 1996
with Report of Independent Auditors
<PAGE>
Alpha Cellulose Corporation
Cash Option Thrift Plan
Financial Statements
and Supplemental Schedules
December 31, 1997 and 1996
Contents
Report of Independent Auditors.................................................1
Financial Statements
Statements of Net Assets Available for Benefits,
With Fund Information.......................................................2
Statement of Changes in Net Assets Available for Benefits,
With Fund Information.......................................................4
Notes to Financial Statements..................................................5
Supplemental Schedules
Line 27a--Schedule of Assets Held for Investment Purposes.....................10
Line 27d--Schedule of Reportable Transactions.................................11
<PAGE>
Report of Independent Auditors
To the Buckeye Investment Committee
We have audited the accompanying statements of net assets available for benefits
of the Alpha Cellulose Corporation Cash Option Thrift Plan (the Plan) as of
December 31, 1997 and 1996, and the statement of changes in net assets available
for benefits for the year ended December 31, 1997. 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. These 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
December 31, 1997 and 1996 and the changes in net assets available for benefits
for the year ended December 31, 1997 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 schedules
of assets held for investment purposes as of December 31, 1997, and reportable
transactions for the year then ended are not a required part of the basic
financial statements but are presented for purposes of complying with the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. These supplemental
schedules are the responsibility of the Plan's management. The fund information
in the statements of net assets available for benefits as of December 31, 1997
and 1996, and the statement of changes in net assets available for benefits for
the year ended December 31, 1997, 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
schedules 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.
June 17, 1998
1
<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
Cash
Management Growth Investment New Buckeye
Bond Fund Trust of Fund of Company Perspective SMALLCAP Stock Unallocated
of America America America of America Fund World Fund Fund Participant Funds Total
Loans
---------- ----------- ---------- ----------- ----------- ---------- ----------- ---------- ---------- ----------
<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
========== =========== ========== =========== =========== ========== =========== ========== ========= ==========
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>
2
<PAGE>
<TABLE>
<CAPTION>
Alpha Cellulose Corporation Cash Option Thrift Plan
Statement of Net Assets Available for Benefits, with Fund Information
Year ended December 31, 1996
Cash
Bond Management Growth Investment New
Fund of Trust of Fund of Company Perspective SMALLCAP Participant Unallocated
America America America of America Fund World Fund Loans Funds Total
---------- ----------- ----------- ----------- ----------- ------------ ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at
fair value:
Shares in
registered
investment
companies $207,628 $ - $1,162,452 $1,829,935 $1,893,910 $2,113,457 $ - $ - $7,207,382
Cash and cash
equivalents - 333,195 - - - - - - 333,195
Participant loans - - - - - - 392,514 - 392,514
Contributions
receivable:
Employer - - - - - - - 15,874 15,874
Participants - - - - - - - 34,809 34,809
---------- ----------- ----------- ----------- ----------- ------------ ----------- ------------ ----------
Total receivables - - - - - - - 50,683 50,683
---------- ----------- ----------- ----------- ----------- ------------ ----------- ------------ ----------
Net assets
available for
benefits $207,628 $333,195 $1,162,452 $1,829,935 $1,893,910 $2,113,457 $392,514 $50,683 $7,983,774
========== =========== =========== =========== =========== ============ =========== ============ ==========
See accompanying notes.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Alpha Cellulose Corporation Cash Option Thrift Plan
Statement of Changes in Net Assets Available for Benefits, with Fund Information
For the Year ended December 31, 1997
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>
Additions:
Net appreciation
(depreciation)
in fair value
of investments $ (2,802) $ (849) $169,059 $276,839 $140,038 $44,903 $5,917 $ - $ - $633,105
Interest and
dividend income 7,396 22,287 112,247 217,765 127,292 107,622 - 28,121 - 622,730
Participants'
contribution 6,722 12,142 50,946 91,739 86,756 72,634 - - (2,548) 318,391
Employer's
contribution 2,879 6,025 29,794 56,417 52,645 44,601 44,117 - (3,128) 233,350
--------- ---------- ---------- ----------- ----------- ----------- ---------- ---------- ---------- ----------
Total additions 14,195 39,605 362,046 642,760 406,731 269,760 50,033 28,121 (5,676) 1,807,576
Deductions:
Benefits payments 593,982 7,628 204,920 354,032 244,148 942,089 812 72,892 - 2,420,502
--------- ---------- ---------- ----------- ----------- ----------- ---------- ---------- ---------- ----------
Net increase
(decrease) prior
to interfund
transfers (579,787) 32,087 157,126 288,728 162,583 (672,329) 49,222 (44,771) (5,676) (612,926)
Interfund
transfers, net 409,946 238,698 (242,209) 82,639 (300,764) (255,540) 963 66,268 - -
--------- ---------- ---------- ----------- ----------- ----------- ---------- ---------- ---------- ----------
Net increase
(decrease) (169,841) 270,675 (85,083) 371,367 (138,181) (927,869) 50,185 21,497 (5,676) (612,926)
Net assets
available for
benefits:
Beginning of
year 207,628 333,195 1,162,452 1,829,935 1,893,910 2,113,457 - 392,514 50,683 7,983,774
-------- ---------- ----------- ----------- ----------- ----------- ---------- ---------- ---------- ----------
End 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
========== ========== =========== =========== =========== =========== ========== ========== ========== ==========
See accompanying notes.
</TABLE>
4
<PAGE>
Alpha Cellulose Corporation Cash Option Thrift Plan
Notes to Financial Statements
December 31, 1997
1. Description of the Plan
The following description of the Alpha Cellulose Corporation Cash Option Thrift
Plan (the Plan) provides only general information. Participants should refer to
the Plan document for a more complete description of the 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 each 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.
5
<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:
Vesting Percentage
Years of Service
---------------------- ----------------------
Less than 3 0%
3 20
4 40
5 60
6 80
7 100
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 form of payment available includes
annuities, installments and single lump-sum payments. There were no amounts
payable to such participants at December 31, 1997 and 1996.
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).
6
<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. At December 31, 1997, there were 4,433 units in the Buckeye Stock Fund
with a net value per unit of $11.32. The average unit value during the year
ended December 31, 1997 was $10.66.
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 amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
3. Investments
Participants may choose to invest their monies among the following investment
options which have varying degrees of risk:
Bond Fund of America.- This fund is designed to provide an opportunity for
current income and preservation of capital through a diversified portfolio of
bonds.
Cash Management Trust of America - This fund is designed to provide a way to
earn current income while preserving capital and maintaining liquidity.
7
<PAGE>
3. Investments (continued)
Growth Fund of America - This fund is designed to provide an opportunity for
growth of capital through a diversified portfolio of common stocks.
Investment Company of America - This fund is designed to provide an opportunity
for long-term growth of capital and income.
New Perspective Fund - This fund is designed to provide an opportunity for
long-term growth of capital primarily through investments in stocks of companies
based around the world.
SMALLCAP World Fund - This fund is designed to provide an opportunity for
long-term growth of capital primarily through stocks of smaller companies in the
United States and around the world.
Buckeye Stock Fund - This fund is designed to provide an opportunity for
investment in the Plan Sponsor's common stock.
4. Party-in-Interest Transactions
A special contribution to all eligible participants was made during 1997 to
purchase 2,170 shares of the Plan Sponsor's common stock. The stock held by the
Plan at December 31, 1997, had a market value of $50,185.
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.
In April 1998, the Plan Sponsor executed an amendment to the Plan to merge the
Plan with another plan of the Plan Sponsor effective as of the opening of
business on July 1, 1998.
8
<PAGE>
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.
7. Year 2000 Issue (unaudited)
The Plan Sponsor intends to modify its internal information technology to be
ready for the year 2000. The project includes determining whether third party
service providers have reasonable plans in place to become year 2000 compliant.
The Plan Sponsor does not expect this project to have a significant effect on
Plan operations.
9
<PAGE>
<TABLE>
<CAPTION>
Alpha Cellulose Corporation Cash Option Thrift Plan
EIN 56-1882960
Plan Number 002
Line 27a--Schedule of Assets Held for Investment Purposes
December 31, 1997
Identity of Issue, Borrower, Description of Investment including Maturity Date, Rate of Market
Lessor or Similar Party Interest, Collateral, Par or Maturity Value Cost Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Registered Investment Companies:
Bond Fund of America 2,699 shares $ 35,035 $ 37,787
Cash Management Trust of America 603,870 shares 603,870 603,870
Growth Fund of America 57,368 shares 922,193 1,077,369
Investment Company of America 77,922 shares 1,897,976 2,201,302
New Perspective Fund 90,642 shares 1,548,980 1,755,729
SMALLCAP World Fund 45,635 shares 1,164,301 1,185,588
Common stock of Buckeye Technologies Inc.* 2,170 shares 44,313 50,185
Cash and cash equivalents 45,007 45,007
Participant loans Loans maturing from 1 to 5 years at prime rate of interest
plus 1% (9.5% at December 31, 1997) secured by participant
balances - 414,011
---------- ----------
$6,261,675 $7,370,848
========== ==========
*Denotes party-in-interest of the Plan.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Alpha Cellulose Corporation Cash Option Thrift Plan
EIN 56-1882960
Plan Number 002
Line 27d--Schedule of Reportable Transactions
Year Ended December 31, 1997
Sale or Current Value Net
Purchase Maturity Cost of of Asset on Gain (Loss)
Identity of Party Involved Description of Asset Price Price Asset Transaction Date
- ----------------------------------- ----------------------- ------------- ------------ ------------- ----------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Category (i) reportable
transactions:
Bond Fund of America 32,661 shares $ 453,328 $ - $453,328 $ 453,328 $ -
Bond Fund of America 32,787 shares - 450,495 453,709 450,495 (3,214)
Cash Management Trust of America 894,134 shares 894,134 - 894,134 894,134 -
Cash Management Trust of America 637,007 shares - 637,007 637,007 637,007 -
Cash Management Trust of America 450,495 shares 450,495 - 450,495 450,495 -
Cash Management Trust of America 450,495 shares - 450,495 450,495 450,495 -
Cash Management Trust of America 466,348 shares 466,348 - 466,348 466,348 -
Cash Management Trust of America 466,348 shares - 466,348 466,348 466,348 -
Small Capital World Fund 19,686 shares - 497,938 509,527 497,938 (11,589)
Category (iii) reportable
transactions
Bond Fund of America 51 Purchases 549,933 - 549,933 549,933 -
Bond Fund of America 14 Sales - 716,945 720,397 716,945 (3,452)
Cash Management Trust of America 140 Purchases 4,041,232 - 4,041,232 4,041,232 -
Cash Management Trust of America 122 Sales - 3,724,767 3,724,767 3,724,767 -
Growth Fund of America 41 Purchases 239,841 - 239,841 239,841 -
Growth Fund of America 26 Sales - 493,873 427,865 493,873 66,008
Investment Company of America 63 Purchases 1,065,942 - 1,065,942 1,065,942 -
Investment Company of America 32 Sales - 971,195 862,577 971,195 108,618
New Perspective Fund 35 Sales - 665,709 606,769 665,709 58,940
SMALLCAP World Fund 45 Purchases 494,613 - 494,613 494,613 -
SMALLCAP World Fund 43 Sales - 1,467,186 1,415,121 1,467,186 52,065
There were no category (ii) or (iv) transactions.
</TABLE>
11
<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
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David H. Whitcomb, Sr. Vice President-Finance
Date: June 24, 1998
12
<PAGE>
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 June 17, 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 year ended December 31,
1997.
/s/ ERNST & YOUNG LLP
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Ernst & Young LLP
Memphis, Tennessee
June 24, 1998
