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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 June 30, 1998
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Commission file number: 33-60032
Buckeye Retirement 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
June 30, 1998 and 1997
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<PAGE>
Audited Financial Statements and
Supplemental Schedules
Buckeye Retirement Plan
Years ended June 30, 1998 and 1997
with Report of Independent Auditors
<PAGE>
Buckeye Retirement Plan
Audited Financial Statements and Supplemental Schedules
June 30, 1998 and 1997
Contents
Report of Independent Auditors........................................1
Audited Financial Statements
Statements of Net Assets Available for Benefits.......................2
Statement of Changes in Net Assets Available for Benefits.............4
Notes to Financial Statements.........................................5
Supplemental Schedules
Line 27a--Schedule of Assets Held for Investment Purposes.............9
Line 27d--Schedule of Reportable Transactions........................10
<PAGE>
Report of Independent Auditors
Buckeye Investment Committee
We have audited the accompanying statements of net assets available for benefits
of the Buckeye Retirement Plan (the Plan) as of June 30, 1998 and 1997, and the
statement of changes in net assets available for benefits for the year ended
June 30, 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 June
30, 1998 and 1997 and the changes in net assets available for benefits for the
year ended June 30, 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 supplemental schedules of assets held
for investment purposes as of June 30, 1998, and reportable transactions for the
year then ended are presented for the purpose of additional analysis and are not
a required part of the basic financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The fund information in the statements of net assets available for
benefits as of June 30, 1998 and 1997, and the statement of changes in net
assets available for benefits for the year ended June 30, 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 schedules and fund information have been subjected to the auditing
procedures applied in the 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
1
<PAGE>
<TABLE>
<CAPTION>
Buckeye Retirement Plan
Statement of Net Assets Available for Benefits,
With Fund Information
June 30, 1998
Money Growth & Buckeye
Market Income Balanced Income Growth International Stock
Fund Fund Funds Funds Funds Fund Fund Other Total
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investments,at fair
value:
Shares in registered
investment companies $ - $373,787 $1,937,507 $14,523,544 $292,627 $37,477 $ - $ - $17,164,942
Common stock of
Buckeye Technologies
Inc. - - - - - - 9,399,707 - 9,399,707
Cash and cash
equivalents 692,784 - - - - - - 42,223 735,007
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Total investments 692,784 373,787 1,937,507 14,523,544 292,627 37,477 9,399,707 42,223 27,299,656
Employer contributions
receivable 160,874 90,442 353,499 2,856,931 118,041 3,943 1,720,413 - 5,304,143
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Net assets available for
benefits $853,658 $464,229 $2,291,006 $17,380,475 $410,668 $41,420 $11,120,120 $42,223 $32,603,799
==========================================================================================================
See accompanying notes.
2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of Net Assets Available for Benefits,
With Fund Information
June 30, 1997
Money Stock Growth & Buckeye
Market Bond Balanced Index Income Growth Stock
Fund Fund Fund Fund Fund Fund Fund Total
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at fair value:
Shares in registered investment
companies ................... $ -- $320,554 $1,354,920 $2,519,541 $1,958,656 $6,170,154 $ -- $12,323,825
Common stock of Buckeye
Technologies Inc. ........... -- -- -- -- -- -- 4,985,449 4,985,449
Cash and cash equivalents ..... 433,451 3,105 18,726 9,756 432 40,843 184,130 690,443
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Total investments ................ 433,451 323,659 1,373,646 2,529,297 1,959,088 6,210,997 5,169,579 17,999,717
Employer contributions receivable 147,375 92,288 358,944 695,961 709,130 1,578,378 1,405,140 4,987,216
Accrued income ................... 1,812 1,887 10,987 18 23 79 54 14,860
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Net assets available for benefits $582,638 $417,834 $1,743,577 $3,225,276 $2,668,241 $7,789,454 $6,574,773 $23,001,793
==============================================================================================
See accompanying notes.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Buckeye Retirement Plan
Statement of Changes in Net Assets Available for Benefits,
With Fund Information
Year ended June 30, 1998
Money Stock Growth & Buckeye
Market Income Balanced Index Income Growth International Stock
Fund Fund Funds Fund Funds Funds Fund Fund Other 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 in fair
value of investments $ - $ 19,906 $ 203,226 $ 233,795 $1,500,223 $ 474,748 $ 2,935 $2,322,361 $ - $ 4,757,194
Interest and dividends 31,192 21,533 150,286 94 491,133 412 - ,072 - 645,722
Employer contributions 160,874 90,442 303,499 - 2,856,931 118,041 3,943 1,720,413 - 5,304,143
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Total additions $192,066 131,881 657,011 233,889 4,848,287 593,201 6,878 4,043,846 - 10,707,059
Deductions from net assets
attributed to:
Benefit payments 61,892 27,395 85,805 45,849 254,422 245,065 - 4,494 - 1,074,922
Administrative expenses 1,597 847 3,233 2,930 7,340 7,017 - 7,167 - 30,131
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Total deductions 63,489 28,242 89,038 48,779 261,762 252,082 - 361,661 - 1,105,053
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Net increase before transfer
to successor trustee and
interfund transfers 128,577 103,639 567,973 185,110 4,586,525 341,119 6,878 3,682,185 - 9,602,006
Transfer to successor trustee (2,971) (5,211) (20)(3,267,778) 10,532,147 (7,256,167) - - - -
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Net increase (decrease) prior
to interfund transfers 125,606 98,428 567,953 (3,082,668) 15,118,672 (6,915,048) 6,878 3,682,185 - 9,602,006
Interfund transfers (net) 145,414 (52,033) (20,524) (142,608) (406,438) (463,738) 34,542 863,162 42,223 -
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Net increase (decrease) 271,020 46,395 547,429 (3,225,276) 14,712,234 (7,378,786) 41,420 4,545,347 42,223 9,602,006
Net assets available for
benefits:
Beginning of year 582,638 417,834 1,743,577 3,225,276 2,668,241 7,789,454 - 6,574,773 - 23,001,793
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End of year $853,658 $464,229 $2,291,006 $ - $17,380,475 $ 410,668 $41,420 $11,120,120 $42,223 $32,603,799
======================================================================================================
See accompanying notes.
</TABLE>
4
<PAGE>
Buckeye Retirement Plan
Notes to Financial Statements
June 30, 1998
1. Description of Plan
The following description of the Buckeye Retirement Plan (the Plan) provides
only general information. Participants should refer to the Plan agreement for a
more complete description of the Plan's provisions.
General
The Plan is a noncontributory defined contribution plan covering all salaried
and hourly employees of Buckeye Technologies Inc. (the Plan Sponsor), formerly
Buckeye Cellulose Corporation, and its wholly owned subsidiaries Buckeye
Florida, Limited Partnership and, Buckeye Florida Corporation. During 1998,
salaried employees of Buckeye Lumberton, Inc. were included in the Plan at their
current vested status. As of July 1, 1998, all employees of Buckeye Lumberton,
Inc. are participants of the Plan, subject to the Plan's eligibility
requirements. Employees are eligible upon completion of 1,000 hours of service
during their first year of employment or during any Plan year (July 1 to June
30).
Contributions
The Plan Sponsor makes an annual contribution to each participant's account
based on the following formula:
Contribution = participant's annual times [ 1 + .5 (years of service,
gross income maximum of 20)]%
Contributions are generally funded in the quarter following the Plan's year end.
Participant Accounts
Each participant's account is credited with the employer contribution and
allocations of Plan earnings and administrative expenses. Earnings in each
investment fund are allocated to participants' accounts based on the relative
value of the account balances prior to the allocation of current year
contributions. Forfeited balances of terminated participants' nonvested accounts
are used to reduce future contributions by the Plan Sponsor.
Vesting
Participants are 100% vested after five years of credited service, or
immediately upon death, disability or attainment of normal retirement age (65).
5
<PAGE>
Buckeye Retirement Plan
Notes to Financial Statements (continued)
1. Description of Plan (continued)
Payment of Benefits
On termination of service due to death the balance in the participant's account
will be distributed to the named beneficiary as a lump sum distribution. For
participants who terminate due to permanent disability or retirement, the
following forms of payment may be elected:
Single - Life Annuity payable monthly
Married - 50% Qualified Joint and Survivor Annuity purchased from
an insurance Company
Optional - Lump Sum Distribution
Lump Sum for account balanced under $3,500
For termination of service due to other reasons, a participant may receive the
value of the vested interest in his or her account as a lump-sum distribution,
or the vested balance may be rolled over directly into another qualified plan or
Individual Retirement Account.
Investment Options
Upon enrollment in the Plan, a participant may direct employer contributions in
5% increments in the prescribed investment options. Effective November 1997, the
Plan Sponsor changed trustees to Fidelity Investments and chose eleven funds for
participation.
Administrative Costs
Administrative costs of the Plan are paid by the Company at its discretion.
2. Accounting Policies
Investments
Investments are stated at fair market value (based on quoted market prices) with
the change in carrying value reported as the net change in unrealized
appreciation or depreciation in 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.
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.
6
<PAGE>
3. Investments
Investments that represent 5% or more of the fair value of the Plan's net assets
are separately identified as follows:
<TABLE>
<CAPTION>
June 30
1998 1997
-----------------------
<S> <C> <C>
Investments at fair value as determined
by quoted market price:
Balanced Funds:
Dodge & Cox Balanced Fund $ - $1,373,646
Puritan Fund 1,916,052 -
Stock Index Fund:
Vanguard Institutional Index Fund - 2,529,297
Growth Fund:
Janus Fund, Inc. - 6,210,997
Growth & Income Funds:
Spartan U.S. Equity Index Fund 3,597,846 -
MAS Value Fund 2,902,696 1,959,088
Fidelity Growth & Income Fund 8,023,002 -
Common stock of Buckeye Technologies Inc. 9,399,707 5,169,579
</TABLE>
During 1998, the Plan's investments (including investments bought, sold, and
held during the year) appreciated (depreciated) in value by $4,757,194 as
follows:
<TABLE>
<CAPTION>
Year ended
June 30
1998
-----------
<S> <C>
Investments at fair value as determined by
quoted market price:
Balanced Funds:
Dodge & Cox Balanced Fund $ 84,628
Puritan Fund 118,445
Stock Index Fund:
Vanguard Institutional Index Fund 233,795
Growth Fund:
Janus Fund, Inc. 458,993
Growth & Income Funds:
Spartan U.S. Equity Index Fund 456,185
MAS Value Fund (53,717)
Fidelity Growth & Income Fund 1,088,389
Common stock of Buckeye Technologies Inc. 2,322,361
Other 47,915
===========
$4,757,194
===========
</TABLE>
7
<PAGE>
4. Related Party Transactions
The Plan purchased $2,597,363 and sold $699,431 of the Plan Sponsor's common
stock during the year. The stock held by the Plan at June 30, 1998 and 1997, had
a market value of $9,399,707 and $4,985,449, respectively.
5. Plan Termination
Although it has not expressed any intent to do so, the Plan Sponsor has the
right to discontinue its contributions at any time and to terminate the Plan
subject to the provisions of the Employee Retirement Income Security Act of 1974
(ERISA). In the event of plan termination, participants will become 100 percent
vested in their accounts.
6. Income Tax Status
The Internal Revenue Service has ruled in a determination letter dated December
23, 1994, that the Plan qualifies under the applicable sections of the Internal
Revenue Code (IRC) and the related trust is, therefore, not subject to tax under
present income tax law. The Plan, which has been amended since receiving the
determination letter, is required to operate in conformity with the IRC to
maintain its qualification. Management 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, and has begun converting critical data processing
systems. The project also includes determining whether third party service
providers have reasonable plans in place to become year 2000 compliant. The Plan
Sponsor currently expects the project to be substantially complete by early
1999. The Plan Sponsor does not expect this project to have a significant effect
on Plan operations.
8
<PAGE>
<TABLE>
<CAPTION>
Buckeye Retirement Plan
EIN 62-1518973
Plan Number 002
Line 27a--Schedule of Assets Held for Investment Purposes
June 30, 1998
Description of Investment Including
Identity of Issue, Borrower, Lessor Maturity Date, Rate of Interest, Current
or Similar Party Collateral, Cost Value
Par or Maturity Value
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<S> <C> <C> <C>
*Federated Short Term U.S. Government
Treasury 692,784 units $ 692,784 $ 692,784
Strong Government Securities Fund 34,419 shares 356,809 373,787
*Fidelity Puritan Fund 90,636 shares 1,799,917 1,916,052
Dodge & Cox Balanced Fund 309 shares 21,125 21,455
*Spartan U.S. Equity Index Fund 88,858 shares 3,159,399 3,597,846
*Fidelity Growth & Income Fund 182,300 shares 6,970,098 8,023,002
MAS Value Fund 154,481 shares 2,640,324 2,902,696
Newberger & Berman Genesis Trust 5,141 shares 113,475 113,212
Pimco Capital Appreciation Fund 6,903 shares 163,500 179,415
*Buckeye Technologies Inc. Common Stock 398,918 shares 6,211,720 9,399,707
*Fidelity Diversified International Fund 2,002 shares 36,432 37,477
Other - 42,223 42,223
===========================
$22,207,806 $27,299,656
===========================
* Denotes a party-in-interest of the plan.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Buckeye Retirement Plan
EIN 62-1518973
Plan Number 002
Line 27d--Schedule of Reportable Transactions
Year ended June 30, 1998
Current
Value of
Identity Description Asset on Net
of of Purchase Selling Cost of Transaction Gain or
Party Involved Asset Price Price Asset Date (Loss)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Category (i)--single transactions in
excess of 5 percent of plan assets:
Janus Fund Inc. Purchase of 54,187 shares $1,578,456 $ - $1,578,456 $1,578,456 $ -
Fidelity Institutional Cash
U.S. Government Purchase of 1,405,140 units 1,405,140 - 1,405,140 1,405,140 -
Dodge & Cox Balanced Fund Sale of 25,268 shares - 1,762,409 1,477,939 1,762,409 284,470
Janus Fund Inc. Sale of 245,212 shares - 7,255,833 6,017,020 7,255,833 1,238,813
Vanguard Institutional Sale of 36,609 shares - 3,267,703 2,465,058 3,267,703 802,645
Index Fund
Category (iii)--series of
transactions in excess of 5 percent
of plan assets:
Buckeye Technologies Inc. Purchases of 133,793 shares 2,597,363 - 2,597,363 2,597,363 -
Dodge & Cox Balanced Fund Purchases of 6,650 shares 460,815 - 460,815 460,815 -
Janus Fund Inc. Purchases of 54,691 shares 1,617,720 - 1,617,720 1,617,720 -
MAS Value Fund Purchases of 1,043,740 shares 2,458,459 - 2,458,459 2,458,459 -
Vanguard Institutional Index Fund Purchases of 8,914 shares 766,772 - 766,772 766,772 -
Fidelity Institutional Cash
U.S. Government Purchases of 3,885,186 units 3,885,186 - 3,885,186 3,885,186 -
Fidelity Puritan Fund Purchases of 95,453 shares 1,895,444 - 1,895,444 1,895,444 -
Fidelity Growth & Income Fund Purchases of 194,924 shares 7,452,622 - 7,452,622 7,452,622 -
Spartan U.S. Equity Index Fund Purchases of 96,928 shares 3,445,626 - 3,445,626 3,445,626 -
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Buckeye Retirement Plan
EIN 62-1518973
Plan Number 002
Item 27d--Schedule of Reportable Transactions (continued)
Current
Identity Value of
Description Asset on Net
of of Purchase Selling Cost of Transaction Gain or
Party Involved Asset Price Price Asset Date (Loss)
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Category (iii)--series of transactions in excess of 5 percent of plan assets(continued):
<S> <C> <C> <C> <C> <C> <C>
Buckeye Technologies Inc. Sales of 30,309 shares $ - $ 699,431 $ 504,689 $ 699,431 $ 194,565
Dodge & Cox Balanced Fund Sales of 26,949 shares - 1,879,061 1,684,496 1,879,061 303,525
Janus Fund Inc. Sales of 278,922 shares - 8,246,866 6,831,758 8,246,866 1,415,108
MAS Value Fund Sales of 999,113 shares - 1,470,100 1,404,417 1,470,100 65,683
Vanguard Institutional
Index Fund Sales of 39,623 shares - 3,530,427 2,662,420 3,530,427 868,007
Fidelity Institutional
Cash U.S. Government Sales of 4,046,527 units - 4,046,527 4,046,527 4,046,527 -
Fidelity Puritan Fund Sales of 4,816 shares - 97,837 95,527 97,837 2,310
Fidelity Growth &
Income Fund Sales of 12,624 shares - 508,516 482,523 508,516 25,993
Spartan U.S. Equity
Index Fund Sales of 8,071 shares - 303,965 286,227 303,965 17,738
There were no category (ii) or (iv) reportable transactions during the year ended June 30, 1998.
</TABLE>
11
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Retirement Plan Committee of the Employee Retirement Plans for Buckeye
Technologies Inc. has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BUCKEYE RETIREMENT PLAN
By: /s/ DAVID H. WHITCOMB
-----------------------------------
David H. Whitcomb, Senior Vice President, Finance and Accounting
Date: December 21, 1998
BUCKEYE RETIREMENT 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 33-80867) pertaining to the Buckeye Retirement Plan of our report
dated December 14, 1998 with respect to the financial statements and schedules
of the Buckeye Retirement Plan included in this Annual Report (Form 11-K) for
the year ended June 30, 1998.
/s/ ERNST & YOUNG LLP
----------------------
Ernst & Young LLP
Memphis, Tennessee
December 17, 1998
