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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, 2003
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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, 2003 and 2002
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BUCKEYE RETIREMENT PLAN
Financial Statements
and Supplemental Schedule
For the Year Ended June 30, 2003
BUCKEYE RETIREMENT PLAN
Contents
Page
Independent Auditor's Report 2
Statements of Net Assets Available for Benefits 3
Statements of Changes in Net Assets Available for Benefits 4
Notes to Financial Statements 5-10
Supplemental Schedule
Schedule of Assets Held for Investment Purposes at End of Year 11
Independent Auditor's Report
To the Buckeye Investment Committee
Buckeye Retirement Plan
Memphis, Tennessee
We have audited the accompanying statements of net assets available for benefits
of Buckeye Retirement Plan as of June 30, 2003 and 2002, and the related
statements of changes in net assets available for benefits for the years then
ended. 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 auditing standards generally accepted
in the United States of America. 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 Buckeye
Retirement Plan at June 30, 2003 and 2002, and the changes in its net assets
available for benefits for the years then ended in conformity with accounting
principles generally accepted in the United States of America.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The accompanying supplemental schedule of assets
held for investment purposes at end of year as of June 30, 2003 is presented for
the purpose of complying with the Department of Labor's Rules and Regulations
for Reporting and Disclosure under the Employee Retirement Income Security Act
of 1974, and is not a required part of the basic financial statements. The
supplemental schedule has been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
November 18, 2003
BUCKEYE RETIREMENT PLAN
Statements of Net Assets Available for Benefits
June 30, 2003 and 2002
2003 2002
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Assets
Investments
Mutual funds $ 61,860,656 $ 57,589,835
Common stock of Buckeye Technologies Inc. 14,057,741 16,577,592
Loans to participants 290,505 292,343
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76,208,902 74,459,770
Receivables
Employer contributions 5,640,930 5,676,532
Participant contributions - 124,422
Due from broker for unsettled trades 79,518 46,712
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5,720,448 5,847,666
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Net assets available for benefits $ 81,929,350 $ 80,307,436
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The accompanying notes are an integral
part of these financial statements.
-3-
BUCKEYE RETIREMENT PLAN
Statements of Changes in Net Assets Available for Benefits
For the Years Ended June 30, 2003 and 2002
2003 2002
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Additions to (reductions in) net assets attributed to:
Investment income (loss)
Net depreciation in fair value of investments $ (5,485,830) $ (9,754,543)
Interest and dividends 856,162 578,850
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(4,629,668) (9,175,693)
Contributions
Employer 5,452,730 -
Participants 3,201,604 3,362,722
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4,024,666 (5,812,971)
Transfer of net assets from other plan - 38,966,440
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Total additions 4,024,666 33,153,469
Deductions from net assets attributed to:
Benefits paid to participants 2,364,089 2,222,276
Administrative expenses 38,663 35,525
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Total deductions 2,402,752 2,257,801
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Net increase in net assets 1,621,914 30,895,668
Net assets available for benefits
Beginning of year 80,307,436 49,411,768
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End of year $ 81,929,350 $ 80,307,436
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The accompanying notes are an integral
part of these financial statements.
-4-
BUCKEYE RETIREMENT PLAN
Notes to Financial Statements
June 30, 2003 and 2002
Note 1 - Description of Plan
The following description of Buckeye Retirement Plan provides only general
information. Readers should refer to the Plan Agreement for a more complete
description of the Plan's provisions.
General
Buckeye Retirement Plan (the "Plan") is a defined contribution plan covering all
full-time salaried and hourly employees of Buckeye Technologies Inc. and its
wholly owned subsidiaries (collectively the "Company"). Employees, as defined in
the Plan Agreement, 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). The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
Contributions
Participants may defer up to 20% of their annual compensation and may also
contribute a portion or all of incentive compensation, subject to Internal
Revenue Service limitations.
Foundation contributions, as defined in the Plan Agreement, made annually by the
Company are computed based upon the following formula:
Contribution = (A+B)C A = 1% B = .5% X number of years service
not to exceed twenty (20) years. C = Plan year compensation.
The minimum contribution is 1 1/2% of eligible compensation and
the maximum contribution is 11% of compensation.
Foundation contributions are generally funded in the six month period following
the Plan's year end.
The Company may also make a premium contribution, determined annually by the
Board of Directors, that is based upon the Company's financial performance. As
required by the Plan Agreement, subsequent to June 30, 1996, all Company premium
contributions are invested in the common stock of Buckeye Technologies Inc. The
Company did not make a premium contribution to the Plan for the years ended June
30, 2003 and 2002.
Participant accounts
Each participant's account is credited with the participant's contribution, an
allocation of the Company's foundation contributions, and an allocation of the
Company's discretionary premium contribution, if any, plus a proportionate
interest in the investment earnings or losses of the funds in which the
contributions are invested. The benefit to which a participant is entitled is
the benefit that can be provided from the participant's account.
-5-
BUCKEYE RETIREMENT PLAN
Notes to Financial Statements (Continued)
June 30, 2003 and 2002
Note 1 - Description of Plan (continued)
Vesting
Participants are immediately vested in their deferral contributions and Company
discretionary premium contributions plus earnings thereon.
Participants are 100% vested in their Company foundation contributions after
completion of five years of credited service. In the event of death, disability,
normal retirement (age 65) or if the Plan is discontinued, participants become
100% vested in their foundation account balances.
Payment of benefits
Participants may choose to receive account distributions either in the form of a
lump sum payment or installments over a period of time as defined in the Plan
Agreement. However, if the participant's vested balance does not exceed $5,000,
the Plan may distribute funds in the form of a lump sum payment without the
consent of the participant.
Forfeitures
If an employee terminates before his or her account has become fully vested,
such portion of the account is forfeited. Forfeitures are used to reduce future
contributions by the Company. Forfeitures used to reduce employer contributions
totaled $77,746 in 2003. There were no participant forfeitures in 2002.
Plan termination
Although it has not expressed any intent to do so, the Company has the right to
modify or terminate the Plan at any time subject to the provisions of ERISA and
the Plan Agreement. In the event of termination, the Plan provides that all
affected participants' interests will become fully vested and nonforfeitable.
Note 2 - Summary of significant accounting policies
Investments
Investments are stated at fair value and represent the Plan's share of the
market value of fund holdings or are based upon quoted market prices. Purchases
and sales of securities are recorded on a trade-date basis. Interest income is
recorded on the accrual basis and dividends are recorded on the ex-dividend
date.
-6-
BUCKEYE RETIREMENT PLAN
Notes to Financial Statements (Continued)
June 30, 2003 and 2002
Note 2 - Summary of significant accounting policies (continued)
Benefit payments
Benefit payments to participants are recorded upon distribution.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires the plan administrator to make estimates and
assumptions which affect certain reported amounts and disclosures. Actual
results may differ from those estimates.
Note 3 - Investments
The Plan generally allows participants to direct their contributions and account
balances among the different investment options offered by Fidelity Management
Trust Company. The Plan currently allows participants to invest in ten different
mutual funds offered by Fidelity Management Trust Company and Buckeye
Technologies Inc. common stock.
The fair value of individual investments which represent five percent (5%) or
more of the Plan's net assets available for benefits as of June 30, 2003 and
2002 is as follows:
2003 2002
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Fidelity Growth & Income Portfolio $ 22,252,887 $ 21,611,045
Buckeye Technologies Inc. common stock 14,057,741 16,577,592
Spartan U.S. Equity Index Fund 10,611,873 10,256,355
Fidelity Retirement Money Market Portfolio 6,020,316 5,067,407
Fidelity Puritan Fund 5,310,893 5,037,702
Neuberger Berman Genesis Fund 4,116,827 4,170,101
During the year ended June 30, 2002, the Plan's investment assets were held in a
trust account offered by Fidelity Management Trust Company and consisted of an
interest in the Buckeye Master Trust. The Master Trust was composed of the
common stock of Buckeye Technologies Inc., interests in ten mutual funds, and
participant loans.
The net investment income of the Master Trust for the year ended June 30, 2002
is summarized as follows:
Interest and dividends $ 1,102,601
Net depreciation in fair value of investments (16,131,979)
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$ (15,029,378)
-7-
BUCKEYE RETIREMENT PLAN
Notes to Financial Statements (Continued)
June 30, 2003 and 2002
Note 3 - Investments (continued)
During 2003 and 2002, the Plan's investments (including investments bought, sold
and held during the year) depreciated in value as follows:
2003 2002
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Mutual funds $ (505,529) $ (4,689,428)
Common stock of Buckeye Technologies Inc. (4,980,301) (5,065,115)
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$ (5,485,830) $ (9,754,543)
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Note 4 - Nonparticipant-directed investments
Information about the net assets and the significant components of the changes
in net assets relating to the nonparticipant-directed investments is as follows:
2003 2002
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Net assets:
Common stock of Buckeye Technologies Inc. $ 4,147,379 $ 6,192,027
Changes in net assets:
Net depreciation in fair value of investments (1,913,462) (3,028,175)
Benefits paid to participants (130,981) (362,235)
Administrative expenses (205) (1,613)
Note 5 - Loans to participants
As of July 1, 2002, participants that qualify for in-service hardship
withdrawals, as defined in the Plan Agreement, may borrow up to the lessor of
their deferral contributions account or $50,000. Loan repayment periods range
from one to five years. The loans are collateralized by the balance in the
participant's account and bear interest at a rate commensurate with local
prevailing rates as determined by the plan administrator. As of June 30, 2003,
interest rates on loans to participants ranged from 5.25% to 5.75%. Principal
and interest is repaid ratably through payroll deductions.
Note 6 - Transfer of net assets from other plan
On June 28, 2002, Buckeye Retirement Plan was merged into the Buckeye Retirement
Plus Savings Plan. Prior to the merger, the plans covered eligible employees of
Buckeye Technologies Inc. and its wholly owned subsidiaries. The
transferred net assets have been recognized in the accounts of the
-8-
BUCKEYE RETIREMENT PLAN
Notes to Financial Statements (Continued)
June 30, 2003 and 2002
Note 6 - Transfer of net assets from other plan (continued)
Buckeye Retirement Plus Savings Plan as of June 28, 2002, at their balances as
previously carried in the accounts of the Buckeye Retirement Plan. The changes
in net assets of the plans are included in their respective statements of
changes in net assets available for benefits for the year ended June 30, 2002. A
summary of the transferred net assets is as follows:
Investments at fair value $ 33,289,908
Employer contributions receivable 5,676,532
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$ 38,966,440
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As a result of this merger, on July 1, 2002 Buckeye Retirement Plus Savings Plan
changed its name to Buckeye Retirement Plan.
Note 7 - Related party transactions
The Plan purchased $3,854,625 and sold $2,242,636 of the Plan Sponsor's common
stock during the year ended June 30, 2003. During the year ended June 30, 2002,
the Plan purchased $1,936,843 and sold $2,941,760 of the Plan Sponsor's common
stock. The stock held by the Plan at June 30, 2003 and 2002 had a market value
of $14,057,741 and $16,577,592, respectively.
Plan investments include interests in certain mutual funds managed by Fidelity
Investments Institutional Operations Company, Inc. as of June 30, 2003 and 2002.
An affiliate of Fidelity Investments Institutional Operations Company, Inc. is
the trustee as defined by the Plan and, therefore, these investments and related
investment transactions qualify as party-in-interest. Fees paid to Fidelity
totaled $38,663 and $35,525 for the years ended June 30, 2003 and 2002,
respectively.
The Company provides the Plan with certain management and administrative
services for which no fees are charged.
Note 8 - Tax status
The Plan has received a determination letter from the Internal Revenue Service
stating that the Plan qualifies under the applicable sections of the Internal
Revenue Code (IRC), and 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.
-9-
BUCKEYE RETIREMENT PLAN
Notes to Financial Statements (Continued)
June 30, 2003 and 2002
Note 9 - Concentration of market risk
The Plan has invested a significant portion of its assets in Buckeye
Technologies Inc. common stock. This investment in Buckeye Technologies Inc.
common stock approximates 17% of the Plan's net assets available for benefits as
of June 30, 2003. As a result of this concentration, any significant reduction
in the market value of this stock could adversely affect individual participant
accounts and the net assets of the Plan.
-10-
SUPPLEMENTAL SCHEDULE
BUCKEYE RETIREMENT PLAN
Schedule of Assets Held for Investment Purposes at End of Year
EIN: 62-1518973 / Plan Number: 001
June 30, 2003
Current
(a) (b)(c) Identity of Issue/Description (d) Cost (e) Value
--- ------------------------------------------------------- -------- -----------
Mutual funds
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* Fidelity Growth & Income Portfolio $ ** $ 22,252,887
* Spartan U.S. Equity Index Fund ** 10,611,873
* Fidelity Retirement Money Market Portfolio ** 6,020,316
* Fidelity Puritan Fund ** 5,310,893
Neuberger Berman Genesis Fund ** 4,166,827
Davis New York Venture Fund, Inc. ** 3,700,899
Alger Capital Appreciation Institutional Portfolio ** 2,463,646
PIMCo Capital Appreciation Fund ** 2,352,066
Strong Government Securities Fund ** 3,455,572
* Fidelity Diversified International Fund ** 1,525,677
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61,860,656
* Buckeye Technologies Inc. common stock 28,424,332 14,057,741
Loans to participants
Participant loans, interest rates ranging from 5.25% to 5.75% - 290,505
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Total assets held for investment purposes at end of year $ 28,424,332 $ 76,208,902
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* Represents a party-in-interest.
** Cost omitted for participant directed investments.
-11-
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/ KRISTOPHER J. MATULA
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Kristopher J. Matula, Executive Senior Vice President
and Chief Financial Officer
Date: December 23, 2003