UNITEDTable STATESof SECURITIES AND EXCHANGE COMMISSIONContents

~~Washington,~~UNITED ~~D.C. 20549~~STATES

~~FORM~~SECURITIES ~~10-K~~AND EXCHANGE COMMISSION

SWashington, ~~Annual~~D.C. 20549 ~~Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934~~

~~For~~FORM ~~the fiscal year ended June 30, 2012~~10-K

x Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

~~Transition~~For ~~Report Pursuant to Section 13 or 15(d) of~~ the ~~Securities~~fiscal ~~Exchange~~year ~~Act~~ended ofJune 30, ~~1934~~2013

~~For~~or ~~the Transition Period From ____ to ____~~

~~Commission~~¨ ~~file~~Transition ~~number:~~Report ~~1-14030~~Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

~~Buckeye~~For ~~Technologies~~the ~~Inc.~~Transition Period From to

~~(Exact~~Commission ~~name~~file ofnumber: ~~registrant~~1-14030 ~~as specified in its charter)~~

Delaware		62-1518973
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Buckeye Technologies Inc.

1001 Tillman Street, Memphis, Tennessee		38112
(Address of principal executive offices)		(Zip Code)

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code (901) 320-8100


Delaware		62-1518973
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1001 Tillman Street, Memphis, Tennessee		38112
(Address of principal executive offices)		(Zip Code)

~~Securities~~Registrant’s ~~registered~~telephone ~~pursuant~~number, toincluding ~~Section~~area 12code (b901) 320-8100 ~~of the Act:~~

Title of Each Class		Name of Each Exchange on which Registered
Common Stock, par value $0.01 per share		New York Stock Exchange

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None


Title of Each Class		Name of Each Exchange on which Registered
Common Stock, par value $0.01 per share		New York Stock Exchange

~~Indicate~~Securities byregistered ~~check~~pursuant ~~mark~~to ifSection 12(g) ~~the registrant is a well-known seasoned issuer, as defined in Rule 405~~ of the ~~Securities~~ Act~~. Yes~~: ~~No~~None S

Indicate by check mark if the registrant is ~~not~~a ~~required~~well-known toseasoned ~~file~~issuer, ~~reports~~as ~~pursuant~~defined toin ~~Section~~Rule 13405 ~~or Section 15(d)~~ of the Securities Act. Yes  ¨ No x S

Indicate by check mark if ~~whether~~the registrant ~~(1)~~is ~~has~~not ~~filed all reports~~ required to befile ~~filed~~reports bypursuant ~~Section~~to Section 13 or Section 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 ~~S ~~ ¨ No x *

Indicate by check mark whether ~~the~~ registrant (1) has ~~submitted~~filed ~~electronically~~all ~~and~~reports ~~posted on its corporate Web site, if any, every Interactive Data File~~ required to be ~~submitted~~filed ~~and~~by Section 13 ~~posted~~or ~~pursuant~~15(d) toof ~~Rule~~the ~~405~~Securities ofExchange ~~Regulation~~Act ~~S-T~~of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to ~~submit~~file such reports), and ~~post~~(2) has been subject to such ~~files)~~filing requirements for the past 90 days. Yes ~~S ~~ x No ¨ *

Indicate by check mark ifwhether ~~disclosure~~the ofregistrant ~~delinquent~~has ~~filers~~submitted ~~pursuant~~electronically toand ~~Item~~posted ~~405~~on ofits ~~Regulation~~corporate ~~S-K~~Web issite, ~~not~~if ~~contained herein~~any, ~~and~~every ~~will~~Interactive ~~not~~Data beFile ~~contained,~~ required to ~~the~~be ~~best~~submitted ofand ~~registrant’s~~posted ~~knowledge,~~pursuant into ~~definitive~~Rule ~~proxy~~405 orof ~~information~~Regulation ~~statements~~S-T ~~incorporated~~during bythe ~~reference~~preceding in12 ~~Part~~months ~~III~~(or offor ~~this~~such ~~Form~~shorter ~~10-K~~period orthat ~~any~~the ~~amendment~~registrant was required to ~~this~~submit ~~Form~~and ~~10-K~~post such files). Yes Sx No ¨

Indicate by check mark if ~~whether~~disclosure ~~the~~of ~~registrant~~delinquent isfilers apursuant ~~large~~to ~~accelerated~~Item 405 ~~filer,~~of anRegulation ~~accelerated~~S-K ~~filer,~~is anot ~~non-accelerated~~contained ~~filer~~herein, orand awill ~~smaller~~not ~~reporting~~be ~~company. See~~contained, to the ~~definitions~~best of ~~“large~~registrant’s ~~accelerated filer~~knowledge,” ~~“accelerated~~in ~~filer”~~definitive ~~and~~proxy ~~“smaller~~or ~~reporting~~information ~~company”~~statements incorporated by reference in Part ~~Rule~~III ~~12b~~of this Form 10-2K ofor ~~the~~any ~~Exchange~~amendment ~~Act~~to this Form 10-K. ~~(Check~~x ~~one).~~

~~Large~~Indicate by check mark whether the registrant is a large accelerated filer, Tan ~~Accelerated~~accelerated filer, *a ~~Non~~non-accelerated filer *or ~~Smaller~~a ~~Reporting~~smaller ~~Company~~reporting *company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one).

~~Indicate~~Large byaccelerated afiler ~~check~~x ~~mark~~Accelerated ~~whether~~filer ~~the~~¨ ~~registrant is a shell company (as defined in Rule 12b~~Non-2accelerated offiler ~~the~~¨ ~~Exchange~~Smaller ~~Act).~~Reporting ~~Yes~~Company ~~ No S~~¨

AsIndicate ofby ~~December~~a ~~30,~~check ~~2011,~~mark ~~the~~whether ~~last business day of~~ the registrant’s ~~most~~is ~~recently~~a ~~completed~~shell ~~second~~company ~~fiscal~~(as ~~quarter,~~defined ~~the~~in ~~aggregate~~Rule ~~market~~12b-2 ~~value~~ of the ~~registrant’s voting common equity held by non-affiliates, computed by reference to the closing price at which the common equity was last sold on the New York Stock~~ Exchange~~, was approximately $1,255 million~~ Act). Yes ¨ No x

As of ~~August 27~~December 30, 2012, ~~there~~the ~~were~~last ~~outstanding~~business 39day of the registrant’s most recently completed second fiscal quarter,~~948,312~~ ~~Common~~the ~~Shares~~aggregate market value of the registrant’s ~~Registrant~~voting common equity held by non-affiliates, computed by reference to the closing price at which the common equity was last sold on the New York Stock Exchange, was approximately $1,074 million.

~~DOCUMENTS~~As ~~INCORPORATED~~of BYAugust 22, ~~REFERENCE~~2013, there were outstanding 39,050,483 Common Shares of the Registrant.

PortionsTable of Buckeye Technologies Inc.’s 2012 Annual Proxy Statement to be filed with the Commission in connection with the 2012 Annual Meeting of Stockholders (the “2012 Proxy Statement”) are incorporated by reference into Part III of this Annual Report on Form 10-K.Contents

1INDEX

~~INDEX~~BUCKEYE TECHNOLOGIES INC.

BUCKEYE TECHNOLOGIES INC.


ITEM		PAGE
PART I
1.	Business		1
1A.	Risk Factors		7
1B.	Unresolved Staff Comments		11
2.	Properties		11
3.	Legal Proceedings		12
4.	Mine Safety Disclosures		12

PART II
5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		12
6.	Selected Financial Data		14
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
7A.	Qualitative and Quantitative Disclosures About Market Risk		26
8.	Financial Statements and Supplementary Data		27
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		27
9A.	Controls and Procedures		27
9B.	Other Information		28

PART III
10.	Directors, Executive Officers and Corporate Governance		28
11.	Executive Compensation		32
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		60
13.	Certain Relationships and Related Transactions, and Director Independence		62
14.	Principal Accountant Fees and Services		63

PART IV
15.	Exhibits and Financial Statement Schedules		64
	Signatures		65

OTHER
	Index to Consolidated Financial Statements and Schedules		F-1

ITEM		PAGE
	PART I
1.	Business	3
1A.	Risk Factors	9
1B.	Unresolved Staff Comments	12
2.	Properties	12
3.	Legal Proceedings	13
4.	Mine Safety Disclosures	13
	PART II
5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	15
6.	Selected Financial Data	18
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
7A.	Qualitative and Quantitative Disclosures About Market Risk	30
8.	Financial Statements and Supplementary Data	31
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	31
9A.	Controls and Procedures	31
9B.	Other Information	31
	PART III
10.	Directors, Executive Officers and Corporate Governance	31
11.	Executive Compensation	32
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	32
13.	Certain Relationships and Related Transactions, and Director Independence	32
14.	Principal Accountant Fees and Services	32
	PART IV
15.	Exhibits and Financial Statement Schedules	32
	Signatures	33
	OTHER
	Index to Consolidated Financial Statements and Schedules	F-1

2PART I

~~PART~~Item I1. Business

~~Item~~General ~~1. Business~~

~~General~~Buckeye Technologies Inc. (sometimes referred to in this report as “we”, “us”, the “Company” or “Buckeye”) is a leading producer of value-added cellulose-based specialty products, headquartered in Memphis, Tennessee. We believe that we have leading positions in many of the high-end niche markets in which we compete. We utilize our expertise in polymer chemistry, leading research and development and advanced manufacturing facilities to develop and produce innovative and proprietary products for our customers. We sell our products to a wide array of technically demanding niche markets in which we believe our proprietary products, manufacturing processes and commitment to customer technical service give us a competitive advantage. We are the only manufacturer in the world offering cellulose-based specialty products made from both wood and cotton and utilizing wetlaid and airlaid technologies. As a result, we believe we produce and market a broader range of cellulose-based specialty products than any of our competitors. We produce precisely tailored products designed to meet individual customer requirements. Our focus on specialty niche markets allows us to establish long-term supply positions with key customers. We operate manufacturing facilities in the United States and Germany.

~~Buckeye~~Cellulose ~~Technologies Inc. (sometimes referred to in this report as “we”, “us”, the “Company” or “Buckeye”)~~ is a natural ~~leading~~fiber ~~producer~~derived offrom ~~value-added~~trees ~~cellulose-based~~and ~~specialty~~other ~~products,~~plants ~~headquartered in Memphis, Tennessee. We believe~~ that weis ~~have~~used ~~leading positions~~ in ~~many of~~ the ~~high-end~~manufacture ~~niche~~of ~~markets~~a inwide ~~which~~array weof ~~compete~~products. We ~~utilize~~Cellulose ~~our~~generally ~~expertise~~can inbe ~~polymer~~divided ~~chemistry,~~into ~~leading~~two ~~research~~categories: ~~and~~commodity ~~development~~ and ~~advanced~~specialty. Manufacturers ~~manufacturing~~use ~~facilities~~commodity cellulose to ~~develop and~~ produce bulk ~~innovative~~paper and ~~proprietary~~packaging ~~products~~materials, ~~for~~the ~~our customers. We sell our products to a wide array of technically demanding niche~~ markets infor which weare ~~believe~~very ~~our~~large ~~proprietary~~but ~~products,~~highly ~~manufacturing processes and commitment to customer technical service give us a competitive advantage~~cyclical. We Specialty ~~are the only manufacturer in the world offering~~ cellulose~~-based~~ ~~specialty~~is ~~products~~used ~~made~~to ~~from~~impart ~~both~~unique ~~wood~~chemical ~~and~~or ~~cotton~~physical ~~and~~characteristics ~~utilizing~~to ~~wetlaid and airlaid technologies. As~~ a ~~result,~~diverse ~~we believe we produce and market a broader~~ range of ~~cellulose-based~~highly ~~specialty~~engineered products. Specialty cellulose ~~than~~generally ~~any~~commands ofhigher ~~our~~prices, ~~competitors. We~~and ~~produce~~demand ~~precisely~~for ~~tailored~~specialty ~~products~~cellulose ~~designed~~is toless ~~meet~~cyclical ~~individual~~than ~~customer~~commodity ~~requirements~~cellulose. Our focus on specialty ~~niche~~cellulose ~~markets~~has ~~allows~~enabled us to ~~establish~~maintain ~~long-term~~positive ~~supply~~cash ~~positions~~flows ~~with~~even ~~key~~during ~~customers. We~~cyclical ~~operate~~downturns ~~manufacturing facilities~~ in commodity ~~the~~cellulose ~~United States, Canada and Germany~~demand.

~~Cellulose~~Company isHistory a natural fiber derived from trees and other plants that is used in the manufacture of a wide array of products. The total cellulose market generally can be divided into two categories: commodity and specialty. Manufacturers use commodity cellulose to produce bulk paper and packaging materials, the markets for which are very large but highly cyclical. Specialty cellulose is used to impart unique chemical or physical characteristics to a diverse range of highly engineered products. Specialty cellulose generally commands higher prices, and demand for specialty cellulose is less cyclical than commodity cellulose. We believe the more demanding performance requirements for products requiring specialty cellulose limit the number of participants in our niche markets. Our focus on niche specialty cellulose markets has enabled us to maintain positive cash flows even during cyclical downturns in the commodity cellulose markets.

We and our predecessors have manufactured specialty cellulose for over 85 years and have developed new uses for many cellulose-based products. We began operations as an independent company in March 1993, when we acquired the cellulose manufacturing operations of the Procter & Gamble Company ~~History~~located in Memphis, Tennessee and Perry, Florida (the “Foley Plant”), with Procter & Gamble retaining a 50% limited partnership interest in the Foley Plant. We became a public company in November 1995 and simultaneously acquired and redeemed Procter & Gamble’s remaining interest in the Foley Plant.

WeIn ~~and~~May ~~our~~1996, ~~predecessors~~we ~~have~~acquired ~~participated in~~ the specialty cellulose ~~market~~business ~~for~~of ~~over~~Peter 85Temming ~~years~~AG ~~and~~located ~~have~~in ~~developed~~Glueckstadt, Germany. That ~~new~~same ~~uses~~year, ~~for~~we ~~many~~acquired ~~cellulose-based~~Alpha ~~products~~Cellulose Holdings, Inc. We, ~~began~~a ~~operations~~specialty ascellulose anproducing ~~independent~~facility ~~company~~located in ~~March 1993~~Lumberton, ~~when~~North Carolina. In May 1997, we acquired Merfin International Inc., a leading manufacturer of airlaid nonwovens with facilities located in Canada, Ireland and the ~~cellulose~~United ~~manufacturing~~States. ~~operations~~In October 1999, we acquired substantially all of the ~~Procter~~assets &of ~~Gamble~~Walkisoft, ~~Company~~UPM-Kymmene’s ~~located~~airlaid nonwovens business. The acquisition of Walkisoft added manufacturing facilities in ~~Memphis~~Steinfurt, ~~Tennessee~~Germany and ~~Perry~~Gaston County, ~~Florida~~North ~~(the~~Carolina. In ~~“Foley~~March ~~Plant”)~~2000, ~~with~~we ~~Procter~~acquired &the ~~Gamble~~intellectual ~~retaining~~property arights ~~50%~~to ~~limited~~the ~~partnership~~Stac-Pac® ~~interest~~folding intechnology and the cotton ~~Foley~~cellulose ~~Plant. We~~business ~~became~~of aFibra, ~~public~~S.A. ~~company~~located in ~~November~~Americana, ~~1995~~Brazil. ~~and~~In ~~simultaneously~~calendar ~~acquired~~2001, ~~and~~we ~~redeemed~~commenced ~~Procter~~operating &the ~~Gamble~~world’s ~~remaining~~largest ~~interest~~airlaid innonwovens ~~the~~machine ~~Foley~~at ~~Plant~~our Gaston, North Carolina facility and started up a cosmetic cotton fiber line at our Lumberton, North Carolina facility.

InDue ~~May~~to ~~1996~~a decline in demand for cotton content paper, in August 2003 we ~~acquired~~closed the specialty cotton ~~cellulose~~papers ~~business~~portion of ~~Peter~~our ~~Temming~~Lumberton, AGNorth ~~located~~Carolina ~~in Glueckstadt, Germany~~facility. ~~That~~ Due ~~same~~to ~~year,~~excess weairlaid ~~acquired~~production ~~Alpha~~capacity ~~Cellulose~~around ~~Holdings,~~the ~~Inc.~~globe, awe ~~specialty~~closed ~~cellulose~~our ~~producing~~single-line ~~facility~~airlaid ~~located~~nonwovens facility in ~~Lumberton~~Cork, ~~North~~Ireland ~~Carolina~~in July 2004. In ~~May~~December ~~1997~~2005, we ~~acquired~~ceased production ~~Merfin~~at ~~International~~our ~~Inc~~cotton linter pulp facility in Glueckstadt, Germany. In conjunction with this closure, awe ~~leading~~upgraded ~~manufacturer~~the capability of ~~airlaid~~our ~~nonwovens~~Americana, ~~with~~Brazil ~~facilities~~manufacturing ~~located~~facility, inwhich ~~Canada,~~was ~~Ireland~~completed ~~and~~during ~~the~~fiscal ~~United~~year ~~States~~2006. In ~~October~~On January 31, ~~1999~~2012, we ~~acquired~~completed ~~substantially~~the ~~all~~sale of ~~the~~Merfin ~~assets~~Systems, ofour ~~Walkisoft~~nonwoven materials converting business, ~~UPM-Kymmene’s~~to ~~airlaid~~National ~~nonwovens~~Tissue ~~business~~Company. ~~The~~ ~~acquisition~~Our ofdecision ~~Walkisoft~~was ~~added~~due ~~manufacturing~~to ~~facilities~~Merfin inSystems ~~Steinfurt,~~being ~~Germany~~a non-core business and ~~Gaston~~our ~~County,~~desire ~~North~~to ~~Carolina~~redeploy the proceeds into strategic operations. In ~~March~~On ~~2000~~June 14, 2012, we ~~acquired~~completed the ~~intellectual~~sale ~~property~~of ~~rights~~our tocotton ~~the~~specialty ~~Stac-Pac®~~fibers ~~folding~~plant ~~technology~~located ~~and~~in ~~the~~Americana, ~~cotton~~Brazil ~~cellulose~~to ~~business~~Vicunha ofParticipacoes ~~Fibra,~~ S. A. ~~located~~Our indecision ~~Americana~~was due to the facility’s uncompetitive cost position for the products it made, ~~Brazil~~primarily driven by the high cost of its cotton linter raw material supply. InOn ~~calendar~~June 17, ~~2001~~2011, we ~~commenced~~announced ~~operating~~plans ~~the~~to ~~world’s~~close ~~largest~~our Delta, British Columbia, Canada airlaid nonwovens ~~machine~~facility. atOur ~~our~~decision ~~Gaston,~~was ~~North~~due ~~Carolina~~to ~~facility~~several factors including unfavorable site location relative to customers and ~~started~~raw upmaterial suppliers, a ~~cosmetic~~strong ~~cotton~~Canadian ~~fiber~~dollar ~~line~~and atlow ~~our~~capacity ~~Lumberton~~utilization. The plant ceased production in November 2012, ~~North~~and ~~Carolina~~in February 2013 we completed the sale of the facility’s land and buildings.

~~Due~~1 to a decline in demand for cotton content paper, in August 2003 we closed the specialty cotton papers portion of our Lumberton, North Carolina facility. Due to excess airlaid production capacity around the globe, we closed our single-line airlaid nonwovens facility in Cork, Ireland in July 2004. In December 2005, we ceased production at our cotton linter pulp facility in Glueckstadt, Germany. In conjunction with this closure, we upgraded the capability of our Americana, Brazil manufacturing facility, which was completed during fiscal year 2006. On June 17, 2011, we announced plans to close our Delta, British Columbia, Canada airlaid nonwovens facility, which we expect will be completed by the end of calendar 2012. Our decision was due to several factors including unfavorable site location relative to customers and raw material suppliers, a strong Canadian dollar and low capacity utilization. On January 31, 2012, we completed the sale of Merfin Systems, our nonwoven materials converting business, to National Tissue Company. Our decision was due to Merfin Systems being a non-core business and our desire to redeploy the proceeds into strategic operations. On June 14, 2012, we completed the sale of our cotton specialty fibers plant located in Americana, Brazil to Vicunha Participacoes S. A. Our decision was due to the facility’s uncompetitive cost position for the products it made, primarily driven by the high cost of its cotton linter raw material supply.

WeTable areof incorporated in Delaware and our executive offices are located at 1001 Tillman Street, Memphis, Tennessee. Our telephone number is (901) 320-8100.Contents

3On April 24, 2013, we and Georgia-Pacific LLC (“Georgia-Pacific”) announced that we had reached a definitive agreement for Georgia-Pacific to acquire all of the outstanding shares of our common stock for $37.50 per share in cash. On August 15, 2013, at a special stockholders’ meeting, our stockholders approved the Agreement and Plan of Merger (“Merger Agreement”) by and among Georgia-Pacific, GP Cellulose Group LLC and Buckeye and, on August 21, 2013, the U.S. Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice granted termination of the waiting period required under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended. The merger closed on August 23, 2013, upon which Buckeye became an indirect, wholly-owned subsidiary of Georgia-Pacific.

~~Products~~As a result of the merger, our common stock will no longer be listed on the New York Stock Exchange or any other securities exchange, and each issued and outstanding share of common stock of the Company (other than shares held in treasury by the Company or owned by any subsidiary of the Company or Georgia-Pacific or any subsidiary of Georgia-Pacific) was converted into the right to receive $37.50 per share, net to the holder in cash, without interest, subject to any withholding of taxes required by applicable law. We will file a Certification on Form 15 with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, (“the Exchange Act”), to suspend our periodic reporting obligations under Sections 13(a) and 15(d) of the Exchange Act. We became a privately-held company as a result of the merger and do not intend to file periodic reports with the Securities and Exchange Commission in the future.

Our product lines can be broadly grouped into four categories: chemical cellulose, customized fibers, fluff pulp and nonwoven materials. We manage these products within two reporting segments: specialty fibers and nonwoven materials. The ~~chemical~~information cellulose and customized fibers are derived from wood and cotton cellulose materials using wetlaid technologies. Fluff pulps are derived from wood using wetlaid technology. Wetlaid technologies encompass cellulose manufacturing processes in ~~which~~this ~~fibers~~Annual ~~are~~Report on ~~deposited~~Form ~~using~~10-K ~~water. Airlaid~~for ~~nonwoven~~the ~~materials~~fiscal ~~are~~year ~~derived~~ended ~~from~~June 30 ~~wood pulps~~2013, ~~synthetic~~is ~~fibers~~presented ~~and other materials using airlaid technology. Airlaid technology utilizes air~~ as aof ~~depositing~~June 30, ~~medium for fibers~~2013, ~~one~~unless ~~benefit~~otherwise ofindicated ~~which~~and isdoes annot ~~increased~~give ~~ability~~effect ~~as compared~~ to ~~wetlaid processes to mix additional feature-enhancing substances into~~ the ~~material~~merger ~~being~~with ~~produced~~Georgia-Pacific. A ~~breakdown of our major product categories, percentage of sales, product attributes and applications is provided below.~~

Product Groups	% of Fiscal 2012 Sales	Value Added Attributes	Market for End Use Applications
Specialty Fibers Chemical Cellulose Food casings Rayon industrial cord Rayon staple fiber Cellulose ethers Wood acetate Cotton acetate	40%	Purity and strength Strength and heat stability Uniform viscosity and dyeability High viscosity, low viscosity, purity and safety Viscosity uniformity and purity Transparency/clarity, strength and purity	Hot dog and sausage casings High performance tires and hose reinforcement Textiles Personal care products, low fat dairy products, pharmaceuticals and construction materials Cigarette filters Liquid crystal display film for computers and television screens and plastic applications
Customized Fibers Filters Specialty cotton papers Cosmetic Cotton Buckeye UltraFiber 500®	15%	High porosity and product life Color permanence and tear resistance Absorbency, strength and softness Finishing and crack reduction	Automotive, laboratory and industrial filters Personal stationery, premium letterhead and currency Cotton balls and cotton swabs Concrete
Fluff Pulp Fluff pulp	18%	Absorbency and fluid transport	Disposable diapers, feminine hygiene products and adult incontinence products
Nonwoven Materials Airlaid nonwovens	27%	Absorbency, fluid management and wet strength	Feminine hygiene products, specialty wipes and mops, tablecloths, napkins, placemats, incontinence products and food pads

We are incorporated in Delaware and our executive offices are located at 1001 Tillman Street, Memphis, Tennessee. Our telephone number is (901) 320-8100.

~~See~~2 ~~Note 20, Segment Information, to the Consolidated Financial Statements for additional information on products.~~

4Table of Contents

~~Raw~~Products ~~Materials~~

~~Slash~~Our ~~pine~~product ~~timber~~lines ~~and~~can ~~cotton~~be ~~fibers~~broadly ~~are~~grouped ~~the~~into ~~principal~~four ~~raw~~categories: ~~materials~~chemical ~~used~~cellulose, incustomized ~~the~~fibers, ~~manufacture~~fluff ofpulp ~~our~~and ~~specialty fibers products~~nonwoven materials. ~~These~~ We ~~materials~~manage ~~represent~~these ~~the~~products ~~largest~~within ~~components~~two ofreporting ~~our~~segments: ~~variable~~specialty ~~costs~~fibers ofand ~~production~~nonwoven materials. The ~~region~~chemical ~~surrounding~~cellulose ~~the~~and ~~Foley~~customized ~~Plant~~fibers ~~has~~are aderived ~~high~~from ~~concentration~~wood ofand ~~slash~~cotton ~~pine~~cellulose ~~timber,~~materials ~~which~~using ~~enables~~wetlaid technologies. Fluff uspulps toare ~~purchase~~derived ~~adequate~~from ~~supplies~~wood ofusing awetlaid ~~species~~technology. Wetlaid ~~well~~technologies ~~suited~~encompass tocellulose ~~our~~manufacturing ~~products~~processes atin anwhich ~~attractive~~fibers ~~cost. In~~are ~~order~~deposited tousing bewater. Airlaid ~~better~~nonwoven ~~assured~~materials ofare aderived ~~secure~~from ~~source~~wood pulps, ofsynthetic ~~wood~~fibers atand ~~reasonable~~other ~~prices,~~materials weusing ~~have~~airlaid ~~entered~~technology. Airlaid ~~into~~technology ~~timber~~utilizes ~~purchase~~air ~~agreements~~as ~~which~~a ~~allow~~depositing usmedium tofor ~~purchase~~fibers, aone ~~portion~~benefit of ~~our~~which ~~wood~~is atan ~~market~~increased ~~prices~~ability ~~that~~as ~~are~~compared ~~fixed~~to ~~annually~~wetlaid orprocesses ~~current~~to ~~market~~mix ~~prices~~additional feature-enhancing assubstances ~~stated~~into in the ~~agreements~~material being produced. ~~Additional~~ A ~~information~~breakdown isof ~~included~~our inmajor ~~Note~~product 23categories, ~~Commitments~~percentage of sales, toproduct ~~the~~attributes ~~Consolidated~~and ~~Financial~~applications ~~Statements~~is provided below.

We purchase cotton linter fiber either directly from cottonseed oil mills or indirectly through agents or brokers. We purchase the majority of our requirements of cotton fiber for the Memphis and Lumberton plants domestically.


Product Groups	% of Fiscal 2013 Sales	Value Added Attributes	Market for End Use Applications
*Specialty Fibers*
Chemical Cellulose	38%

Food casings		Purity and strength	Hot dog and sausage casings

Rayon industrial cord		Strength and heat stability	High performance tires and hose reinforcement

Rayon staple fiber		Uniform viscosity and dyeability	Textiles

Cellulose ethers		High viscosity, low viscosity, purity and safety	Personal care products, low fat dairy products, pharmaceuticals and construction materials

Wood acetate		Viscosity uniformity and purity	Cigarette filters

Cotton acetate		Transparency/clarity, strength and purity	Liquid crystal display film for computers and television screens and plastic applications

Customized Fibers	15%

Filters		High porosity and product life	Automotive, laboratory and industrial filters

Specialty cotton papers		Color permanence and tear resistance	Personal stationery, premium letterhead and currency

Cosmetic Cotton		Absorbency, strength and softness	Cotton balls and cotton swabs

Buckeye UltraFiber 500^®		Finishing and crack reduction	Concrete

Fluff Pulp	19%

Fluff pulp		Absorbency and fluid transport	Disposable diapers, feminine hygiene products and adult incontinence products

*Nonwoven Materials*

Airlaid nonwovens	28%	Absorbency, fluid management and wet strength	Feminine hygiene products, specialty wipes and mops, tablecloths, napkins, placemats, incontinence products and food pads

~~Fluff~~See ~~pulp~~Note is the principal raw material used in the manufacture of our nonwoven materials products. Approximately 55% of our fluff pulp usage (in nonwovens) in 2012 was internally supplied. The remainder is purchased from several other suppliers. In addition to fluff pulp20, ~~our~~Segment ~~nonwovens products are comprised of synthetic fibers~~Information, ~~latex~~to ~~polymers,~~the ~~absorbent~~Consolidated ~~powders~~Financial ~~and~~Statements ~~carrier~~for ~~tissue~~additional ~~depending~~information on ~~grade specifications~~ products. ~~These~~ ~~raw materials are also purchased from multiple sources.~~

~~The~~Raw ~~cost~~Materials and availability of slash pine timber, cotton linter fiber and fluff pulp are subject to market fluctuations caused by supply and demand factors. We do not foresee material constraints from pricing or availability for slash pine timber and fluff pulp. We continue to have raw material pricing and availability issues for our cotton linter fibers. This raw material availability constraint will limit our growth and will continue to impact production costs. North American cotton linter availability improved significantly after the first quarter of 2011 and we anticipate that it will remain constant at current levels through 2013.

~~Our~~Slash ~~manufacturing~~pine timber ~~processes,~~and ~~especially~~cotton ~~for~~fibers are the principal raw materials used in the manufacture of our specialty fibers, ~~require~~products. ~~significant~~These ~~amounts~~materials represent the largest components of ~~fuel~~our ~~oil~~variable ~~and~~costs ~~natural~~of ~~gas~~production. ~~These~~ The ~~manufacturing~~region ~~inputs~~surrounding ~~are~~the ~~subject~~Foley Plant has a high concentration of slash pine timber, which enables us to ~~significant~~purchase ~~changes~~adequate insupplies of a species well suited to our products at an attractive cost. In order to be better assured of a secure source of wood at reasonable prices, we have entered into timber purchase agreements which ~~could~~allow ~~adversely~~us ~~affect~~to purchase a portion of our ~~operating~~wood ~~results~~at market prices that are fixed annually or current market prices as stated in the agreements. Additional information is included in Note 22, Commitments, to the Consolidated Financial Statements.

~~Sales~~3 ~~and Customers~~

OurTable products are marketed and sold through a technically skilled sales force. We maintain sales offices in the United States, Europe and China. Our worldwide sales are diversified by geographic region as well as end-product application. Our sales are distributed to customers in over 60 countries around the world. Our fiscal 2012 sales reflect this geographic diversity, with 39% of sales in North America, 34% of sales in Europe, 21% of sales in Asia, and 6% in other regions. Approximately 89% of our worldwide sales for fiscal 2012 were denominated in U.S. dollars. Our products are shipped by rail, truck and ocean carrier. Geographic segment data and product sales data are included in Note 20, Segment Information, to the Consolidated Financial Statements.Contents

~~Net~~We ~~sales~~purchase bycotton ~~geographical~~linter ~~destination~~fiber ~~for~~either directly from cottonseed oil mills or indirectly through agents or brokers. We purchase the ~~three~~majority ~~years~~of ~~ended~~our ~~June~~requirements ~~30,~~of ~~2012~~cotton ~~were~~fiber asfor ~~follows:~~the Memphis and Lumberton plants domestically.

Fluff pulp is the principal raw material used in the manufacture of our nonwoven materials products. Approximately 34% of our fluff pulp usage (in ~~millions~~nonwovens) in 2013 was internally supplied. The remainder was purchased from several other suppliers. In addition to fluff pulp, our nonwovens products are comprised of synthetic fibers, latex polymers, absorbent powders and carrier tissue depending on grade specifications. These raw materials are also purchased from multiple sources.

Net Sales by Destination
	2012				2011				2010
United States	$	283	32	%	$	293	33	%	$	223	30	%
Germany		120	13			103	12			70	10
Japan		60	7			59	7			32	4
India		42	5			29	3			21	3
Italy		42	5			49	6			53	7
China		38	4			33	4			44	6
Mexico		39	4			28	3			34	5
France		26	3			28	3			25	4
Canada		24	3			33	4			33	4
All other		221	24			225	25			199	27
Total	$	895	100	%	$	880	100	%	$	734	100	%

The cost and availability of slash pine timber, cotton linter fiber and fluff pulp are subject to market fluctuations caused by supply and demand factors. We do not foresee material constraints from pricing or availability for slash pine timber and fluff pulp. Historically, we have experienced raw material pricing and availability issues for our cotton linter fibers. North American cotton linter availability improved significantly early in 2011 and continued to be favorable through 2013. We do not foresee material constraints from pricing or availability of cotton linter fibers through 2014.

~~The~~Our ~~high-end~~manufacturing processes, ~~technically~~especially ~~demanding~~for specialty ~~niche~~fibers, ~~markets that we serve~~ require significant aamounts ~~higher level~~ of ~~sales~~fuel oil and ~~technical~~natural ~~service support than do commodity product sales~~gas. ~~Our~~ ~~sales,~~These ~~product~~manufacturing ~~development~~inputs ~~and~~are ~~customer~~subject ~~service~~to ~~professionals~~significant ~~work~~changes ~~with customers~~ in ~~their plants to design products tailored precisely to their product needs and manufacturing processes. In addition to a direct sales force~~prices, wewhich ~~also~~could ~~utilize~~adversely ~~outside~~affect ~~sales~~our ~~agents~~operating ~~in some parts of the world~~results.

5Sales and Customers

~~Research~~Our products are marketed and ~~Development~~sold through a technically skilled sales force. We maintain sales offices in the United States, Europe and China. Our worldwide sales are diversified by geographic region as well as end-product application. Our sales are distributed to customers in over 50 countries around the world, and total fiscal 2013, 2012, and 2011 sales outside the United States were $537 million, $612 million and $587 million, respectively. Our fiscal 2013 sales reflect this geographic diversity, with 39% of sales in North America, 33% of sales in Europe, 20% of sales in Asia, and 8% in other regions. Approximately 88% of our worldwide sales for fiscal 2013 were denominated in U.S. dollars. Our products are shipped by rail, truck and ocean carrier. Geographic segment data and product sales data are included in Note 20, Segment Information, to the Consolidated Financial Statements.

~~Our~~Net ~~research~~sales ~~and~~by ~~development~~geographical ~~activities~~destination ~~focus~~for onthe ~~developing~~three ~~new~~years ~~products,~~ended improving existing products and enhancing process technologies to further reduce costs and respond to environmental needs. We have research and development pilot plant facilities in Memphis and we employ engineersJune 30, ~~scientists and technicians who are focused on advanced products and new applications to drive future growth. Our pilot plant facilities allow us to produce~~2013, ~~test~~2012 and ~~deliver~~2011 ~~breakthrough~~were ~~products~~as tofollows: ~~the market place on a more cost-effective basis while minimizing interruptions to the normal production cycles of our operating plants.~~

~~Research~~(in ~~and~~millions) ~~development costs of $7.1 million, $7.1 million and $6.8 million were charged to expense as incurred for the years ended June 30, 2012, 2011 and 2010, respectively.~~

Competition


Net Sales by Destination
	2013				2012				2011
United States	$	275	34	%	$	283	32	%	$	293	33	%
Germany		98	12			120	13			103	12
Japan		47	6			60	7			59	7
Italy		40	5			42	5			49	6
India		34	4			42	5			29	3
China		33	4			38	4			33	4
Mexico		30	4			39	4			28	3
France		23	3			26	3			28	3
Middle East		21	2			17	2			30	3
All other		211	26			228	25			228	26

Total	$	812	100	%	$	895	100	%	$	880	100	%

~~There~~Our ~~are~~sales, ~~relatively~~product ~~few~~development ~~specialty~~and ~~fibers~~customer ~~producers~~service ~~when~~professionals ~~compared~~work with ~~the~~customers ~~much~~in ~~larger~~their ~~commodity~~plants ~~paper~~to design ~~pulp~~products ~~markets. The~~tailored ~~technical~~precisely ~~demands and unique requirements of the high-purity chemical cellulose or customized fiber pulp user tend~~ to ~~differentiate suppliers on the basis of~~ their ~~ability~~product ~~to meet the customer’s particular set of~~ needs, ~~rather~~and ~~than~~manufacturing ~~focusing only on pricing~~processes. ~~The~~ In ~~high-purity~~addition ~~chemical cellulose and customized fiber markets are less subject~~ to ~~price~~a ~~variation~~direct ~~than~~sales ~~commodity paper pulp and low-end dissolving pulp for the rayon staple market. Major competitors include Rayonier Inc.~~force, ~~Borregaard,~~we ~~Sateri~~also ~~International~~utilize ~~Group~~outside ~~(”Sateri”),~~sales ~~Sappi~~agents ~~Saiccor,~~in ~~Tembec~~some ~~Inc.,~~parts ~~Cosmos~~of ~~Specialty~~the ~~Fibers and Archer Daniels Midland Company~~world.

WeResearch ~~believe that the number of producers of high purity chemical cellulose~~ and ~~customized~~Development fiber pulp is unlikely to grow significantly due to the substantial investment and technical know-how required to enter this market. We believe that the total market size for high purity chemical cellulose and customized fiber pulp is approximately 1.4 million tons per year and is growing at a rate of 3-4% per year. Rayonier has announced that they will be converting their fluff pulp line to produce 190,000 tons per year of dissolving pulp in 2013. Buckeye is converting 42,000 tons of fluff production into high-end specialty markets with startup planned for April 2013. Neucel and Domsjö Fabriker, two mills that formerly supplied both the low and mid-range of the dissolving pulp market, have been acquired by viscose staple fiber producers, reducing supply to the high purity cellulose market.

~~Numerous~~Our ~~announcements~~research and ofdevelopment ~~companies~~activities ~~planning~~focus toon ~~convert~~developing ~~commodity~~new ~~paper~~products, ~~grade~~improving ~~mills~~existing toproducts ~~produce~~and ~~low-end~~enhancing ~~dissolving~~process ~~pulps~~technologies ~~for~~to ~~viscose~~further ~~staple~~reduce ~~fiber~~costs ~~have~~and ~~been~~respond ~~announced~~to environmental needs. We ~~believe~~have ~~that~~research itand isdevelopment ~~unlikely~~pilot ~~that~~plant ~~all~~facilities ofin Memphis ~~these conversions will occur due to high costs~~ and ~~technical~~we ~~difficulties~~employ ~~associated with converting~~engineers, scientists and ~~the~~technicians ~~vast~~who ~~majority~~are offocused ~~these~~on ~~conversions~~advanced ~~will~~products ~~not~~and benew ~~capable~~applications ofto ~~supplying~~drive ~~product~~future ~~into~~growth. Our ~~the~~pilot ~~high~~plant ~~purity~~facilities ~~cellulose~~allow ~~and~~us ~~customized~~to ~~fiber segment of the market. Demand from China~~produce, ~~India~~test and ~~other~~deliver ~~fast-growing~~breakthrough ~~Asian~~products ~~markets for chemical cellulose~~ to ~~support~~ the ~~growing viscose rayon staple fiber~~ market place ~~continues. Dissolving~~on ~~pulp~~a ~~prices~~more ~~into~~cost-effective ~~the~~basis ~~viscose~~while ~~rayon~~minimizing ~~staple~~interruptions ~~fiber market in China have fallen considerably due~~ to ~~increased dissolving pulp supply. We do expect~~ the ~~long-term~~normal ~~demand~~production tocycles ~~continue~~of ~~consistent~~our ~~with~~operating ~~the fast-growing middle class in these emerging economies~~plants.

~~Although~~Research ~~global~~and development ~~demand~~costs ~~for~~of fluff pulp is growing by 3% to 5% annually, we expect fluff pulp prices over the longer term to vary to a degree with commodity paper pulp prices because fluff pulp is often produced in mills that also produce commodity paper pulp$7. In7 ~~the past~~million, ~~fluff pulp prices have been higher than commodity pulp prices by~~ $407.1 tomillion ~~$60~~and ~~per air dry metric ton on average, but short term variances can be more significant~~$7. We1 ~~use~~million ~~20,000~~were charged to ~~35,000~~expense ~~metric tons of fluff pulp annually from our Perry, Florida wood cellulose facility~~ as aincurred ~~key~~for ~~raw material in our airlaid nonwovens business. We believe that we currently produce approximately 4% of~~ the ~~world’s~~years ~~supply~~ended ~~of fluff pulp. Major competitors include AbitibiBowater Inc.~~June 30, ~~International Paper Company~~2013, GP2012 ~~Cellulose, LLC, Rayonier, Weyerhaeuser Corp.~~ and ~~Domtar Corp. We believe global fluff pulp capacity is approximately 5.9 million tons annually with International Paper’s 270~~2011,~~000~~ ~~ton conversion in Franklin, Virginia and the conversion of Arauco’s Alto Parana mill in Argentina, which added up to 250,000 tons per year~~respectively.

~~Worldwide~~4 demand for airlaid nonwovens products is estimated to increase by 3-5% per year, driven by growth in demand for airlaid material to be used in wipes and in feminine hygiene products. Buckeye is a leading supplier of airlaid nonwoven materials worldwide. The markets in which we compete also utilize nonwovens materials produced with technologies other than airlaid such as spunlace. Major nonwovens competitors include Suominen, P.H. Glatfelter Company, Duni AB, GP Cellulose, LLC, Petropar, Kimberly-Clark Corporation and Polymer Group, Inc.

TheTable market for airlaid nonwovens products is a regional market due to the bulky nature of the product and resulting high transportation costs. The large markets are North America, Europe, the Middle East, and Asia, which are mostly supplied by producers in those regions. While the North American industry is operating in an environment of excess supply, the European market has been more balanced. In the Asian market, there are many small airlaid suppliers, particularly in China.Contents

6Competition

~~Intellectual~~The ~~Property~~technical demands and unique requirements of the high-purity chemical cellulose or customized fiber pulp user tend to differentiate suppliers on the basis of their ability to meet the customer’s particular set of needs, rather than focusing only on pricing. Major competitors include Rayonier Inc., Borregaard, Sateri International Group (“Sateri”), Sappi Saiccor, Tembec Inc., Cosmos Specialty Fibers and Archer Daniels Midland Company.

AtWe ~~June~~believe ~~30,~~that ~~2012~~the ~~and~~total ~~2011,~~market wesize ~~had~~for ~~intellectual~~high ~~property~~purity chemical ~~assets~~cellulose ~~recorded~~and ~~totaling~~customized ~~$10.2~~fiber ~~million~~pulp ~~and~~is ~~$11.8~~approximately 1.5 million, ~~respectively. These~~tons ~~assets~~per ~~include~~year ~~patents, licenses, trademarks~~ and ~~trade~~is ~~names,~~growing ~~the~~at ~~majority~~a rate of ~~which~~3-4% per ~~were~~year. ~~obtained~~Rayonier inhas completed the ~~acquisition~~conversion of ~~airlaid~~its ~~nonwovens~~fluff ~~businesses~~pulp ~~and~~line ~~Stac-Pac® technology. We intend~~ to ~~protect~~a ~~our~~dissolving ~~patents~~pulp ~~and~~line ~~file~~with ~~applications~~an ~~for~~annual capacity ~~any~~of ~~future~~190,000 ~~inventions~~tons ~~that~~per ~~are~~year. ~~deemed~~We tohave becompleted ~~important~~our project to ~~our~~convert ~~business~~42,000 ~~operations. Additional~~tons ~~information~~of isfluff ~~included~~production ininto ~~Note~~high-end 1,specialty ~~Accounting~~markets ~~Policies,~~with toproduct ~~the~~qualifications ~~Consolidated~~currently ~~Financial Statements~~underway.

~~Seasonality~~Numerous announcements of companies planning to convert commodity paper grade mills to produce low-end dissolving pulps for viscose staple fiber have been publicized. Demand from China, India and other fast-growing Asian markets for chemical cellulose to support the growing viscose rayon staple fiber market continues to grow. Dissolving pulp prices into the viscose rayon staple fiber market in China have fallen considerably due to increased dissolving pulp supply. We expect long-term demand to continue to grow consistent with the fast-growing middle class in these emerging economies.

~~Our~~Although ~~overall~~global ~~business~~demand ~~generally~~for fluff pulp is ~~not~~growing ~~seasonal~~by 3% to 5% annually, we expect fluff pulp prices over the longer term to vary to a ~~substantial~~degree with ~~extent,~~commodity ~~although~~paper wepulp ~~ship~~prices ~~slightly~~because ~~lower~~fluff ~~specialty~~pulp ~~fiber~~is ~~volume~~often produced in mills that also produce commodity paper pulp. In the ~~July~~past, fluff pulp prices have been higher than commodity pulp prices by $40 to ~~September~~$60 ~~quarter~~per ~~and~~air ~~slightly~~dry ~~lower~~metric ~~nonwovens~~ton ~~volume~~on isaverage, ~~shipped~~but short term variances can be more significant. This past year, we used about 20,000 metric tons of fluff pulp from our Perry, Florida wood cellulose facility as a key raw material in our airlaid nonwovens business. We believe that we produce approximately 4% of the ~~October~~world’s tosupply ~~December~~of ~~quarter~~fluff pulp. Major competitors include AbitibiBowater Inc., International Paper Company, Georgia-Pacific, Weyerhaeuser Corp. and Domtar Corp. We believe global fluff pulp capacity is approximately 6.3 million tons annually.

~~Employees~~Worldwide demand for airlaid nonwovens products is estimated to increase by 3-5% per year, driven by growth in demand for airlaid material to be used in wipes and in feminine hygiene products. Buckeye is a leading supplier of airlaid nonwoven materials worldwide. The markets in which we compete also utilize woven and nonwoven materials produced with technologies other than airlaid such as spunlace. Major nonwovens competitors include Suominen, P.H. Glatfelter Company, Duni AB, Fitesa, Kimberly-Clark Corporation and Polymer Group, Inc.

AsIntellectual ofProperty August 27, 2012, we employed approximately 1,270 employees, of whom approximately 77% are employed at our facilities in the United States. Approximately 56% of the U.S. employees are represented by unions at two plants in Perry, Florida and Memphis, Tennessee. Our Foley Plant’s labor agreement is in effect through December 1, 2012. The agreement for the Memphis Plant is in effect through March 18, 2013. On November 7, 2010, union employees at our Canadian facility ratified a new labor agreement. The agreement has been extended to December 31, 2012 to coincide with the plant closure. A works council provides employee representation for non-management workers at our nonwoven materials plant in Steinfurt, Germany. Our plants in Gaston and Lumberton, North Carolina are not unionized.

~~None~~At ofJune 30, 2013 ~~our~~and ~~facilities~~2012, ~~has~~we had ~~labor~~intellectual ~~disputes~~property orassets ~~work~~recorded ~~stoppages~~totaling in$8.6 ~~recent~~million ~~history~~and $10. ~~The~~2 ~~Foley~~million, ~~and~~respectively. These ~~Memphis~~assets ~~Plants~~include ~~have~~patents, ~~not~~licenses, ~~experienced~~trademarks ~~any~~and ~~work~~trade ~~stoppages~~names, ~~due~~the tomajority ~~labor~~of ~~disputes~~which were obtained in ~~over~~the 30acquisition ~~years~~of airlaid ~~and~~nonwovens 50businesses ~~years,~~and ~~respectively~~Stac-Pac® technology. We ~~consider~~intend ~~our~~to ~~relationships~~protect ~~with~~ our ~~employees~~patents and ~~their~~file ~~representative~~applications ~~organizations~~for toany befuture ~~good. An~~inventions ~~extended~~that ~~interruption~~are ofdeemed ~~operations~~to atbe ~~any~~important ofto our ~~facilities,~~business operations. Additional ~~however,~~information ~~could~~is ~~have~~included ain ~~material~~Note ~~adverse~~1, ~~effect~~Accounting onPolicies, ~~our~~to ~~business~~the Consolidated Financial Statements.

~~Environmental~~Seasonality ~~Regulations and Liabilities~~

Our ~~operations~~overall ~~are~~business ~~subject~~generally tois ~~extensive~~not ~~general~~seasonal ~~and~~to ~~industry-specific~~a ~~federal,~~substantial ~~state~~extent, ~~local~~although ~~and~~we ~~foreign~~ship ~~environmental~~slightly ~~laws~~lower ~~and~~specialty ~~regulations,~~fiber ~~particularly~~volume ~~those~~in ~~relating to air and water quality, waste disposal and~~ the ~~cleanup~~July ~~of contaminated soil and groundwater. We devote significant resources~~ to September ~~maintaining~~quarter ~~compliance with these laws~~ and ~~regulations. Such~~slightly ~~environmental~~lower ~~laws~~nonwovens ~~and~~volume ~~regulations~~is atshipped the federal level include the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, the Clean Air Act of 1990, as amended, the Clean Water Act of 1972, as amended, the Resource Conservation and Recovery Act of 1976, as amended, the Toxic Substances Control Act of 1976, as amended, and the Safe Drinking Water Act of 1974, as amended. These environmental regulatory programs are primarily administered by the U.S. Environmental Protection Agency (“EPA”). In addition, the individual states and foreign countries in ~~which we operate have adopted and may adopt in~~ the ~~future~~October ~~equivalent~~to orDecember ~~more stringent environmental laws and regulations or have enacted their own parallel environmental programs~~quarter. We ~~closely monitor our environmental compliance with current environmental requirements and believe that we are in substantial compliance.~~

WeEmployees expect that, due to the nature of our operations, we will be subject to increasingly stringent environmental requirements, including standards applicable to wastewater discharges and air emissions, such as emissions of greenhouse gases, and general permitting requirements for our manufacturing facilities. We also expect that we will continue to incur substantial costs to comply with such requirements. Any failure on our part to comply with environmental laws or regulations could subject us to penalties or other sanctions that could materially affect our business, results of operations or financial condition. We cannot currently assess, however, the impact that more stringent environmental requirements may have on our operations or capital expenditure requirements. We do not anticipate that capital expenditures in connection with matters relating to environmental compliance will have a material effect on our earnings during fiscal year 2013.

~~Our~~As ~~Foley Plant discharges treated wastewater into the Fenholloway River. Under the terms~~ of ~~an agreement with the Florida Department of Environmental Protection (“FDEP”)~~June 30, ~~approved by the EPA in 1995~~2013, we ~~agreed~~employed toapproximately a1,240 ~~comprehensive~~employees. Approximately ~~plan~~60% toof ~~attain~~the ~~Class~~global ~~III~~workforce ~~(“fishable/swimmable”)~~is ~~status~~covered ~~for the Fenholloway River~~ under ~~applicable~~collective bargaining ~~Florida law (the “Fenholloway Agreement”)~~agreements. ~~The~~ ~~Fenholloway~~These ~~Agreement~~employees ~~established~~are arepresented ~~schedule~~by ~~for~~unions ~~the~~at ~~filing~~three ~~of necessary permit applications and approvals to implement the following activities~~plants, ~~among others: (i) make process changes within~~ the Foley Plant, toand ~~reduce~~one ~~the~~in ~~coloration~~Memphis, ~~of its wastewater discharge~~Tennessee, ~~(ii)~~and ~~restore~~one ~~certain~~in ~~wetlands areas~~Steinfurt, ~~(iii)~~Germany. Our ~~install~~Foley aPlant’s ~~pipeline~~labor toagreement ~~relocate~~is ~~the~~in ~~wastewater~~effect ~~discharge~~through ~~point into the Fenholloway River to a point closer to the mouth of the river~~April 1, 2016. The ~~and~~agreement ~~(iv)~~for ~~provide oxygen enrichment to~~ the ~~treated~~Memphis ~~wastewater~~Plant ~~prior~~is toin ~~discharge~~effect atthrough ~~the~~March 18, ~~new location~~2016. We The ~~have~~agreement ~~completed~~for the ~~process~~Steinfurt ~~changes within the Foley~~ Plant asis ~~required by the Fenholloway Agreement. In making these~~ in~~-plant~~ ~~process~~effect ~~changes,~~through ~~we incurred significant capital expenditures. Based on the anticipated permit conditions~~August 31, ~~we expect to incur significant additional capital expenditures once final permits are issued~~2014.

7None of our facilities has had labor disputes or work stoppages in recent history. The Foley and Memphis Plants have not experienced any work stoppages due to labor disputes in over 30 years and 50 years, respectively. We consider our relationships with our employees and their representative organizations to be good. An extended interruption of operations at any of our facilities, however, could have a material adverse effect on our business.

In5 August 2005 FDEP drafted a proposed renewal of the Buckeye National Pollutant Discharge Elimination System (“NPDES”) permit. The FDEP completed the required public notice, review and comment process and issued the formal Notice of Intent to Issue Permit in November 2005. The proposed permit was challenged by some members of the public. In January 2008, the pending administrative hearing was dismissed due to anticipated revisions to the permit based on additional studies and development of a total maximum daily load (“TMDL”) for the Fenholloway River. The development of the TMDL is necessary because the EPA and FDEP have listed the Fenholloway River as an impaired water (not meeting all water quality standards) under the Clean Water Act for certain pollutants. The additional studies necessary to support revisions to the permit have been completed. As a result, we filed petitions with the FDEP for the establishment of several Site-Specific Alternative Water Quality Criteria (“SSAC”) for the Fenholloway River. The Florida Environmental Regulation Commission adopted a rule establishing a SSAC for the Fenholloway River and the FDEP approved the other SSACs. SSACs require the approval of the EPA. The FDEP forwarded the SSACs to EPA in September 2010 for their approval. We are currently working with EPA to address their questions related to the SSACs. The revised draft NPDES permit to be issued by FDEP will be based upon modeling performed in conjunction with the EPA and the FDEP, will address the TMDL established for the Fenholloway River by the EPA and will also contain Water Quality Based Effluent Limits based on the new SSACs. In a recent development, EPA has requested additional data for one parameter. Gathering that data may delay issuance of that SSAC and the NPDES permit by a year. When the FDEP issues the revised draft permit it will be subject to public comment and opportunity for requesting a hearing.

WeTable expect to incur additional capital expenditures related to our wastewater treatment and discharge of between $40 million and $60 million over at least five years, possibly beginning as early as fiscal year 2014. The amount and timing of these capital expenditures may vary depending on a number of factors including when the final NPDES permit is issued and its final terms and conditions.Contents

~~The~~Environmental ~~Foley~~Regulations ~~Plant is also subject to FDEP~~ and ~~EPA~~Liabilities air emission standards. In 2007, new EPA boiler air emission regulations [boiler Maximum Achievable Control Technology (“MACT”) standards] were vacated following a public legal challenge. These regulations would apply to the bark boilers at the Foley Plant. EPA re-proposed those regulations in April 2010 and issued final regulations in February 2011. Due to significant feedback provided during the public comment period, EPA has recognized that portions of the final boiler MACT regulations contain problematic provisions that will have to be resolved through the ‘reconsideration process’ allowed by the Clean Air Act. These regulations may impact both bark boilers at the Foley Plant. However, until the reconsideration process is completed, it will be difficult to predict the potential capital expenditures associated with these pending regulations.

~~Other~~Our ~~Information~~operations are subject to extensive general and industry-specific federal, state, local and foreign environmental laws and regulations, particularly those relating to air and water quality, waste disposal and the cleanup of contaminated soil and groundwater. We devote significant resources to maintaining compliance with these laws and regulations. Such environmental laws and regulations at the federal level include the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, the Clean Air Act of 1990, as amended, the Clean Water Act of 1972, as amended, the Resource Conservation and Recovery Act of 1976, as amended, the Toxic Substances Control Act of 1976, as amended, and the Safe Drinking Water Act of 1974, as amended. These environmental regulatory programs are primarily administered by the U.S. Environmental Protection Agency (“EPA”). In addition, the individual states and Germany have adopted and may adopt in the future equivalent or more stringent environmental laws and regulations or have enacted their own parallel environmental programs. We closely monitor our compliance with current environmental requirements and believe that we are in substantial compliance.

~~Our website is www.bkitech.com.~~ We ~~make~~expect ~~available~~that, ~~free~~due to the nature of ~~charge~~our operations, ~~through~~we ~~our~~will ~~website~~be ~~under~~subject ~~the~~to ~~heading~~increasingly ~~“Investors,”~~stringent ~~proxy~~environmental ~~materials~~requirements, ~~annual~~including ~~reports~~standards onapplicable ~~Form~~to ~~10-K~~wastewater discharges and air emissions, ~~quarterly~~such ~~reports~~as onemissions ~~Form~~of ~~10-Q~~greenhouse gases, and ~~current~~general ~~reports~~permitting requirements onfor ~~Form~~our ~~8-K,~~manufacturing ~~and~~facilities. ~~any~~We ~~amendments~~also expect that we will continue to ~~those~~incur ~~reports~~substantial ~~filed~~costs orto ~~furnished~~comply ~~pursuant~~with such requirements. Any failure on our part to ~~Section~~comply ~~13(a)~~with environmental laws or ~~Section~~regulations ~~15(d)~~could ofsubject ~~the~~us ~~Securities~~to penalties ~~Exchange~~or ~~Act~~other ofsanctions ~~1934~~that could materially affect our business, asresults ~~amended. The~~of ~~information~~operations onor ~~our~~financial ~~website~~condition. isWe ~~not~~cannot ~~part~~currently ofassess, orhowever, ~~incorporated~~the byimpact ~~reference~~that inmore ~~this~~stringent ~~Annual~~environmental ~~Report~~requirements may have on ~~Form~~our ~~10-K~~operations or capital ~~any~~expenditure ~~other~~requirements. ~~report~~We do not anticipate that wecapital ~~may~~expenditures ~~file~~in connection with ~~the~~matters ~~Commission~~relating to environmental compliance will have a material effect on our liquidity during fiscal year 2014.

~~These~~Our ~~reports~~Foley ~~are~~Plant ~~also~~discharges ~~available~~treated aswastewater ~~soon~~into asthe ~~reasonably~~Fenholloway River. Under ~~practicable~~the ~~after~~terms weof ~~electronically~~an ~~file~~agreement ~~such~~with ~~materials~~the ~~with~~Florida Department of Environmental Protection (“FDEP”), orapproved ~~furnish~~by ~~such~~the ~~materials~~EPA toin 1995, we agreed to a comprehensive plan to attain Class III (“fishable/swimmable”) status for the ~~Securities~~Fenholloway ~~and~~River ~~Exchange~~under ~~Commission,~~applicable orFlorida law (the “Fenholloway ~~SEC~~Agreement”). The ~~public~~Fenholloway ~~may~~Agreement ~~also~~established ~~read~~a ~~and~~schedule ~~copy~~for ~~any~~the ~~materials~~filing weof ~~file~~necessary ~~with~~permit applications and approvals to implement the ~~SEC~~following atactivities, among others: (i) make process changes within the Foley ~~SEC’s~~Plant ~~Public~~to ~~Reference~~reduce ~~Room~~the atcoloration ~~Station~~of ~~Place~~its wastewater discharge, ~~100~~(ii) restore Fcertain ~~Street~~wetlands NEareas, ~~Washington, D.C.~~(iii) ~~20549. The~~install ~~public~~a ~~may~~pipeline ~~obtain~~to ~~information~~relocate ~~about~~the wastewater discharge point into the ~~operation~~Fenholloway River to a point closer to the mouth of the river, ~~Public~~and ~~Reference~~(iv) provide ~~Room~~oxygen byenrichment ~~calling~~to the ~~SEC~~treated wastewater prior to discharge at ~~1-800-SEC-0330~~the new location. In We ~~addition,~~have completed the ~~SEC~~process ~~maintains~~changes anwithin ~~internet~~the ~~site~~Foley ~~that~~Plant ~~contains~~as ~~reports~~required by the Fenholloway Agreement. In making these in-plant process changes, ~~proxy~~we ~~and~~incurred ~~information~~significant ~~statements~~capital ~~and~~expenditures. ~~other~~Based ~~information~~on ~~filed~~the ~~electronically~~anticipated bypermit usconditions, ~~which~~we ~~are~~expect ~~available~~to atincur ~~http://www~~significant additional capital expenditures once final permits are issued.~~sec.gov.~~

~~Safe~~In August 2005 FDEP drafted a proposed renewal of the Buckeye National Pollutant Discharge Elimination System (“NPDES”) permit. The FDEP completed the required public notice, review and comment process and issued the formal Notice of Intent to Issue Permit in November 2005. ~~Harbor~~The ~~Provisions~~proposed permit was challenged by some members of the public. In January 2008, the pending administrative hearing was dismissed due to anticipated revisions to the permit based on additional studies and development of a total maximum daily load (“TMDL”) for the Fenholloway River. The development of the TMDL is necessary because the EPA and FDEP have listed the Fenholloway River as an impaired water (not meeting all water quality standards) under the Clean Water Act for certain pollutants. The additional studies necessary to support revisions to the permit have been completed. As a result, we filed petitions with the FDEP for the establishment of several Site-Specific Alternative Water Quality Criteria (“SSAC”) for the Fenholloway River and near shore area. The Florida Environmental Regulation Commission adopted a rule establishing a SSAC for the Fenholloway River and the FDEP approved the other SSACs. The FDEP forwarded the SSACs to the EPA in September 2010 for their required approval. We have addressed all questions raised by the EPA and the SSACs were approved by the Environmental Regulation Commission in April 2013. The revised draft NPDES permit to be issued by the FDEP will be based upon modeling performed in conjunction with the EPA and the FDEP, will address the TMDL established for the Fenholloway River by the EPA and will also contain Water Quality Based Effluent Limits based on the new SSACs and water quality standards. When the FDEP issues the revised draft permit it will be subject to public comment and opportunity for requesting an administrative hearing.

~~This~~We ~~document~~expect ~~contains~~to ~~both~~incur ~~historical~~additional ~~and~~capital ~~forward-looking~~expenditures ~~statements. All~~related ~~statements~~to ~~other~~our ~~than~~wastewater treatment ~~statements~~and discharge of ~~historical~~between ~~fact~~$75 ~~are,~~million orand ~~may~~$90 bemillion ~~deemed~~over toat beleast five years, ~~“forward-looking”~~possibly ~~statements~~beginning ~~within~~as ~~the~~early ~~meaning~~as offiscal ~~the~~year ~~Private~~2015. ~~Securities~~The ~~Litigation~~amount ~~Reform~~and ~~Act~~timing of ~~1995. These~~these ~~forward-looking~~capital ~~statements~~expenditures ~~are~~may ~~not~~vary ~~based~~depending on ~~historical~~a ~~facts,~~number ~~but~~of ~~rather~~factors ~~reflect~~including ~~management’s~~when the ~~current~~final ~~expectations~~NPDES ~~concerning~~permit ~~future~~is ~~results~~issued and ~~events~~its final terms and conditions.

~~These~~The ~~forward-looking~~Foley ~~statements~~Plant ~~generally~~is ~~can~~also besubject ~~identified~~to byFDEP ~~the~~and ~~use~~EPA ofair ~~statements~~emission standards. In ~~that~~2007, ~~include~~new ~~phrases~~EPA ~~such~~boiler asair ~~"believe,"~~emission ~~"expect,"~~regulations ~~"anticipate,"~~[boiler ~~"intend,"~~Maximum ~~"plan,"~~Achievable ~~"foresee,"~~Control ~~"likely,"~~Technology ~~"will"~~(“MACT”) orstandards] ~~other~~were ~~similar~~vacated ~~words~~following ora ~~phrases. Similarly,~~public ~~statements~~legal ~~that~~challenge. ~~describe~~These ~~management’s~~regulations ~~objectives,~~would ~~plans~~apply orto ~~goals~~the ~~are~~bark orboilers ~~may~~at bethe Foley ~~forward-looking statements~~Plant. ~~These~~ EPA ~~forward~~re-~~looking~~proposed ~~statements~~those ~~involve~~regulations ~~known~~in ~~and~~April ~~unknown~~2010 ~~risks, uncertainties~~ and ~~other~~issued ~~factors~~final ~~that~~regulations ~~are~~in ~~difficult~~February 2011. Due to ~~predict~~significant ~~and~~feedback ~~which~~provided ~~may~~during ~~cause~~ the ~~actual~~public ~~results,~~comment ~~performance or achievements to be different from any future results~~period, ~~performance~~the ~~and~~EPA ~~achievements~~has ~~expressed~~recognized ~~or implied by these statements.~~that

TheTable following important factors, among others, including those set forth below in Item 1A of this Annual Report on Form 10-K, could affect future results, causing these results to differ materially from those expressed in our forward-looking statements: dependence on a single customer; the ability to obtain additional capital, maintain adequate cash flow to service debt as well as meet operating needs; maintaining satisfactory labor relations; an inability to predict the scope of future environmental compliance costs or liabilities; pricing fluctuations and worldwide economic conditions; competition; and fluctuations in the costs and availability of raw materials.Contents

~~Any~~ portions ~~forward-looking~~of ~~statements~~the ~~included~~final inboiler ~~this~~MACT ~~document~~regulations ~~are~~contain ~~only~~problematic ~~made~~provisions asthat ofwill have to be resolved through the ~~date~~‘reconsideration ofprocess’ ~~this~~allowed ~~document~~by the Clean Air Act. The EPA recently completed the reconsideration process and wepublished dothe ~~not~~final ~~intend~~boiler ~~nor~~MACT ~~undertake~~regulations toon ~~publicly~~January 31, ~~update~~2013. ~~any~~We ~~forward-looking~~are ~~statements~~currently toin ~~reflect~~the ~~subsequent~~process ~~events~~of orassessing ~~circumstances~~the ~~except~~impact asof these new regulations and once we ~~may~~complete bethe ~~required~~assessment byprocess we ~~law~~will be able to dodetermine soa range of capital expenditures associated with these new regulations.

~~Item~~Other ~~1A.~~Information ~~Risk Factors~~

Our ~~operations~~website ~~are~~is ~~subject~~www.bkitech.com. We tomake aavailable, ~~number~~free of ~~risks~~charge, ~~including~~through ~~those~~our ~~listed~~website ~~below~~under ~~and~~the ~~discussed~~heading ~~elsewhere~~“Investors,” proxy inmaterials, ~~this~~annual ~~Annual~~reports ~~Report~~ on Form 10-K, ~~(particularly~~quarterly inreports ~~Item 7. Management’s~~on ~~Discussion~~Form 10-Q and ~~Analysis~~current ofreports ~~Financial~~on ~~Condition~~Form 8-K, and ~~Results~~any ofamendments ~~Operations~~to those reports filed or furnished pursuant to Section 13(a)~~. If~~ ~~any~~or Section 15(d) of the ~~events~~Exchange ~~described~~Act. The information on our website is not part of or incorporated by reference in ~~the~~this ~~following~~Annual ~~risk~~Report ~~factors~~on ~~actually~~Form ~~occur,~~10-K itor ~~could~~any ~~materially~~other ~~affect~~report ~~our~~that ~~results~~we ofmay ~~operations~~file with the Securities and ~~financial~~Exchange ~~condition~~Commission.

~~Risks~~These ~~related~~reports are also available as soon as reasonably practicable after we electronically file such materials with, or furnish such materials to, ~~our~~the ~~industry~~Securities and Exchange Commission, or the SEC. The public may also read and copy any materials we file with the SEC at the SEC’s Public Reference Room at Station Place, 100 F Street NE, Washington, D.C. 20549. The public may obtain information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an internet site that contains reports, proxy and information statements and other information filed electronically by us, which are available at http://www.sec.gov.

WeSafe Harbor ~~are~~Provisions ~~subject to the cyclical changes caused by general global and industry conditions.~~

~~The~~This ~~demand~~document ~~and~~contains pricing of our products, particularly fluff pulp, are influenced by the much larger market for papermaking pulps which is highly cyclical. The markets for most cellulose and absorbent products are sensitive to both ~~changes~~historical ~~in general global economic conditions~~ and toforward-looking ~~changes~~statements. All instatements ~~industry~~other ~~capacity.~~than ~~Both~~statements of ~~these~~historical ~~factors~~fact are, ~~beyond~~or ~~our~~may be ~~control. The~~deemed ~~price~~to ~~of these products can fluctuate significantly when supply and demand become imbalanced for any reason. Our financial performance can~~ be, ~~heavily~~“forward-looking” ~~influenced~~statements bywithin ~~these pricing fluctuations and~~ the ~~general~~meaning ~~cyclicality~~ of the ~~industries~~Private inSecurities ~~which~~Litigation weReform ~~compete. Furthermore,~~Act aof ~~general~~1995. ~~economic~~Forward-looking ~~downturn~~statements inare anot ~~particular~~based ~~country or~~ on anhistorical ~~international scale could reduce the overall sales within our industry~~facts, ~~thereby~~but ~~likely~~rather ~~reducing~~reflect ~~our~~management’s ~~sales. We cannot assure you that~~ current expectations ~~prices~~concerning will be maintained, that any price increases will be achieved, or that industry capacity utilization will reach favorable levels. The demand, cost and prices for our products may fluctuate substantially in the future ~~and downturns in market conditions could have a material adverse effect on our business,~~ results ~~of operations~~ and ~~financial condition~~events.

~~Competition~~Forward-looking ~~and~~statements ~~surplus~~generally ~~capacity~~can be identified by the use of statements that include phrases such as “trends,” “assumptions,” “target,” “guidance,” “outlook,” “opportunity,” “future,” “plans,” “goals,” “objectives,” “expectations,” “near-term,” “long-term,” “projection,” “may,” “might,” “will,” “would,” “could,” ~~adversely~~“can,” ~~affect~~“expect,” ~~our~~“intend,” “estimate,” ~~operating~~“anticipate,” “believe,” “potential,” “regular,” “should,” “project,” “predict,” “forecast” or “continue” (or the negative or other derivatives of each of these terms) or similar terminology. Similarly, statements that describe management’s objectives, plans or goals are or may be forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that are difficult to predict and which may cause the actual results, performance or achievements to be different from any future results, performance and ~~financial~~achievements ~~condition~~expressed or implied by these statements.

The ~~markets~~following ~~for~~important ~~our~~factors, ~~products~~among ~~are~~others, ~~all~~including ~~competitive. Actions~~those byset ~~competitors~~forth ~~can~~below ~~affect~~in ~~our~~Item 1A ~~ability~~of tothis ~~sell~~Annual ~~our~~Report ~~products~~on ~~and~~Form 10-K, ~~can~~could affect ~~the~~future ~~volatility~~results, ofcausing ~~the~~these ~~prices~~results atto ~~which~~differ ~~our~~materially ~~products~~from ~~are~~those ~~sold. Other~~expressed ~~actions~~in byour ~~competitors, such as reducing costs or adding low~~forward-~~cost~~looking ~~capacity,~~statements: ~~may~~dependence ~~adversely~~on ~~affect~~a ~~our~~single ~~competitive~~customer; ~~position in~~ the ~~products~~ability weto ~~manufacture~~obtain ~~and,~~additional ~~consequently~~capital, ~~our~~maintain ~~sales,~~adequate ~~operating income and~~ cash ~~flows. New~~flow ~~competitors~~to ~~and~~service debt ~~the~~as ~~expansion~~well ofas ~~existing~~meet ~~competitors~~operating ~~could~~needs; ~~create~~maintaining asatisfactory ~~surplus~~labor ~~capacity~~relations; ofan ~~the~~inability ~~goods that we sell, which might cause us~~ to ~~either~~predict ~~lose sales or lower~~ the ~~prices~~scope of ~~our~~future ~~goods. Actions~~environmental bycompliance ~~our~~costs ~~competitors~~or ~~and~~liabilities; ~~any~~pricing ~~surplus~~fluctuations ~~capacity~~and ~~could~~worldwide ~~cause~~economic ~~our~~conditions; ~~sales~~competition; and fluctuations ~~profits~~in tothe ~~decline,~~costs ~~affecting~~and ~~our~~availability ~~operating~~of ~~results~~raw ~~and financial condition~~materials.

~~Market~~Any ~~fluctuations~~forward-looking statements included in ~~the~~this ~~availability~~document ~~and~~are ~~cost~~only made as of the ~~energy~~date of this document and ~~raw~~we ~~materials~~do ~~are~~not ~~beyond~~intend ~~our~~nor ~~control~~undertake ~~and~~to publicly update any forward-looking statements to reflect subsequent events or circumstances except as we may ~~adversely~~be ~~affect~~required ~~our~~by ~~business~~law to do so.

~~Energy,~~Item ~~chemicals, and raw material costs, including fuel oil, natural gas, electricity, cotton linters, wood, and caustic and other chemicals are a significant operating expense~~1A. ~~The~~ ~~prices~~Risk and availability of raw materials and energy can be volatile and are susceptible to rapid and substantial changes due to factors beyond our control such as changing economic conditions, currency fluctuations, weather conditions, political unrest and instability in energy-producing nations, and supply and demand considerations. We have raw material pricing and availability issues at our Memphis specialty fiber plant. We have the option to import cotton linters for our Memphis specialty cotton fiber production in order to minimize the impact of unexpected fluctuations in North American cotton fiber availability. We have limited production at our Memphis specialty fibers facility because of raw material constraints. This raw material availability constraint will limit growth and continue to impact our production costs. Energy and chemical costs which had increased substantially in recent years, resulting in increased production costs for our products, have recently moderated. Increases in production costs could have a material adverse effect on our business, financial condition and results of operations. In addition to increased costs, it is possible that a disruption in supply of natural gas or other fossil fuels could limit our ability to operate our facilities.Factors

9Our operations are subject to a number of risks including those listed below and discussed elsewhere in this Annual Report on Form 10-K (particularly in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations). If any of the events described in the following risk factors actually occurs, it could materially and adversely affect our results of operations and financial condition.

~~Market~~7 ~~fluctuations in the availability and cost of transportation are beyond our control and may adversely impact our business.~~

OurTable business depends on the transportation of a large number of products, both domestically and internationally. An increase in transportation rates or fuel surcharges and/or a reduction in transport availability in truck, rail and international shipping could negatively impact our ability to provide products to our customers in a timely manner. An increase in international shipping rates or fuel surcharges or a reduction in the availability of vessels could negatively impact our costs and our ability to provide products to our international customers in a timely manner. While we have had adequate transportation availability, there is no assurance that such availability can continue to be effectively managed in the future.Contents

Risks related to our ~~business~~industry

~~Exposure~~We are subject to ~~commodity~~the ~~products~~cyclical ~~creates~~changes ~~volatility~~caused inby ~~pricing~~general global and ~~profits~~industry conditions.

IfThe demand and pricing of our ~~research~~products, particularly fluff pulp, are influenced by the much larger market for papermaking pulps which is highly cyclical. The markets for most cellulose and ~~development~~absorbent ~~efforts~~products doare ~~not~~sensitive ~~result~~to both changes in general global economic conditions and to changes in industry capacity. Both of these factors are beyond our control. The price of these products can fluctuate significantly when supply and demand become imbalanced for any reason. Our financial performance can be heavily influenced by these pricing fluctuations and the ~~commercialization~~general cyclicality of ~~new~~the industries in which we compete. Furthermore, ~~proprietary~~a ~~products~~general economic downturn in a particular country or on an international scale could reduce the overall sales within our industry, wethereby likely reducing our sales. We cannot assure you that current prices will ~~continue~~be maintained, tothat ~~have~~any ~~significant~~price ~~exposure~~increases towill ~~fluff~~be ~~pulp~~achieved, ~~which~~or ~~could~~that ~~result~~industry capacity utilization will reach favorable levels. The demand, cost and prices for our products may fluctuate substantially in ~~volatility~~the future and downturns in ~~sales~~market ~~prices~~conditions could have a material adverse effect on our business, results of operations and ~~profits~~financial condition.

ACompetition ~~material~~and ~~disruption~~surplus atcapacity ~~one of our manufacturing facilities~~ could ~~prevent us from meeting customer demand, reduce our sales or negatively~~ adversely affect our operating results ~~of operation~~ and financial condition.

~~Any~~The markets for our products are all competitive. Actions by competitors can affect our ability to sell our products and can affect the volatility of the prices at which our ~~manufacturing~~products ~~facilities~~are sold. Other actions by competitors, such as reducing costs or ~~any~~adding oflow-cost capacity, may adversely affect our ~~machines~~competitive position ~~within~~in anthe ~~otherwise~~products ~~operational~~we ~~facility~~manufacture and, consequently, our sales, operating income and cash flows. New competitors and the expansion of existing competitors could ~~cease~~create ~~operations~~a ~~unexpectedly~~surplus ~~due~~capacity of the goods that we sell, which might cause us to either alose ~~number~~sales or lower the prices of ~~events~~our goods. Actions by our competitors and any surplus capacity could cause our sales and profits to decline, ~~including:~~which could affect our operating results and financial condition.

~~- unscheduled~~Market ~~maintenance~~fluctuations ~~outages;~~in the availability and cost of energy and raw materials are beyond our control and may adversely affect our business.

Energy, chemicals, and raw material costs, including fuel oil, natural gas, electricity, cotton linters, wood, and caustic and other chemicals are a significant operating expense. The prices and availability of raw materials and energy can be volatile and are susceptible to rapid and substantial changes due to factors beyond our control such as changing economic conditions, currency fluctuations, weather conditions, political unrest and instability in energy- ~~prolonged~~producing ~~power~~nations, ~~failures;~~and supply and demand considerations. We have raw material pricing and availability issues at our Memphis specialty fiber plant, and we have limited production at this plant because of raw material constraints. This raw material availability constraint will limit growth and continue to impact our production costs. We have the option to import cotton linters for our Memphis specialty cotton fiber production in order to minimize the impact of unexpected fluctuations in North American cotton fiber availability but have not done so due to the high logistical cost of importing raw linters. Increases in production costs, including further increases in energy and chemical costs, could have a material adverse effect on our business, financial condition and results of operations. In addition to increased costs, it is possible that a disruption in supply of natural gas or other fossil fuels could limit our ability to operate our facilities.

~~- an~~Market ~~equipment~~fluctuations ~~failure;~~in the availability and cost of transportation are beyond our control and may adversely impact our business.

- Our business depends on the transportation of a ~~chemical~~large ~~spill~~number of products, both domestically and internationally. An increase in transportation rates or ~~release;~~fuel surcharges and/or a reduction in transport availability in truck, rail and international shipping could negatively impact our ability to provide products to our customers in a timely manner. An increase in international shipping rates or fuel surcharges or a reduction in the availability of vessels could adversely impact our costs and our ability to provide products to our international customers in a timely manner. There is no assurance that adequate transportation availability can continue to be effectively managed in the future.

~~- explosion~~Risks related ofto aour ~~boiler;~~business

~~- labor~~Exposure ~~difficulties;~~to commodity products creates volatility in pricing and profits.

~~- disruptions~~If our research and development efforts do not result in the ~~transportation~~commercialization ~~infrastructure~~of new, ~~including~~proprietary ~~roads~~products, ~~bridges~~we will continue to have significant exposure to fluff pulp, ~~railroad~~which ~~tracks~~could result in volatility in sales prices and ~~tunnels;~~profits.

~~- fires,~~A ~~floods,~~material ~~windstorms,~~disruption ~~earthquakes~~at one of our manufacturing facilities could prevent us from meeting customer demand, ~~hurricanes~~reduce our sales or ~~other~~negatively ~~catastrophes;~~affect our results of operation and financial condition.

~~- terrorism~~Any of our manufacturing facilities, or ~~threats~~any of ~~terrorism;~~our machines within an otherwise operational facility, could cease operations unexpectedly due to a number of events, including:

~~- governmental~~• ~~regulations;~~unscheduled ~~and~~maintenance outages;

~~- other~~• ~~operational~~prolonged ~~problems.~~power failures;

We8 ~~may be required to pay significant export taxes or countervailing and anti-dumping duties for exported products.~~

WeTable may experience reduced revenues and margins on some of our businesses as a result of export taxes or countervailing and anti-dumping duty applications. It is possible that countervailing duty and antidumping tariffs, or similar types of tariffs could be imposed on us in the future. These tariffs could have a material adverse effect on our business, financial results and financial condition.Contents

~~The~~• ~~impacts~~an ofequipment ~~climate-related initiatives, at the international, federal and state levels, remain uncertain at this time.~~failure;

~~Currently,~~• ~~there~~a ~~are~~chemical ~~numerous~~spill ~~international, federal and state-level initiatives and proposals addressing domestic and global climate issues. Within the U.S., most of these proposals would regulate and/~~or tax, in one fashion or another, the production of carbon dioxide and other “greenhouse gases” to facilitate the reduction of carbon compound emissions to the atmosphere, and provide tax and other incentives to produce and use more “clean energy.”release;

10• explosion of a boiler;

We• ~~are~~labor ~~dependent upon attracting and retaining key personnel.~~difficulties;

We• ~~believe~~disruptions ~~that~~in ~~our~~the ~~success~~transportation ~~depends~~infrastructure, toincluding aroads, ~~significant extent~~bridges, ~~upon~~railroad ~~our~~tracks ~~ability to attract~~ and ~~retain key senior management and operations management personnel. Our failure to recruit and retain these key personnel could adversely affect our financial condition or results of operations.~~tunnels;

~~Our~~• ~~failure~~fires, tofloods, ~~maintain~~windstorms, ~~satisfactory~~earthquakes, ~~labor~~hurricanes ~~relations~~or ~~could~~other ~~have a material adverse effect on our business.~~catastrophes;

If• ~~our~~terrorism ~~negotiations~~or ~~with~~threats ~~the representatives~~ of the unions, to which many of our employees belong, are not successful, our operations could be subject to interruptions at many of our facilities, which could materially and adversely affect our business. As of August 27, 2012, we employed approximately 1,270 employees, of whom approximately 77% are employed at our facilities in the United States. Approximately 56% of the U.S. employees are represented by unions at two plants in Perry, Florida and Memphis, Tennessee. Our Foley Plant’s labor agreement is in effect through December 1, 2012. The agreement for the Memphis Plant is in effect through March 18, 2013. On November 7, 2010, union employees at our Canadian facility ratified a new labor agreement. The agreement has been extended through December 31, 2012 to coincide with the plant closure.terrorism;

~~Employee~~• ~~representation~~governmental isregulations; ~~provided by a works council at our nonwoven materials plant in Steinfurt, Germany. Our plants in Gaston~~ and ~~Lumberton, North Carolina are not unionized.~~

~~The~~• ~~failure~~other tooperational ~~renegotiate labor agreements in a timely manner could lead to a curtailment or stoppage of work at our factories~~problems. If we negotiated a labor agreement on unfavorable terms, our production costs will increase. A reduction in production or increasing the costs of production would lower our profits and harm our business.

~~Compliance~~Any ~~with~~of ~~extensive~~these ~~general~~risks ~~and~~could ~~industry~~have ~~specific~~a ~~environmental~~material ~~laws~~adverse ~~and~~effect ~~regulations~~on ~~requires significant resources~~our business, ~~and~~results ~~the~~of ~~significant~~operations ~~associated~~or ~~costs~~financial ~~may adversely affect our business~~condition.

~~Our~~We ~~operations~~may ~~are~~be ~~subject~~required to ~~extensive~~pay general and industry-specific federal, state, local and foreign environmental laws and regulations, particularly those relating to air and water quality, waste disposal and the cleanup of contaminated soil and groundwater. We devote significant ~~resources~~export totaxes maintaining compliance with these laws and regulations. Such environmental laws and regulations at the federal level include the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, the Clean Air Act of 1990, as amended, the Clean Water Act of 1972, as amended, the Resource Conservation and Recovery Act of 1976, as amended, the Toxic Substances Control Act of 1976, as amended, and the Safe Drinking Water Act of 1974, as amended. These environmental regulatory programs are primarily administered by the U.S. Environmental Protection Agency (“EPA”). In addition, the individual states and foreign countries in which we operate have adopted and may adopt in the future equivalent or ~~more~~countervailing ~~stringent environmental laws~~ and ~~regulations~~anti-dumping orduties for ~~have~~exported ~~enacted their own parallel environmental programs~~products. We ~~closely monitor our environmental compliance with current environmental requirements and believe that we are in substantial compliance.~~

We ~~expect~~may ~~that,~~experience ~~due~~reduced torevenues ~~the nature of our operations, we will be subject to increasingly stringent environmental requirements, including standards applicable to wastewater discharges~~ and ~~air~~margins ~~emissions,~~on ~~such~~some ~~as emissions~~ of ~~greenhouse gases, and general permitting requirements for~~ our ~~manufacturing~~businesses ~~facilities. We~~as ~~also~~a ~~expect~~result ~~that~~of weexport ~~will~~taxes ~~continue~~or countervailing toand ~~incur~~anti-dumping ~~substantial~~duty ~~costs to comply with such requirements~~applications. ~~Any~~ ~~failure~~It onis ~~our~~possible ~~part to comply with environmental laws or regulations could subject us to penalties or other sanctions~~ that ~~could~~countervailing ~~materially~~duty ~~affect~~and ~~our~~antidumping ~~business~~tariffs, ~~results of operations~~ or ~~financial~~similar ~~condition. We~~types ~~cannot~~of ~~currently~~tariffs ~~assess,~~could ~~however,~~be ~~the~~imposed ~~impact that more stringent environmental requirements may have~~ on ~~our~~us ~~operations~~in orthe ~~capital expenditure requirements~~future. We doThese ~~not~~tariffs ~~anticipate~~could ~~that capital expenditures in connection with matters relating to environmental compliance will~~ have a material adverse effect on our ~~earnings~~business, financial ~~during~~results ~~fiscal~~and ~~year~~financial ~~2013~~condition.

~~Compliance~~The ~~with~~impacts ~~recently~~of ~~passed~~climate-related ~~legislation~~initiatives ~~may~~at ~~adversely~~the ~~affect~~international, ~~our~~federal ~~business~~and state levels, remain uncertain at this time.

~~In March 2010~~Currently, ~~Congress~~there ~~passed~~are ~~the~~numerous ~~Patient~~international, ~~Protection~~federal and ~~Affordable~~state-level ~~Care~~initiatives ~~Act~~ and ~~the~~proposals ~~Health~~addressing ~~Care~~domestic and global ~~Education~~climate ~~Affordability~~issues. ~~Reconciliation~~Within ~~Act (collectively,~~ the ~~“Acts”)~~U. ~~Among~~S., ~~other~~most ~~things,~~of ~~the~~these ~~Acts~~proposals ~~contain~~would ~~provisions~~regulate ~~that~~and/or ~~will~~tax, ~~affect~~in ~~employer-sponsored~~one ~~health~~fashion ~~care~~or ~~plans~~another, ~~impose~~the ~~excise~~production ~~taxes~~of oncarbon ~~certain~~dioxide ~~plans,~~ and ~~reduce~~other ~~the~~“greenhouse ~~tax~~gases” ~~benefits available~~ to ~~employers~~facilitate ~~that receive~~ the ~~Medicare~~reduction ~~Part~~of Dcarbon ~~subsidy. We~~compound ~~are~~emissions ~~currently reviewing provisions of~~ to the ~~Acts~~atmosphere, and ~~their~~provide ~~impact~~tax onand ~~our~~other ~~company-sponsored~~incentives ~~plans. We are currently unable~~ to ~~estimate~~produce ~~costs~~and ~~associated~~use ~~with~~more ~~compliance~~“clean ~~with the Acts~~energy.”

11We are dependent upon attracting and retaining key personnel.

We ~~are~~believe ~~subject~~that our success depends, to ~~the~~a ~~economic~~significant extent, upon our ability to attract and ~~political~~retain ~~conditions~~key ofsenior management ~~foreign~~and ~~nations~~operations management personnel. Our failure to recruit and retain these key personnel could adversely affect our financial condition or results of operations.

WeOur ~~have~~failure ~~manufacturing~~to ~~facilities~~maintain insatisfactory ~~three~~labor ~~countries~~relations ~~and~~could sell products in over 60 countries. For the fiscal year ended June 30, 2012, sales of our products outside the United States represented approximately 68% of our sales. The global economy and relative strength or weakness of the U.S. dollar can have a ~~significant~~material ~~impact~~adverse effect on our ~~sales~~business. In addition, although approximately 89% of our sales are denominated in U.S. dollars, it is possible that as we expand globally, we will face increased risks associated with operating in foreign countries, including:

- If our negotiations with the ~~risk~~representatives ~~that~~of ~~foreign~~the ~~currencies~~unions, ~~will~~to which many of our employees belong, are not successful, our operations could be subject ~~devalued~~to orinterruptions ~~that~~at ~~currency~~many ~~exchange~~of ~~rates~~our ~~will~~facilities, ~~fluctuate;~~which could materially and adversely affect our business. As of June 30, 2013, we employed approximately 1,240 employees. Approximately 60% of our global workforce is covered under collective bargaining agreements. These employees are represented by unions at three plants, the Foley Plant, one in Memphis, Tennessee, and one in Steinfurt, Germany. Our labor agreement for the Foley Plant and the Memphis Plant expire in 2016 and the agreement for the Steinfurt Plant expires in 2014.

-Employee ~~the~~representation ~~risk~~is ~~that~~provided ~~limitations~~by ~~will~~a beworks ~~imposed~~council onat our ~~ability~~nonwoven materials toplant ~~convert~~in ~~foreign~~Steinfurt, ~~currencies into U~~Germany.S. Our ~~dollars~~plants orin onGaston ~~our foreign subsidiaries' ability to remit dividends~~ and ~~other~~Lumberton, ~~payments~~North toCarolina ~~the~~are ~~United~~not ~~States;~~unionized.

-The ~~the~~failure ~~risk~~to renegotiate ~~that~~labor ~~our~~agreements ~~foreign~~in ~~subsidiaries~~a ~~will~~timely bemanner ~~required~~could lead to ~~pay~~a ~~withholding~~curtailment or ~~other~~stoppage ~~taxes~~of onwork ~~remittances~~at ~~and~~our ~~other~~factories. If ~~payments~~we were to ~~the~~negotiate ~~United~~a ~~States~~labor agreement on unfavorable terms, our production costs could increase, perhaps materially. A reduction in production or ~~that~~increasing the ~~amount~~costs of ~~any~~production ~~such~~would ~~taxes~~lower ~~will~~our beprofits ~~increased;~~and harm our business.

~~- the~~9 ~~risk that certain foreign countries may experience hyperinflation; and~~

- theTable riskof that foreign governments may impose or increase investment or other restrictions affecting our business.Contents

~~Any~~Compliance ofwith ~~these~~extensive ~~risks~~general ~~could~~and ~~have~~industry aspecific ~~material~~environmental ~~adverse~~laws ~~effect~~and onregulations ~~our~~requires significant ~~business~~resources, ~~results~~and ofthe ~~operations~~significant orassociated ~~financial~~costs ~~condition~~may adversely affect our business.

~~Risks~~Our ~~related~~operations are subject to ~~ownership~~extensive general and industry-specific federal, state, local and foreign environmental laws and regulations, particularly those relating to air and water quality, waste disposal and the cleanup of contaminated soil and groundwater. We devote significant resources to maintaining compliance with these laws and regulations. Such environmental laws and regulations at the federal level include the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, the Clean Air Act of 1990, as amended, the Clean Water Act of 1972, as amended, the Resource Conservation and Recovery Act of 1976, as amended, the Toxic Substances Control Act of 1976, as amended, and the Safe Drinking Water Act of 1974, as amended. These environmental regulatory programs are primarily administered by the EPA. In addition, the individual states and foreign countries in which we operate have adopted and may adopt in the future equivalent or more stringent environmental laws and regulations or have enacted their own parallel environmental programs. We closely monitor our ~~common~~environmental ~~stock~~compliance with current environmental requirements and believe that we are in substantial compliance.

~~The~~We ~~price~~expect that, due to the nature of our ~~common~~operations, ~~stock~~we ~~may~~will be ~~volatile~~subject to increasingly stringent environmental requirements, including standards applicable to wastewater discharges and air emissions, such as emissions of greenhouse gases, and general permitting requirements for our manufacturing facilities. We also expect that we will continue to incur substantial costs to comply with such requirements. Any failure on our part to comply with environmental laws or regulations could subject us to penalties or other sanctions that could materially affect our business, results of operations or financial condition. We cannot currently assess, however, the impact that more stringent environmental requirements may have on our operations or capital expenditure requirements.

~~The~~Compliance ~~market~~with ~~price~~recently ofpassed ~~our~~legislation ~~common stock~~ may beadversely ~~influenced~~affect ~~by many factors, some of which are beyond~~ our ~~control, including those described above under “Risks related to our industry” and “Risks related to our~~ business”. ~~and the following:~~

In March 2010, Congress passed the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act (collectively, the “Acts”). Among other things, the Acts contain provisions that will affect employer- ~~actual~~sponsored orhealth ~~anticipated~~care ~~fluctuations~~plans, inimpose ~~our~~excise ~~operating~~taxes ~~results~~on orcertain plans, and reduce the tax benefits available to employers that receive the Medicare Part D subsidy. We are currently reviewing provisions of the Acts and their impact on our ~~competitors’~~company-sponsored ~~operating~~plans. ~~results;~~We are currently unable to estimate costs associated with compliance with the Acts.

-We ~~announcements~~are bysubject usto orthe ~~our~~economic ~~competitors~~and ofpolitical ~~new~~conditions ~~products,~~of ~~capacity~~foreign ~~changes,~~nations. ~~significant contracts, acquisitions or strategic investments;~~

- We have manufacturing facilities in two countries and sell products in over 50 countries. For the fiscal year ended June 30, 2013, sales of our ~~growth~~products ~~rate~~outside the United States represented approximately 66% of our sales. The global economy and relative strength or weakness of the U.S. dollar can have a significant impact on our ~~competitors’~~sales. In ~~growth~~addition, ~~rates;~~although approximately 88% of our sales are denominated in U.S. dollars, we face risks associated with operating in foreign countries, including:

- • the ~~financial~~risk ~~market~~that ~~and~~foreign ~~general~~currencies ~~economic~~will ~~conditions~~be devalued or that currency exchange rates will fluctuate;

-• ~~changes~~the inrisk ~~stock~~that ~~market~~limitations ~~analyst~~will ~~recommendations~~be ~~regarding~~imposed ~~us,~~on our ~~competitors~~ability to convert foreign currencies into U.S. dollars or on our ~~industry~~foreign ~~generally,~~subsidiaries’ orability ~~lack~~to ofremit ~~analyst~~dividends ~~coverage~~and ofother ~~our~~payments ~~common~~to ~~stock~~the United States;

-• ~~sales~~the ofrisk that our ~~common~~foreign ~~stock~~subsidiaries bywill ~~our~~be ~~executive~~required ~~officers,~~to ~~directors~~pay withholding or other taxes on remittances and ~~significant~~other ~~stockholders~~payments to the United States or ~~sales~~that the amount of ~~substantial~~any ~~amounts~~such oftaxes ~~common~~will ~~stock;~~be ~~and~~increased;

~~- changes~~• inthe ~~accounting~~risk ~~principles.~~that certain foreign countries may experience hyperinflation; and

In• ~~addition,~~the ~~there~~risk ~~has~~that ~~been~~foreign ~~significant~~governments ~~volatility~~may inimpose ~~the~~or ~~market~~increase ~~price~~investment ~~and~~or ~~trading~~other ~~volume~~restrictions ofaffecting ~~securities of companies operating in~~ our ~~industry that often has been unrelated to the operating performance of particular companies~~business.

~~Some~~Any ~~companies~~of ~~that~~these ~~have~~risks ~~had~~could ~~volatile market prices for their securities~~ have ~~had~~a ~~securities~~material ~~litigation~~adverse ~~brought~~effect ~~against~~on ~~them.~~our Ifbusiness, ~~litigation~~results of ~~this~~operations ~~type~~or isfinancial ~~brought against us, it could result in substantial costs and would divert management’s attention and resources~~condition.

~~Item~~We ~~1B.~~identified ~~Unresolved~~material ~~Staff~~weaknesses ~~Comments~~in our internal control over financial reporting.

~~None~~As required by SEC rules, we carried out the required quarterly evaluation, under the supervision and with the participation of our management, including our principal executive officer and our principal financial and accounting officer, of the effectiveness of our disclosure controls and procedures as of June 30, 2013, the end of the period covered by this Annual Report on Form 10-K. Based on this evaluation and due to the material weaknesses described below, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of June 30, 2013. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting that creates a reasonable possibility that a material misstatement of our interim or annual financial statements will not be prevented or detected on a timely basis. In the course of preparing the financial statements as of June 30, 2013, that are included in this Annual Report on Form 10-K, management identified material weaknesses in internal control related to granting and reviewing user access privileges within the Company’s SAP application and over the purchasing, accounts payable, and cash disbursements processes transacted through SAP due to inadequate segregation of duties. These material weaknesses did not result in material misstatements in the Company’s annual and interim financial statements. These material weaknesses were reported by management to our Audit Committee.

~~Item~~10 ~~2. Properties~~

CorporateTable Headquarters. Ourof corporate headquarters, research and development laboratories, and pilot plants are located in Memphis, Tennessee.Contents

~~Specialty~~We ~~Fiber~~are ~~Plants~~a private company,

~~Memphis~~On ~~Plant. The~~April 24, ~~Memphis~~2013, ~~Plant~~we isand ~~located~~Georgia-Pacific onLLC ~~approximately~~announced 75that ~~acres~~we ~~adjacent~~had reached a definitive agreement for Georgia-Pacific to acquire all of the ~~headquarters~~outstanding ~~complex~~shares ~~and~~of ~~has~~our common stock for $37.50 per share in cash. On August 15, 2013, at a ~~capacity~~special stockholders’ meeting, our stockholders approved the Agreement and Plan of ~~approximately~~Merger, ~~100~~or the Merger Agreement,~~000~~ ~~annual~~by ~~metric~~and ~~tons~~among Georgia-Pacific, GP Cellulose Group LLC and Buckeye and, on August 21, 2013, the U.S. Federal Trade Commission and the Antitrust Division of ~~cotton~~the ~~cellulose~~U. AsS. Department of ~~June~~Justice ~~30,~~granted ~~2012,~~termination of the ~~Memphis~~waiting ~~Plant~~period ~~operated~~required atunder ~~about~~the Hart-Scott-Rodino ~~55%~~Antitrust Improvement Act of ~~its~~1976, ~~capacity~~as amended. The merger closed on August 23, 2013, upon which Buckeye became an indirect, wholly-owned subsidiary of Georgia-Pacific.

12As a result of the merger, our common stock will no longer be listed on the New York Stock Exchange or any other securities exchange, and each issued and outstanding share of common stock of the Company (other than shares held in treasury by the Company or owned by any subsidiary of the Company or Georgia-Pacific or any subsidiary of Georgia-Pacific) was converted into the right to receive $37.50 per share, net to the holder in cash, without interest, subject to any withholding of taxes required by applicable law. We will file a Certification on Form 15 with the Securities and Exchange Commission under the Exchange Act to suspend our reporting obligations under Sections 13(a) and 15(d) of the Exchange Act. We became a privately-held company as a result of the merger and do not intend to file periodic reports with the Securities and Exchange Commission in the future.

~~Foley~~Item ~~Plant~~1B. ~~The~~ ~~Foley~~Unresolved ~~Plant~~Staff is located at Perry, Florida, on a 2,900 acre site and has a capacity of approximately 465,000 annual metric tons of wood cellulose. We also own approximately 21,000 acres of real property near the plant site of which approximately 4,900 is subject to a conservation easement. As of June 30, 2012, the Foley Plant operated at approximately 100% of its capacity.Comments

~~Lumberton Plant~~None. ~~The~~ Lumberton Plant is located in Lumberton, North Carolina on a 65-acre site and has a capacity of approximately 8,000 annual metric tons of cosmetic cotton fiber. As of June 30, 2012, the Lumberton Plant operated at approximately 100% of its capacity.

~~Nonwovens~~Item ~~Plants~~2. Properties

~~The~~Corporate ~~stated capacity of airlaid nonwovens machines is based upon an assumed mix of products~~Headquarters. ~~The~~ Our ~~flexible~~corporate ~~nature of airlaid technology allows for a wide range of materials to be produced. Machine production capability has typically been lower than the stated capacity~~headquarters, ~~often~~research byand ~~factors~~development ~~of 10-20%~~laboratories, ~~when~~and ~~adjusted~~pilot toplants ~~reflect~~are ~~the~~located ~~actual~~in ~~product mix. Based on current product mix~~Memphis, ~~utilization of our airlaid machines worldwide, as of June 30, 2012, was approximately 75% of their capacity~~ Tennessee.

~~Delta~~Specialty ~~Plant. The~~Fiber ~~Delta~~Plants Plant is located in Delta, British Columbia on a 12-acre industrial park site and has a total capacity of approximately 30,000 annual metric tons of airlaid nonwovens (18,000 based on current production mix) from one production line. In June 2012, we entered into an agreement of purchase and sale for our Delta facility’s land and buildings. See Note 4 for further discussion.

~~Steinfurt~~Memphis Plant. The ~~Steinfurt~~Memphis Plant is located inon ~~Steinfurt,~~approximately ~~Germany~~75 onacres anadjacent ~~18-acre~~to ~~site~~the headquarters complex and has a ~~total~~ capacity of approximately 30100,000 annual metric tons of ~~airlaid~~cotton ~~nonwovens~~cellulose. As ~~from~~of ~~two~~June 30, ~~production~~2013, ~~lines~~the Memphis Plant operated at about 50% of its capacity.

~~Gaston~~Foley Plant. The ~~Gaston~~Foley Plant is located inat ~~Gaston County~~Perry, ~~near Mt. Holly~~Florida, ~~North Carolina~~ on ana ~~80-~~2,900 acre site and has a ~~total~~ capacity of approximately 60465,000 annual metric tons of ~~airlaid~~wood ~~nonwovens~~cellulose. We ~~(40~~also own approximately 21,000 ~~annual~~acres ~~metric~~of ~~tons~~real ~~based~~property onnear ~~current~~the ~~production~~plant ~~mix)~~site ~~from~~of ~~two~~which ~~production~~approximately ~~lines~~4,900 is subject to a conservation easement. As of June 30, 2013, the Foley Plant operated at approximately 100% of its capacity.

WeLumberton ~~own~~Plant. The ~~our~~Lumberton ~~corporate headquarters, the Memphis~~ Plant, ~~the~~is ~~Foley~~located ~~Plant,~~in ~~the~~ Lumberton ~~Plant~~, ~~the~~North ~~Delta~~Carolina ~~Plant,~~on ~~the~~a ~~Steinfurt~~65-acre ~~Plant~~site and ~~the~~has a ~~Gaston~~capacity ~~Plant. We~~of ~~lease~~approximately ~~buildings~~8,500 ~~that~~annual ~~house~~metric ~~the~~tons ~~sales~~of ~~offices~~cosmetic incotton ~~Europe and China and distribution facilities in Savannah, Georgia~~fiber. ~~All~~ As of ~~the~~June 30, ~~facilities~~2013, ~~located in~~ the ~~United~~Lumberton ~~States~~Plant ~~are~~operated ~~pledged~~at asapproximately ~~collateral~~100% ~~for~~of ~~certain~~its ~~debt agreements~~capacity.

WeNonwovens ~~believe~~Plants ~~that our specialty fibers and nonwoven materials manufacturing facilities and administrative buildings are adequate to meet current operating demands.~~

~~Item~~Steinfurt Plant. 3The Steinfurt Plant is located in Steinfurt, Germany on an 18-acre site and has a total capacity of approximately 30,000 annual metric tons of airlaid nonwovens from two production lines. ~~Legal~~As ~~Proceedings~~of June 30, 2013, the Steinfurt Plant operated at approximately 100% of its capacity.

WeGaston ~~are~~Plant. ~~involved~~The ~~from~~Gaston ~~time~~Plant tois ~~time~~located in ~~routine~~Gaston County ~~legal~~near ~~matters and other claims incidental to our business~~Mt. We ~~review~~Holly, North ~~outstanding~~Carolina ~~claims~~on ~~and~~an ~~proceedings internally and with external counsel as necessary to assess the probability and amount of potential loss. These assessments are re~~80-~~evaluated~~acre atsite ~~each reporting period~~ and ashas ~~new information becomes available to determine whether~~ a ~~reserve~~total ~~should~~capacity ~~be established or if any existing reserve should be adjusted. The actual cost~~ of ~~resolving~~approximately ~~a claim or proceeding ultimately may be substantially different than the amount of the recorded reserve. In addition~~40,000 ~~because~~annual itmetric istons not permissible under GAAP to establish a litigation reserve until the loss is both probable and estimable, in some cases there may be insufficient time to establish a reserve prior to the actual incurrence of ~~the~~airlaid ~~loss~~nonwovens (~~upon~~based ~~verdict~~on ~~and~~current ~~judgment~~production atmix) ~~trial,~~from ~~for~~two ~~example,~~production ~~or in the case of a quickly negotiated settlement)~~lines. We ~~believe~~As ~~the resolution~~ of ~~routine matters and other incidental claims~~June 30, ~~taking into account reserves and insurance~~2013, ~~will~~the ~~not~~Gaston ~~have~~Plant aoperated ~~material~~at ~~adverse~~over ~~effect~~90% of onits ~~our business, financial condition or results from operations~~capacity.

~~Item~~We 4own our corporate headquarters, the Memphis Plant, the Foley Plant, the Lumberton Plant, the Steinfurt Plant and the Gaston Plant. We ~~Mine~~lease ~~Safety~~buildings ~~Disclosures~~that house the sales offices in Europe and China and distribution facilities in Savannah, Georgia. As of June 30, 2013, all of our facilities located in the United States were pledged as collateral under our credit facility.

~~Not~~We ~~applicable~~believe that our specialty fibers and nonwoven materials manufacturing facilities and administrative buildings are adequate to meet current operating demands.

1311

PursuantTable to Instruction 3 to Item 401(b) of Regulation S-K and General Instruction G(3) to Form 10-K, the following information is included in Part I of this Annual Report on Form 10-K.Contents

~~Executive~~Item ~~Officers~~3. ofLegal ~~the Registrant~~Proceedings

We are involved from time to time in routine legal matters and other claims incidental to our business. We review outstanding claims and proceedings internally and with external counsel as necessary to assess the probability and amount of potential loss. These assessments are re-evaluated at each reporting period and as new information becomes available to determine whether a reserve should be established or if any existing reserve should be adjusted. The ~~names~~actual cost of resolving a claim or proceeding ultimately may be substantially different than the amount of the recorded reserve. In addition, ~~ages~~because it is not permissible under GAAP to establish a litigation reserve until the loss is both probable and ~~positions~~estimable, ~~held~~in bysome ~~our~~cases ~~executive~~there ~~officers~~may be insufficient time to establish a reserve prior to the actual incurrence of the loss (upon verdict and judgment at trial, for example, or in the case of a quickly negotiated settlement). We believe the resolution of routine matters and other incidental claims, taking into account reserves and insurance, will not have a material adverse effect on ~~August~~our 29business, ~~2012~~financial condition ~~are:~~or results from operations.

Name	Age	Position
John B. Crowe	65	Chairman of the Board, Chief Executive Officer and Director
Steven G. Dean	56	Executive Vice President and Chief Financial Officer
Douglas L. Dowdell	54	Executive Vice President, Specialty Fibers
Charles S. Aiken	62	Sr. Vice President, Energy and Sustainability
Sheila Jordan Cunningham	60	Sr. Vice President, General Counsel and Secretary
Paul N. Horne	57	Sr. Vice President, Product and Market Development
Marko M. Rajamaa	51	Sr. Vice President, Nonwovens
Terrence M. Reed	52	Sr. Vice President, Human Resources

On May 1, 2013, a putative shareholder class action complaint was filed in the Court of Chancery of the State of Delaware, or the Delaware Court, captioned James Beckett, Jr. v. Buckeye Technologies Inc., et. al., Case No. 8519-CS, or the Beckett Action. On May 7, 2013, a putative shareholder class action complaint was filed in the Delaware Court, captioned Richard Oliver v. John Crowe, et. al., Case No. 8534-CS, or the Oliver Action. Pursuant to an order granted in the Delaware Court on May, 9, 2013, the Beckett Action and the Oliver Action were consolidated into a single action, all future actions filed in Delaware related to the same subject matter are to become part of the consolidated action and counsel to Mr. Beckett and Mr. Oliver were appointed as the lead counsel for the putative shareholder class. On May 13, 2013, the plaintiffs in the consolidated action filed a consolidated amended class action complaint, captioned In re Buckeye Technologies, Inc. Shareholders Litigation, Consolidated Case No. 8519-CS, or the Consolidated Complaint. The plaintiffs also filed a motion for expedited proceedings and a motion for a preliminary injunction. The Consolidated Complaint named as defendants Buckeye, each member of the Board, or the Individual Defendants, Georgia-Pacific and the GP Cellulose Group LLC. The Consolidated Complaint generally alleged that the Individual Defendants breached their fiduciary duties and that Buckeye, Georgia-Pacific and GP Cellulose Group LLC aided and abetted these purported breaches of fiduciary duties. On May 21, 2013, a telephonic hearing was held in the Consolidated Complaint on the plaintiffs’ motion to expedite proceedings and to set a hearing for preliminary injunction. The Delaware Court ruled that the plaintiffs had failed to set forth a colorable basis for expedited proceedings and denied the plaintiffs’ motion. On June 19, 2013, the Consolidated Complaint was dismissed without prejudice pursuant to a Stipulation and Order of Dismissal, or the Order, filed by the parties and entered by the Delaware Court. The Order stipulates that each party to the Consolidated Complaint will bear its own costs and that no compensation has passed or been promised from any of the defendants to the plaintiffs or plaintiffs’ counsel.

~~John~~Item B4. ~~Crowe~~Mine Safety Disclosures

~~Chairman~~Not ofapplicable. ~~the Board, Chief Executive Officer and Director~~

~~Mr.~~PART ~~Crowe~~II has served as Chairman of the Board and Chief Executive Officer since July 1, 2006. He served as President and Chief Operating Officer from April 2003 to July 2006. He was elected as a director of Buckeye in August 2004. He served as Senior Vice President, Wood Cellulose from January 2001 to April 2003. He served as Vice President, Wood Cellulose Manufacturing from January 1998 to January 2001. Prior to joining us, he was Executive Vice President/General Manager of Alabama River Pulp and Alabama Pine Pulp Operations, a division of Parsons and Whittemore, Inc. and was Vice President and Site Manager of Flint River Operations, a subsidiary of Weyerhauser Company. From 1979 to 1992, he was an employee of Procter & Gamble.

~~Executive~~Our ~~Vice~~common ~~President~~stock is traded on the New York Stock Exchange under the symbol BKI. There were approximately 5,065 shareholders on August 21, 2013, based on the number of record holders of our common stock and ~~Chief~~an ~~Financial~~estimate ~~Officer~~of the number of individual participants represented by security position listings. The table below sets forth the high and low sales prices for our common stock.

Mr. Dean has served as Executive Vice President and Chief Financial Officer since July 24, 2012. He served as Senior Vice President and Chief Financial Officer from July 2007 to July 2012. He served as Vice President and Chief Financial Officer from July 2006 to July 2007. He served as Vice President and Controller from February 2006 to July 2006. Mr. Dean served as Company Controller from December 2005 to February 2006. Previously, he served as Controller for Buckeye's Specialty Fibers Division from December 2004 to November 2005 and Controller for Buckeye's Nonwovens Division from August 2001 to November 2004. Prior to joining Buckeye in 1999, he held various financial management positions with Thomas & Betts and Hewlett-Packard.


	Year Ended June 30
	2013				2012
	High		Low		High		Low
First quarter (ended September 30)	$	32.62	$	28.33	$	29.24	$	23.80
Second quarter (ended December 31)		32.19		23.76		34.22		24.00
Third quarter (ended March 31)		31.36		26.84		37.40		32.60
Fourth quarter (ended June 30)		37.86		28.66		34.00		26.41

~~Douglas~~We Lmade $13.7 ~~Dowdell~~million in dividend payments, $0.35 per share, during the year ended June 30, 2013. We made $10.8 million in dividend payments, $0.27 per share, during the year ended June 30, 2012. We made $7.3 million in dividend payments, $0.18 per share, during the year ended June 30, 2011. On August 6, 2013, our Board of Directors declared a quarterly dividend of $0.09 per share of common stock. The dividend is payable on September 16, 2013, to stockholders of record as of the close of business on August 16, 2013. Each quarterly dividend payment is subject to review and approval by our Board of Directors, and we evaluate our dividend payment amount on an annual basis at the end of each fiscal year. The amount we distribute as dividends will depend on our financial results at the time of distribution.

~~Executive~~12 ~~Vice President, Specialty Fibers~~

Mr.Table Dowdell has served as Executive Vice President, Specialty Fibers since July 24, 2012. He served as Senior Vice President, Specialty Fibers from February 2006 to July 2012. He served as Senior Vice President, Nonwovens from February 2005 to February 2006. He served as Vice President, Nonwovens from October 2003 to February 2005. He served as Vice President, Absorbent Wood Fiber Sales from February 2002 to October 2003. He served as Vice President, Nonwovens Business Development from February 2001 to February 2002. He served as Vice President, Absorbent Products Business Development from August 2000 to February 2001. Prior to August 2000 he held several positions in the Company including: Manager, Absorbent Fiber Sales; Manager, Business Development; and Manager, Wood Procurement. He was an employee of Procter & Gamble from 1988 to March 1993.Contents

~~Charles~~Issuer S.Purchases ~~Aiken~~of Equity Securities

~~Senior~~The ~~Vice~~Board ~~President~~of Directors has authorized total repurchases of 11.0 million shares of common stock. During fiscal years 2013, ~~Energy~~2012 and ~~Sustainability~~2011 we repurchased 0.3 million, 1.2 million and 0.4 million shares of our common stock, respectively, at a total cost of $9.2 million, $32.9 million and $9.8 million, respectively. At June 30, 2013, we have remaining approximately 3.7 million shares authorized by our Board of Directors to repurchase. Repurchased shares will be held as treasury stock and will be available for general corporate purposes, including the funding of employee benefit and stock-related plans. No shares were repurchased during the quarter ending June 30, 2013.

~~Mr.~~Equity ~~Aiken~~Compensation ~~has~~Plan ~~served~~Information as ~~Senior~~of ~~Vice President~~June 30, ~~Energy~~2013 and Sustainability since January 1, 2010. He served as Senior Vice President, Manufacturing from October 2003 to January 2010. He served as Senior Vice President, Nonwovens Manufacturing from April 2000 to October 2003. He served as Vice President, Business Systems from April 1998 to April 2000 and as Vice President, Foley Plant from June 1995 to April 1998. He was an employee of Procter & Gamble from 1977 to March 1993.

~~Sheila~~Equity ~~Jordan~~compensation ~~Cunningham~~plan information as of June 30, 2013, appears under Item 12.

~~Senior~~Performance ~~Vice~~Graph ~~President, General Counsel and Secretary~~

~~Ms.~~The ~~Cunningham~~line ~~has~~graph below ~~served~~compares asthe ~~Senior~~cumulative ~~Vice~~total ~~President,~~stockholder ~~General~~return ~~Counsel~~on ~~and~~our ~~Secretary~~common ~~since~~stock ~~April~~with ~~2000. She~~the ~~served~~cumulative astotal ~~Vice~~return ~~President,~~of ~~General~~the ~~Counsel~~Russell 2000 Index and ~~Secretary~~the ~~from~~New ~~April~~York ~~1998~~Stock toExchange ~~April~~(“NYSE”) ~~2000. She~~Paper & ~~served~~Allied asProducts ~~Assistant~~peer ~~General~~group ~~Counsel~~for ~~from~~the ~~March~~five ~~1997~~fiscal years toended ~~April~~June 30, ~~1998~~2013. The graph and astable ~~Secretary~~assume ~~from~~that ~~July~~$100 ~~1997~~was toinvested ~~April~~on ~~1998. Prior~~June 30, to2008, ~~joining~~in useach of our common stock, ~~she~~the ~~was~~Russell a2000 ~~partner~~Index, inand the ~~law~~NYSE ~~firm~~Paper & ofAllied ~~Baker,~~Products ~~Donelson,~~peer ~~Bearman,~~group ~~Caldwell,~~excluding &Kimberly-Clark Corporation ~~Berkowitz,~~(KMB) Pand that all dividends were reinvested.C.

14COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*

~~Paul~~Among NBuckeye Technologies Inc., ~~Horne~~the Russell 2000 Index,

~~Senior~~and ~~Vice~~NYSE ~~President,~~Paper ~~Product~~& ~~and~~Allied ~~Market~~Products ~~Development~~- SIC Codes 2600-2699 (excluding KMB)

LOGO

~~Mr.~~* ~~Horne~~$100 ~~has~~invested ~~served~~on as6/30/08 ~~Senior~~in ~~Vice~~stock ~~President,~~or ~~Product and Market Development since February 1~~index, ~~2006. He~~including ~~served~~reinvestment asof ~~Senior Vice President, Cotton Cellulose from January 2001 to February 2006~~dividends. He ~~served~~Fiscal asyear ~~Senior~~ending ~~Vice~~June ~~President, Commercial - Specialty Cellulose from July 1997 to January 2001 and as Vice President, North and South American Sales from October 1995 to July 1997~~30. ~~He was an employee of Procter & Gamble from 1982 to March 1993.~~

Marko M. Rajamaa


	2008		2009		2010		2011		2012		2013
Buckeye Technologies Inc.		100.00		53.07		117.61		321.89		343.01		451.29
Russell 2000		100.00		74.99		91.10		125.18		122.58		152.25
NYSE Paper & Allied Products – SIC Codes 2600-2699 (U.S. & Foreign Cos.) excluding KMB		100.00		81.24		113.27		154.41		145.81		219.30

~~Senior~~13 ~~Vice President, Nonwovens~~

Mr.Table Rajamaaof has served as Senior Vice President, Nonwovens since October 26, 2006. He served as Vice President, Nonwovens from February 2006 to October 2006 and as Vice President, Nonwovens Sales – Europe and Middle East from January 2002 to February 2006. Previously, he served as Manager, Nonwoven Sales, Europe, Middle East and Africa from 1999 to 2002. Prior to joining Buckeye in 1999, he held various sales management positions with Walkisoft / UPM-Kymmene.Contents

~~Terrence~~Item M6. ~~Reed~~Selected Financial Data

~~Senior~~Selected ~~Vice~~Financial ~~President,~~Data ~~Human Resources~~

Mr. Reed has served as Senior Vice President, Human Resources since July 24, 2012. He served as Vice President, Human Resources from March 2006 to July 2012. Previously he served as Plant Manager, Foley Plant from January 2005 to March 2006 and prior to that he held various manufacturing roles in the Foley Plant. Prior to joining Buckeye in 1995, he was an engineer for American Greetings Corporation from 1992 to 1995 and was an officer in the United States Army from 1983 to 1992.


In thousands, except per share data	Year Ended June 30
In thousands, except per share data	2013 (b)		2012 (c)		2011 (d)		2010 (e)		2009 (f)
Operating Data:
Net sales (a)	$	812,450	$	894,881	$	880,428	$	733,893	$	727,647
Operating income (loss) (a)	$	121,351	$	164,039	$	134,497	$	148,602	$	(6,675	)
Income from continuing operations (a)	$	87,309	$	118,915	$	128,806	$	116,476	$	(48,721	)
Net income (loss)	$	88,678	$	90,028	$	124,268	$	114,574	$	(65,388	)
Basic earnings (loss) per share
Income (loss) from continuing operations	$	2.22	$	3.00	$	3.20	$	3.00	$	(1.26	)
Basic earnings (loss) per share	$	2.26	$	2.26	$	3.09	$	2.95	$	(1.69	)
Diluted earnings (loss) per share
Income (loss) from continuing operations	$	2.20	$	2.98	$	3.16	$	2.95	$	(1.26	)
Diluted earnings (loss) per share	$	2.23	$	2.24	$	3.05	$	2.90	$	(1.69	)
Cash dividends per share	$	0.35	$	0.27	$	0.18	$	—	$	—
Balance sheet data:
Total assets	$	895,321	$	837,411	$	869,851	$	852,454	$	792,384
Total long-term debt and capital leases (including current portion)	$	41,172	$	58,578	$	96,921	$	237,332	$	327,465

~~PART~~(a) IIAmounts exclude the impact of discontinued operations of the cotton specialty fibers plant in Americana, Brazil. Additional information is included in Note 6, Discontinued Operations, to the Consolidated Financial Statements.

~~Item~~(b) 5Includes a pretax charge of $9,918 ($9,574 after tax) for restructuring expense. ~~Market~~Includes a pretax charge of $5,527 ($3,581 after tax) for expenses related to the ~~Registrant’s~~Georgia-Pacific ~~Common~~merger. ~~Equity~~Includes a charge of $3,591 ~~Related~~for ~~Stockholder~~long-lived ~~Matters~~asset ~~and~~impairment. ~~Issuer~~Includes ~~Purchases~~pretax gains of ~~Equity~~$7,597 ~~Securities~~($7,509 after tax) on the sale of assets. Includes a pretax charge of $331 ($212 after tax) for interest

~~Our~~14 common stock is traded on the New York Stock Exchange under the symbol BKI. There were approximately 11,500 shareholders on August 9, 2012, based on the number of record holders of our common stock and an estimate of the number of individual participants represented by security position listings. The table below sets forth the high and low sales prices for our common stock.

	Year Ended June 30
	2012				2011
	High		Low		High		Low
First quarter (ended September 30)	$	29.24	$	23.80	$	14.99	$	9.32
Second quarter (ended December 31)		34.22		24.00		23.25		14.20
Third quarter (ended March 31)		37.40		32.60		28.50		19.94
Fourth quarter (ended June 30)		34.00		26.41		28.62		22.45

Wepayable ~~made~~to ~~$10.8 million in dividend payments, $0.27 per share, during~~ the ~~year~~IRS ~~ended~~for ~~June 30, 2012. We made $7.3 million in dividend payments, $0.18 per share, during~~ the ~~year~~use ~~ended~~of ~~June~~funds ~~30,~~from ~~2011. We~~Alternative ~~did~~Fuel ~~not~~Mixture ~~make~~Credits ~~any~~(“AFMC”) ~~dividend~~refunds ~~payments~~expected ~~during~~to ~~the~~be ~~year~~exchanges ~~ended~~for ~~June 30, 2010~~CBC. On ~~August~~Includes 7,an ~~2012,~~after-tax ~~our~~benefit ~~Board~~ of ~~Directors declared a quarterly dividend of~~ $~~0.08 per share of common stock. The dividend is payable on September 14~~4,586 ~~2012~~related to ~~stockholders~~CBC of(see ~~record~~Note as7, ofAlternative ~~the~~Fuel ~~close~~Mixture ofCredits ~~business~~/ onCellulosic ~~August~~Biofuel 14Credits, ~~2012. Each quarterly dividend payment is subject~~ to ~~review and approval by our Board of Directors, and we evaluate our dividend payment amount on an annual basis at~~ the ~~end~~Consolidated ofFinancial ~~each fiscal year~~Statements). ~~The amount we distribute as dividends will depend on our financial results at the time of distribution.~~

15(c) Includes a pretax charge of $2,425 ($2,425 after tax) for goodwill impairment. Includes a pretax charge of $2,094 ($1,356 after tax) for long-lived asset impairment. Includes a pretax charge of $234 ($152 after tax) for restructuring expense. Includes a pretax reversal of accrued interest of $2,285 ($1,459 after tax) that was recorded in prior periods related to a payable to the IRS for which the IRS subsequently concluded no interest was due. See Note 7, Alternative Fuel Mixture Credits / Cellulosic Biofuel Credits, to the Consolidated Financial Statements. Includes an after-tax benefit of $9,040 related to CBC.

~~Issuer~~(d) ~~Purchases~~Includes a pretax charge of ~~Equity~~$1,082 ~~Securities~~($978 after tax) for restructuring costs. Includes a pretax charge of $13,007 ($13,007 after tax) for asset impairment charges. Includes a pretax charge of $3,649 ($2,372 after tax) for early extinguishment of debt. Includes an after tax benefit of $51,458 related to CBC. Includes a pretax charge of $2,452 ($1,565 after tax) for interest payable to the IRS for the use of funds from AFMC refunds expected to be exchanges for CBC.

~~The~~(e) ~~Board~~Includes ofa ~~Directors~~pretax ~~has~~charge ~~authorized total repurchases~~ of ~~11.0~~$3,353 ~~million~~($2,095 ~~shares~~after oftax) ~~common~~for ~~stock. During~~restructuring ~~fiscal years 2012 and 2011 we repurchased 1~~costs.2 ~~million~~Includes ~~and 0.4 million shares of our common stock, respectively, at~~ a ~~total~~pretax ~~cost~~benefit of $~~32.9~~77,677 ~~million and~~ ($~~9.8 million~~76,791 ~~respectively. We~~after ~~did~~tax) ~~not~~for ~~repurchase~~AFMC. ~~any~~Includes ~~shares~~a ~~during~~pretax ~~2010. At~~charge ~~June~~of 30$2,606 ~~2012~~($1,629 weafter ~~have~~tax) ~~remaining~~for ~~approximately~~early ~~4.0~~extinguishment ~~million shares authorized by our Board~~ of ~~Directors to repurchase~~debt. ~~Repurchased~~ ~~shares~~Includes ~~will~~an beafter ~~held~~tax asbenefit ~~treasury~~of ~~stock~~$5,415 ~~and will be available~~ for ~~general~~investment ~~corporate~~tax ~~purposes,~~credits ~~including~~on ~~the~~prior ~~funding of employee benefit and stock-related plans. Below is a summary of our stock repurchases for the~~ period ~~ending~~energy ~~June~~project ~~30, 2012~~expenditures.

	(a) Total number of shares purchased		(b) Average price paid per share	(c) Total number of shares purchased as part of publicly announced plans or programs	(d) Maximum number of shares that may yet be purchased under plans or programs
April 1 – April 30, 2012	166,094	$	32.51	6,367,223	4,632,777
May 1 – May 31, 2012	383,906		29.99	6,751,129	4,248,871
June 1 – June 30, 2012	200,000		27.08	6,951,129	4,048,871
Total	750,000	$	29.77	6,951,129	4,048,871

(f)	Includes a pretax charge of $138,008 ($127,598 after tax) for goodwill impairment. Includes a pretax benefit of $54,232 ($39,644 after tax) for AFMC. Includes a pretax benefit of $401 ($261 after tax) for early extinguishment of debt.

~~See~~15 ~~the table labeled ‘Equity Compensation Plan Information” to be contained in the 2012 Proxy Statement, incorporated by reference in Part III, Item 12 of this Annual Report on Form 10-K.~~

PartTable III, Item 12 of this Annual Report on Form 10-K is incorporated herein by this reference.Contents

16Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~Performance~~The ~~Graph~~following Management’s Discussion and Analysis of Results of Operations and Financial Condition (“MD&A”) summarizes the significant factors affecting our results of operations, liquidity, capital resources and contractual obligations, as well as discusses our critical accounting policies. This discussion should be read in conjunction with the Consolidated Financial Statements, Notes to the Consolidated Financial Statements, and other sections of this Annual Report on Form 10-K. Our MD&A is composed of four major sections: Executive Summary, Results of Operations, Financial Condition and Critical Accounting Policies and Estimates. Unless otherwise indicated, references to a year (e.g., “2013”) refers to our fiscal year ended June 30 of that year.

~~The~~Executive ~~line~~Summary graph below compares the cumulative total stockholder return on our common stock with the cumulative total return of the Russell 2000 Index and the New York Stock Exchange (“NYSE”) Paper & Allied Products peer group for the five fiscal years ended June 30, 2012. The graph and table assume that $100 was invested on June 30, 2007 in each of our common stock, the Russell 2000 Index, and the NYSE Paper & Allied Products peer group and that all dividends were reinvested.

	2007	2008	2009	2010	2011	2012
Buckeye Technologies Inc.	100.00	54.69	29.02	64.32	176.03	187.58
Russell 2000	100.00	83.81	62.84	76.35	104.91	102.73
NYSE Paper & Allied Products – SIC Codes 2600-2699 (U.S. & Foreign Cos.) excluding KMB	100.00	66.93	54.37	75.81	103.35	97.59

We manufacture and distribute value-added cellulose-based specialty products used in numerous applications, including disposable diapers, personal hygiene products, engine, air and oil filters, concrete reinforcing fibers, food casings, cigarette filters, rayon filaments, acetate plastics, thickeners and papers. Our products are produced in the United States and Germany, and we sell these products in approximately 50 countries worldwide. We generate revenues, operating income and cash flows from two reporting segments: specialty fibers and nonwoven materials. Specialty fibers are derived from wood and cotton cellulose materials using wetlaid technologies. Our nonwoven materials are derived from wood pulps, synthetic fibers and other materials using an airlaid process.

17Our strategy is to continue to strengthen our position as a leading supplier of renewable cellulose-based specialty products. The key focus areas for Buckeye over the next twelve months include maximizing cash flow, optimizing capacity utilization, successful execution of our high-end specialty wood pulp expansion project, identifying new profitable, sustainable growth opportunities, improving our return on invested capital for all assets and continuing our progress to a Lean Enterprise culture. Inflation has not had and is not expected to have a material impact on our financial condition and results of operations in the near term.

~~Item~~Net 6sales were $812.4 ~~Selected~~million, ~~Financial~~down ~~Data~~$82.5 million or 9% from a record $894.9 million in 2012, as specialty fibers external sales decreased $72.0 million, or 11%, due primarily to lower fluff pulp and specialty cotton fibers pricing combined with unfavorable sales mix due to weak market conditions in Europe. Nonwovens sales were down $10.5 million, or 4%, due to the sale of the Merfin Systems converting business in January 2012. Shipment volume was relatively flat compared to the prior year.

~~Selected~~Operating ~~Financial~~income ~~Data~~for 2013 was $121.4 million, down $42.6 million compared to $164.0 million in 2012. Restructuring and impairment losses totaled $13.5 million during 2013 compared to losses of $4.8 million in the prior year. Selling, research and administrative expenses increased $9.8 million compared to the prior year, primarily due to costs associated with strategic initiatives, including our pending merger with Georgia-Pacific. Operating income for 2013 benefited from $4.3 million in insurance proceeds related to the June 2012 steam drum failure outage at our Foley mill. Gross margin decreased $28.4 million compared to the same period in 2012 as lower sales prices, unfavorable changes in product mix and reduced sales volume in the specialty fibers segment more than offset the impact of lower raw material costs. Gross margin as a percentage of net sales was 23.3% in 2013 compared to 24.3% in 2012.

In thousands, except per share data	Year Ended June 30
	2012(b)		2011(c)		2010(d)		2009 (e)			2008 (f)
Operating Data:
Net sales(a)	$	894,881	$	880,428	$	733,893	$	727,647		$	789,771
Operating income (loss) (a)	$	164,039	$	134,497	$	148,602	$	(6,675	)	$	101,702
Income from continuing operations (a)	$	118,915	$	128,806	$	116,476	$	(48,721	)	$	48,134
Net income (loss)	$	90,028	$	124,268	$	114,574	$	(65,388	)	$	47,102
Basic earnings (loss) per share
Income (loss) from continuing operations	$	3.00	$	3.20	$	3.00	$	(1.26	)	$	1.24
Basic earnings (loss) per share	$	2.26	$	3.09	$	2.95	$	(1.69	)	$	1.21
Diluted earnings (loss) per share
Income (loss) from continuing operations	$	2.98	$	3.16	$	2.95	$	(1.26	)	$	1.23
Diluted earnings (loss) per share	$	2.24	$	3.05	$	2.90	$	(1.69	)	$	1.20
Cash dividends per share	$	0.27	$	0.18	$	-	$	-		$	-
Balance sheet data:
Total assets	$	837,411	$	869,851	$	852,454	$	792,384		$	1,009,225
Total long-term debt and capital leases (including current portion)	$	58,578	$	96,921	$	237,332	$	327,465		$	394,268

Net income for 2013 was $88.7 million, or $2.23 per diluted share, down $1.3 million, or $0.01 per diluted share, compared to 2012. The decline in operating income was largely offset by a favorable change in the results from discontinued operations of $30.3 million and a gain of $7.3 million on the sale of the land and building at our closed Delta, B.C., Canada nonwovens plant.

~~(a)~~Net ~~Amounts~~cash ~~exclude~~provided ~~the~~by ~~impact~~operating ofactivities ~~discontinued~~in ~~operations~~2013 of ~~the~~$136.2 ~~cotton~~million ~~specialty~~was ~~fibers~~down ~~plant~~$35.6 million from $171.8 million in ~~Americana~~2012, ~~Brazil.~~primarily ~~Additional~~due ~~information~~to islower ~~included~~net insales ~~Note~~and 6margins combined with higher selling, ~~Discontinued~~research ~~Operations~~and administrative expenses when compared to the prior year. Capital expenditures of $109.4 million, up $24.5 million compared to 2012, remained at high levels due to work on the ~~Consolidated~~specialty ~~Financial~~conversion ~~Statements~~and oxygen delignification projects at the Foley Mill. Long-term debt has decreased by $17.4 million since June 30, 2012.

~~(b)~~Recent ~~Includes~~Developments a pretax charge of $2,425 ($2,425 after tax) for goodwill impairment. Includes a pretax charge of $2,094 ($1,356 after tax) for long-lived asset impairment. Includes a pretax charge of $234 ($152 after tax) for restructuring expense. Includes a pretax reversal of accrued interest of $2,285 ($1,459 after tax) that was recorded in prior periods related to a payable to the IRS for which the IRS subsequently concluded no interest was due. See Note 26, Subsequent Events, to the Consolidated Financial Statements. Includes an after-tax benefit of $9,040 related to CBC.

~~(c)~~On ~~Includes~~April 24, 2013, awe ~~pretax~~and ~~charge~~Georgia-Pacific ofannounced ~~$1,082~~that ~~($978~~we ~~after~~had ~~tax)~~reached ~~for~~a ~~restructuring~~definitive ~~costs.~~agreement ~~Includes~~for aGeorgia-Pacific ~~pretax~~to ~~charge~~acquire all of ~~$13,007~~the ~~($13,007~~outstanding ~~after~~shares ~~tax)~~of ~~for~~our ~~asset~~common ~~impairment~~stock ~~charges~~for $37.50 ~~Includes~~per ashare ~~pretax~~in ~~charge~~cash. ofOn $3August 15,~~649~~ ~~($2~~2013,~~372~~ ~~after~~at ~~tax)~~a ~~for~~special ~~early~~stockholders’ meeting, ~~extinguishment~~our ofstockholders ~~debt.~~approved ~~Includes~~the anMerger ~~after~~Agreement. ~~tax~~On ~~benefit~~August 21, ~~of $51~~2013,~~458~~ ~~related~~the ~~to CBC~~U.S. ~~Includes~~Federal aTrade ~~pretax~~Commission ~~charge~~and the Antitrust Division of ~~$2,452~~the ~~($1,565~~U.S. ~~after~~Department ~~tax)~~of ~~for~~Justice ~~interest~~granted ~~payable~~termination toof the ~~IRS~~waiting ~~for~~period required under the Hart-Scott-Rodino ~~use~~Antitrust Improvement Act of ~~funds~~1976, ~~from~~as ~~Alternative~~amended. ~~Fuel~~The ~~Mixture~~merger ~~Credits~~closed ~~(“AFMC”)~~on ~~refunds~~August 23, ~~expected~~2013, toupon bewhich ~~exchanges~~Buckeye ~~for~~became ~~CBC~~an indirect, wholly-owned subsidiary of Georgia-Pacific.

~~(d)~~16 Includes a pretax charge of $3,353 ($2,095 after tax) for restructuring costs. Includes a pretax benefit of $77,677 ($76,791 after tax) for AFMC. Includes a pretax charge of $2,606 ($1,629 after tax) for early extinguishment of debt. Includes an after tax benefit of $5,415 for investment tax credits on prior period energy project expenditures.

(e)Table Includes a pretax charge of $138,008 ($127,598 after tax) for goodwill impairment. Includes a pretax benefit of $54,232 ($39,644 after tax) for AFMC. Includes a pretax benefit of $401 ($261 after tax) for early extinguishment of debt.Contents

As a result of the merger, our common stock will no longer be listed on the New York Stock Exchange or any other securities exchange, and each issued and outstanding share of common stock of the Company (f)other ~~Includes~~than ashares ~~pretax~~held ~~charge~~in treasury by the Company or owned by any subsidiary of the Company or Georgia-Pacific or any subsidiary of Georgia-Pacific) was converted into the right to receive $~~623~~37.50 per share, net to the holder in cash, without interest, subject to any withholding of taxes required by applicable law. We will file a Certification on Form 15 with the Securities and Exchange Commission under the Exchange Act to suspend our periodic reporting obligations under Sections 13(~~$392~~a) ~~after~~and ~~tax~~15(d) ~~for~~of ~~early~~the ~~extinguishment~~Exchange Act. We became a privately-held company as a result of ~~debt~~the merger and do not intend to file periodic reports with the Securities and Exchange Commission going forward.

18Results of Operations

~~Item~~Consolidated 7.results ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

The following ~~Management's~~table compares ~~Discussion and Analysis of Results of Operations and Financial Condition ("MD&A") summarizes~~ the ~~significant~~components ~~factors affecting our results~~ of ~~operations,~~consolidated ~~liquidity,~~operating ~~capital~~income ~~resources~~for ~~and contractual obligations, as well as discusses our critical accounting policies. This discussion should be read in conjunction with~~ the ~~Consolidated~~three ~~Financial~~fiscal ~~Statements,~~years ~~Notes~~ended ~~to the Consolidated Financial Statements~~June 30, ~~and other sections of this Annual Report on Form 10-K. Our MD&A is composed of four major sections: Executive Summary~~2013, ~~Results~~2012 ~~of Operations, Financial Condition~~ and ~~Critical Accounting Policies and Estimates~~2011. ~~Unless~~ ~~otherwise indicated, references to a year (e.g., “2012”) refers to our fiscal year ended June 30 of that year.~~

Executive Summary


(dollars in millions)	Year Ended June 30								$ Change						Percent Change
	2013			2012		2011			2013/ 2012			2012/ 2011			2013/ 2012			2012/ 2011
Net sales	$	812.4		$	894.9	$	880.4		$	(82.5	)	$	14.5			(9.2	)%		1.6	%
Cost of goods sold		623.3			677.4		678.2			(54.1	)		(0.8	)		(8.0	)		(0.1	)

Gross margin		189.1			217.5		202.2			(28.4	)		15.3			(13.1	)		7.6
Selling, research and administrative expenses		56.5			46.7		51.7			9.8			(5.0	)		21.0			(9.7	)
Amortization of intangibles and other		2.1			2.0		2.0			0.1			—			5.0			—
Impairment and restructuring costs		13.5			4.8		14.1			8.7			(9.3	)		181.3			(66.0	)
Other operating income		(4.4	)		—		(0.1	)		(4.4	)		0.1			(100.0	)		100.0

Operating income (loss)	$	121.4		$	164.0	$	134.5		$	(42.6	)	$	29.5			(26.0	)		21.9

WeNet ~~manufacture~~sales ~~and~~decreased ~~distribute~~$82.5 ~~value-added~~million, ~~cellulose-based~~or ~~specialty~~9%, ~~products~~in ~~used~~2013 incompared ~~numerous~~to ~~applications~~2012, ~~including~~primarily ~~disposable~~due ~~diapers,~~to ~~personal~~unfavorable ~~hygiene~~changes ~~products,~~in product ~~engine,~~mix ~~air~~ and ~~oil~~lower ~~filters,~~selling ~~concrete~~prices ~~reinforcing~~which ~~fibers,~~had ~~food~~unfavorable ~~casings,~~impacts ~~cigarette~~of ~~filters,~~approximately ~~rayon~~$40.2 ~~filaments,~~million ~~acetate plastics, thickeners~~ and ~~papers~~$26. ~~Our~~4 ~~products~~million, ~~are~~respectively. The ~~produced~~King indivestiture ~~the~~accounted ~~United~~for ~~States,~~$10.1 ~~Canada~~million ~~and~~of ~~Germany,~~the ~~and~~year weover ~~sell~~year ~~these~~reduction ~~products~~ in ~~approximately~~net ~~60 countries worldwide~~sales. We ~~generate~~In ~~revenues~~addition, exchange ~~operating~~rates ~~income~~in ~~and~~Europe ~~cash~~unfavorably ~~flows~~impacted ~~from~~net ~~two~~sales ~~reporting~~for ~~segments:~~the ~~specialty fibers and~~ nonwoven materials~~. Specialty~~ ~~fibers~~segment ~~are~~by ~~derived from wood and cotton cellulose materials using wetlaid technologies~~$3. ~~Our~~6 ~~nonwoven materials are derived from wood pulps, synthetic fibers and other materials using an airlaid process~~million.

~~Our~~Gross ~~strategy~~margin isin to2013 decreased ~~continue~~$28.4 million, or 13%, compared to ~~strengthen~~2012 ~~our~~driven ~~position~~by aslower asales ~~leading~~prices, ~~supplier~~unfavorable ofchanges ~~renewable~~in ~~cellulose-based~~product ~~specialty~~mix ~~products~~and reduced sales volume. ~~The~~ ~~key~~Gross ~~focus~~margin ~~areas~~was ~~for~~negatively ~~Buckeye~~impacted ~~over~~in ~~the~~2013 ~~next~~by ~~twelve~~$25.8 ~~months~~million, ~~include~~$19.9 ~~maximizing~~million ~~cash~~and ~~flow~~$10.6 million due to sales prices, ~~optimizing~~product ~~capacity~~mix ~~utilization~~and sales volume, ~~successful~~respectively. ~~execution~~These ofimpacts ~~our~~were ~~high-end~~partially ~~specialty~~offset ~~wood~~as ~~pulp~~lower ~~expansion~~raw ~~project~~materials costs, ~~identifying~~primarily ~~new~~lower ~~profitable,~~raw ~~sustainable~~cotton ~~growth~~linter ~~opportunities~~prices, ~~improving~~had ~~our~~a ~~return~~favorable onimpact ~~invested~~of ~~capital~~$22.7 ~~for~~million ~~all~~on ~~assets~~gross ~~and~~margin. ~~continuing~~The ~~our~~February ~~progress~~2012 topower afailure and ~~Lean~~the ~~Enterprise~~June ~~culture. We~~2012 ~~plan~~steam todrum ~~take~~failure aoutages ~~balanced~~at ~~approach~~our inFoley ~~allocating~~mill ~~capital~~had ~~between~~a ~~debt~~negative ~~reduction,~~impact ~~investment~~on ingross ~~high~~margin ~~rate~~in 2012 of ~~return~~$6.3 ~~projects~~million, ~~and~~net ~~returning~~of ~~value~~insurance ~~to stockholders~~proceeds.

Net sales, ~~excluding~~increased ~~discontinued operations in Brazil, for 2012, were a record~~ $~~895~~14.5 million, ~~up $15 million~~ or 2%, ~~from~~in ~~$880~~2012 ~~million~~compared into 2011,. asHigher ~~higher specialty fibers~~ selling prices, ~~more~~mainly ~~than~~in ~~offset~~ the ~~impact~~specialty offibers ~~lower~~segment ~~airlaid~~accounted for ~~nonwovens~~an ~~shipment~~increase ~~volumes and the January sale~~ of ~~our~~$52.4 ~~Merfin~~million. ~~Systems~~Higher ~~converting~~specialty ~~business~~wood ~~to National Tissue. Specialty~~ fibers, ~~segment sales were~~ up 618%, and ~~sales~~cotton inspecialty ~~the~~prices, ~~nonwoven~~up ~~materials~~12%, ~~segment~~more ~~(excluding~~than ~~the~~offset ~~impact~~lower offluff ~~the~~pulp ~~sale~~prices of ~~our~~$78 ~~King~~per ~~converting business) were down 7%~~ton. ~~The~~ ~~sale~~These ofhigher ~~our~~selling ~~King~~prices ~~business~~were ~~accounted~~partially ~~for~~offset anby ~~$11~~lower ~~million~~volume ~~reduction~~ in ~~net~~nonwoven materials ~~sales~~as ~~compared~~we tosold ~~2011. Shipment~~Merfin ~~volume~~Systems, ~~excluding~~our ~~the~~nonwoven ~~impact~~materials ofconverting ~~plant closures and divestitures~~business, ~~was~~($11.3 ~~down~~million 2%impact) ~~compared~~and toexperienced ~~the~~lower ~~prior~~demand ~~year,~~in ~~with~~our ~~specialty~~North ~~fibers~~American ~~shipments~~markets. ~~down~~We 1%also ~~and~~experienced ~~nonwovens~~lower ~~shipment~~ volume ~~down~~and ~~6%. For~~unfavorable ~~the~~product ~~total~~mix ~~year,~~in ~~average selling prices were up by 18% on both our high-end~~ wood ~~and cotton~~ specialty ~~pulp, while average fluff pulp prices decreased by $77 per ton compared to the prior year~~ products. ~~Average~~ ~~nonwovens selling prices were up by about 1% year over year.~~

~~Operating~~Gross ~~income,~~margin ~~excluding discontinued operations~~ in ~~Brazil, for~~ 2012, ~~was~~increased $~~164~~15.3 million, anor ~~increase~~8%, ~~of $30 million~~ compared to ~~$134 million in~~ 2011~~. Gross~~, ~~margin~~primarily ~~improved~~driven by ~~$15 million compared to~~ the ~~same~~higher ~~period in 2011 as~~ selling prices ~~overall~~which were ~~up significantly in spite of lower average fluff pulp prices. Higher prices were~~ more than enough to offset the impact of increased cotton linter raw material costs~~. Chemical~~, and ~~transportation costs were modestly~~ higher, ~~while~~chemical ~~energy costs~~ and ~~fixed~~transportation ~~overhead~~ costs. ~~were~~The ~~modestly~~February ~~lower~~2012 ~~year~~power ~~over~~failure ~~year. The~~and ~~impact of~~ the ~~power~~June ~~and~~2012 steam drum failure outages at our Foley ~~reduced~~mill ~~gross~~had ~~margin~~a bynegative $6impact on ~~million~~gross ~~compared to the prior year. Gross~~ margin ~~as a percentage of net sales improved from 22.9%~~ in ~~2011 to 24.3% in~~ 2012, ~~the highest level in 12 years. Restructuring and impairment losses for the year, excluding discontinued operations in Brazil, and relating to the sale~~ of ~~our Merfin Systems business, totaled~~ $~~5 million in 2012~~6. ~~This~~3 ~~compares to $14~~ million, innet ~~2011 relating mostly to the announced closure~~ of ~~our~~insurance ~~Delta nonwovens facility planned for December 2012~~proceeds.

~~Net income for 2012 was $90 million~~Selling, orresearch ~~$2.24~~and ~~per~~administrative ~~diluted~~expenses ~~share,~~increased ~~down~~by $34 9.8 million orin ~~$0.81~~2013 ~~per diluted share~~ compared to ~~2011. A~~2012, ~~reduction~~primarily indue ~~the~~to ~~net~~costs ~~benefit~~associated ~~realized~~with ~~from~~strategic ~~the cellulosic biofuel credit~~initiatives, ~~which~~including ~~impacts~~our ~~both~~pending ~~income~~merger ~~tax~~with ~~and interest expense~~Georgia-Pacific, ~~accounted~~and ~~for~~higher ~~$40~~stock ~~million~~compensation ~~of this reduction in net income~~expense. In ~~addition~~Selling, ~~the~~research ~~loss~~and ~~from~~administrative ~~discontinued~~expenses ~~operations,~~decreased ~~net of tax, was~~ $24 5.0 million ~~greater~~from ~~year~~2011 ~~over year due~~ to ~~impairment~~2012 ~~and~~as ~~restructuring charges related to~~ the ~~closure~~result ~~and sale~~ of ~~our~~lower ~~Americana,~~bonus ~~Brazil cotton linter pulp facility in 2012~~expense. ~~Other~~ ~~impairment~~As ~~and~~a ~~restructuring~~percentage ~~losses related to the sale~~ of ~~our~~net ~~Merfin~~sales ~~Systems~~these ~~business~~costs ~~and~~increased ~~the~~to ~~announced~~7.0% ~~closure of our Delta nonwovens plant were lower~~ in ~~2012~~2013 compared to ~~2011, accounting for a $9 million improvement in net income~~5. An2% ~~offsetting $20 million improvement~~ in ~~net~~2012 ~~income was mainly the result of increased sales~~ and ~~improved gross margin primarily driven by higher selling prices~~5. In9% ~~addition,~~in ~~selling, research and administrative expenses and net interest expenses were lower compared to the prior year~~2011.

~~Net~~On ~~cash~~June 17, ~~provided~~2011, bywe ~~operating~~announced ~~activities~~our indecision ~~2012~~to ~~totaled~~cease ~~$172~~production ~~million~~at our Delta, ~~which~~B.C., ~~was~~Canada ~~lower~~airlaid nonwovens facility by ~~$40~~the ~~million~~end ~~compared~~of calendar to2012. The ~~$212~~plant ~~million~~ceased production in ~~2011. The~~November ~~cash~~2012, ~~tax~~at ~~benefit~~which ~~from~~time ~~the~~we ~~cellulosic~~evaluated ~~biofuel~~the ~~credit~~recoverability ~~was~~of ~~down~~the ~~$89~~long-lived ~~million~~assets ~~compared~~at tothe ~~2011~~Delta facility, ~~when~~and wedetermining ~~received~~that ~~tax~~certain ~~refunds~~ of ~~$73~~these ~~million,~~long-lived ~~mostly~~assets ~~relating~~were toimpaired, ~~alternative~~we ~~fuel~~wrote ~~mixture~~them ~~credits~~down to ~~and~~their ~~cellulosic~~estimated ~~biofuel~~fair ~~credits. In 2012~~value, weresulting ~~received~~in aan ~~tax~~impairment ~~benefit~~charge of $233.6 million ~~relating~~in to2013. The sale of the ~~closure~~land and ~~sale~~buildings ofresulted ~~our~~in ~~Brazilian~~a ~~cotton~~gain ~~linter~~of ~~pulp~~$7.3 ~~operations~~million in 2013. An ~~offsetting~~We also recognized $268.9 million ~~improvement~~of restructuring cost in ~~cash~~2013 ~~flow~~as ~~from~~we ~~operations~~reduced ~~was~~the carrying ~~driven~~value byof ~~increased~~certain ~~sales~~other ~~revenue~~assets, ~~improved~~and ~~gross~~recognized ~~margin,~~severance ~~lower~~and ~~selling,~~employee ~~research~~benefit costs and ~~administrative~~other ~~expenses~~miscellaneous costs (see Note 5, ~~and~~Restructuring ~~lower~~Costs ~~cash~~for ~~interest~~additional ~~costs~~detail).

1917

OurTable capital spending for the year just completed was $85 million, up from $57 million in 2011. This included $33 million in spending on the Florida Specialty Expansion Project, which is targeted for completion in the April-June quarter of 2013. Of the $172 million in net cash provided by operating activities and the $12 million in proceeds from the two divestitures completed in 2012, $85 million was reinvested in the business in the form of capital expenditures, $38 million was applied to debt reduction, and $44 million was returned to shareholders in the form of share repurchases and dividends.Contents

~~Fourth~~On ~~quarter and full-year results~~July 26, ~~as previously reported in our earnings release dated August 7,~~ 2012, ~~were~~we ~~subsequently~~announced ~~adjusted~~a tocorporate ~~reflect~~restructuring ~~the~~of ~~reversal~~our ofexecutive ~~accrued~~management ~~interest~~team in support ~~the amount~~ of ~~$8.1~~our ~~million~~previously ~~($5.7~~announced ~~million~~decision ~~reduction in interest expense and $2.4 million reduction~~ to ~~income~~close ~~tax~~or ~~expense)~~sell ~~and~~several ~~related~~underperforming ~~deferred~~or ~~tax~~non-core assets ofand ~~$2.9~~in ~~million~~conjunction aswith ~~a result of a release from~~ the ~~Internal~~departure ~~Revenue Service on August 22, 2012. The net effect~~ of ~~these~~our ~~adjustments~~chief ~~was~~operating anofficer ~~increase~~and torecognized ~~net income of~~ $51.20 million ~~($0.13~~of ~~per~~restructuring ~~diluted~~costs ~~share). See additional discussion~~ in ~~Note 26, Subsequent Events, to the Consolidated Financial Statements~~2013.

~~Results~~On January 31, 2012 we completed the sale of ~~Operations~~Merfin Systems, our nonwovens materials converting business, in King, North Carolina. The sale of this non-core business resulted in an asset impairment charge of $2.1 million, a goodwill impairment charge of $2.4 million and restructuring expenses of $0.2 million in 2012.

~~Consolidated~~In ~~results~~2011, in connection with our decision to cease production at the Delta facility by the end of calendar 2012, we evaluated the recoverability of the long-lived assets at this facility, and determining that they were impaired, we wrote them down to their estimated fair value, resulting in an impairment charge of $13.0 million.

~~The~~In ~~following~~2012, ~~table~~the ~~compares~~Foley Plant experienced a significant failure of a steam drum on the ~~components~~fluff pulp machine, causing damage to multiple drums and structural damage to the paper machine building and structure. In 2013, we received insurance proceeds related to the insured value of ~~consolidated~~the damaged equipment and recognized a gain of $4,277 in other operating income ~~for~~in ~~the~~our ~~three~~consolidated ~~fiscal~~statements ~~years~~of operations. ~~ended~~These ~~June~~proceeds ~~30,~~were ~~2012~~used to fund capital expenditures to replace the damaged equipment.

(dollars in millions)	Year Ended June 30								$ Change						Percent Change
	2012		2011			2010			2012/ 2011			2011/ 2010			2012/ 2011			2011/ 2010
Net sales	$	894.9	$	880.4		$	733.9		$	14.5		$	146.5			1.6	%		20.0	%
Cost of goods sold		677.4		678.2			610.4			(0.8	)		67.8			(0.1	)		11.1
Gross margin		217.5		202.2			123.5			15.3			78.7			7.6			63.7
Selling, research and administrative expenses		46.7		51.7			48.1			(5.0	)		3.6			(9.7	)		7.5
Amortization of intangibles and other		2.0		2.0			1.9			-			0.1			-			5.3
Impairment and restructuring costs		4.8		14.1			3.4			(9.3	)		10.7			(66.0	)		314.7
Alternative fuel mixture credits		-		-			(77.7	)		-			77.7			-			100.0
Other operating income		-		(0.1	)		(0.8	)		0.1			0.7			100.0			87.5
Operating income (loss)	$	164.0	$	134.5		$	148.6		$	29.5		$	(14.1	)		21.9	%		(9.5	)%

Segment results

~~Net~~Although ~~sales~~nonwoven ~~increased~~materials ~~$14.5~~processes, ~~million~~customers, indistribution ~~2012~~methods ~~versus~~and ~~2011. Higher~~regulatory ~~selling~~environment ~~prices,~~are ~~mainly~~very insimilar ~~the~~to specialty fibers, ~~segment~~we believe ~~accounted~~it is appropriate for annonwoven ~~increase~~materials ofto ~~$52.4~~be ~~million. Higher~~disclosed ~~specialty~~as ~~wood~~a ~~fibers~~separate ~~(up~~reporting ~~18%)~~segment ~~and~~from ~~cotton~~specialty fibers. The specialty ~~prices~~fibers ~~(up~~segment ~~12%)~~consists ~~more~~of ~~than~~our ~~offset~~chemical ~~lower~~cellulose, customized fibers and fluff pulp ~~prices~~product lines which are cellulosic fibers based on both wood and cotton. The nonwovens materials segment consists of ~~$78~~our ~~per~~airlaid ~~ton~~plants and our converting plant. ~~These~~ ~~higher~~We ~~selling~~make ~~prices~~separate ~~were~~financial ~~partially~~decisions ~~offset~~and byallocate ~~lower~~resources ~~volume~~based inon ~~nonwoven~~the ~~materials~~sales asand weoperating ~~sold~~income ~~Merfin~~of each ~~Systems~~segment. We allocate selling, ~~our~~research, ~~nonwoven~~and ~~materials~~administrative ~~converting~~expenses ~~business~~to each segment, ~~($11.3~~and ~~million~~we ~~impact)~~use ~~and~~the ~~experienced~~resulting ~~lower~~operating ~~demand~~income into ~~our~~measure ~~North~~the ~~American~~performance ~~markets~~of the two segments. We ~~also~~exclude ~~experienced~~items ~~lower~~that ~~volume~~are ~~and~~not ~~unfavorable~~included ~~product~~in ~~mix~~measuring business inperformance, ~~wood~~such ~~specialty~~as ~~products~~restructuring costs, the impact of goodwill impairment loss, long-lived asset impairments, alternative fuel mixture credits, amortization of intangibles, and unallocated at-risk and stock-based compensation.

~~Gross~~The ~~margin~~following intable ~~2012~~compares ~~increased by $15.3 million versus 2011 and improved as a percentage of~~ net sales ~~from~~and ~~23.0%~~operating inincome ~~2011 to 24.3% in 2012, primarily driven~~ by ~~the~~segment ~~higher~~for ~~selling prices which were more than enough to offset~~ the ~~impact~~three ofyears ~~increased~~ended ~~cotton linter raw material costs, and higher chemical and transportation costs. In~~ June ~~2012~~ 30, ~~our Foley plant experienced a significant failure of a steam drum on the fluff pulp machine~~2013, ~~causing~~2012 ~~damage to multiple drums~~ and ~~structural damage to the paper machine building and structure~~2011. ~~This~~ ~~had~~Each segment ais ~~negative~~discussed ~~impact on gross margin of $4.0 million~~ in ~~2012,~~further ~~net~~detail ~~of insurance proceeds. In February 2012, we had a power failure at our Foley plant which resulted~~ in ~~lower~~the ~~operating~~paragraphs ~~income of $2~~below.3 ~~million, which is net of insurance proceeds.~~

Net sales in 2011 versus 2010 increased by $146.5 million or 20.0%, primarily due to higher selling prices in both segments, accounting for an increase of $131.3 million. Both segments also experienced favorable product mix, which contributed an additional $23.8 million to the higher sales number, partially offset by lower volume and unfavorable exchange rates in Europe.


(dollars in millions)	Year Ended June 30									$ Change						Percent Change
	2013			2012			2011			2013/ 2012			2012/ 2011			2013/ 2012			2012/ 2011
Net sales
Specialty Fibers	$	601.2		$	686.7		$	648.5		$	(85.5	)	$	38.2			(12.5	)%		5.9	%
Nonwoven Material		228.5			239.0			264.9			(10.5	)		(25.9	)		(4.4	)		(9.8	)
Corporate		(17.3	)		(30.8	)		(33.0	)		13.5			2.2			43.8			6.7

Total net sales		812.4			894.9			880.4			(82.5	)		14.5			(9.2	)		1.6

Operating income
Specialty Fibers		131.3			165.4			147.5			(34.1	)		17.9			(20.6	)%		12.1	%
Nonwoven Material		21.2			11.7			13.8			9.5			(2.1	)		81.2			(15.2	)
Corporate		(31.1	)		(13.1	)		(26.8	)		(18.1	)		13.7			(138.2	)		51.1

Total operating income	$	121.4		$	164.0		$	134.5		$	(42.6	)	$	29.5			(26.0	)%		21.9	%

~~Our~~18 2011 gross margin was $78.7 million better than 2010 and improved as a percentage of net sales from 16.8% in 2010 to 23.0% in 2011. This improvement was due to the higher selling prices. Raw material costs were up significantly for our cotton specialty fibers and nonwovens products compared to 2010, but wood costs were only modestly higher. Chemical, freight and direct costs were up, while natural gas costs were slightly lower. The final insurance settlement related to the June 2010 power outage at our Foley Plant added $3.2 million to our gross margin, representing a partial recovery of the $6.1 million in lost margin from business interruption and property damage.

20Table of Contents

~~Selling,~~Specialty ~~research~~fibers and administrative expenses decreased $5.0 million from 2011 to 2012 as the result of lower bonus expense. Selling, research and administrative expenses increased $3.6 million in 2011 from 2010 as a result of higher bonus and stock compensation expense, due to improved profit, cash flow, safety and quality and a higher stock price. As a percentage of net sales these costs decreased to 5.2% in 2012 versus 5.9% in 2011 and 6.6% in 2010.

OnThe ~~January~~following ~~31,~~table ~~2012~~compares wespecialty ~~completed~~fibers ~~the~~net ~~sale~~sales ~~of Merfin Systems, our nonwovens materials converting business, in King, North Carolina. It was a non-core business~~ and weoperating ~~wanted~~income tofor ~~redeploy~~ the ~~proceeds~~three ~~into~~years ~~strategic~~ended ~~operations. This~~June 30, ~~sale resulted in an asset impairment charge of $2.1 million~~2013, a2012 ~~goodwill impairment charge of $2.4 million~~ and ~~restructuring expenses of $0~~2011.2 ~~million. We recorded proceeds of $5.5 million from the sale.~~

On June 17, 2011, we announced our decision to cease production at our Delta, B.C., Canada airlaid nonwovens facility by the end of calendar 2012. We evaluated the recoverability of the long-lived assets at the Delta facility and determined that these long-lived assets were impaired and wrote them down to their estimated fair value resulting in an impairment charge of $13.0 million.


(dollars in millions)	Year Ended June 30									$ Change					Percent Change
	2013			2012			2011			2013/ 2012			2012/ 2011		2013/ 2012			2012/ 2011
Net sales	$	601.2		$	686.7		$	648.5		$	(85.5	)	$	38.2		(12.5	)%		5.9	%
Operating income		131.3			165.4			147.5			(34.1	)		17.9		(20.6	)		12.1

Operating margin percentage		21.8	%		24.1	%		22.7	%

WeNet ~~recorded~~sales decreased by $7785.75 million in ~~AFMCs,~~2013 ~~which~~compared ~~were~~to 2012. Lower shipment volume reduced net ofsales ~~expenses~~by $22.6 million, inreflecting the effects of lost sales resulting from the June 2012 steam drum failure outage at our ~~consolidated~~Foley ~~statements~~Plant. Unfavorable changes in product mix and lower selling prices had unfavorable impacts of ~~operations~~$37.4 ~~for~~million ~~the~~and ~~year~~$25.5 ~~2010~~million, respectively. Average selling prices on our high-end specialty wood (excluding viscose staple fiber) and cotton linter pulp, were up 3% and down 9%, respectively.

~~Segment~~Operating ~~results~~income decreased by $34.1 million in 2013 compared to 2012, primarily due to lower selling prices, unfavorable changes in product mix, and reduced sales volume which had unfavorable impacts of approximately $26.5 million, $21.5 million and $8.2 million, respectively, while raw material costs for our cotton specialty fibers decreased approximately $22.8 million compared to 2012. The February 2012 power failure and the June 2012 steam drum failure outages at our Foley Plant had a negative impact on gross margin in 2012 of $6.3 million, net of insurance proceeds.

~~Although~~In ~~nonwoven materials processes~~2012, ~~customers,~~net ~~distribution~~sales ~~methods~~increased ~~and~~by ~~regulatory~~$38.2 ~~environment~~million ~~are~~compared ~~very similar~~ to ~~specialty fibers~~2011, weprimarily ~~believe~~due itto ishigher ~~appropriate~~selling ~~for~~prices ~~nonwoven~~in ~~materials~~our tospecialty bewood ~~disclosed~~fibers asgrades, aup 18%, ~~separate~~cotton ~~reporting segment from~~ specialty fibers~~. The~~ ~~specialty~~grades, ~~fibers~~up ~~segment consists of our chemical cellulose~~12%, ~~customized~~partially ~~fibers~~offset ~~and~~by lower fluff pulp ~~product~~prices ~~lines~~of ~~which~~9% ~~are~~or ~~cellulosic~~$78 ~~fibers~~per ~~based~~ton. onWe ~~both~~continue ~~wood~~to ~~and~~have ~~cotton. The~~more ~~nonwovens~~than ~~materials~~90% ~~segment consists~~ of our ~~airlaid~~Memphis ~~plants and our converting~~ plant~~. We~~’s ~~make~~specialty ~~separate~~cotton ~~financial~~fibers ~~decisions~~business ~~and~~committed ~~allocate~~to ~~resources based on the~~ sales ~~and~~agreements ~~operating~~that ~~income~~allow ~~of each segment. We allocate selling, research, and administrative expenses~~ us to ~~each~~pass ~~segment,~~through ~~and we use~~ the ~~resulting~~higher ~~operating~~cost ~~income to measure the performance~~ of ~~the~~cotton ~~two segments~~linters. We ~~exclude~~Partially ~~items~~offsetting ~~that are not included in measuring business performance, such as restructuring costs,~~ the ~~impact~~higher ofprices ~~goodwill~~were ~~impairment~~specialty ~~loss,~~wood ~~long-lived~~fibers ~~asset~~lower ~~impairments,~~shipment ~~alternative~~volume ~~fuel mixture credits, amortization of intangibles,~~ and ~~unallocated~~unfavorable ~~at-risk and stock-based compensation~~mix.

~~The~~Operating ~~following~~income ~~table~~increased ~~compares~~by ~~net~~$17.9 ~~sales~~million ~~and~~in ~~operating~~2012 ~~income~~compared byto ~~segment~~2011, ~~for~~primarily due to the ~~three~~higher ~~years~~selling ~~ended~~prices ~~June~~in ~~30,~~our ~~2012~~specialty grades. ~~Each~~ Improved ~~segment~~capacity isutilization ~~discussed~~at inour ~~further~~Memphis ~~detail~~specialty cotton fibers plant contributed to higher gross margin as we continued to experience improvement in the ~~paragraphs~~availability ~~below~~of cotton linters relative to the year ago period. Offsetting the higher selling prices were increased costs for raw materials, chemicals and transportation. The February 2012 power failure and the June 2012 steam drum failure outages at our Foley Plant had a negative impact on gross margin in 2012 of $6.3 million, net of insurance proceeds.

(dollars in millions)	Year Ended June 30									$ Change						Percent Change
	2012			2011			2010			2012/ 2011			2011/ 2010			2012/ 2011			2011/ 2010
Net sales
Specialty Fibers	$	686.7		$	648.5		$	515.0		$	38.2		$	133.5			5.9	%		25.9	%
Nonwoven Material		239.0			264.9			246.8			(25.9	)		18.1			(10.0	)		7.3
Corporate		(30.8	)		(33.0	)		(27.9	)		2.2			(5.1	)		6.7			(18.3	)
Total net sales		894.9			880.4			733.9			14.5			146.5			1.6			20.0
Operating income
Specialty Fibers		165.4			147.5			67.3			17.9			80.2			12.1			119.2
Nonwoven Material		11.7			13.8			16.8			(2.1	)		(3.0	)		(15.2	)		(17.9	)
Corporate		(13.1	)		(26.8	)		64.5			13.7			(91.3	)		51.1			(141.6	)
Total operating income	$	164.0		$	134.5		$	148.6		$	29.5		$	(14.1	)		21.9	%		(9.5	)%

Nonwoven materials

~~Specialty~~The ~~fibers~~following table compares nonwoven materials net sales and operating income for the three years ended June 30, 2013, 2012 and 2011.

The following table compares specialty fibers net sales and operating income for the three years ended June 30, 2012.


(dollars in millions)	Year Ended June 30									$ Change						Percent Change
	2013			2012			2011			2013/ 2012			2012/ 2011			2013/ 2012			2012/ 2011
Net sales	$	228.5		$	239.0		$	264.9		$	(10.5	)	$	(25.9	)		(4.4	)%		(9.8	)%
Operating income		21.2			11.7			13.8			9.5			(2.1	)		81.2			(15.2	)

Operating margin percentage		9.3	%		4.9	%		5.2	%

(dollars in millions)	Year Ended June 30									$ Change				Percent Change
	2012			2011			2010			2012/ 2011		2011/ 2010		2012/ 2011			2011/ 2010
Net sales	$	686.7		$	648.5		$	515.0		$	38.2	$	133.5		5.9	%		25.9	%
Operating income		165.4			147.5			67.3			17.9		80.2		12.1			119.2
Operating margin percentage		24.1	%		22.7	%		13.1	%

Net sales decreased by $10.5 million in 2013 compared to 2012 due to the sale of the Merfin Systems converting business in January 2012.

21Operating income increased $9.5 million in 2013 compared to 2012 due to a reduction in fixed manufacturing costs resulting from the closure of our Delta, B.C., Canada airlaid facility in December 2012.

InNet ~~2012, net~~ sales ~~increased~~decreased by $3825.29 million ~~versus~~in ~~2011,~~2012 compared ~~primarily due~~ to ~~higher~~2011. ~~selling~~Lower ~~prices~~shipment volume in ~~our~~North ~~specialty~~America ~~wood~~was ~~fibers~~the ~~grades,~~main updriver ~~18%,~~for ~~cotton~~the ~~specialty~~decrease. ~~fibers~~The ~~grades,~~sale ~~up 12%, partially offset by lower fluff pulp prices~~ of 9%Merfin orSystems ~~$78~~contributed ~~per ton~~$11. We3 ~~continue~~million to ~~have~~the ~~more than 90% of our Memphis plant’s specialty cotton fibers business committed to~~ sales ~~agreements that allow us to pass through the higher cost of cotton linters~~decrease. ~~Partially~~ ~~offsetting the higher prices were specialty wood fibers lower shipment volume and unfavorable mix.~~

Operating income ~~increased~~decreased byslightly ~~$17.9 million~~ in 2012 ~~versus~~compared ~~2011, primarily due~~ to ~~the higher selling prices in our specialty grades~~2011. ~~Improved~~ ~~capacity~~The ~~utilization~~sale ~~at our Memphis specialty cotton fibers plant contributed to higher gross margin as we continued to experience improvement in the availability~~ of ~~cotton~~Merfin ~~linters~~Systems relative to the year ago period. Offsetting the higher selling prices were increased costs for raw materials, chemicals and transportation. In June 2012, our Foley plant experienced a significant failure of a steam drum on the fluff pulp machine, causing damage to multiple drums and structural damage to the paper machine building and structure. This had aan ~~negative~~ impact ~~on gross margin~~ of $42.0 million ~~in 2012, net of insurance proceeds~~. In ~~February 2012, we had a power failure at our Foley plant which resulted in lower operating income of $2.3 million, which is net of insurance proceeds.~~

~~Net~~19 sales were up substantially in 2011 versus 2010, primarily due to higher selling prices. Average selling prices for high-end specialty wood fibers grades were up 18%, reflecting strong market conditions and improved mix. Fluff pulp prices were up 27% in 2011 versus 2010 driven by a rapidly growing demand for absorbent products in emerging markets. Prices for specialty cotton grades were up 35% as higher costs for cotton linters were passed through based on provisions included in our long-term sales agreements. Adding to the sales improvement were favorable product mix and higher shipment volume from our Memphis plant. As of June 30, 2011, more than 90% of our Memphis plant’s specialty cotton fibers business was committed to contracts that allowed us to commit to longer procurement agreements for cotton linters. This provided improved control of cost and flow of products to our customers.

OperatingTable income increased by $80.1 million in 2011 versus 2010 and improved as a percentage of net sales from 13.1% in 2010 to 22.7% in 2011. This improvement was driven by the higher pricing and improved product sales mix. The successful January 2011 start-up of Phase I of our energy project’s turbine generator at our specialty wood fibers mill contributed to our improved gross margin. Improved capacity utilization at our Memphis specialty cotton fibers plant also contributed to the higher gross margin as we experienced some improvement in the availability of cotton linters. Partially offsetting these items were higher raw material prices mainly due to the higher cost for cotton linters. Direct costs increased due mainly to higher spending on maintenance and higher bonus accruals. In addition we experienced higher chemical and transportation costs.Contents

~~Nonwoven~~Corporate ~~materials~~

~~The~~Our ~~following~~intercompany ~~table~~net ~~compares~~sales ~~nonwoven~~elimination ~~materials~~represents ~~net~~intercompany sales from our Florida and ~~operating~~Memphis ~~income~~specialty ~~for~~fiber ~~the~~facilities ~~three~~to ~~years~~our ~~ended~~airlaid nonwovens ~~June~~plants. ~~30,~~The ~~2012~~unallocated at-risk compensation and unallocated stock-based compensation represent compensation for executive officers and certain other employees.

(dollars in millions)	Year Ended June 30									$ Change						Percent Change
	2012			2011			2010			2012/ 2011			2011/ 2010			2012/ 2011			2011/ 2010
Net sales	$	239.0		$	264.9		$	246.8		$	(25.9	)	$	18.1			(10.0	)%		7.3	%
Operating income		11.7			13.8			16.8			(2.1	)		(3.0	)		(15.2	)		(17.9	)
Operating margin percentage		4.9	%		5.2	%		6.8	%

The following tables compare corporate net sales and operating income (loss) for the three years ended June 30, 2013, 2012 and 2011.

Nonwoven materials sales decreased in 2012 versus 2011. Lower shipment volume in North America was the main driver for the decrease. The sale of Merfin Systems contributed $11.3 million to the sales decrease.


(dollars in millions)	Year Ended June 30									$ Change					Percent Change
	2013			2012			2011			2013/ 2012			2012/ 2011		2013/ 2012			2012/ 2011
Net sales	$	(17.3	)	$	(30.8	)	$	(33.0	)	$	13.5		$	2.2		43.8	%		6.7	%
Operating loss		(31.1	)		(13.1	)		(26.8	)		(18.1	)		13.7		(138.2	)		51.1

~~Operating~~The operating income ~~decreased~~(loss) ~~slightly~~for inthe ~~2012~~three ~~versus~~years ~~2011. The~~ended ~~sale~~June 30, of2013, ~~Merfin~~2012 ~~Systems~~and ~~had~~2011 anconsists ~~impact~~ of: ~~$2.0 million.~~

Nonwoven materials sales increased in 2011 versus 2010 by $18.1 million or 7.3%, primarily due to higher selling prices and higher shipment volume. Selling prices were up approximately 5% and shipment volume was up approximately 2%.


(dollars in millions)	2013			2012			2011
Unallocated at-risk compensation	$	(3.7	)	$	(2.7	)	$	(5.7	)
Unallocated stock-based compensation		(4.8	)		(4.2	)		(4.6	)
Unallocated growth initiative expenses		(7.0	)		—			—
Intellectual property amortization		(2.1	)		(2.0	)		(2.0	)
Restructuring expenses		(9.9	)		(0.2	)		(1.1	)
Asset impairment		(3.6	)		(2.1	)		(13.0	)
Goodwill impairment		—			(2.4	)		—
Gross margin on intercompany sales		—			0.5			(0.4	)

Operating loss	$	(31.1	)	$	(13.1	)	$	(26.8	)

~~Operating~~Net ~~income~~interest ~~decreased~~expense inand ~~2011~~amortization ~~versus~~of ~~2010~~debt ~~as higher raw material~~ costs~~, mainly due to the rapid rise in fluff pulp costs in 2011, more than offset higher selling prices.~~

~~Corporate~~Net interest expense and amortization of debt costs increased $1.4 million for 2013 compared to 2012 primarily due to the reversal of interest expense in 2012 that was expected to be paid to the U.S. government related to exchanging AFMC credits for CBC credits. In a release dated August 22, 2012, the IRS concluded that no interest is due on the AFMC cash refunds in the CBC exchange. Conversely, interest capitalized was $1.1 million higher in 2013 reflecting the high levels of capital expenditures due to work on the specialty conversion and oxygen delignification projects at the Foley Plant.

~~Our~~Net ~~intercompany~~interest ~~net~~expense ~~sales~~and ~~elimination~~amortization ~~represents~~of ~~intercompany~~debt ~~sales~~costs ~~from~~decreased ~~our~~$8.3 ~~Florida~~million ~~and~~for ~~Memphis~~2012 ~~specialty~~compared ~~fiber~~to ~~facilities~~2011 primarily due to ~~our~~the ~~airlaid~~reversal ~~nonwovens~~of ~~plants. The~~interest that ~~unallocated~~had ~~at-risk~~been ~~compensation~~accrued ~~and~~as ~~unallocated~~payable ~~stock-based~~to ~~compensation~~the ~~represent~~IRS ~~compensation~~for the use of funds from AFMC refunds expected to be exchanged for ~~executive~~CBC. ~~officers~~Additionally, interest expense decreased due to debt reduction of $38.3 million and ~~certain~~lower ~~other~~annual ~~employees~~interest rates of approximately 156 basis points.

22Loss on early extinguishment of debt costs

~~The~~During ~~following~~2011, ~~tables~~we ~~compare~~used ~~corporate~~borrowings ~~net~~under ~~sales~~our ~~and~~credit ~~operating~~facility ~~income~~to (redeem the remaining $140 million of our 2013 notes. As a result of this extinguishment, we recorded a $3.6 million loss) ~~for~~which included a $2.0 million premium paid to the ~~three~~note ~~years~~holders ~~ended~~and ~~June~~$1.7 ~~30,~~million ~~2012~~of unamortized deferred financing costs.

(dollars in millions)	Year Ended June 30									$ Change					Percent Change
	2012			2011			2010			2012/ 2011		2011/ 2010			2012/ 2011			2011/ 2010
Net sales	$	(30.8	)	$	(33.0	)	$	(27.9	)	$	2.2	$	(5.1	)		6.7	%		(18.3	)%
Operating income (loss)		(13.1	)		(26.8	)		64.5			13.7		(91.3	)		51.1			(141.6	)

Gain on sale of assets held for sale

In 2011, we announced our decision to cease production at our Delta airlaid nonwovens facility by the end of calendar 2012. The ~~operating~~plant ~~income~~ceased ~~(loss)~~production ~~for~~in November 2012, and we completed the ~~three~~sale ~~years~~of ~~ended~~the ~~June~~land 30and ~~consists~~buildings in February 2013, recognizing $19.9 million in proceeds and a gain on sale of: assets held for sale of $7.3 million.

(dollars in millions)	2012			2011			2010
Unallocated at-risk compensation	$	(2.7	)	$	(5.7	)	$	(5.0	)
Unallocated stock-based compensation		(4.2	)		(4.6	)		(2.7	)
Intellectual property amortization		(2.0	)		(2.0	)		(1.9	)
Restructuring expenses		(0.2	)		(1.1	)		(3.4	)
Asset impairment		(2.1	)		(13.0	)		-
Goodwill impairment		(2.4	)		-			-
Gross margin on intercompany sales		0.5			(0.4	)		(0.2	)
Alternative fuel mixture credits		-			-			77.7
	$	(13.1	)	$	(26.8	)	$	64.5

Foreign exchange and other

~~Impairment~~Foreign exchange and ~~Restructuring~~other ~~activities~~in 2013, 2012 and 2011 were $0.1 million, $0.4 million and $(1.5) million, respectively. The loss in 2011 was primarily due to foreign currency losses as a result of the strengthening of the euro and Canadian dollar versus the U.S. dollar.

~~King,~~20 ~~North Carolina facility~~

OnTable January 31, 2012 we completed the sale of the nonwovens materials Merfin Systems converting business in King, North Carolina. It was a non-core business and we wanted to redeploy the proceeds into strategic operations. We evaluated the recoverability of the long-lived assets at the facility. Based on this evaluation, and after reducing the value of certain other assets by $0.4 million, we determined that the long-lived assets associated with this operation, which had a carrying value of $1.4 million, were impaired and wrote them down to their estimated fair value of $0.2 million, resulting in an impairment charge of $1.3 million. We also recorded a goodwill impairment charge of $2.4 million. With the completion of the sale of Merfin Systems we recorded an additional $0.4 million of impairment based on the negotiated purchase price. We recorded proceeds of $5.5 million from the sale. In conjunction with the sale, four positions were eliminated and we recorded restructuring expense of $0.2 million.Contents

~~Delta,~~Income ~~B.C.,~~tax ~~Canada~~expense ~~facility~~

OnOur ~~June~~effective ~~17,~~tax ~~2011,~~rate weon ~~announced~~continuing ~~our~~operations ~~decision~~for to2013 ~~close~~was ~~our~~approximately ~~Delta, B~~31.~~C.,~~2% ~~Canada~~versus ~~airlaid~~27.5% ~~nonwovens~~in ~~facility~~2012 byand ~~the~~(6.8)% ~~end~~in ~~of calendar 2012~~2011. Our ~~decision~~effective ~~was~~tax rate ~~due~~has todiffered ~~several~~from ~~factors~~the ~~including~~U.S. ~~unfavorable~~Federal ~~site~~statutory ~~location~~income ~~relative~~tax torate ~~customers~~during ~~and~~these ~~raw~~periods ~~material~~primarily ~~suppliers,~~as a ~~strong~~result ~~Canadian~~of ~~dollar,~~tax ~~and~~benefits ~~low~~from ~~capacity~~investment ~~utilization. We~~tax ~~plan~~credits, ~~to consolidate a portion of~~ the ~~Delta~~domestic ~~facility’s~~manufacturing ~~production~~deduction, ~~at our two other airlaid nonwovens facilities. We believe that this closure~~ and ~~consolidation~~CBCs ~~of business will improve capacity utilization, profitability~~ and ~~return~~AFMCs onoffset ~~invested~~by ~~capital~~state ~~for~~tax ~~our Nonwovens business~~expense.

AsDuring ~~a result of this decision~~2013, we2012 ~~evaluated~~and ~~the recoverability of the long-lived assets at the Delta facility in~~ 2011~~. Based on this evaluation~~, we ~~determined~~recorded ~~that~~domestic ~~these~~manufacturing ~~long-lived~~deductions ~~assets, with a carrying amount~~ of $~~38.~~4.3 million, ~~were impaired and wrote them down to their estimated fair value of~~ $~~25.~~4.9 million, ~~resulting~~and ~~in an impairment charge of~~ $134.05 million, ~~in 2011~~respectively.

InDuring ~~2011~~2013 and 2012, we ~~announced~~recorded ~~the~~tax ~~consolidation~~benefits of ~~production~~$4.6 atmillion ~~our~~and ~~Delta~~$9.0 million, ~~British Columbia~~respectively, ~~Canada~~for ~~airlaid~~additional ~~facility~~CBC onbenefits. ~~the~~During ~~newer~~2011, we recorded tax benefits of ~~the~~$20.3 ~~two~~million ~~machines~~for atCBCs ~~that~~claimed ~~site. The~~on ~~cost~~black ofliquor ~~this~~without ~~consolidation~~diesel ~~was~~for ~~approximately~~the ~~$0.8~~period ~~million~~January 1, 2009 through February 11, 2009, and $031.1 million for exchange of ~~which~~CBCs ~~remains~~from toAFMCs. beSee ~~paid~~Note 7, Alternative Fuel Mixture Credits / Cellulosic Biofuel Credits, in the Consolidated Financial Statements for further discussion.

InThe ~~June~~American Recovery and Reinvestment Act of 2009 expanded the IRC Section 48 energy investment tax credit to include qualified property for facilities producing electricity using open-loop biomass. In 2012, weand ~~entered~~2011, ~~into~~we anrecorded ~~agreement~~tax benefits of ~~purchase~~$3.7 million and ~~sale~~$3.9 million, ~~for~~respectively, relating to this tax credit. In 2013 we did not record any tax benefits relating to this tax credit. We expect to realize continuing benefits from the energy investment tax credit which will reduce our ~~Delta~~effective ~~facility’s~~tax ~~land~~rate ~~and~~over the ~~buildings~~next several years based on planned spending on energy projects at our Foley mill.

~~Sales~~Financial ~~and~~Condition ~~Administration~~

~~During~~Liquidity 2010, we implemented a restructuring program to sharpen our focus on key priorities which included restructuring our Ultra Fiber sales force, aligning capacity utilization with current market conditions at our Memphis Plant, and ~~reducing~~capitalization selling, research and administrative expenses. The total cost of this program was $3.6 million, $0.2 million of which remains to be paid. As a result of this restructuring, 32 positions were eliminated and 8 employees were transferred from selling, research and administrative positions to management positions at our Florida facility.

On October 22, 2010, we entered into a Second Amended and Restated Credit Agreement (“credit facility”) which increased our maximum committed borrowing capacity to $300.0 million and extended the maturity date of the facility to October 22, 2015. We used the proceeds from the credit facility to pay the outstanding balance on the former credit facility plus fees and expenses. The interest rate applicable to borrowings under the credit facility is the agent’s prime rate plus 0.75% to 1.75%, or a LIBOR-based rate ranging from LIBOR plus 1.75% to LIBOR plus 2.75%, based on a grid related to our leverage ratio. The credit facility is secured by substantially all of our assets located in the United States. The costs for the issuance of this credit facility were $2.6 million and are being amortized to interest expense using the effective interest method over the life of the facility. The credit facility was terminated on August 23, 2013 upon closing of the merger with Georgia-Pacific.

~~Interest~~The ~~expense~~credit ~~and~~facility ~~amortization~~contains covenants customary for financing of this type. The financial covenants include: maximum total leverage ratio of consolidated total debt ~~costs~~to consolidated earnings before interest, taxes, depreciation and amortization (“EBITDA”), and a minimum consolidated fixed charge coverage ratio. At June 30, 2013, we were in compliance with the financial covenants under the credit facility.

~~Interest~~At ~~expense~~June 30, ~~and~~2013, ~~amortization~~we ofhad ~~debt costs decreased~~ $817.1 million ~~for~~of ~~2012~~cash ~~versus~~and ~~2011~~$254.9 million ~~primarily~~borrowing ascapacity aunder ~~result~~the ofcredit ~~reversing~~facility. ~~interest~~The ~~that~~commitment ~~had~~fee ~~been~~on ~~accrued as payable to~~ the ~~IRS~~unused ~~for~~portion ~~the use~~ of ~~funds~~the ~~from~~credit ~~AFMC~~facility ~~refunds~~is ~~expected~~0.375% per ~~to be exchanged for CBC~~annum. In aOf ~~release dated August 22, 2012,~~ the ~~IRS~~cash ~~concluded~~and ~~that no interest is due on the AFMC~~ cash ~~refunds~~equivalents inheld ~~the~~at ~~CBC~~June 30, ~~exchange. Additionally~~2013, ~~interest expense decreased due to debt reduction of~~ $3817.30 million ~~and~~was ~~lower~~held ~~annual~~by ~~interest rates of approximately 156 basis points~~foreign subsidiaries.

~~Interest~~From ~~expense~~June 30, ~~and~~2012 ~~amortization~~to ofJune 30, ~~debt~~2013, ~~costs~~total debt decreased by $817.74 million ~~for~~to ~~2011 versus 2010~~$41. ~~Interest~~2 ~~expense~~million ~~decreased~~after ~~due~~decreasing toby $38.3 ~~debt~~million ~~reduction~~from ofJune 30, ~~$140~~2011.6 ~~million~~Our ~~and~~total ~~lower~~debt ~~annual~~as ~~interest~~a ~~rates~~percentage of ~~approximately~~our ~~243~~total ~~basis~~capitalization ~~points. The decrease~~ was ~~slightly offset by $2.~~5.7% ~~million~~at ofJune 30, ~~accrued~~2013, ~~interest~~as ~~payable~~compared to ~~the~~8.9% ~~IRS~~at ~~for~~June 30, ~~the~~2012 ~~use~~and of14.3% ~~funds~~at ~~from~~June 30, ~~AFMC refunds expected to be exchanged for CBC~~2011.

~~Loss~~While onwe ~~early~~can ~~extinguishment~~offer ofno assurances, we believe that our cash flow from operations, together with current domestic cash and cash equivalents, will be sufficient to fund necessary capital expenditures, meet operating expenses and service our debt ~~costs~~obligations for the next 24 months.

During 2011, we used borrowings under our credit facility to redeem the remaining $140 million of our 2013 notes. As a result of this extinguishment, we recorded a $3.6 million loss which included a $2.0 million premium paid to the note holders and $1.7 million of unamortized deferred financing costs.Treasury stock

~~During~~At ~~2010~~June 30, we2013, ~~used~~a ~~borrowings~~total ~~under~~of ~~our~~7.3 million ~~credit~~shares ~~facility~~have tobeen ~~redeem~~repurchased ~~the~~under ~~remaining~~authorizations ~~$110~~by ~~million of~~ our ~~2010~~Board ~~notes. As a result~~ of ~~this~~Directors ~~extinguishment,~~to repurchase weup ~~recorded~~to ~~a $0~~11.2 0 million ~~non-cash~~shares ~~gain~~of ~~which~~our ~~was~~common ~~the~~stock. ~~net~~Repurchased ofshares, ~~the~~if ~~deferred financing costs~~any, ~~offset~~are byheld ~~the~~as ~~remaining~~treasury ~~unamortized~~stock ~~interest~~and ~~rate~~are ~~swap~~available ~~early~~for ~~termination~~general ~~fee. We~~corporate ~~also~~purposes, ~~used~~including ~~cash~~the ~~and~~funding ~~borrowings~~of toemployee ~~redeem~~benefit ~~$60~~and ~~million~~stock-related ofplans. ~~our~~During 2013, 2012, ~~notes. As~~and a2011 ~~result of this extinguishment,~~ we ~~recorded~~repurchased $20.8 3 million, ~~in losses which included redemption price premiums of $~~1.7 2 million and ~~non-cash~~0.4 million ~~write-off~~shares of ~~deferred~~our ~~financing~~common ~~costs~~stock, ~~of $1~~respectively.1 ~~million.~~

~~Foreign~~21 ~~exchange and other~~

ForeignTable exchange and other in 2012, 2011 and 2010 were $0.4 million, $(1.5) million and $(0.8) million, respectively. In 2012, the U.S. dollar strengthened against the euro. The loss in 2011 was primarily due to foreign currency losses as a result of the strengthening of the euro and Canadian dollar versus the U.S. dollar. The loss in 2010 was primarily due to foreign currency losses as a result of the strengthening of the Canadian dollar versus the U.S. dollar.Contents

~~Income~~Cash ~~tax~~Flow ~~expense~~

~~Our~~Cash ~~effective~~and ~~tax~~cash ~~rate~~equivalents ontotaled ~~continuing~~$17.1 ~~operations~~million ~~for~~at ~~2012~~June 30, ~~was~~2013, ~~approximately~~compared 27to $38.5%3 ~~versus~~million ~~(6.8)%~~at inJune 30, ~~2011~~2012 and 8$30.8%5 inmillion ~~2010. Our~~at June 30, ~~effective tax rate has differed from the U~~2011.S. ~~Federal~~The ~~statutory~~following ~~income~~table ~~tax~~provides ~~rate during these periods primarily as~~ a ~~result~~summary of ~~tax~~cash ~~benefits~~flows ~~from~~for ~~investment tax credits,~~ the ~~domestic~~three ~~manufacturing~~years ~~deduction~~ended June 30, ~~and CBCs and AFMCs offset by state tax expense~~2013.

During 2012, 2011 and 2010, we recorded domestic manufacturing deductions of $4.9 million, $4.5 million and $0.7 million, respectively. The large increase in this deduction in 2012 and 2011 was due to an increase in the applicable percentage from 6% to 9% and the increase in taxable income.


(dollars in millions)	2013			2012			2011
Operating activities:
Net income	$	88.7		$	90.0		$	124.3
Noncash charges and credits, net		52.0			105.9			30.0
Changes in operating assets and liabilities, net		(4.5	)		(24.1	)		57.7

Net cash provided by operating activities		136.2			171.8			212.0
Investing activities:
Purchases of property, plant and equipment		(109.4	)		(84.9	)		(57.3	)
Other investing activities		(8.3	)		2.0			(0.5	)

Net cash used in investing activities		(117.7	)		(82.9	)		(57.8	)
Financing activities:
Net borrowings (payments) under lines of credit		(17.4	)		(38.3	)		(0.6	)
Payments on long-term debt		—			—			(140.0	)
Other financing activities, net		(19.0	)		(38.1	)		(16.3	)

Net cash used in financing activities		(36.4	)		(76.4	)		(156.9	)
Effect of foreign currency rate fluctuations on cash		(3.3	)		(4.7	)		11.1

Net increase in cash and cash equivalents	$	(21.2	)	$	7.8		$	8.4

~~During~~Cash ~~2012,~~provided weby ~~recorded~~operating ~~tax~~activities benefits of $9.0 million for additional CBC benefits. During 2011, we recorded tax benefits of $20.3 million for CBCs claimed on black liquor without diesel for the period January 1, 2009 through February 11, 2009, and $31.1 million for exchange of CBCs from AFMCs. See Note 7, Alternative Fuel Mixture Credits / Cellulosic Biofuel Credits, in the Consolidated Financial Statements for further discussion.

~~During~~Cash ~~2010,~~provided weby ~~claimed~~operating ~~the~~activities ~~AFMCs~~in as2013 ~~cash~~decreased ~~refunds~~$35.6 ~~through~~million ~~the~~compared ~~filing~~to of2012 ~~periodic excise tax refund claims and~~ as ~~income~~operating ~~tax credits on the federal~~ income ~~tax~~decreased ~~returns~~$42.7 ~~filed~~million ~~for~~driven ~~the~~by lower ~~2010~~sales revenue and ~~2009~~margins ~~tax years. For purposes of calculating federal~~ and ~~state~~higher ~~income taxes, we treat the credits claimed as~~ cash ~~refunds~~expenditures offor ~~excise~~strategic ~~tax as taxable income and the credits claimed on the federal income tax return as nontaxable income. In 2010~~initiatives, weincluding ~~recorded tax benefits of $26.3 million due to~~ the ~~nontaxable~~merger ~~nature~~with ofGeorgia-Pacific ~~the~~and ~~AFMCs~~restructuring ~~claimed on the federal income tax return~~costs.

~~The~~Cash ~~American~~provided ~~Recovery~~by ~~and~~operating ~~Reinvestment~~activities ~~Act~~in of2012 ~~2009~~was ~~expanded~~$40.2 ~~the~~million ~~IRC~~less ~~Section~~than 48in ~~energy~~2011. Cash ~~investment~~taxes ~~tax~~in ~~credit~~2012 towere ~~include~~$89.2 ~~qualified~~million ~~property~~higher ~~for~~compared to ~~facilities~~2011 ~~producing~~when ~~electricity using open-loop biomass. During 2010,~~ we ~~recorded~~received afederal tax ~~benefit~~refunds oftotaling $872.47 million ~~relating to this tax credit~~, ofmostly ~~which~~relating ~~$5.4 million relates~~ to ~~expenditures~~alternative ~~prior~~fuel tomixture ~~June~~credits ~~30, 2009~~ and ~~$3.0~~cellulosic ~~million~~biofuel ~~relates to 2010 expenditures~~credits. In ~~2011,~~2012 we ~~recorded~~repaid ~~an additional~~ $317.96 million ~~tax~~in ~~benefit~~previously ~~relating~~received toalternative ~~this~~fuel ~~tax~~mixture ~~credit. We~~credits ~~expect~~ to ~~realize~~the IRS ~~continuing~~in ~~benefits~~exchange ~~from~~for ~~the~~cellulosic ~~energy~~biofuel ~~investment~~credits. ~~tax~~Offsetting ~~credit~~these ~~which~~decreases ~~will~~was ~~reduce~~a ~~our~~$31.4 ~~effective~~million ~~tax~~year-over-year ~~rate~~increase ~~over~~in ~~the~~cash ~~next~~flow ~~several~~from ~~years~~operations ~~based~~driven onby ~~planned~~increased ~~spending~~sales onrevenue, ~~energy~~improved ~~projects~~margins, atand ~~our~~lower ~~Foley~~cash ~~mill~~interest costs.

24Net cash used in investing activities

~~Financial~~Purchases ~~Condition~~of property, plant and equipment increased $24.5 million in 2013 after increasing $27.6 million in 2012, due mainly to the Foley Specialty Expansion Project, which will add approximately 42,000 tons annually of high-end specialty production while reducing an equal amount of fluff pulp production. This project will cost approximately $89 million, of which approximately $46 million and $34 million was spent in 2013 and 2012, respectively. We expect our capital spending will be approximately $85 million in 2014.

~~Our~~Net ~~financial~~cash ~~condition~~used ~~continued~~in toinvesting ~~improve~~activities ~~during~~for ~~2012~~2013 ~~with~~includes ~~another~~ $3832.32 million infor ~~debt~~the ~~reduction. We~~purchase ~~plan~~of toshort ~~take~~term ainvestments ~~balanced~~compared ~~approach~~to in$9.2 ~~allocating~~million ~~capital between debt reduction, investment~~ in ~~high rate of return projects, and returning cash to stockholders~~ 2012.

~~Liquidity~~In 2011, we announced our decision to cease production at our Delta airlaid nonwovens facility by the end of calendar 2012. The plant ceased production in November 2012, and ~~capitalization~~we completed the sale of the land and buildings in February 2013, recognizing $19.9 million in proceeds and a gain on sale of assets held for sale of $7.3 million.

OnIn ~~October 22~~2012, ~~2010,~~ we ~~entered~~completed ~~into~~the asale ~~Second~~of ~~Amended~~Merfin Systems and ~~Restated~~recorded ~~Credit~~proceeds ~~Agreement~~of ~~(“credit facility”) which increased our maximum committed borrowing capacity to~~ $~~300~~5.05 million ~~and extended the maturity date of the facility to October 22, 2015. We used the proceeds~~ from the ~~credit facility to pay the outstanding balance on the former credit facility plus fees and expenses~~sale. ~~The~~ ~~interest~~In ~~rate~~2012, ~~applicable~~we toalso ~~borrowings~~completed ~~under~~ the ~~credit~~sale facility is the agent’s prime rate plus 0.75% to 1.75%, or a LIBOR-based rate ranging from LIBOR plus 1.75% to LIBOR plus 2.75%, based on a grid related to our leverage ratio. The credit facility is secured by substantially all of Americana ~~our~~Ltda ~~assets~~and ~~located~~recorded inproceeds ~~the United States. The costs for the issuance~~ of ~~this credit facility were~~ $2.6.3 million ~~and~~from ~~are being amortized to interest expense using~~ the ~~effective interest method over the life of the facility~~sale.

~~The~~We ~~credit~~expect ~~facility~~to ~~contains~~incur ~~covenants~~significant ~~customary~~capital ~~for~~expenditures ~~financing~~in ofthe ~~this~~future ~~type. The~~to comply ~~financial~~with ~~covenants~~environmental ~~include:~~obligations ~~maximum~~at ~~total~~our ~~leverage~~Foley ~~ratio~~Plant specialty fibers facility. The amount and timing of ~~consolidated~~these ~~total~~capital ~~debt~~expenditures tomay ~~consolidated~~vary ~~earnings~~depending ~~before~~on ~~interest,~~a ~~taxes~~number of factors, ~~depreciation~~including ~~and~~when ~~amortization~~the ~~(“EBITDA”),~~final ~~and~~NPDES apermit ~~minimum~~is ~~consolidated~~issued ~~fixed~~and ~~charge~~its ~~coverage~~final terms ~~ratio~~and conditions. At ~~June~~For ~~30,~~additional ~~2012,~~information weon ~~were~~environmental inmatters, ~~compliance~~see ~~with~~Note ~~the~~23, ~~financial~~Contingencies, ~~covenants~~to ~~under~~ the ~~credit~~Consolidated ~~facility~~Financial Statements.

At22 June 30, 2012, we had $38.3 million of cash and $237.4 million borrowing capacity under the credit facility. The commitment fee on the unused portion of the credit facility is 0.375% per annum. Of the cash and cash equivalents held at June 30, 2012, $36.6 million was held by foreign subsidiaries.

FromTable June 30, 2011 to June 30, 2012, total debt decreased by $38.3 million. Our total debt decreased $140.6 million to $96.9 million at June 30, 2011 from $237.5 million at June 30, 2010. Our total debt as a percentage of our total capitalization was 8.9% at June 30, 2012, as compared to 14.3% at June 30, 2011 and 35.2% at June 30, 2010.Contents

~~While~~Net ~~we can offer no assurances, we believe that our~~ cash ~~flow~~used ~~from~~in ~~operations,~~financing ~~together with current domestic cash and cash equivalents, will be sufficient to fund necessary capital expenditures, meet operating expenses and service our debt obligations for the next 24 months.~~activities

~~Treasury~~During ~~stock~~2013, we reduced our debt by $17.4 million, paid cash dividends of $13.7 million, and repurchased 0.3 million shares for $9.2 million. During 2012, we reduced our debt by $38.3 million, paid cash dividends of $10.8 million and repurchased 1.2 million shares for $32.9 million. During 2011, we reduced our debt by $140.6 million, paid cash dividends of $7.3 million, and 0.4 million shares for $9.8 million.

AtContractual ~~June~~Obligations 30, 2012, a total of 7.0 million shares have been repurchased under authorizations by our Board of Directors to repurchase up to 11.0 million shares of our common stock. Repurchased shares, if any, are held as treasury stock and are available for general corporate purposes, including the funding of employee benefit and stock-related plans. During 2012 and 2011 we repurchased 1.2 million and 0.4 million shares, respectively. We did not repurchase any shares during 2010.

25The following table summarizes our significant contractual cash obligations at June 30, 2013. Certain of these contractual obligations are reflected in our balance sheet, while others are disclosed as future obligations under accounting principles generally accepted in the United States.

Cash Flow


(millions)	Payments Due by Period ⁽⁵⁾
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		Greater than 5 years
Long-term obligations ⁽¹⁾	$	43	$	1	$	42	$	—	$	—
Operating lease obligations⁽²⁾		4		2		2		—		—
Timber commitments ⁽³⁾		172		30		49		50		43
Other purchase commitments⁽⁴⁾		45		43		2		—		—

Total contractual cash obligations	$	264	$	76	$	95	$	50	$	43

~~Cash~~(1) ~~and~~Amounts ~~cash~~include ~~equivalents~~related ~~totaled~~interest ~~$38~~payments.3 ~~million~~Interest atpayments ~~June~~for ~~30,~~variable ~~2012,~~debt ~~compared~~of to $~~30.5~~41 million atare ~~June~~based ~~30,~~on ~~2011~~the ~~and~~effective ~~$22.1~~rate ~~million~~as atof June 30, ~~2010~~2013, of 2. ~~The~~3%. ~~following~~See ~~table~~Note ~~provides~~11, aLong-Term ~~summary~~Debt, ofto ~~cash~~the ~~flows~~Consolidated ~~for~~Financial ~~the~~Statements ~~three~~for ~~years~~further ~~ended~~information ~~June~~on ~~30,~~interest ~~2012~~rates.

(dollars in millions)	2012			2011			2010
Operating activities:
Net income	$	90.0		$	124.3		$	114.6
Noncash charges and credits, net		105.9			30.0			64.9
Changes in operating assets and liabilities, net		(24.1	)		57.7			(54.0	)
Net cash provided by operating activities		171.8			212.0			125.5
Investing activities:
Purchases of property, plant and equipment		(84.9	)		(57.3	)		(47.5	)
Other investing activities		2.0			(0.5	)		6.9
Net cash used in investing activities		(82.9	)		(57.8	)		(40.6	)
Financing activities:
Net borrowings (payments) under lines of credit		(38.3	)		(0.6	)		80.5
Payments on long-term debt		-			(140.0	)		(170.0	)
Other financing activities, net		(38.1	)		(16.3	)		2.3
Net cash used in financing activities		(76.4	)		(156.9	)		(87.2	)
Effect of foreign currency rate fluctuations on cash		(4.7	)		11.1			2.3
Net increase in cash and cash equivalents	$	7.8		$	8.4		$	0.0

⁽²⁾	See Note 12, Leases, to the Consolidated Financial Statements for further information.

~~Cash~~(3) ~~provided~~See byNote ~~operating~~22, ~~activities~~Commitments, to the Consolidated Financial Statements for further information.

~~Cash~~(4) ~~provided~~The bymajority ~~operating~~of ~~activities~~other inpurchase ~~2012~~commitments ~~was~~are ~~$40.2~~take-or-pay ~~million~~contracts ~~less~~made ~~than~~ in ~~2011. Cash~~the ~~taxes~~ordinary incourse 2012 were $89.2 million higher compared to 2011 when we received federal tax refunds totaling $72.7 million, mostly relating to alternative fuel mixture credits and cellulosic biofuel credits. In February of ~~this~~business ~~year,~~related ~~we repaid $17.6 million in previously received alternative fuel mixture credits~~ to ~~the~~utilities IRS in exchange for cellulosic biofuel credits. Offsetting these decreases was a $31.4 million year over year increase in cash flow from operations driven by increased sales revenue, improved margins, and ~~lower~~raw ~~cash~~material ~~interest costs~~purchases.

~~In 2011, cash provided by operating activities increased $86.~~(5) ~~million~~Less ~~over~~than ~~2010. The~~one ~~majority~~year ofreferences ~~the~~2014; ~~increase~~1-3 ~~was~~years ~~due~~references to2015 ~~an increase of $72.7 million in tax refunds, most of which was attributed to the AFMCs~~ and ~~CBCs. Gross~~2016; ~~margin~~3-5 ~~was~~years ~~significantly~~references ~~higher~~2017 ~~in 2011 versus 2010 but was partially offset by higher accounts receivable, due to higher sales prices,~~ and ~~an increase in working capital as we rebuilt inventory to more sustainable levels~~2018.

~~Net~~Note 1: Additionally, the cash ~~used~~flow to fund postretirement benefit obligations for our U.S. plan has an expected net present value of $29.1 million. The actuarially estimated annual benefit payments are as follows: 2014 - $1.7 million; 2015-2016 - $3.6 million; 2017 - 2018 - $3.9 million; and 2019 through 2023 - $10.1 million. These obligations are not included in ~~investing~~the ~~activities~~table above as the total obligation is based on the present value of the payments and would not be consistent with the contractual cash obligations disclosures included in the table above. See Note 19, Employee Benefit Plans, to the Consolidated Financial Statements for further information.

~~Purchases~~Note of2: ~~property,~~We ~~plant~~also ~~and~~have ~~equipment~~a ~~increased~~noncurrent ~~$27.6~~tax ~~million~~liability ~~in 2012, due mainly to the Foley Specialty Expansion Project. In October 2011, the Board~~ of Directors approved this project, which will add approximately 42,000 tons annually of high-end specialty production while reducing an equal amount of fluff pulp production. This project will cost approximately $~~85 million, of which $34~~49.~~5 million ($33.~~4 million inrelated ~~capital~~to ~~and~~the ~~$1.1~~repayment ~~million~~of inAFMC ~~expense)~~refunds ~~was spent in 2012. The Foley Energy Project was basically completed in 2012 and added $3.7 million~~ to the ~~capital~~IRS ~~spent. Through 2012 we have spent $48.0 million ($45.9 million~~ in ~~capital~~exchange ~~and~~for $2CBC.1 ~~million~~Based inon ~~expense)~~our ofcurrent ~~this three-year~~forecasts, ~~$49~~we ~~million~~anticipate ~~project,~~this ~~which~~liability ~~involves the installation of a steam turbine generator and upgrade of two recovery boilers, and is expected~~ to ~~save~~be ~~the~~paid ~~equivalent~~during offiscal ~~200,000 barrels of oil per year and improve the energy self-sufficiency of our Foley Plant from about 85% to about 95%~~2015. We ~~expect~~This ~~our~~liability ~~capital~~is ~~spending~~not ~~will~~included ~~be approximately $114 million~~ in ~~2013, which will include approximately $42 million for~~ the ~~Foley~~table ~~Specialty Expansion Project~~above.

OnRecent ~~January~~Accounting ~~31,~~Pronouncements 2012, we completed the sale of Merfin Systems and recorded proceeds of $5.5 million from the sale. On June 14, 2012, we completed the sale of Americana Ltda and recorded proceeds of $6.3 million from the sale.

WeSee ~~expect~~Note to1, ~~incur~~Accounting ~~significant~~Policies, ~~capital~~to ~~expenditures in~~ the ~~future~~Consolidated toFinancial ~~comply~~Statements ~~with~~for ~~environmental obligations at our Foley Plant specialty fibers facility. The amount and timing of these capital expenditures may vary depending on~~ a ~~number~~discussion of ~~factors,~~recent ~~including~~accounting ~~when~~pronouncements ~~the final NPDES permit is issued~~ and ~~its final terms and conditions~~their impact. ~~For~~ ~~additional information on environmental matters, see Note 24, Contingencies, to the Consolidated Financial Statements.~~

26Critical Accounting Policies and Estimates

~~Net~~This ~~cash~~discussion ~~used~~and analysis is based upon our consolidated financial statements. Our critical and significant accounting policies are more fully described in ~~financing~~Note ~~activities~~1, Accounting Policies, to the Consolidated Financial Statements. Some of our accounting policies require us to make significant estimates and assumptions about future events that affect the amounts reported in our financial statements and the accompanying notes. Future events and their effects cannot be determined with certainty. Therefore, the

~~During~~23 2012, we used cash from operations and proceeds from stock option exercises to reduce our debt by $38.3 million, fund $32.9 million in share repurchases and pay out $10.8 million in cash dividends to our stockholders.

DuringTable 2011,of we used cash from operations, proceeds from stock option exercises and tax refunds attributable to AFMC, CBC and energy investment tax credits to reduce our debt by $140.6 million, fund $9.8 million in share repurchases and pay out $7.3 million in cash dividends to our stockholders.Contents

~~During~~ determination ~~2010,~~of weestimates ~~used~~underlying ~~cash~~our financial statements requires the exercise of management’s judgment. Actual results could differ from ~~operations~~those estimates, and ~~proceeds~~any ~~from~~such ~~stock~~differences ~~options~~may be ~~exercises~~material to ~~reduce~~our financial statements. Our management exercises critical judgment in the application of our ~~debt~~accounting bypolicies ~~$89~~in the following areas, which significantly affect our financial condition and results of operations.9 ~~million~~Management has discussed the development and selection of these critical accounting policies and estimates with the Audit Committee of our Board of Directors and with our independent auditors.

~~Contractual~~Allowance ~~Obligations~~for doubtful accounts

~~The~~We provide ~~following~~an ~~table~~allowance ~~summarizes~~for ~~our~~receivables ~~significant~~we ~~contractual~~believe ~~cash~~we ~~obligations~~may atnot ~~June~~collect ~~30,~~in ~~2012~~full. ~~Certain~~ Management evaluates the collectability of ~~these~~accounts ~~contractual~~based ~~obligations~~on ~~are~~a ~~reflected~~combination inof ~~our~~factors. ~~balance~~In ~~sheet,~~circumstances ~~while~~in ~~others~~which we are ~~disclosed~~aware asof ~~future~~a specific customer’s inability to meet its financial obligations ~~under~~(i.e., ~~accounting~~bankruptcy ~~principles~~filings ~~generally~~or ~~accepted~~substantial downgrading of credit ratings), we record a specific reserve. For all other customers, we recognize reserves for bad debts based on our historical collection experience. If circumstances change (i.e., higher than expected defaults or an unexpected material adverse change in a major customer’s ability to meet its financial obligations), our estimates of the ~~United~~recoverability ~~States~~of amounts due could be reduced by a material amount.

(millions)	Payments Due by Period (5)
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		Greater than 5 years
Long-term obligations (1)	$	65	$	1	$	3	$	61	$	-
Operating lease obligations (2)		5		2		3		-		-
Timber commitments (3)		186		27		49		45		65
Other purchase commitments(4)		75		61		14		-		-
Total contractual cash obligations	$	331	$	91	$	69	$	106	$	65

Bad debt expense for 2013, 2012 and 2011 was $0.7 million, $0.1 million and $0.2 million, respectively.

~~(1)~~Deferred ~~Amounts~~income ~~include~~taxes ~~related~~and ~~interest~~other ~~payments. Interest~~liabilities payments for variable debt of $59 million are based on the effective rate as of June 30, 2012 of 2.4%. See Note 11, Long-Term Debt, to the Consolidated Financial Statements for further information on interest rates.

~~(2)~~Deferred ~~See~~income ~~Note~~tax ~~12,~~assets ~~Leases,~~and liabilities are recognized based on the difference between the financial statement and the tax law treatment of certain items. Realization of certain components of deferred tax assets is dependent upon the occurrence of future events. We record a valuation allowance to reduce our net deferred tax assets to the ~~Consolidated~~amount ~~Financial~~we ~~Statements~~believe ~~for~~is ~~further~~more ~~information~~likely than not to be realized. These valuation allowances can be impacted by changes in tax laws, changes to statutory tax rates, and future taxable income levels and are based on our judgment, estimates and assumptions regarding those future events.

(We increased tax expense by $1.3) ~~See~~million ~~Note~~in 232013, ~~Commitments,~~by to$0.1 ~~the~~million ~~Consolidated~~in ~~Financial~~2012 ~~Statements~~and by $4.2 million in 2011 for ~~further~~changes ~~information~~to our valuation allowance.

~~(4)~~In ~~The~~the ~~majority~~event ofwe ~~other~~were ~~purchase~~to ~~commitments~~determine ~~are~~that ~~take-~~we would not be able to realize all or~~-pay~~ ~~contracts~~a portion of the net deferred tax assets in the future, we would increase the valuation allowance through a charge to income in the period that such determination is made. Conversely, if we were to determine that we would be able to realize our deferred tax assets in the ~~ordinary~~future, ~~course~~in excess of ~~business~~the ~~related~~net carrying amounts, we would decrease the recorded valuation allowance through an increase to ~~utilities~~income ~~and~~in ~~raw~~the ~~material~~period ~~purchases~~that such determination is made.

~~(5)~~We ~~Less~~record ~~than~~our ~~one~~world-wide ~~year~~tax ~~references~~provision ~~2013;~~based ~~1-3~~on ~~years~~the ~~references~~tax ~~2014~~rules and ~~2015;~~regulations ~~3-5~~in ~~years~~the ~~references~~various ~~2016~~jurisdictions in which we operate. Significant managerial judgment is required in determining our effective tax rate and ~~2017~~evaluating our tax positions. Where we believe that the deduction of an item is supportable for income tax purposes, the item is deducted in our income tax returns.

~~Note~~We 1:record ~~Additionally, the cash flow to fund postretirement benefit obligations for~~ our ~~U.S.~~unrecognized ~~plan~~tax ~~has~~benefits anon ~~expected~~the ~~net~~consolidated ~~present~~balance ~~value~~sheets ofin ~~$30.4~~other ~~million~~liabilities. ~~The~~Cumulative ~~actuarially~~potential ~~estimated~~interest ~~annual benefit payments are as follows: 2013 - $1.7 million; 2014-2015 - $3.6 million; 2016 - 2017 - $3.7 million;~~ and ~~2018~~penalties accrued ~~through~~related ~~2022~~to -unrecognized ~~$9.9~~tax ~~million.~~benefits ~~These obligations~~ are ~~not~~ included ~~in the table above~~ as ~~the~~a ~~total~~component ~~obligation is based on the present value~~ of ~~the~~income ~~payments~~before ~~and~~income ~~would not be consistent with the contractual cash obligations disclosures included in the table above~~taxes. ~~See Note 19, Employee Benefit Plans, to the Consolidated Financial Statements for further information.~~

~~Note~~Cellulosic 2:Biofuel WeCredits also have a tax liability of $61.7 million ($11.9 million current and $49.8 million noncurrent) related to the repayment of AFMC refunds to the IRS in exchange for CBC. This liability is not included in the table above.

~~Recent~~Cellulosic ~~Accounting~~biofuel ~~Pronouncements~~credits (“CBC”) are recognized based on our expected ability to utilize the CBC prior to expiration. Estimating the amount of the benefit recognized requires us to make assumptions and estimates about future profitability affecting the realization of these tax benefits. The key assumptions in estimating future profitability relate to future selling prices and volumes, operating reliability, raw material, energy, chemical and freight costs, and various other projected operating factors as reflected in our internal planning models including interest cost and the impact of currency exchange rates. These models take into account recent sales and cost data as well as macroeconomic drivers including gross domestic product growth, customer demand and industry capacity. Other assumptions affecting estimates of future taxable income include; significant book-to-tax differences impacting future credit utilization, cost recovery of existing and future capital assets and the domestic manufacturing deduction. Our current forecasts of these book-to-tax differences are based on expected capital acquisitions and operating results, respectively. Significant changes to any of these key assumptions could have a material impact on the estimate of CBC utilization. As key factors in these models change in future periods, we will update our projections and revise the estimate of the CBC benefit expected to be utilized. Such changes to the estimate may be significant.

~~See~~For ~~Note~~2013 and 22012, ~~Recent~~we ~~Accounting~~recognized ~~Pronouncements~~$4.6 million and $9.0 million, respectively, of income tax benefit in our consolidated statement of operations related to the ~~Consolidated~~expected ~~Financial~~incremental ~~Statements~~benefit from exchanging previously claimed AFMC for aCBC. ~~discussion~~As of ~~recent~~June 30, 2013, ~~accounting~~we ~~pronouncements~~have estimated that we will not be able to utilize approximately $11.5 million of the additional benefit from the available CBC and ~~their~~have ~~impact~~not recognized any benefit in our consolidated statement of operations related to this amount. We will continue to evaluate our ability to utilize the remaining available CBC and will record any related changes in estimates when our expected utilization of the available CBCs change.

2724

CriticalTable Accountingof Policies and EstimatesContents

~~This~~Depreciation discussion and analysis is based upon our consolidated financial statements. Our critical and significant accounting policies are more fully described in Note 1, Accounting Policies, to the Consolidated Financial Statements. Some of our accounting policies require us to make significant estimates and assumptions about future events that affect the amounts reported in our financial statements and the accompanying notes. Future events and their effects cannot be determined with certainty. Therefore, the determination of estimates underlying our financial statements requires the exercise of management’s judgment. Actual results could differ from those estimates, and any such differences may be material to our financial statements. Our management exercises critical judgment in the application of our accounting policies in the following areas, which significantly affect our financial condition and results of operations. Management has discussed the development and selection of these critical accounting policies and estimates with the Audit Committee of our Board of Directors and with our independent auditors.

~~Allowance~~We provide for ~~doubtful~~depreciation ~~accounts~~on our production machinery and equipment at our cotton cellulose and airlaid nonwovens plants using the units-of-production depreciation method which is based on the expected productive hours of the assets, subject to a minimum level of depreciation. Under this method, we calculate depreciation based on the expected total productive hours of the assets subject to a minimum level of depreciation. We review our estimate of total productive hours at least annually. If the estimated productive hours of these assets change based on changes in utilization and useful life assumptions, we adjust depreciation expense per unit of production accordingly. We use the straight-line method for determining depreciation on our other capital assets.

WeLong-lived ~~provide~~assets an allowance for receivables we believe we may not collect in full. Management evaluates the collectability of accounts based on a combination of factors. In circumstances in which we are aware of a specific customer’s inability to meet its financial obligations (i.e., bankruptcy filings or substantial downgrading of credit ratings), we record a specific reserve. For all other customers, we recognize reserves for bad debts based on our historical collection experience. If circumstances change (i.e., higher than expected defaults or an unexpected material adverse change in a major customer’s ability to meet its financial obligations), our estimates of the recoverability of amounts due could be reduced by a material amount.

~~Bad~~Long-lived ~~debt~~assets ~~expense~~are reviewed for ~~2012,~~impairment ~~2011~~when circumstances indicate the carrying value of an asset may not be recoverable. For assets that are held and ~~2010~~used, ~~was~~recoverability $0is evaluated based on the undiscounted cash flows expected to be generated by the asset.1 ~~million~~If the carrying value of the assets is determined to not be recoverable, $0we measure the potential impairment by comparing the carrying value of the assets to their fair value.2 ~~million~~If ~~and~~impairment $0exists, an adjustment is made to write the asset down to its fair value.1 ~~million~~Estimated fair values are determined based on quoted market values, ~~respectively~~discounted cash flows or internal and external appraisals, as applicable. Assets to be disposed of are carried at the lower of carrying value or estimated net realizable value.

~~Deferred~~As ~~income~~a ~~taxes~~result of a significant reduction in demand from a key customer at our specialty fibers Americana, Brazil cotton linter facility, we evaluated the recoverability of the long-lived assets at this facility in accordance with ASC 360, “Impairment or Disposal of Long-Lived Assets” (ASC 360), as of December 31, 2011. The results of this test indicated that the Americana assets were impaired as the estimated fair value was less than the carrying value. The fair value was based on the discounted projected cash flows from the continued operation of the waste water treatment facility plus the estimated value in exchange of the remaining assets. Based on this evaluation, and ~~other~~after ~~liabilities~~writing-off recoverable assets of $11.9 million and inventory of $1.0 million, which had minimal future use, we determined that the long-lived assets associated with this operation, which had a carrying value of $42.0 million, were impaired and wrote them down to their fair value of $5.9 million, resulting in an impairment charge of $49.0 million in 2012. In June 2012, we completed the sale of this facility resulting in an additional impairment charge of $0.2 million. These impairment charges are included in discontinued operations for 2012.

~~Deferred~~As ~~income~~a result ~~tax~~of ~~assets~~a ~~and~~decision ~~liabilities~~to ~~are~~pursue ~~recognized~~the ~~based~~sale onof the ~~difference~~nonwovens ~~between~~materials Merfin Systems converting business in King, North Carolina during the ~~financial~~quarter ~~statement~~ended ~~and~~December 31, 2011, we evaluated the ~~tax~~recoverability ~~law~~of ~~treatment~~the long-lived assets at the King facility in accordance with ASC 360 as of ~~certain~~December 31, ~~items~~2011. ~~Realization~~ The results of ~~certain~~the ~~components~~recoverability oftest ~~deferred~~indicated ~~tax~~that the King facility’s assets iswere ~~dependent~~impaired ~~upon~~as the ~~occurrence~~estimated offair ~~future~~value ~~events~~was less than the carrying value. We The ~~record~~fair value awas ~~valuation~~estimated ~~allowance~~based toon ~~reduce~~the ~~our~~value ~~net~~in ~~deferred~~exchange ~~tax~~for ~~assets~~the tofacility. Based on this evaluation, and after reducing the ~~amount~~value of certain other assets by $0.4 million, we ~~believe~~determined isthat ~~more~~the ~~likely~~long-lived ~~than~~assets ~~not~~associated with this operation, which had a carrying value of $1.4 million, were impaired and wrote them down to betheir ~~realized~~fair value of $0. ~~These~~1 ~~valuation~~million, ~~allowances~~resulting ~~can~~in bean ~~impacted~~impairment bycharge ~~changes~~of $1.3 million in ~~tax~~2012. On ~~laws~~January 31, ~~changes~~2012, towe ~~statutory~~completed ~~tax~~the ~~rates,~~sale ~~and~~of ~~future~~Merfin ~~taxable~~Systems ~~income~~resulting in ~~levels~~an ~~and~~additional ~~are~~impairment ~~based~~charge onof ~~our~~$0.4 ~~judgment~~million. In addition, ~~estimates~~the goodwill associated with this facility was considered impaired and ~~assumptions~~was ~~regarding~~written-off ~~those~~resulting ~~future~~in ~~events~~an impairment charge of $2.4 million. At June 30, 2012, we have no remaining goodwill balance.

WeIn ~~increased~~2011, ~~tax~~we ~~expense~~announced our decision to cease production at our Delta, B.C., Canada airlaid nonwovens facility by $0the end of calendar 2012.1 ~~million~~We evaluated the recoverability of the long-lived assets at the Delta facility in ~~2012~~accordance with ASC 360, by“Impairment or Disposal of Long-Lived Assets”. The results of this test indicated that the Delta assets were impaired as the sum of the undiscounted cash flow analysis was less than the carrying amount of the long-lived assets. As such, the impairment test was performed to determine the estimated fair value of the long-lived assets compared to their carrying value. We engaged an independent valuation firm to assist with this impairment testing and fair value determination. The impairment was the amount that the carrying value exceeded the fair value of the assets estimated as the value in exchange of the underlying asset group using market and cost valuation approaches which exceeded the operating value of the asset group. Based on this evaluation, we determined that these long-lived assets, with a carrying amount of $38.4 million, were impaired and wrote them down to their estimated fair value of $25.24 million, resulting in ~~2011~~an ~~and~~impairment bycharge of $013.70 million in ~~2010~~2011. ~~for~~The plant ceased production in November 2012, at which time we reevaluated the recoverability of the long-lived assets at the Delta facility, and determining that, based on current market conditions and changes in management’s plans for disposition of the assets, certain of these long-lived assets were impaired, we wrote them down to ~~our~~their estimated ~~valuation~~fair ~~allowance~~value, resulting in an impairment charge of $3.6 million in 2013.

InAs ~~the event we were to determine that we would not be able to realize all or a portion~~ of ~~the~~June 30, ~~net~~2013, ~~deferred~~2012, ~~tax~~and ~~assets in the future~~2011, welong-lived assets ~~would~~outside ~~increase~~ the ~~valuation~~United ~~allowance~~States ~~through~~were ~~a charge to income in the period that such determination is made~~$38.2 ~~Conversely~~million, if$43.9 wemillion ~~were~~and to$120.4 ~~determine that we would be able to realize our deferred tax assets in the future~~million, ~~in excess of the net carrying amounts, we would decrease the recorded valuation allowance through an increase to income in the period that such determination is made~~respectively.

We25 record our world-wide tax provision based on the tax rules and regulations in the various jurisdictions in which we operate. Significant managerial judgment is required in determining our effective tax rate and evaluating our tax positions. Where we believe that the deduction of an item is supportable for income tax purposes, the item is deducted in our income tax returns.

WeTable record our unrecognized tax benefits on the consolidated balance sheets in other liabilities. Cumulative potential interest and penalties accrued related to unrecognized tax benefits are included as a component of income before income taxes.Contents

~~Cellulosic~~Item ~~Biofuel~~7A. ~~Credits~~Qualitative and Quantitative Disclosures About Market Risk

~~Cellulosic~~We ~~biofuel credits (“CBC”)~~ are ~~recognized~~exposed ~~based on our expected ability~~ to ~~utilize~~market ~~the~~risk ~~CBC~~from ~~prior~~changes to expiration. Estimating the amount of the benefit recognized requires us to make assumptions and estimates about future profitability affecting the realization of these tax benefits. The key assumptions in ~~estimating~~foreign ~~future~~exchange ~~profitability relate to future selling prices and volumes~~rates, ~~operating~~interest ~~reliability~~rates, raw material, ~~energy, chemical and freight~~ costs, and ~~various~~the ~~other~~price ~~projected~~of certain ~~operating~~commodities ~~factors~~used ~~as reflected~~ in our ~~internal~~production ~~planning models including interest cost and the impact of currency exchange rates~~processes. ~~These~~ ~~models~~To ~~take~~reduce ~~into~~such ~~account recent sales and cost data as well as macroeconomic drivers including gross domestic product growth~~risks, ~~customer~~we ~~demand~~selectively ~~and~~use ~~industry~~financial ~~capacity~~instruments. ~~Other~~ ~~assumptions~~All ~~affecting~~hedging ~~estimates~~transactions ofare ~~future~~authorized ~~taxable income include; significant book-to-tax differences impacting future credit utilization, cost recovery of existing~~ and ~~future~~executed ~~capital~~pursuant ~~assets and the domestic manufacturing deduction. Our current forecasts of these book-~~to~~-tax~~ ~~differences~~clearly ~~are~~defined ~~based~~policies ~~on expected capital acquisitions~~ and ~~operating results, respectively~~procedures. ~~Significant~~ ~~changes to any of these key assumptions could have a material impact on the estimate of CBC utilization. As key factors in these models change in future periods~~Further, we ~~will~~do ~~update~~not ~~our~~enter into ~~projections~~financial ~~and~~instruments ~~revise~~for ~~the~~trading ~~estimate of the CBC benefit expected to be utilized~~purposes. ~~Such~~ ~~changes to the estimate may be significant.~~

28The following risk management discussion and the estimated amounts generated from the sensitivity analyses are forward-looking statements of market risk, assuming that certain adverse market conditions occur. Actual results in the future may differ materially from those projected results due to actual developments in the global financial markets. The analysis methods used to assess and mitigate risks discussed below should not be considered projections of future events or losses.

~~For~~A ~~2012,~~discussion ~~we recognized $9.0 million~~ of ~~income tax benefit in~~ our ~~consolidated~~accounting ~~statement~~policies ~~of operations related to the expected incremental benefit from exchanging previously claimed AFMC~~ for ~~CBC. As~~risk ofmanagement ~~June~~is ~~30,~~included ~~2012,~~in weNote ~~have estimated that we will not be able to utilize approximately $16.~~1, ~~million~~Accounting ofPolicies, ~~the additional benefit from the available CBC and have not recognized any benefit in our consolidated statement of operations related~~ to ~~this amount. We will continue to evaluate our ability to utilize~~ the ~~remaining~~Consolidated ~~available CBC and will record any related changes in estimates when our expected utilization of the available CBCs change~~Financial Statements.

~~Depreciation~~Interest Rates

WeThe ~~provide~~fair ~~for~~value ~~depreciation on our production machinery and equipment at our cotton cellulose and airlaid nonwovens plants using the units-~~of~~-production~~ ~~depreciation method which is based on~~ the ~~expected~~credit ~~productive~~facility ~~hours~~approximates ofits ~~the~~carrying ~~assets,~~value ~~subject~~due to aits ~~minimum~~variable ~~level~~interest ~~of depreciation~~rate. ~~Under~~ The ~~this~~carrying ~~method,~~value weand ~~calculate~~fair ~~depreciation based on the expected total productive hours~~ value of ~~the~~long-term ~~assets~~debt ~~subject~~at toJune 30, a2013, ~~minimum~~were ~~level~~both ~~of depreciation~~$41. We2 ~~review~~million ~~our~~and ~~estimate of total productive hours~~ at ~~least~~June 30, ~~annually. If the estimated productive hours of these assets change based on changes in utilization and useful life assumptions~~2012, wewere ~~adjust~~both ~~depreciation expense per unit of production accordingly~~$58. We6 ~~use the straight-line method for determining depreciation on our other capital assets~~million.

~~Long~~We had $41.2 million of variable rate long-~~lived~~term ~~assets~~debt outstanding on June 30, 2013. At this borrowing level, a hypothetical 100 basis point increase in interest rates would have a $0.4 million unfavorable impact on our pre-tax earnings and cash flows. The primary interest rate exposures on floating rate debt are with respect to LIBOR rates and U.S. prime rates.

~~Long-lived~~Foreign ~~assets~~Currency ~~are~~Exchange reviewed for impairment when circumstances indicate the carrying value of an asset may not be recoverable. For assets that are held and used, recoverability is evaluated based on the undiscounted cash flows expected to be generated by the asset. If the carrying value of the assets is determined to not be recoverable, we measure the potential impairment by comparing the carrying value of the assets to their fair value. If impairment exists, an adjustment is made to write the asset down to its fair value. Estimated fair values are determined based on quoted market values, discounted cash flows or internal and external appraisals, as applicable. Assets to be disposed of are carried at the lower of carrying value or estimated net realizable value.Rates

AsForeign acurrency ~~result~~exposures ofarise ~~a significant reduction in demand~~ from atransactions ~~key~~including ~~customer~~firm atcommitments ~~our~~and ~~specialty~~anticipated ~~fibers~~transactions ~~Ameriana,~~denominated ~~Brazil~~in ~~cotton~~a currency ~~linter~~other ~~facility,~~than wean ~~evaluated~~entity’s ~~the~~functional ~~recoverability~~currency. We ofand ~~the~~our ~~long-lived~~subsidiaries ~~assets~~generally atenter ~~this~~into ~~facility~~transactions denominated in ~~accordance~~their ~~with~~respective ~~ASC~~functional ~~360,~~currencies. Our ~~“Impairment~~primary orforeign ~~Disposal~~currency ofexposure ~~Long~~arises from foreign-~~Lived~~denominated ~~Assets”~~revenues ~~(ASC~~and ~~360),~~costs asand oftheir ~~December~~translation ~~31,~~into ~~2011~~U. S. dollars. The ~~results~~primary ofcurrency ~~this~~to ~~test~~which ~~indicated~~we ~~that~~are ~~the~~exposed ~~Americana~~is ~~assets were impaired as~~ the ~~estimated~~euro. ~~fair~~We ~~value~~do ~~was~~not ~~less~~have ~~than~~any ~~the~~hedges ~~carrying~~in ~~value. The~~place ~~fair~~to ~~value~~protect ~~was~~against ~~based~~fluctuations onin ~~the~~this ~~discounted~~currency, ~~projected~~but ~~cash~~we ~~flows~~do ~~from~~sometimes hedge ~~the~~this ~~continued~~exposure. ~~operation~~Our ofeuro ~~the~~exposure ~~waste~~is ~~water~~internally ~~treatment~~hedged ~~facility~~for ~~plus~~ the ~~estimated~~most ~~value~~part inbecause ~~exchange~~a ofhigh ~~the~~percentage ~~remaining~~of ~~assets. Based~~both onthe ~~this~~sales ~~evaluation,~~ and ~~after~~costs ~~writing-off~~at ~~recoverable~~our ~~assets~~Steinfurt, ofGermany ~~$11.9~~plant ~~million~~are ~~and~~denominated ~~inventory~~in ~~of $1~~euros.0 ~~million,~~We ~~which~~estimate ~~had minimal future use, we determined~~ that the ~~long~~negative pre-~~lived~~tax ~~assets~~impact ~~associated~~of ~~with this operation, which had~~ a ~~carrying~~5% strengthening ~~value~~ of ~~$42.0~~the ~~million,~~USD ~~were~~versus ~~impaired~~the ~~and~~Euro ~~wrote~~(USD/Euro ~~them~~rate) ~~down~~on toour ~~their~~operating ~~fair~~income ~~value~~is ofapproximately $51.94 million, ~~resulting in an impairment charge of $49~~annually.0 ~~million~~We inare ~~the~~continuously ~~quarter~~evaluating ~~ended~~our ~~December~~foreign ~~31,~~currency ~~2011. In June 2012~~exposure, weand ~~completed~~our ~~the~~hedging ~~sale~~policy ofis ~~this~~subject ~~facility~~to ~~resulting in an additional impairment charge of $0~~change.2 ~~million.~~

AsWe agenerally ~~result~~view ofas along-term ~~decision~~our toinvestments ~~pursue~~in ~~the~~foreign ~~sale~~subsidiaries ofwith ~~the~~a ~~nonwovens~~functional ~~materials~~currency ~~Merfin~~other ~~Systems~~than ~~converting~~the ~~business~~U.S. indollar. As ~~King~~a result, ~~North~~we ~~Carolina~~do ~~during~~not ~~the~~generally ~~quarter~~hedge ~~ended~~these ~~December~~net 31investments. However, ~~2011,~~ we ~~evaluated~~use ~~the~~capital ~~recoverability~~structuring oftechniques ~~the~~to ~~long-lived~~manage ~~assets~~our atnet ~~the~~investment ~~King facility~~ in ~~accordance~~foreign ~~with~~currencies ~~ASC 360~~ as ofconsidered ~~December 31, 2011~~necessary. The ~~results~~net ofinvestment ~~the recoverability test indicated that the King facility’s assets were impaired as the estimated fair value was less than the carrying value. The fair value was estimated based on the value~~ in ~~exchange~~foreign ~~for~~subsidiaries ~~the~~translated ~~facility. Based~~into dollars onusing ~~this evaluation, and after reducing~~ the ~~value of certain other assets by $0.4 million, we determined that the long~~year-~~lived~~end ~~assets~~exchange ~~associated~~rates ~~with~~is ~~this operation, which had a carrying value of~~ $1103.40 million, ~~were impaired~~ and ~~wrote them down to their fair value of~~ $0113.1 million, ~~resulting~~at ~~in an impairment charge of $1.3 million in the second quarter of 2012.~~June On30, ~~January~~2013 ~~31,~~and 2012, werespectively. ~~completed~~The ~~the~~potential ~~sale~~foreign ofcurrency ~~Merfin~~translation ~~Systems~~loss ~~resulting~~from investment in anforeign ~~additional~~subsidiaries ~~impairment~~resulting ~~charge~~from ofa ~~$0.4~~hypothetical ~~million. In~~10% adverse ~~addition,~~change ~~the~~in ~~goodwill~~quoted ~~associated~~foreign ~~with~~currency ~~this~~exchange ~~facility~~rates ~~was~~amounts ~~considered~~to ~~impaired~~approximately ~~and was written-off resulting in an impairment charge of~~ $29.4 million~~. At~~ ~~June~~at June 30, ~~2012, we have no remaining goodwill balance~~2013. On This ~~January~~change ~~31,~~would ~~2012~~be wereflected ~~completed~~in the ~~sale~~equity section of ~~Merfin Systems,~~ our ~~nonwovens~~consolidated ~~materials~~balance ~~converting~~sheet ~~business,~~ in ~~King,~~accumulated ~~North~~other ~~Carolina, resulting in an impairment charge of $2~~comprehensive loss.1 The ~~million. We~~primary ~~also~~foreign ~~recorded~~currency aexposure ~~goodwill~~on ~~impairment~~our ~~charge~~long-term ofinvestments ~~$2.4~~is ~~million. At~~with ~~June~~the ~~30, 2012, we have no remaining goodwill balance~~euro.

InRaw ~~2011,~~Materials we announced our decision to cease production at our Delta, B.C., Canada airlaid nonwovens facility by the end of calendar 2012. We evaluated the recoverability of the long-lived assets at the Delta facility in accordance with ASC 360, “Impairment or Disposal of Long-Lived Assets”. The results of this test indicated that the Delta assets were impaired as the sum of the undiscounted cash flow analysis was less than the carrying amount of the long-lived assets. As such, the impairment test was performed to determine the estimated fair value of the long-lived assets compared to their carrying value. We engaged an independent valuation firm to assist with this impairment testing and fair value determination. The impairment was the amount that the carrying value exceeded the fair value of the assets estimated as the value in exchange of the underlying asset group using market and cost valuation approaches which exceeded the operating value of the asset group. Based on this evaluation, we determined that these long-lived assets, with a carrying amount of $38.4 million, were impaired and wrote them down to their estimated fair value of $25.4 million, resulting in an impairment charge of $13.0 million in 2011.

29Slash pine timber and cotton fibers are the principal raw materials used in the manufacture of our specialty fibers products. These materials represent the largest components of our variable costs of production. Fluff pulp is the principal raw material used in the manufacture of our nonwoven materials products. The cost and availability of slash pine timber, cotton linter fiber and fluff pulp are subject to market fluctuations caused by supply and demand factors.

~~Item~~In 7Aorder to be better assured of a secure source of wood at reasonable prices, we have a 10-year timber purchase agreement which supplies 25% of our wood fiber needs, and we continue to pursue long-term agreements with other sizeable landowners. ~~Qualitative~~In order to manage availability and ~~Quantitative~~price ~~Disclosures~~risks associated ~~About~~with ~~Market~~cotton ~~Risk~~ fibers, we continue to utilize long-term customer take-or-pay agreements with cost pass through provisions to ensure that we can match customer commitments with lint from North American suppliers, and we continue to hold higher levels of raw material inventories to bridge possible shortages. Our countermeasures to manage raw material supply risk for fluff pulp used in our nonwovens business include internal supply and a dual sourcing strategy.

We26 are exposed to market risk from changes in foreign exchange rates, interest rates, raw material costs and the price of certain commodities used in our production processes. To reduce such risks, we selectively use financial instruments. All hedging transactions are authorized and executed pursuant to clearly defined policies and procedures. Further, we do not enter into financial instruments for trading purposes.

TheTable following risk management discussion and the estimated amounts generated from the sensitivity analyses are forward-looking statements of market risk, assuming that certain adverse market conditions occur. Actual results in the future may differ materially from those projected results due to actual developments in the global financial markets. The analysis methods used to assess and mitigate risks discussed below should not be considered projections of future events or losses.Contents

ACommodities ~~discussion of our accounting policies for risk management is included in Note 1, Accounting Policies, to the Consolidated Financial Statements.~~

~~Interest~~We ~~Rates~~are dependent on commodities in our production process. Natural gas, electricity, fuel oil, caustic and other chemicals are just some of the commodities that our processes rely upon. Exposure to these commodities can have a significant impact on our operating performance.

~~The~~In ~~fair~~order ~~value~~to minimize market exposure, we may use forward contracts to reduce price fluctuations in a desired percentage of ~~the~~forecasted purchases ~~credit~~of ~~facility~~fossil ~~approximates~~fuels ~~its~~over ~~carrying~~a ~~value~~period ~~due~~of togenerally ~~its~~less ~~variable~~than ~~interest~~one ~~rate~~year. ~~The~~ As ~~carrying~~of ~~value~~June 30, ~~and~~2013, ~~fair~~we ~~value~~had a commodity swap transaction in place for 90,000 MMBTUs of ~~long-term~~natural ~~debt~~gas at ~~June~~a fixed price of $3.50 per MMBTU settling monthly through December 2013. As of June 30, 2012, ~~were~~we ~~both~~had a commodity swap transaction in place for 195,000 MMBTUs of natural gas at a fixed price of $583.650 ~~million~~per ~~and~~MMBTU atsettling ~~June~~monthly through December 2013. As of June 30, 2011, ~~were~~we ~~both~~had options in place to purchase 675,000 MMBTUs of natural gas at prices ranging from $966 to $7 per MMBTU through November 2011.9.

WeItem ~~had $58~~8.6 ~~million~~Financial ofStatements variable rate long-term debt outstanding on June 30, 2012. At this borrowing level, a hypothetical 100 basis point increase in interest rates would have a $0.6 million unfavorable impact on our pre-tax earnings and ~~cash~~Supplementary ~~flows. The primary interest rate exposures on floating rate debt are with respect to LIBOR rates and U.S. prime rates.~~Data

~~Foreign~~Information ~~Currency~~required ~~Exchange~~by ~~Rates~~this Item is set forth in the Company’s Consolidated Financial Statements and supplementary data contained in this report beginning on page F-1.

~~Foreign~~Item ~~currency exposures arise from transactions including firm commitments and anticipated transactions denominated in a currency other than an entity’s functional currency~~9. We ~~and~~Changes ~~our subsidiaries generally enter into transactions denominated~~ in ~~their respective functional currencies. Our primary foreign currency exposure arises from foreign-denominated revenues~~ and ~~costs~~Disagreements ~~and~~with ~~their~~Accountants translation into U.S. dollars. The primary currencies to which we are exposed include the euro and Canadian dollar. We do not have any hedges in place to protect against fluctuations in any of these currencies, but we do sometimes hedge this exposure. Our euro exposure is internally hedged for the most part because a high percentage of both the sales and costs at our Steinfurt, Germany plant are denominated in euros. We estimate that the negative pre-tax impact of a 5% strengthening of the USD versus the Euro (USD/Euro rate) on ~~our~~Accounting operating income is about $1.1 million annually. We estimate the positive pre-tax impact of a 5% strengthening of the USD versus the Canadian dollar (USD/CAD exchange rate) at about $1.1 million annually. We are continuously evaluating our foreign currency exposure and ~~our~~Financial ~~hedging policy is subject to change.~~Disclosure

~~We generally view as long-term our investments in foreign subsidiaries with a functional currency other than the U~~None.S. dollar. As a result, we do not generally hedge these net investments. However, we use capital structuring techniques to manage our net investment in foreign currencies as considered necessary. The net investment in foreign subsidiaries translated into dollars using the year-end exchange rates is $113.1 million and $194.9 million at June 30, 2012 and 2011, respectively. The potential foreign currency translation loss from investment in foreign subsidiaries resulting from a hypothetical 10% adverse change in quoted foreign currency exchange rates amounts to approximately $10.3 million at June 30, 2012. This change would be reflected in the equity section of our consolidated balance sheet in accumulated other comprehensive loss. The primary foreign currency exposures on our long-term investments are with the euro and Canadian dollar.

~~Commodities~~Item 9A. Controls and Procedures

WeManagement’s ~~are~~Evaluation ~~dependent~~of onDisclosure ~~commodities~~Controls ~~in our production process. Natural gas, electricity, fuel oil, caustic~~ and ~~other~~Procedures ~~chemicals are just some of the commodities that our processes rely upon. Exposure to these commodities can have a significant impact on our operating performance.~~

InAs ~~order~~required toby ~~minimize~~Rule ~~market~~13a-15(b) ~~exposure,~~of wethe ~~may~~Exchange ~~use~~Act, ~~forward~~management, ~~contracts~~with tothe ~~reduce~~participation ~~price~~of ~~fluctuations~~our inChief aExecutive ~~desired~~Officer ~~percentage~~and ofChief ~~forecasted~~Financial Officer, ~~purchases~~evaluated, as of ~~fossil~~the ~~fuels~~end ~~over~~of athe period ofcovered ~~generally~~by ~~less~~this ~~than~~report, ~~one~~the ~~year. As~~effectiveness of ~~June~~our ~~30,~~disclosure ~~2012,~~controls weand ~~had~~procedures aas ~~commodity~~defined ~~swap transaction~~ in ~~place~~Exchange ~~for~~Act ~~195,000~~Rule ~~MMBTUs~~13a-15(e). ofBased ~~natural~~upon ~~gas~~that atevaluation, aour ~~fixed~~Chief ~~price~~Executive ofOfficer ~~$3.50~~and ~~per~~Chief Financial ~~MMBTU~~Officer ~~settling~~concluded ~~monthly~~that ~~through~~due ~~December~~to ~~2013. As~~the ofmaterial ~~June~~weaknesses ~~30, 2011, we had options~~ in ~~place~~our tointernal ~~purchase~~control ~~675,000~~over ~~MMBTUs~~financial ofreporting ~~natural~~that ~~gas~~are atdescribed ~~prices~~in ~~ranging~~management’s ~~from~~report $6on tointernal $7control ~~per~~over ~~MMBTU~~financial ~~through~~reporting ~~November~~on ~~2011. As~~page F-3 of ~~June~~this ~~30,~~Annual ~~2010,~~Report weon Form ~~had contracts in place to purchase 125~~10-K,~~000~~ ~~MMBTUs~~our ofdisclosure ~~natural~~controls ~~gas~~and atprocedures ~~various~~were ~~fixed~~not ~~prices~~effective ~~through~~as ~~December~~of ~~2010~~June 30, 2013.

30Assessment of Internal Control Over Financial Reporting

~~Item~~Management’s 8report on our internal control over financial reporting is presented on page F-3 of this Annual Report on Form 10-K. ~~Financial~~The ~~Statements~~report of Ernst & Young LLP with respect to internal control over financial reporting is presented on page F-4 of this Annual Report on Form 10-K. In the course of preparing the financial statements as of June 30, 2013, that are included in this Annual Report on Form 10-K, management identified material weaknesses in internal control related to granting and ~~Supplementary~~reviewing ~~Data~~user access privileges within the Company’s SAP application and over the purchasing, accounts payable, and cash disbursements processes transacted through SAP due to inadequate segregation of duties. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting that creates a reasonable possibility that a material misstatement of our interim or annual financial statements will not be prevented or detected on a timely basis. These material weaknesses did not result in material misstatements in the Company’s annual and interim financial statements. These material weaknesses were reported by management to our Audit Committee.

~~Information~~Notwithstanding ~~required~~the byidentified ~~this~~material ~~Item~~weaknesses isdescribed ~~set forth~~ in ~~the Company~~management’s ~~Consolidated~~report ~~Financial~~on ~~Statements~~internal control over financial reporting, our management does not believe that these deficiencies had an adverse effect on our reported operating results or financial condition and ~~supplementary~~management ~~data~~has ~~contained~~determined that the financial statements and other information included in this report ~~beginning~~and onother periodic ~~page~~filings ~~F-1~~present fairly in all material respects our financial condition, results of operations and cash flows at and for the periods presented in accordance with accounting principles generally accepted in the United States (“GAAP”).

~~Item 9.~~ Changes in ~~and~~Internal ~~Disagreements~~Control ~~with~~Over ~~Accountants on Accounting and~~ Financial ~~Disclosure~~Reporting

~~None~~Except for the material weaknesses noted above, there have been no changes in the Company’s internal control over financial reporting during the fiscal quarter ended June 30, 2013, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~Item~~27 ~~9A. Controls and Procedures~~

Management’sTable Evaluation of Disclosure Controls and ProceduresContents

~~Under~~Item the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we evaluated the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (“Exchange Act”) as of June 30, 20129B. ~~Based~~ onOther that evaluation, our principal executive and financial officers have concluded that, as of June 30, 2012, our disclosure controls and procedures were effective to ensure that the information required to be disclosed in our filings under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including ensuring that such information is accumulated and communicated to our management as appropriate to allow timely decisions regarding required disclosure.Information

~~Assessment~~None. ~~of Internal Control Over Financial Reporting~~

~~Management’s~~PART ~~report~~III on our internal control over financial reporting is presented on page F-3 of this Annual Report on Form 10-K. The report of Ernst & Young LLP with respect to internal control over financial reporting is presented on page F-4 of this Annual Report on Form 10-K.

~~Changes~~Item in10. ~~Internal~~Directors, ~~Control~~Executive ~~Over~~Officers ~~Financial~~and ~~Reporting~~Corporate Governance

~~During~~Directors our fiscal quarter ended June 30, 2012, no change occurred in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

~~Item~~The ~~9B.~~names ~~Other~~and ~~Information~~ages of the directors of the Company immediately prior to completion of the merger with Georgia-Pacific on August 23, 2013 were as follows:

None.


Name	Age	Position(s)	Director of the Company Since
John B. Crowe	66	Chairman of the Board and Chief Executive Officer	2004
Shannon A. Brown	56	Director	2012
George W. Bryan	69	Director	2001
R. Howard Cannon	50	Director	1996
Red Cavaney	70	Director	1996
David B. Ferraro	75	Director	1993
Katherine Buckman Gibson	51	Director	2004
Lewis E. Holland	70	Director	2005
Virginia B. Wetherell	65	Director	2006

~~PART~~The ~~III~~Board consisted of nine directors immediately prior to completion of the merger with Georgia-Pacific on August 23, 2013. Biographical information concerning the directors immediately prior to completion of the merger with Georgia-Pacific on August 23, 2013 is set forth below:

~~Item~~John 10B. ~~Directors~~Crowe, age 66, has been a director of Buckeye since August 2004. Since July 2006, he has served as Chairman of the Board and Chief Executive Officer ~~Officers~~of Buckeye. From April 2003 through June 2006, he served as President and ~~Corporate~~Chief ~~Governance~~Operating Officer of Buckeye. He was Senior Vice President, Wood Cellulose from January 2001 to April 2003. He joined Buckeye in December 1997 and was Vice President, Wood Cellulose from January 1998 to January 2001. Prior to joining Buckeye, he was Executive Vice President and General Manager at Alabama River Pulp Co., Inc. and Alabama Pine Pulp Co., Inc. from 1994 to 1997. He was Vice President and Site Manager of Flint River Operations, a subsidiary of the Weyerhaeuser Company from 1992 to 1994. From 1979 to 1992, he served in numerous positions with the Procter & Gamble Company. Mr. Crowe is a director of Myers Industries, Inc.

~~Directors~~Key Attributes, Experiences and Skills: Mr. Crowe’s service as our Chairman and Chief Executive ~~Officers~~Officer and his various other management positions with our company provides significant leadership and management experience. Mr. Crowe also provides a deep understanding of our industry, having 32 years of experience in manufacturing, serving in multiple plant manager and site manager roles.

~~The~~Shannon ~~information~~A. ~~required~~Brown, byage ~~this~~56, ~~Item~~was ~~regarding~~a ~~our~~director ~~Board~~ of ~~Directors~~Buckeye isfrom ~~incorporated~~August by2012 ~~reference~~ to ~~the~~August ~~section~~2013. ~~entitled~~Since ~~“Proposal~~2008, 1Mr. Brown –has ~~Election~~served ofas Senior ~~Directors”~~Vice toPresident, beHR ~~included~~and inChief ~~the~~Diversity ~~2012~~Officer ~~Proxy~~for ~~Statement~~FedEx Express. ~~The~~ ~~information~~From ~~required~~2005-2008, byMr. Brown ~~this~~served ~~Item~~as ~~regarding~~Senior ~~our~~Vice ~~executive~~President, ~~officers~~HR isand ~~set~~Chief ~~forth~~Diversity inOfficer ~~Part~~for IFedEx Ground , a provider of ~~this~~transportation, ~~Annual~~economic ~~Report~~and onbusiness ~~Form~~services. Prior ~~10-K~~to ~~under~~that, ~~the~~Mr. Brown ~~heading~~held ~~“Executive~~various ~~Officers~~positions ofat ~~the~~FedEx ~~Registrant”~~Express from 1998-2005.

~~Corporate~~Key ~~Governance~~Attributes, Experiences and ~~Code~~Skills: ofMr. Brown provided ~~Business~~substantial ~~Conduct~~experience &in ~~Ethics~~human resources to our Board, with extensive experience in leadership development, recruitment, employee benefits and compensation. Mr. Brown’s positions as Chief Diversity Officer for FedEx Express and FedEx Ground since 2003 provided our Board with significant leadership experience.

~~The~~George ~~information~~W. ~~required~~Bryan, byage ~~this~~69, ~~Item~~was ~~regarding~~a ~~our~~director ~~Code~~ of ~~Business~~Buckeye ~~Conduct~~from April 2001 to August 2013. Mr. &Bryan ~~Ethics~~served as Chief Executive Officer of Sara Lee Foods from 1998 until his retirement in 2000, and ~~Audit~~as ~~Committee~~a ~~(including~~Senior Vice President of the ~~Audit~~Sara ~~Committee’s~~Lee ~~“audit~~Corporation ~~committee~~between ~~financial~~1983 ~~expert”)~~and 1998. Mr. Bryan is ~~incorporated~~a bydirector ~~reference~~of toRegions Financial ~~the~~Corp. ~~section~~Mr. Bryan ofis ~~the~~also ~~2012~~a ~~Proxy~~private ~~Statement~~real ~~entitled~~estate ~~“Governance~~developer and President of ~~the~~Old ~~Company~~Waverly Properties, LLC.”

~~Compliance~~Key ~~with~~Attributes, ~~Section~~Experiences ~~16(~~and Skills: Mr. Bryan offered valuable leadership experience as a) result of his holding several key positions in a major corporation in the ~~Exchange~~areas ~~Act~~of production, sales and marketing. His experience as a member of the board of directors of other public companies also was valuable to Buckeye.

~~The~~28 information required by this Item relating to compliance with Section 16(a) of the Exchange Act is incorporated by reference to the section of our 2012 Proxy Statement entitled “Section 16(a) Beneficial Ownership Reporting Compliance.”

31Table of Contents

~~Item~~R. 11Howard Cannon, age 50, a private investor, was a director of Buckeye from 1996 to August 2013. Mr. Cannon ~~Executive~~resigned ~~Compensation~~from service as an officer of Buckeye in April 2005 to pursue other interests. From April 2003 to April 2005, he served as Senior Vice President, Wood Cellulose. Mr. Cannon was Vice President, Nonwovens Sales from August 2000 to April 2003 and was Manager, Corporate Strategy from November 1999 to August 2000. Before assuming a position with Buckeye, he was President of Dryve, Inc., a company which at one time consisted of 33 dry cleaning operations, a position he had held since 1987.

~~The~~Key ~~information~~Attributes, ~~required~~Experiences byand ~~this~~Skills: ~~Item~~As a former officer of the Company, Mr. Cannon provided our Board with ~~respect~~a todeep ~~director~~and comprehensive knowledge of, and ~~executive~~experience ~~officer~~with, ~~compensation~~our iscompany ~~incorporated~~and byour ~~reference~~industry. toMr. Cannon ~~the~~has ~~section~~important ofleadership ~~the~~experience; ~~2012~~his ~~Proxy~~financial ~~Statement~~experience ~~entitled~~and ~~“Executive~~business ~~Compensation~~expertise gained in founding and developing a successful business with 33 locations added value to the Company.”

~~Item~~Red 12Cavaney, age 70, was a director of Buckeye from 1996 to August 2013. ~~Security~~From ~~Ownership~~November 2008 until his retirement in January 2013, he was Senior Vice President – Government Affairs of ~~Certain~~ConocoPhillips ~~Beneficial~~Company, ~~Owners~~an international exploration and ~~Management~~production oil company. From 1997 to October 2008, he served as President and ~~Related~~Chief ~~Stockholder~~Executive Officer ~~Matters~~of the American Petroleum Institute. He was President, Chief Executive Officer and a director of the American Plastics Council from 1994 to 1997 immediately following service as President of the American Forest & Paper Association and President of its predecessor, the American Paper Institute. He is also a member of the Boards of Directors of the US Chamber of Commerce and the National Association of Manufacturers, as well as past Chairman of the American Society of Association Executives and the American Council on Capital Formation.

~~The~~Key ~~information~~Attributes, ~~required~~Experiences byand ~~this~~Skills: ~~Item~~Mr. Cavaney isoffered ~~incorporated~~deep knowledge byof ~~reference~~our toindustry from his positions with the ~~section~~American ofForest & Paper Association and the ~~2012~~American ~~Proxy~~Paper ~~Statement~~Institute. ~~entitled~~Additionally, ~~“Security~~his ~~Ownership~~knowledge of ~~Certain~~the ~~Beneficial~~energy ~~Owners~~industry and ~~Management”~~his understanding of government agencies and ~~“Equity~~government activities ~~Compensation~~were ~~Plan~~important ~~Information~~resources to us.” In addition, Mr. Cavaney provided valuable leadership experience as a result of the various executive positions he has held.

~~Item~~David 13B. ~~Certain~~Ferraro, ~~Relationships~~age 75, a private investor, was a director of Buckeye from March 1993 to August 2013. From April 2003 through June 2006, he served as Chairman of our Board and ~~Related~~our ~~Transactions~~Chief Executive Officer; he retired from the Company in September 2006. From March 1993 to April 2003, he was President and ~~Director~~Chief ~~Independence~~Operating Officer of Buckeye. He was Manager of Strategic Planning of The Procter & Gamble Company from 1991 through 1992. He served as President of Buckeye Cellulose Corporation, then a subsidiary of Procter & Gamble, from 1989 through 1991, as its Executive Vice President and Manager of Commercial Operations from 1987 through 1989, and as its Comptroller from 1973 through 1986.

~~The~~Key ~~information~~Attributes, ~~required~~Experiences byand ~~this~~Skills: ~~Item~~As ~~relating~~our toformer ~~certain relationships~~ Chairman and ~~related~~Chief ~~transactions~~Executive Officer, ~~and~~Mr. Ferraro ~~director~~offered ~~independence~~our isBoard ~~incorporated~~a bydeep ~~reference~~and tocomprehensive ~~the~~knowledge ~~sections~~ of ~~the~~our ~~2012~~company, ~~Proxy~~our ~~Statement~~customers ~~entitled~~and ~~“Certain~~our ~~Relationships~~industry. ~~and~~Mr. Ferraro ~~Related~~also ~~Transactions”~~provided ~~and~~valuable ~~“Governance~~financial ofexpertise, ~~the~~having ~~Company~~previously served as our chief financial officer.”

~~Item~~Katherine 14Buckman Gibson, age 51, was a director of Buckeye from August 2004 to August 2013. ~~Principal~~Since ~~Accountant~~April ~~Fees~~2000, she has been Chairman of the Board of Directors of Bulab Holdings, Inc., the parent company of Buckman Laboratories International, Inc., or Buckman. From May 1993 to May 2001, she served as Secretary of Buckman and ~~Services~~as Vice President-Legal from 1994 to 2001. She also serves as Vice Chairman of Buckman.

~~The~~Key ~~information~~Attributes, ~~required~~Experiences byand ~~this~~Skills: ~~Item~~Ms. Buckman ~~regarding~~Gibson’s ~~principal~~service ~~accountant~~with ~~fees~~Buckman, a leading manufacturer of specialty chemicals for aqueous industrial systems serving the pulp and ~~services~~paper, iswater ~~incorporated~~treatment and leather markets, provided our Board with substantial industry experience. She offered significant leadership experience by ~~reference~~virtue toof her ~~the~~extensive ~~2012~~international ~~Proxy~~commercial ~~Statement~~experience and her legal and financial education.

~~PART~~Lewis IVE. Holland, age 70, was a director of Buckeye from September 2005 to August 2013. He is a director of Evolve Bank & Trust. Mr. Holland was President of Henry Turley Company, a real estate company specializing in development of urban communities, from 2001 until his retirement in September 2009. He previously served as Vice Chairman and Chief Financial Officer and also head of ancillary businesses at National Commerce Bancorporation from 1994 until July 2001. From 1989 to 1994, Mr. Holland was a partner with the accounting firm of Ernst & Young LLP where he managed the Memphis audit staff.

~~Item~~Key 15Attributes, Experiences and Skills: Mr. Holland provided ~~Exhibits~~substantial financial expertise to our Board through his positions with Ernst & Young LLP, National Commerce Bancorporation and Evolve Bank & Trust. Mr. Holland also offered leadership experience as a result of his positions as President of Henry Turley Company and Vice Chairman and Chief Financial ~~Statement~~Officer ~~Schedules~~of National Commerce Bancorporation.

(a)	(1)	Financial Statements
		- See Index to Consolidated Financial Statements and Schedule on page F-1.
	(2)	Financial Statement Schedules
		- See Index to Consolidated Financial Statements and Schedule on page F-1. All other financial statement schedules are omitted as the information is not required or because the required information is presented in the financial statements or the notes thereto.
	(3)	Listing of Exhibits. See Exhibit Index immediately following signature page to the Annual Report on Form 10-K.

32Table of Contents

~~SIGNATURES~~Virginia B. Wetherell, age 65, was a director of Buckeye from May 2006 to August 2013. She is co-founder and a director of Florida Biomass Energy, LLC and serves as President of Wetherell Consulting, Inc., which provides consulting for government regulation and solar assisted Biomass to electricity power plants development and operation. From 1991 to 1998, she served as Secretary to the Florida Department of Environmental Protection. From 1988 to 1991, she served as the Deputy Director to the Florida Department of Natural Resources. From 1982 to 1988, she served as a State Representative to the Florida House of Representatives.

~~Pursuant~~Key Attributes, Experiences and Skills: Ms. Wetherell provided our Board with extensive knowledge of environmental issues through her experience as Secretary to the ~~requirements~~Florida Department of ~~Section~~Environmental 13Protection orand ~~15(d)~~Deputy ofDirector to the ~~Securities~~Florida ~~Exchange~~Department ~~Act~~of Natural Resources. As co-founder and director of ~~1934~~Florida Biomass Energy, LLC, she is knowledgeable in the ~~registrant~~areas ~~has~~of ~~duly~~bio-energy ~~caused~~and ~~this~~sustainability. ~~report~~Ms. Wetherell also offered leadership experience as a former legislator, a former public servant and as President of Wetherell Consulting, Inc.

toExecutive beOfficers ~~signed on its behalf by the undersigned, thereunto duly authorized.~~

~~Buckeye~~The ~~Technologies~~names, ages ~~Inc.~~and positions held by our executive officers immediately prior to completion of the merger with Georgia-Pacific on August 23, 2013 were:

By:	/s/ John B. Crowe
Name		Age		Position
	John B. Crowe, Director, Chairman of the Board and Chief Executive Officer
John B. Crowe			66	Chairman of the Board, Chief Executive Officer and Director
Date:	August 29, 2012
Steven G. Dean			57	Executive Vice President and Chief Financial Officer
Douglas L. Dowdell			55	Executive Vice President, Specialty Fibers
Charles S. Aiken			63	Sr. Vice President, Energy and Sustainability
Sheila Jordan Cunningham			61	Sr. Vice President, General Counsel and Secretary
Paul N. Horne			58	Sr. Vice President, Product and Market Development
Marko M. Rajamaa			52	Sr. Vice President, Nonwovens
Terrence M. Reed			53	Sr. Vice President, Human Resources

~~Pursuant~~Each toofficer ~~the~~serves ~~requirements~~until ofhis ~~the~~or ~~Securities~~her ~~Exchange~~successor ~~Act~~is ofduly ~~1934,~~elected ~~this report has been signed below by the following persons on behalf of the registrant~~ and ~~in the capacities and on the dates indicated~~qualified.

By:	/s/ John B. Crowe
	John B. Crowe, Director, Chairman of the Board and Chief Executive Officer (principal executive officer)
Date:	August 29, 2012

John B. Crowe

By:	/s/ Katherine Buckman Gibson
	Katherine Buckman Gibson, Director
Date:	August 29, 2012

Chairman of the Board, Chief Executive Officer and Director

By:	/s/ R. Howard Cannon
	R. Howard Cannon, Director
Date:	August 29, 2012

Mr. Crowe has served as Chairman of the Board and Chief Executive Officer since July 1, 2006. He served as President and Chief Operating Officer from April 2003 to July 2006. He was elected as a director of Buckeye in August 2004. He served as Senior Vice President, Wood Cellulose from January 2001 to April 2003. He served as Vice President, Wood Cellulose Manufacturing from January 1998 to January 2001. Prior to joining us, he was Executive Vice President/General Manager of Alabama River Pulp and Alabama Pine Pulp Operations, a division of Parsons and Whittemore, Inc. and was Vice President and Site Manager of Flint River Operations, a subsidiary of Weyerhauser Company. From 1979 to 1992, he was an employee of Procter & Gamble.

By:	/s/ Red Cavaney
	Red Cavaney, Director
Date:	August 29, 2012

Steven G. Dean

By:	/s/ Lewis E. Holland
	Lewis E. Holland, Director
Date:	August 29, 2012

Executive Vice President and Chief Financial Officer

By:	/s/ Steven G. Dean
	Steven G. Dean, Executive Vice President and Chief Financial Officer (principal financial officer)
Date:	August 29, 2012

Mr. Dean has served as Executive Vice President and Chief Financial Officer since July 24, 2012. He served as Senior Vice President and Chief Financial Officer from July 2007 to July 2012. He served as Vice President and Chief Financial Officer from July 2006 to July 2007. He served as Vice President and Controller from February 2006 to July 2006. Mr. Dean served as Company Controller from December 2005 to February 2006. Previously, he served as Controller for Buckeye’s Specialty Fibers Division from December 2004 to November 2005 and Controller for Buckeye’s Nonwovens Division from August 2001 to November 2004. Prior to joining Buckeye in 1999, he held various financial management positions with Thomas & Betts and Hewlett-Packard.

By:	/s/ Elizabeth J. Welter
	Elizabeth J. Welter, Vice President and Chief Accounting Officer (principal accounting officer)
Date:	August 29, 2012

Douglas L. Dowdell

33Executive Vice President, Specialty Fibers

~~EXHIBIT~~Mr. Dowdell ~~INDEX~~served as Executive Vice President, Specialty Fibers from July 24, 2012 to August 23, 2013. He served as Senior Vice President, Specialty Fibers from February 2006 to July 2012. He served as Senior Vice President, Nonwovens from February 2005 to February 2006. He served as Vice President, Nonwovens from October 2003 to February 2005. He served as Vice President, Absorbent Wood Fiber Sales from February 2002 to October 2003. He served as Vice President, Nonwovens Business Development from February 2001 to February 2002. He served as Vice President, Absorbent Products Business Development from August 2000 to February 2001. Prior to August 2000 he held several positions in the Company including: Manager, Absorbent Fiber Sales; Manager, Business Development; and Manager, Wood Procurement. He was an employee of Procter & Gamble from 1988 to March 1993.

Exhibit		Incorporation by Reference or
Numbers	Description	Filed Herewith
3.1	Second Amended and Restated Certificate of Incorporation	Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for quarter ended December 31, 1997, filed on February 13, 1998
3.1(a)	Articles of Amendment to the Second Amended and Restated Certificate of Incorporation	Exhibit 3.1(a) to Form S-4 file no. 333-59267, filed on July 16, 1998
3.2	Amended and Restated By-laws	Exhibit 3.1 to the Company's Current Report on Form 8-K, filed on September 16, 2009
4.1	First Amendment to the Rights Agreement	Exhibit 4.1 to the Company’s Annual Report on Form 10-K for year ended June 30, 1997, filed on September 26, 1997
4.3	Indenture for 8.5% Senior Notes due 2013, dated September 22, 2003	Exhibit 4.4 to Form S-4, file no. 333-110091, filed on October 30, 2003
4.4	First Supplemental Indenture for 8.5% Senior Notes due 2013, dated as of July 1, 2009	Exhibit 4.4 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2009, filed on August 27, 2009
10.1	Amended and Restated 1995 Management Stock Option Plan	Exhibit 10.1 to the Company's Annual Report on Form 10-K for year ended June 30, 1998, filed on September 23, 1998
10.2	Second Amended and Restated 1995 Incentive and Nonqualified Stock Option Plan for Management Employees	Exhibit 10.2 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2000, filed on September 25, 2000
10.3	Form of Management Stock Option Subscription Agreement	Exhibit 10.3 to the Company's Annual Report on Form 10-K for year ended June 30, 1998, filed on September 23, 1998
10.4	Form of Stock Option Subscription Agreement	Exhibit 10.4 to the Company's Annual Report on Form 10-K for year ended June 30, 1998, filed on September 23, 1998
10.5	Amended and Restated Formula Plan for Non-Employee Directors	Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for quarter ended December 31, 2000, filed on February 6, 2001
10.6	Amendment No. 1 to Timberlands Agreement dated January 1, 1999 by and Between Buckeye Florida, Limited Partnership and Foley Timber and Land Company. Certain portions of the Agreement have been omitted pursuant to an Application for Confidential Treatment dated October 30, 1995	Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q/A for quarter ended March 31, 1999, filed on May 12, 1999
10.7	Form of Change in Control Agreement, dated August 8, 2006	Exhibit 10.1 to the Company's Current Report on Form 8-K, filed on August 11, 2006
10.8	Retirement Replacement Plan	Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2006, filed on October 27, 2006
10.9	Second Amended and Restated Credit Agreement, dated October 22, 2010, among the Company, Bank of America NA, Banc of America Securities LLC, Citizens Bank of Pennsylvania, J.P. Morgan Securities LLC, Regions Capital Markets and the other lenders party thereto	Exhibit 10.1 to the Company’s Current Report on Form 8-K/A, filed on January 21, 2011
10.10	2007 Omnibus Incentive Compensation Plan	Exhibit A to the Company's 2007 Proxy Statement, filed on September 20, 2007
10.11	Form of Indemnification Agreement	Exhibit 10.1 to the Company's Current Report on Form 8-K, filed on October 27, 2009
10.12	Form of Performance Shares Award Agreement	Exhibit 10.1 to the Company's Current Report on Form 8-K, filed on July 21, 2010
10.13	Separation Agreement	Exhibit 10.1 to the Company's Current Report on Form 8-K, filed on July 24, 2012
21.1	Subsidiaries	Filed herewith
23.1	Consent of Ernst & Young LLP	Filed herewith
31.1	Section 302 Certification of Chief Executive Officer	Filed herewith
31.2	Section 302 Certification of Chief Financial Officer	Filed herewith
32.1	Section 1350 Certification of Chief Executive Officer	Filed herewith
32.2	Section 1350 Certification of Chief Financial Officer	Filed herewith

Charles S. Aiken

34Senior Vice President, Energy and Sustainability

~~BUCKEYE~~Mr. Aiken ~~TECHNOLOGIES~~served ~~INC~~as Senior Vice President, Energy and Sustainability from January 1, 2010 to August 23, 2013. He served as Senior Vice President, Manufacturing from October 2003 to January 2010. He served as Senior Vice President, Nonwovens Manufacturing from April 2000 to October 2003. He served as Vice President, Business Systems from April 1998 to April 2000 and as Vice President, Foley Plant from June 1995 to April 1998. He was an employee of Procter & Gamble from 1977 to March 1993.

~~INDEX~~30 ~~TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE~~

	PAGE
Report of Management	F-2
Management’s Report on Internal Control Over Financial Reporting	F-3
Reports of Independent Registered Public Accounting Firm	F-4
Financial Statements as of June 30, 2012, June 30, 2011 and for the Three Years Ended June 30, 2012:
Consolidated Statements of Operations	F-6
Consolidated Balance Sheets	F-7
Consolidated Statements of Stockholders’ Equity	F-8
Consolidated Statements of Cash Flows	F-9
Notes to Consolidated Financial Statements	F-10
Schedule:
Schedule II - Valuation and Qualifying Accounts	F-33

~~F-1~~Sheila Jordan Cunningham

~~Report~~Senior ofVice ~~Management~~President, General Counsel and Secretary

~~The~~Ms. Cunningham ~~management~~has ofserved ~~Buckeye~~as ~~Technologies~~Senior ~~Inc~~Vice President, General Counsel and Secretary since April 2000. isShe ~~committed~~served as Vice President, General Counsel and Secretary from April 1998 to ~~providing~~April ~~financial~~2000. ~~reports~~She ~~that~~served ~~are~~as ~~complete,~~Assistant ~~accurate~~General Counsel from March 1997 to April 1998 and ~~easily~~as ~~understood~~Secretary from July 1997 to April 1998. Prior to joining us, she was a partner in the law firm of Baker, Donelson, Bearman, Caldwell, & Berkowitz, P.C.

~~The~~Paul consolidated financial statements and financial information included in this report have been prepared in accordance with accounting principles generally accepted in the United States and in the opinion of management fairly and completely present the Company’s financial resultsN. ~~Our~~ ~~independent~~Horne ~~auditor, Ernst & Young LLP, has audited our financial statements and expressed an unqualified opinion.~~

~~Ensuring~~Senior ~~the~~Vice ~~accuracy of financial statements starts at the top of the Company. Our Board of Directors provides oversight as the representative of the stockholders. Our Audit Committee~~President, ~~consisting~~Product ~~entirely of independent Directors, meets regularly with management, internal audit~~ and ~~the~~Market ~~independent~~Development ~~auditors to review our financial reports.~~

~~The~~Mr. Horne ~~Company’s~~served ~~senior~~as ~~management,~~Senior ~~our~~Vice ~~corporate leadership team~~President, isProduct ~~actively~~and ~~involved~~Market inDevelopment ~~all~~from ~~aspects~~February 1, of2006 ~~the~~to ~~business~~August 23, 2013. ~~This~~ He served ~~group~~as ~~understands~~Senior ~~key~~Vice ~~strategies~~President, ~~and~~Cotton ~~monitors~~Cellulose ~~financial~~from ~~results. We~~January ~~maintain~~2001 ato ~~system~~February of2006. ~~internal~~He ~~control~~served ~~which~~as ~~provides~~Senior ~~reasonable~~Vice ~~assurance~~President, ~~that~~Commercial—Specialty ~~transactions~~Cellulose ~~are~~from ~~accurately~~July ~~recorded~~1997 ~~and~~to ~~assets~~January ~~are~~2001 ~~safeguarded. All~~and ofas ~~the~~Vice ~~Company’s~~President, ~~officers~~North and ~~financial~~South ~~executives~~American ~~adhere~~Sales tofrom October ~~the~~1995 ~~Company’s~~to ~~Code~~July of1997. ~~Business~~He ~~Conduct~~was ~~and~~an ~~Ethics~~employee ~~and~~of ~~provide~~Procter & ~~written~~Gamble ~~confirmation~~from of1982 ~~their~~to ~~compliance~~March ~~annually~~1993.

~~Our~~Marko ~~Company was built on a foundation of integrity and honesty~~M. We ~~take~~Rajamaa ~~responsibility for the quality and accuracy of our financial reporting.~~

~~/s/~~Senior ~~John B. Crowe /s/ Steven G. Dean John B. Crowe Steven G. Dean Chairman of the Board and Executive~~ Vice President, ~~and~~Nonwovens ~~Chief Executive Officer Chief Financial Officer~~

FMr. Rajamaa served as Senior Vice President, Nonwovens from October 26, 2006 to August 23, 2013. He served as Vice President, Nonwovens from February 2006 to October 2006 and as Vice President, Nonwovens Sales – Europe and Middle East from January 2002 to February 2006. Previously, he served as Manager, Nonwoven Sales, Europe, Middle East and Africa from 1999 to 2002. Prior to joining Buckeye in 1999, he held various sales management positions with Walkisoft / UPM-2Kymmene.

~~Management’s~~Terrence ~~Report~~M. ~~on Internal Control Over Financial Reporting~~Reed

~~Our~~Senior ~~management~~Vice ~~is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934~~President, asHuman ~~amended). Our~~Resources internal control over financial reporting includes, among other things: defined policies and procedures for conducting and governing our business, a written Code of Business Conduct and Ethics adopted by our Board of Directors and applicable to all directors and all officers and employees of Buckeye and our subsidiaries, sophisticated information systems for processing transactions and a properly staffed and professional internal audit department. Mechanisms are in place to monitor the effectiveness of our internal control over financial reporting and actions are taken to correct identified deficiencies. Our procedures for financial reporting include the active involvement of senior management, our Audit Committee and a staff of highly qualified financial and legal professionals.

~~Management,~~Mr. Reed ~~with~~served ~~the~~as ~~participation~~Senior ofVice ~~our~~President, ~~principal~~Human ~~executive~~Resources ~~and~~from ~~financial~~July 24, ~~officers~~2012 to August 23, ~~evaluated~~2013. He ~~our~~served ~~internal~~as ~~control~~Vice President, ~~over~~Human ~~financial~~Resources ~~reporting~~from asMarch of2006 ~~June~~to ~~30,~~July 2012. Previously he served as Plant Manager, ~~the~~Foley ~~end~~Plant offrom ~~our~~January ~~fiscal~~2005 ~~year. Management~~to ~~based~~March ~~its~~2006 ~~evaluation~~and onprior ~~criteria~~to ~~established~~that inhe ~~Internal~~held ~~Control—Integrated~~various ~~Framework~~manufacturing ~~issued~~roles byin the ~~Committee~~Foley ofPlant. ~~Sponsoring~~Prior ~~Organizations~~to ofjoining ~~the~~Buckeye ~~Treadway~~in ~~Commission~~1995, he (was an engineer for American Greetings Corporation from 1992 to 1995 and was an officer in the ~~“COSO~~United ~~criteria”)~~States Army from 1983 to 1992.

~~Based~~Corporate Governance onDocuments ~~this evaluation, management has concluded that our internal control over financial reporting was effective as of June 30, 2012.~~

~~Our~~The ~~independent~~Code ~~registered~~of ~~public~~Business ~~accounting~~Conduct ~~firm~~and Ethics, ~~Ernst~~the &Employee ~~Young~~Complaint ~~LLP~~Procedures for Accounting and Auditing Matters, the ~~audited~~Corporate Governance Guidelines and the ~~effectiveness~~charters of our ~~internal~~Audit ~~controls~~Committee, ~~over~~Compensation ~~financial~~Committee ~~reporting. Ernst~~and &Nominating ~~Young~~and ~~LLP~~Corporate ~~has~~Governance ~~issued~~Committee ~~their~~were ~~report~~adopted onby us for the ~~effectiveness~~purpose of ~~internal~~increasing ~~control~~transparency ~~over~~in ~~financial~~our ~~reporting~~governance ~~which~~practices isas ~~included~~well as promoting honest and ethical conduct, promoting full, fair, accurate, timely and understandable disclosure in ~~this~~periodic ~~Annual~~reports ~~Report~~required onto ~~Form~~be ~~10-K~~filed by us, and promoting compliance with all applicable rules and regulations that apply to us and our officers and directors.

~~/s/~~Prior ~~John~~to B.the ~~Crowe~~completion ~~/s/~~of ~~Steven~~the Gmerger with Georgia-Pacific, the Code of Business Conduct and Ethics applied to the members of our Board, our Chief Executive Officer and our senior financial officers as well as all our other officers and employees. ~~Dean~~It ~~John~~provided Bthat any waiver of this code may be made only by our Board. ~~Crowe~~Any ~~Steven~~waiver Gin favor of a director or executive officer would have been publicly disclosed. ~~Dean~~Prior ~~Chairman~~to the completion of the ~~Board~~merger with Georgia-Pacific, we disclosed amendments to, and ~~Executive~~waivers ~~Vice~~from, ~~President~~the Code of Business Conduct and ~~Chief~~Ethics, ~~Executive~~if ~~Officer~~any, ~~Chief~~on ~~Financial~~our ~~Officer~~website, www.bkitech.com.

~~F-3~~Audit Committee

~~Report~~Prior to the completion of ~~Independent~~the ~~Registered~~merger ~~Public~~with ~~Accounting~~Georgia-Pacific, ~~Firm~~the Audit Committee consisted of Mr. Lewis E. Holland (Chairman), Mr. Red Cavaney, Mr. R. Howard Cannon, Ms. Katherine Buckman Gibson and Ms. Virginia B. Wetherell, all of whom were independent directors of Buckeye under the listing standards of the NYSE. Our Board has determined that Mr. Holland is an “audit committee financial expert” as such term is defined in the rules of the SEC.

The ~~Board~~Audit Committee met six times during fiscal year 2013. Prior to the completion of ~~Directors~~the ~~and~~merger ~~Stockholders~~with Georgia-Pacific, a copy of ~~Buckeye~~the ~~Technologies~~Audit Committee ~~Inc~~charter was available to our stockholders and other interested parties at the Investors tab on our website at www.bkitech.com and was also available in print to any stockholder or other interested party who makes a request to our Corporate Secretary. Ernst & Young LLP served as our independent registered public accounting firm for the fiscal year ended June 30, 2013.

WePrior ~~have~~to ~~audited~~completion ~~Buckeye Technologies Inc.’s internal control over financial reporting as~~ of ~~June 30, 2012, based on criteria established in Internal Control—Integrated Framework issued by~~ the ~~Committee~~merger ofwith Sponsoring Organizations of the Treadway Commission (the “COSO criteria”). Buckeye Technologies Inc.’s management is responsible for maintaining effective internal control over financial reportingGeorgia-Pacific, ~~and for its assessment of~~ the ~~effectiveness~~Audit ofCommittee ~~internal~~had ~~control over financial reporting included in~~ the ~~accompanying~~authority ~~Management’s~~and ~~Report on Internal Control Over Financial Reporting. Our~~ responsibility is to: ~~express an opinion on the company’s internal control over financial reporting based on our audit.~~

We• ~~conducted~~hire ~~our~~one ~~audit~~or inmore ~~accordance~~independent ~~with~~registered ~~the~~public ~~standards~~accountants ~~of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit~~ to ~~obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our~~ audit ~~included~~our ~~obtaining~~books, anrecords ~~understanding~~and ~~of internal control over~~ financial ~~reporting,~~statements ~~assessing the risk that a material weakness exists, testing~~ and ~~evaluating~~to ~~the~~review ~~design~~our ~~and~~systems ~~operating effectiveness~~ of ~~internal~~accounting ~~control~~(including ~~based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that~~ our ~~audit~~systems ~~provides~~of ainternal ~~reasonable basis for our opinion.~~control);

A31 company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

BecauseTable of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.Contents

In• ~~our~~discuss ~~opinion,~~with ~~Buckeye~~the ~~Technologies~~independent ~~Inc.~~registered ~~maintained,~~public inaccounting ~~all~~firm ~~material~~the ~~respects,~~results ~~effective internal control over financial reporting as~~ of ~~June~~the ~~30,~~annual ~~2012,~~audit ~~based~~and ~~on the~~quarterly ~~COSO criteria.~~reviews;

We• ~~also~~conduct ~~have~~periodic ~~audited,~~independent inreviews ~~accordance~~of ~~with~~ the ~~standards~~systems of ~~the~~accounting ~~Public Company Accounting Oversight Board~~ (~~United~~including ~~States),~~systems ~~the consolidated balance sheets~~ of ~~Buckeye~~internal ~~Technologies~~control); ~~Inc. as of June 30, 2012~~ and 2011 and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended June 30, 2012 of Buckeye Technologies Inc. and our report dated August 29, 2012 expressed an unqualified opinion thereon.

~~Memphis,~~• Tennessee /s/make ~~Ernst~~reports &periodically ~~Young~~to ~~LLP~~our Board with respect to its findings.

~~August~~Material ~~29,~~Changes ~~2012~~to Security Holder Director Recommendation Procedures

FOn August 23, 2013, our bylaws were amended in connection with the closing of the merger with Georgia-4Pacific. The new Bylaws do not provide procedures by which stockholders may recommend nominees to our Board.

~~Report~~Section 16(a) ofBeneficial Ownership ~~Independent~~Reporting ~~Registered~~Compliance ~~Public Accounting Firm~~

The ~~Board~~U.S. federal securities laws require our directors and executive officers, and persons who beneficially own more than 10% of ~~Directors~~a registered class of our equity securities, to file with the SEC initial reports of ownership and ~~Stockholders~~reports of changes in ownership of any securities of Buckeye. ~~Technologies~~Based ~~Inc~~on our review of the copies of such reports furnished to Buckeye and written representations by certain reporting persons, we believe all of our officers, directors and greater than 10% beneficial owners made all filings required in a timely manner during the fiscal year ended June 30, 2013.

We have audited the accompanying consolidated balance sheets of Buckeye Technologies Inc. as of June 30, 2012 and 2011 and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended June 30, 2012. Our audits also included the financial statement schedule listed in the Index at Item ~~15 (a)~~11. ~~These~~ ~~financial~~Executive ~~statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.~~Compensation

WeCOMPENSATION ~~conducted~~DISCUSSION ~~our~~AND ~~audits~~ANALYSIS in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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.

InPrior ~~our~~to ~~opinion,~~completion of the ~~financial~~merger ~~statements~~with ~~referred~~Georgia-Pacific, toour ~~above~~primary ~~present~~compensation ~~fairly,~~philosophy inwas ~~all~~to ~~material~~offer ~~respects,~~a ~~the~~competitive ~~consolidated~~compensation ~~financial~~program that ~~position~~attracts, ofretains ~~Buckeye~~and ~~Technologies~~rewards ~~Inc.~~executive asofficers ofwho ~~June~~contribute ~~30,~~to ~~2012~~Buckeye’s ~~and~~long ~~2011,~~term success and ~~the~~increased ~~consolidated~~stockholder ~~results~~value. ofOur ~~its~~compensation ~~operations~~discussion and ~~its~~analysis ~~cash~~discusses ~~flows~~the total compensation for ~~each~~our ofChief Executive Officer, Chief Financial Officer, the three ~~years~~other inmost ~~the~~highly ~~period~~compensated ~~ended~~executive ~~June~~officers at June 30, ~~2012~~2013, inand ~~conformity~~Kristopher ~~with U~~J.S. ~~generally~~Matula ~~accepted~~(who ~~accounting~~would ~~principles~~have been a named executive officer had he been employed at the end of the last fiscal year) or our “named executive officers. ~~Also~~” We historically had a strong “pay for performance” philosophy for our executive compensation program, inwhich was designed to reward executive officers for maximizing our ~~opinion~~success, ~~the~~as ~~related~~determined by our financial ~~statement~~and ~~schedule~~operational goals and stockholder value creation. We generally rewarded executives for near-term and sustained longer-term financial and operating performance, ~~when~~stockholder ~~considered~~value increation ~~relation~~and leadership excellence. Compensation opportunities were intended to align the ~~basic~~interests ~~financial~~of ~~statements~~executives ~~taken~~with asthose aof ~~whole,~~our ~~presents~~stockholders ~~fairly~~and inencourage ~~all~~them ~~material~~to ~~respects~~remain ~~the~~with ~~information~~Buckeye ~~set~~for ~~forth~~long ~~therein~~and productive careers.

WePrior ~~also~~to ~~have~~completion ~~audited,~~of inthe ~~accordance~~merger with Georgia-Pacific, the ~~standards~~Compensation ofCommittee ~~the~~regularly ~~Public~~reviewed ~~Company~~Buckeye’s ~~Accounting~~compensation ~~Oversight~~philosophy and ~~Board~~objectives. ~~(United~~The ~~States),~~Compensation ~~Buckeye~~Committee ~~Technologies~~was ~~Inc.’s~~also ~~internal~~responsible ~~control~~for ~~over~~reviewing ~~financial~~and ~~reporting~~approving ascompensation offor ~~June~~Buckeye’s ~~30,~~executive ~~2012,~~officers ~~based~~ on ~~criteria~~an ~~established~~annual inbasis. ~~Internal~~Prior ~~Control-Integrated~~to ~~Framework~~completion ~~issued~~of by the ~~Committee~~merger ofwith ~~Sponsoring~~Georgia-Pacific, ~~Organizations~~a description of the Compensation ~~Treadway~~Committee’s ~~Commission~~responsibilities ~~and~~was ~~our~~set ~~report~~forth ~~dated~~in ~~August~~detail 29in its charter, ~~2012~~which ~~expressed~~was anposted ~~unqualified~~on ~~opinion~~the ~~thereon~~Company’s website at www.bkitech.com.

~~Memphis,~~Set Tennessee /forth below is a detailed discussion of the Company’s/ ~~Ernst~~compensation &program ~~Young~~for ~~LLP~~its executive officers in fiscal 2013, when Buckeye was a standalone publicly traded entity.

~~August~~Executive ~~29,~~Summary ~~2012~~

FPrior to completion of the merger with Georgia-5Pacific, we managed our business with the long-term objective of providing value to all of our constituents, namely, stockholders, customers, employees, suppliers, and the communities in which we have a presence. Our compensation programs as a public company were designed to support this overall objective. Our compensation philosophy as a public company was that compensation for all employees, including our named executive officers, should be:

~~Consolidated~~• ~~Statements~~fair ofand ~~Operations~~equitable when viewed both internally and externally;

~~(In~~• ~~thousands,~~competitive ~~except~~in ~~per~~order ~~share~~to ~~data)~~attract and retain the best qualified individuals; and

	Year Ended June 30
	2012			2011			2010
Net sales	$	894,881		$	880,428		$	733,893
Cost of goods sold		677,396			678,234			610,354
Gross margin		217,485			202,194			123,539
Selling, research and administrative expenses		46,704			51,705			48,107
Amortization of intangibles and other		2,021			1,966			1,905
Asset impairment		2,094			13,007			-
Goodwill impairment		2,425			-			-
Restructuring costs		234			1,082			3,353
Alternative fuel mixture credits		-			-			(77,677	)
Other operating income		(32	)		(63	)		(751	)
Operating income		164,039			134,497			148,602
Other income (expense):
Interest income		261			80			54
Interest expense and amortization of debt costs		(760	)		(8,849	)		(17,541	)
Loss on early extinguishment of debt		-			(3,649	)		(2,606	)
Foreign exchange and other		386			(1,506	)		(796	)
Income from continuing operations before income taxes		163,926			120,573			127,713
Income tax expense (benefit)		45,011			(8,233	)		11,237
Income from continuing operations		118,915			128,806			116,476
Loss from discontinued operations, net of tax		(28,887	)		(4,538	)		(1,902	)
Net income	$	90,028		$	124,268		$	114,574
Earnings (loss) per share
Basic
Income from continuing operations	$	3.00		$	3.20		$	3.00
Loss from discontinued operations		(0.74	)		(0.11	)		(0.05	)
Earnings per share - basic	$	2.26		$	3.09		$	2.95
Diluted
Income from continuing operations	$	2.98		$	3.16		$	2.95
Loss from discontinued operations		(0.74	)		(0.11	)		(0.05	)
Earnings per share - diluted	$	2.24		$	3.05		$	2.90
Cash dividends per share	$	0.27		$	0.18		$	-

•

aligned with performance.

~~See~~We ~~accompanying~~had ~~notes~~designed our compensation programs to reflect each of these characteristics. Our named executive officers received compensation packages that primarily consisted of an annual base salary, short-term incentive awards, and long-term incentive awards. The performance-based incentives (tied to corporate performance, and in some cases, individual performance and strategic business area performance goals) sought to reward both short-term and long-term results and to align the interests of our executive officers and other participants with the interests of our stockholders.

~~F-6~~32

ConsolidatedTable Balanceof SheetsContents

~~(In~~The ~~thousands~~Compensation Committee approved the short-term and long-term incentive award performance targets for participants, ~~except~~including ~~share~~our ~~data)~~named executive officers, in July or August of each year for the fiscal year commencing the prior July 1st. We believe that the performance targets approved by the Compensation Committee were both challenging and realistic, and require participants, including executive officers, to perform at a high level to earn target awards.

	June 30
	2012			2011
Assets
Current assets:
Cash and cash equivalents	$	38,284		$	30,494
Short-term investments		8,813			-
Accounts receivable – trade, net of allowance for doubtful accounts of $595 in 2012 and $652 in 2011		119,069			135,942
Accounts receivable – other		7,636			4,640
Inventories		90,183			91,024
Deferred income taxes		9,040			4,712
Prepaid expenses and other		16,657			7,504
Total current assets		289,682			274,316
Property, plant and equipment, net		492,109			530,468
Goodwill		-			2,425
Deferred income taxes		42,427			32,741
Intellectual property and other, net		13,193			29,901
Total assets	$	837,411		$	869,851
Liabilities and stockholders’ equity
Current liabilities:
Trade accounts payable	$	40,600		$	41,437
Accrued expenses		43,135			71,722
Total current liabilities		83,735			113,159
Long-term debt		58,578			96,921
Accrued postretirement benefits		30,602			25,336
Deferred income taxes		4,930			7,968
Payable related to exchange of alternative fuel mixture credits		49,741			39,494
Other liabilities		6,789			7,676
Commitments and contingencies (Notes 23 and 24)
Stockholders’ equity:
Preferred stock, $.01 par value; 10,000,000 shares authorized; none issued or outstanding		-			-
Common stock, $.01 par value; 100,000,000 shares authorized; 43,142,770 shares issued; 38,823,455 and 39,512,129 shares outstanding at June 30, 2012 and 2011, respectively		431			431
Additional paid-in capital		47,206			45,223
Accumulated other comprehensive income		24,968			57,003
Retained earnings		599,339			520,114
Treasury shares, 3,690,682 and 2,941,429 shares at June 30, 2012 and 2011, respectively		(68,908	)		(43,474	)
Total stockholders’ equity		603,036			579,297
Total liabilities and stockholders’ equity	$	837,411		$	869,851

Fiscal Year 2013 Financial and Operational Performance

~~See~~We ~~accompanying~~had ~~notes~~strong financial results in fiscal year 2013, but sales and profits were down compared to record levels in 2012, as more specifically described under Item 7 of this Annual Report on Form 10-K. Highlights for fiscal year 2013 include:

~~F-7~~• Net sales of $812 million were down $83 million or 9% from record 2012 level

~~Consolidated~~• ~~Statements~~Operating income of ~~Stockholders'~~$121 ~~Equity~~million down $43 million compared to 2012

~~(In~~• ~~thousands,~~Net ~~except~~income ~~share~~of ~~data)~~$89 million down $1 million compared to 2012

	Common stock		Additional paid-in capital			Accumulated other comprehensive income (loss)			Retained Earnings			Treasury shares			Total
Balance at June 30, 2009	$	431	$	43,736		$	33,701		$	288,547		$	(48,384	)	$	318,031
Comprehensive income:
Net income		-		-			-			114,574			-			114,574
Other comprehensive income (loss):
Foreign currency translation adjustment		-		-			(689	)		-			-			(689	)
Net prior service credit and actuarial losses on post retirement obligations, net of tax of ($1,194)		-		-			(2,033	)		-			-			(2,033	)
Net unrealized gain from cash flow hedging instrument, net of tax of $89		-		-			152			-			-			152
Comprehensive income																112,004
Issuance of 504,461 shares of common stock		-		(2,766	)		-			-			6,682			3,916
Withholding of 47,877 shares of restricted stock for tax payments		-		641			-			-			(641	)		-
Forfeiture of 37,100 shares of common stock		-		499			-			-			(499	)		-
Stock-based compensation expense		-		2,335			-			-			-			2,335
Tax benefit from stock-based awards		-		1,035			-			-			-			1,035
Balance at June 30, 2010	$	431	$	45,480		$	31,131		$	403,121		$	(42,842	)	$	437,321
Comprehensive income:
Net income		-		-			-			124,268			-			124,268
Other comprehensive income (loss):
Foreign currency translation adjustment		-		-			25,971			-			-			25,971
Net prior service credit and actuarial losses on post retirement obligations, net of tax of $93		-		-			159			-			-			159
Net unrealized loss from cash flow hedging instrument, net of tax of ($152)		-		-			(258	)		-			-			(258	)
Comprehensive income																150,140
Issuance of 737,940 shares of common stock		-		(6,957	)		-			-			9,782			2,825
Withholding of 43,812 shares of restricted stock for tax payments		-		586									(586	)		-
Forfeiture of 2,097 shares of common stock		-		29			-			-			(29	)		-
Repurchase of 400,000 shares of common stock		-		-			-			-			(9,799	)		(9,799	)
Stock-based compensation expense				3,398			-			-			-			3,398
Tax benefit from stock-based awards		-		2,687			-			-			-			2,687
Dividends		-		-			-			(7,275	)		-			(7,275	)
Balance at June 30, 2011	$	431	$	45,223		$	57,003		$	520,114		$	(43,474	)	$	579,297
Comprehensive income:
Net income		-		-			-			90,028			-			90,028
Other comprehensive income (loss):
Foreign currency translation adjustment		-		-			(28,325	)		-			-			(28,325	)
Net prior service credit and actuarial losses on post retirement obligations, net of tax of $2,182		-		-			(3,716	)		-			-			(3,716	)
Net unrealized gain from cash flow hedging instrument, net of tax of ($3)		-		-			6			-			-			6
Comprehensive income																57,993
Issuance of 489,545 shares of common stock		-		(6,385	)		-			-			7,913			1,528
Withholding of 49,121 shares of restricted stock for tax payments		-		350									(350	)		-
Forfeiture of 2,648 shares of common stock		-		81			-			-			(81	)		-
Repurchase of 1,187,029 shares of common stock		-		-			-			-			(32,916	)		(32,916	)
Stock-based compensation expense				3,959			-			-			-			3,959
Tax benefit from stock-based awards		-		3,978			-			-			-			3,978
Dividends		-		-			-			(10,803	)		-			(10,803	)
Balance at June 30, 2012	$	431	$	47,206		$	24,968		$	599,339		$	(68,908	)	$	603,036
See accompanying notes.

•

Good Progress on Specialty Expansion Startup and Product Qualification

~~F-8~~• Nonwovens operating income up $9 million compared to 2012 as we closed Delta, Canada facility and successfully transferred business to Gaston and Steinfurt facilities

~~Consolidated~~• ~~Statements~~Cash ofand ~~Cash~~short-term ~~Flows~~investments exceed debt for first time in Company history

~~(In~~Our ~~thousands~~fiscal year 2013 performance was a key factor in the compensation decisions for the fiscal year, as more specifically discussed below. Fiscal year 2013 short-term incentive award opportunities were tied to our annual operating plan at target (50%) levels, and were heavily weighted toward financial performance metrics including cash flow, earnings per share, and return on invested capital. Actual performance on these metrics was below plan levels on a total Company level and for our Specialty Fibers segment. All three of these key financial metrics were negatively impacted by reduced fluff pulp prices and unfavorable sales mix due to weak market conditions in Europe. As a result, short-term incentives earned in Fiscal Year 2013 were below target award levels.

	Year Ended June 30
	2012			2011			2010
Operating activities
Net income	$	90,028		$	124,268		$	114,574
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		50,136			50,030			46,275
Amortization		2,641			2,629			2,857
Loss on early extinguishment of debt		-			3,649			2,606
Asset impairment loss		51,268			13,007			-
Goodwill impairment loss		2,425			-			-
Deferred income taxes		(14,454	)		(81,565	)		7,658
Payable for exchange of alternative fuel mixture credits		10,247			39,494			-
Provision for bad debts		(57	)		(198	)		(84	)
Excess tax benefit from stock based compensation		(4,062	)		(2,495	)		(726	)
Stock-based compensation expense		4,245			4,594			2,672
Loss on disposal of equipment		1,602			1,297			1,096
Other		1,861			(492	)		2,503
Changes in operating assets and liabilities excluding effects of dispositions:
Accounts receivable		6,548			(14,805	)		(16,200	)
Income tax and alternative fuel mixture credits receivable		-			68,356			(58,982	)
Inventories		(5,119	)		(13,532	)		12,452
Other assets		803			122			(94	)
Accounts payable and other current liabilities		(26,349	)		17,643			8,883
Net cash provided by operating activities		171,763			212,002			125,490
Investing activities
Purchases of property, plant and equipment		(84,940	)		(57,307	)		(47,540	)
Proceeds from sale of assets held for sale		11,760			-			-
Proceeds from State of Florida grant		-			-			7,381
Purchase of short term investments		(9,213	)		-			-
Other		(481	)		(471	)		(413	)
Net cash used in investing activities		(82,874	)		(57,778	)		(40,572	)
Financing activities
Net borrowings (payments) under revolving line of credit		(38,343	)		(609	)		80,502
Payments on long-term debt and other		-			(140,000	)		(170,000	)
Payments for debt issuance costs		-			(2,586	)		(650	)
Payments related to early extinguishment of debt		-			(1,984	)		(1,700	)
Purchase of treasury shares		(32,916	)		(9,799	)		-
Cash used to settle net share equity awards		(1,526	)		(1,186	)		(684	)
Net proceeds from sale of equity interests		3,054			4,011			4,600
Excess tax benefit from stock based compensation		4,062			2,495			726
Payment of dividend		(10,756	)		(7,252	)		-
Net cash used in financing activities		(76,425	)		(156,910	)		(87,206	)
Effect of foreign currency rate fluctuations on cash		(4,674	)		11,059			2,348
Increase in cash and cash equivalents		7,790			8,373			60
Cash and cash equivalents at beginning of year		30,494			22,121			22,061
Cash and cash equivalents at end of year	$	38,284		$	30,494		$	22,121

Summary of Fiscal Year 2013 Named Executive Officers’ Compensation

~~See~~• ~~accompanying~~Annual ~~notes~~Base Salary. In fiscal year 2013, our named executive officers received annual base salary increases ranging from 3.0% to 8.7%. The increases to the base salaries of Mr. Dean and Mr. Dowdell were effective August 1, 2012 and were made in connection with their respective promotions on August 1, 2012. All other changes were effective as of October 1, 2012. Please note, due to Mr. Matula’s resignation, his salary was not increased in fiscal 2013.

F• Short-9Term Incentive Awards. Prior to completion of the merger with Georgia-Pacific, we had two short-term incentive plans in which our executive officers participated: the “All Employee Bonus” plan in which most of our employees participated and the “At-Risk Incentive Compensation”, or “ARC” plan in which our named executive officers and certain other employees participated. Both short-term incentive compensation programs were performance-based and were designed to reward employees, including executive officers, for their contributions to Buckeye based primarily on objective, measurable criteria. For the executive officers there was no subjective component of the incentive opportunity. The Compensation Committee established various quantitative operational and performance targets for both the All Employee Bonus plan and the ARC plan. The Compensation Committee reviewed attainment of relevant goals for these areas each year. For each executive officer, the maximum award under the All Employee Bonus plan is capped at 15% of base salary. In fiscal 2013, maximum award opportunities under the ARC plan were capped at 165% of base salary for the Chief Executive Officer, 120% of base salary for the Executive Vice Presidents, and 90% of base salary for each of the other named executive officers (other than Mr. Matula who did not have an incentive opportunity due to his resignation). The Compensation Committee determined that the target award opportunity for each of the executive officers was 50% of the maximum award opportunity. As discussed in more detail below, the Compensation Committee determined that our named executive officers partially satisfied most of the quantitative performance measures under both short-term incentive plans between threshold and target levels, earning on average 36% of maximum awards under the ARC plan and approximately 50% of maximum awards under the All Employee Bonus plan. Accordingly, the Compensation Committee awarded the following short-term incentive awards to our named executive officers:

~~Notes~~33 ~~to Consolidated Financial Statements~~

(InTable thousands,of except share data)Contents

NOTE 1: ACCOUNTING POLICIES


Name	All Employee Bonus Plan Achievement as a % of Base Salary			All Employee Bonus Plan Award		At Risk Incentive Compensation Plan Achievement as a % of Base Salary			At Risk Incentive Compensation Plan Award		Aggregate Short Term Incentive Awards
John B. Crowe		7.43	%	$	57,362		56.73	%	$	438,217	$	495,579
Steven G. Dean		7.44	%	$	29,016		41.37	%	$	161,348	$	190,364
Kristopher J. Matula		—	%	$	—		—	%	$	—	$	—
Paul N. Horne		7.48	%	$	28,050		42.93	%	$	135,472	$	163,522
Douglas L. Dowdell		7.43	%	$	27,863		36.13	%	$	160,980	$	188,843
Sheila Jordan Cunningham		7.38	%	$	26,554		34.51	%	$	124,250	$	150,804

~~Business~~• ~~Description~~Long-Term Incentive Awards. Prior to completion of the merger with Georgia-Pacific, the Company’s long-term, performance-based compensation was stock-based and ~~Basis~~was designed to align the interests of ~~Presentation~~management with the interests of our stockholders. Expressed as percentages of salary, maximum awards in fiscal 2013 were equal to 180% for the Chief Executive Officer, 90% for the Executive Vice Presidents, and 60% for other named executive officers. In July 2012, named executive officers received equity grants provided through a mix of stock options, service-based restricted stock, and performance shares tied to Buckeye’s 3-year total shareholder return relative to industry peers. The target equity award mix was weighted 50% toward performance share grants, 25% toward service-based restricted stock and 25% toward stock options.

~~Our~~Significant ~~financial~~Compensation ~~statements~~Practices ~~are consolidated financial statements of Buckeye Technologies Inc. We manufacture~~ and ~~distribute~~Recent ~~value-added~~Modifications cellulose-based specialty products used in numerous applications including disposable diapers, personal hygiene products, engine air and oil filters, food casings, rayon filament, acetate plastics, thickeners and papers.

InPrior ~~June~~to ~~2012,~~completion weof ~~sold~~the ~~our~~merger ~~Brazilian~~with ~~subsidiary~~Georgia-Pacific, ~~Buckeye~~our ~~Americana~~compensation ~~Ltda.~~programs, topractices, ~~Vicunha~~and ~~Participacoes~~policies ~~S.A. The~~were ~~operating~~reviewed ~~results,~~and asreevaluated ~~well~~on asan ongoing ~~the~~basis. ~~impairment~~We ~~charges,~~historically ~~are~~modified ~~reported~~our incompensation ~~discontinued~~programs ~~operations~~to inaddress ~~the~~evolving ~~consolidated~~best ~~statements~~practices ofand ~~operations~~changing onregulatory ~~an after-tax basis~~requirements. ~~All~~ ~~prior~~Listed ~~periods~~below ~~have~~are ~~been~~some ~~adjusted~~of toour ~~reflect~~more ~~discontinued~~significant ~~operations. See~~practices ~~Note~~and 6,recent ~~Discontinued Operations, for further discussion~~modifications.

~~Fiscal~~• ~~Year~~Performance-Based Pay. As discussed above, as a public company we had a strong pay for performance philosophy. For fiscal year 2013, approximately 45% to 61% of target total pay levels for our named executive officers were variable and tied to financial, operating, or stock price performance. Additionally, approximately 53% to 73% of target total pay for our named executive officers was provided in the form of short-term and long-term incentives.

~~Except~~• asIncreased ~~otherwise~~Emphasis ~~specified~~on Performance Share Grants. Beginning in Fiscal 2013, ~~references~~performance toshare agrants ~~year~~will represent half (~~e.g.,~~compared ~~“2012”~~with 33% previously) ~~refers~~of the target long-term incentive award mix for senior executives. This change was made to ~~our~~further ~~fiscal~~strengthen ~~year~~the ~~ended~~link ~~June~~between 30executive ofpay ~~that~~and ~~year~~long-term performance.

~~Principles~~• ofCompensation ~~Consolidation~~Risk Assessment. We conducted a compensation risk assessment and concluded that our compensation policies and practices did not encourage excessive or unnecessary risk-taking and were not reasonably likely to have a material adverse effect on Buckeye.

~~The~~• ~~consolidated~~Cash ~~financial~~Retention ~~statements~~Bonuses. ~~include~~Due to the ~~accounts~~merger with Georgia-Pacific, we were precluded under the terms of ~~Buckeye~~the ~~Technologies~~Merger ~~Inc.~~Agreement ~~and~~from making customary equity grants to our ~~subsidiaries~~employees; accordingly to encourage employee retention up to and through the closing of the merger, and in lieu of annual equity grants that would have occurred in July 2013, the Compensation Committee made grants of cash retention bonuses to certain Company employees, including all of the named executive officers, which are ~~wholly~~generally ~~owned. All~~contingent ~~significant~~on ~~intercompany~~the ~~accounts~~recipient ~~and~~remaining ~~transactions~~employed ~~have~~by ~~been~~the ~~eliminated~~Company through the Closing.

~~Summary~~• Independent Compensation Committee. During fiscal 2013, each member of ~~Significant~~the ~~Accounting~~Compensation ~~Policies~~Committee was independent as defined in the corporate governance listing standards of the NYSE and our director independence standards.

~~Cash~~• ~~and~~Independent ~~Cash~~Compensation ~~Equivalents~~Consultant. In Fiscal Year 2013, the Compensation Committee engaged Pearl Meyer & Partners to provide independent outside compensation consulting.

WeCompensation ~~consider~~Consultant ~~cash equivalents to be temporary cash investments with a maturity of three months or less when purchased.~~

~~Short-term~~To ~~Investments~~assist the Compensation Committee in assessing the market competitiveness of our compensation program and establishing executive compensation for fiscal 2013, the Compensation Committee retained Pearl Meyer & Partners, which is a nationally recognized compensation consulting firm, to:

We• ~~consider~~compile ~~short-term~~market ~~investments~~data toand bebusiness ~~temporary~~performance ~~investments~~statistics ~~with a maturity~~ of ~~greater~~comparable ~~than~~companies ~~three~~for ~~months~~Compensation ~~but~~Committee ~~less~~comparison ~~than~~and ~~one year when purchased.~~review,

~~Allowance~~34 ~~for Doubtful Accounts~~

WeTable provide an allowance for receivables we believe we may not collect in full. Management evaluates the collectability of accounts based on a combination of factors. In circumstances where we are aware of a specific customer’s inability to meet its financial obligations (i.e., bankruptcy filings or substantial downgrading of credit ratings), we record a specific reserve. For all other customers, we recognize reserves for bad debts based on our historical collection experience. If circumstances change (i.e., higher than expected defaults or an unexpected material adverse change in a major customer’s ability to meet its financial obligations), our estimates of the recoverability of amounts due could differ by a material amount. We charge off receivables when they are determined to no longer be collectible. We have established credit limits for each customer. We generally require the customer to provide a letter of credit for export sales in high-risk countries. Credit limits are monitored routinely.Contents

~~Inventories~~• summarize trends and developments affecting executive compensation,

~~Inventories~~• ~~are~~provide ~~valued~~guidance aton ~~the~~compensation ~~lower~~structure ofas ~~cost~~well oras ~~market. The~~levels ~~costs~~ of ~~manufactured~~compensation ~~cotton-based specialty fibers and costs~~ for nonwoven raw materials are generally determined on the first-in, first-out (“FIFO”) basis. Other manufactured products and raw materials are generally valued on an average cost basis. Manufactured inventory costs include material, labor and manufacturing overhead. Slash pine timber, cotton fibers and chemicals are the principal raw materials used in the manufacture of our ~~specialty~~senior ~~fiber~~executives ~~products. Fluff pulp is the principal raw material used in our nonwoven materials products. We take physical counts of inventories at least annually,~~ and ~~we review periodically~~ the ~~provision for potential losses from obsolete~~Board, ~~excess or slow-moving inventories. The reserve for the lower of cost or market valuation was $454 on June 30, 2012 and $195 on June 30, 2011.~~

~~F-10~~• review equity grant practices and other topics as requested by the Compensation Committee, and

~~Property,~~• ~~Plant~~participate ~~and~~in ~~Equipment~~Compensation Committee meetings

~~Property~~Beginning in 2010, ~~plant~~the ~~and~~Compensation ~~equipment~~Committee elected ~~are~~to ~~recorded~~have ata ~~cost~~comprehensive executive compensation study conducted on an annual basis. ~~Cost~~The ~~includes~~most ~~the~~recent ~~interest~~Pearl ~~cost~~Meyer & ~~associated~~Partners ~~with~~study ~~significant~~was ~~capital~~completed ~~additions~~in May 2012. ~~Interest~~ ~~capitalized~~In ~~for~~light ~~2012~~of the pending acquisition by Georgia-Pacific, ~~2011~~the ~~and~~Compensation Committee ~~2010~~determined that it was ~~$532,~~not ~~$881~~necessary ~~and~~to ~~$1,376,~~update ~~respectively.~~the ~~Depreciation~~study onin ~~production~~fiscal ~~machinery~~year ~~and~~2013. ~~equipment~~Pearl atMeyer & Partners reports directly to the ~~cotton~~Compensation ~~cellulose~~Committee, which directs its work, and ~~airlaid~~regularly ~~nonwovens~~participates ~~plants~~in isCompensation ~~determined~~Committee meetings. byThe ~~the~~Compensation ~~units-of-production~~Committee ~~method~~has ~~which~~the issole ~~based~~authority onto establish the ~~expected~~nature ~~productive~~and ~~hours~~scope of ~~the~~Pearl ~~assets,~~Meyer & ~~subject~~Partners’ engagement, to aapprove ~~minimum~~Pearl ~~level~~Meyer & ofPartners’ ~~depreciation~~fees and to terminate Pearl Meyer & Partners’ engagement. ~~The~~ ~~straight-line~~Pearl ~~method~~Meyer & isPartners ~~used~~does ~~for~~not ~~determining~~provide ~~depreciation~~any onservices to Buckeye other ~~capital~~than ~~assets. Depreciation~~those ~~under~~requested by the ~~straight-line~~Compensation ~~method~~Committee iswith ~~computed~~respect ~~over~~to executive compensation. Based on these considerations, the ~~following~~Compensation Committee ~~estimated~~determined ~~useful~~that ~~lives:~~the ~~buildings—30~~advice toit 40received ~~years;~~from ~~machinery~~Pearl ~~and~~Meyer & ~~equipment—3~~Partners tois 20independent ~~years~~and objective.

~~Long-Lived~~All ~~Assets~~of the decisions with respect to determining the amount or form of compensation for our named executive officers are made by the Compensation Committee and may reflect factors and considerations other than the information and advice provided by Pearl Meyer & Partners.

~~Long-lived~~Components ~~assets are reviewed for impairment when circumstances indicate the carrying value~~ of anBuckeye’s ~~asset~~Compensation ~~may~~Program not be recoverable. For assets that are to be held and used as part of continuing operations, recoverability is evaluated based on comparing the carrying amount of the long-lived asset, or asset group, to the undiscounted cash flows expected from the use and eventual disposition of the assets. If the sum of the undiscounted cash flow analysis is less than the carrying amount of the long-lived asset, or asset group, impairment exists. If impairment is determined to exist, we next measure the amount of the impairment by calculating the fair value of the long-lived asset, or asset group, and compare the result to the carrying value of the assets. The impairment that is recorded is the amount that the carrying value exceeds the fair value. Estimated fair values are determined based on quoted market values, discounted cash flows or internal and external appraisals, as applicable. Assets to be disposed of are carried at the lower of carrying value or estimated net realizable value. In 2012, we recorded an impairment charge of $2,094 on our King, North Carolina facility. In 2011, we recorded an impairment charge of $13,007 on our Delta, B.C., Canada facility. See Note 4, Impairment of Long-Lived Assets for ~~further~~Executive ~~discussion~~Officers ~~of the impairment charges.~~

~~Goodwill~~Prior is recognized for the excess of the purchase price over the fair value of tangible and identifiable intangible net assets of businesses acquired. Goodwill of businesses acquired is specifically identified to ~~the~~completion reporting units to which the businesses belong. In accordance with ASC 350 “Intangibles – Goodwill and Other”, we perform a goodwill impairment analysis on an annual basis, in the fourth fiscal quarter, and, if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis. Recoverability of ~~goodwill is determined by comparing~~ the ~~fair~~merger ~~value of a reporting unit~~ with ~~its carrying value~~Georgia-Pacific, ~~including~~our ~~goodwill. Goodwill~~executive ~~impairment~~compensation ~~exists~~program ~~when~~consisted ~~the implied fair value~~ of goodwill is less than its carrying value. During 2012, we recorded an impairment charge of $2,425. No impairment of goodwill was recorded during 2011 or 2010. See Note 3, Goodwill, for further discussion of goodwill and the ~~goodwill~~following ~~impairment~~key ~~charge. Prior~~components: ~~to adoption of ASC 350, we amortized goodwill. Accumulated amortization totaled $0 and $1,577 at June 30, 2012 and 2011, respectively.~~

~~Intellectual~~• ~~Property~~base ~~and Other~~salary,

At• ~~June~~annual 30, 2012 and 2011, we had intellectual property totaling $10,217 and $11,789, respectively, which includes patents, licenses, trademarks and trade names, the majority of which were obtained in the acquisition of airlaid nonwovens businesses and Stacperformance-~~Pac®~~based ~~technology. Intellectual~~incentive ~~property is amortized by the straight-line method over 5 to 20 years and is net of accumulated amortization of $24~~compensation,579 and $22,578 at June 30, 2012 and 2011, respectively. Intellectual property amortization expense of $2,021, $1,966 and $1,905 was recorded during 2012, 2011 and 2010, respectively. Estimated amortization expense for the five succeeding fiscal years follows: $2,015 in 2013, $2,015 in 2014, $2,011 in 2015, $1,570 in 2016 and $1,369 in 2017.

~~Deferred~~• ~~debt~~long-term ~~costs~~equity-based ~~of $2~~incentives,~~077~~ ~~and~~consisting ~~$2,698 at June 30, 2012 and 2011, respectively, are amortized by the effective interest method over the life~~ of ~~the~~stock ~~related debt and are net of accumulated amortization of $1~~options,~~085~~ ~~and~~restricted ~~$464~~stock ~~at June 30, 2012~~ and ~~2011,~~performance ~~respectively. We recorded amortization of deferred debt costs of $620~~shares, ~~$663 and $946 during 2012, 2011 and 2010, respectively.~~

~~Income~~• ~~Taxes~~health and welfare benefits,

We• ~~provide~~severance ~~for income taxes under the liability method. Accordingly, deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets~~ and ~~liabilities~~change for financial reporting purposes and the amounts used for income tax purposes. No provision is made for U.S. income taxes applicable to undistributed earnings of foreign subsidiaries that are indefinitely reinvested in ~~foreign~~control operations. It is not practicable to compute the potential deferred tax liability associated with these undistributed foreign earnings. We include interest and penalties related to uncertain tax positions as a component of income before income taxes.benefits,

~~F-11~~• cash retention bonus opportunities, and

~~Risk~~• ~~Management~~retirement benefits.

WeProcess ~~are~~for ~~exposed~~Determining toCompensation ~~certain~~for ~~market~~Named ~~risks~~Executive asOfficers a part of our ongoing business operations and use derivative financial instruments, where appropriate, to manage these risks. Derivatives are financial instruments whose value is derived from one or more underlying financial instruments. Examples of underlying instruments are currencies, commodities and interest rates. We record the fair value of all outstanding derivatives in other assets or other liabilities. Gains and losses related to non-designated instruments or the ineffective portion of any hedge are recorded in various costs and expenses. Derivatives are recorded in the consolidated balance sheet at fair value. All cash flows associated with purchasing and selling derivatives are classified as operating cash flows in the consolidated statement of cash flows.

As ~~part~~a ofpublic ~~our risk management program~~company, we ~~use~~followed a ~~variety~~two-phase ofprocess. ~~financial~~In ~~instruments~~the ~~such~~first ~~as foreign currency forwards and options~~phase, ~~interest~~the ~~rate~~Compensation ~~swaps,~~Committee ~~and~~engaged ~~natural~~a ~~gas~~compensation ~~contracts~~consultant ~~as cash flow hedges~~ to conduct ~~mitigate~~a ~~risk. We~~competitive docompensation ~~not~~analysis ~~hold~~of orall ~~issue~~primary ~~derivative~~pay ~~financial~~components, ~~instruments~~including ~~for~~base ~~trading~~salary, ~~purposes. We~~total ~~periodically~~cash ~~use~~compensation ~~hedging~~(base tosalary ~~address~~plus ~~the risk associated with non~~short-~~functional~~term ~~currency~~incentive ~~(primarily European euro~~compensation) ~~financial statement exposures. Fluctuations in exchange rates can change our foreign currency equivalent revenue~~ and ~~hence~~total ~~our~~direct ~~foreign~~compensation ~~currency~~(base ~~earnings,~~salary asplus ~~well~~short-term asincentives ~~our~~plus the ~~net~~annualized ~~investment~~value ~~in foreign operations. When conditions warrant, our foreign subsidiaries hedge a portion~~ of ~~forecasted~~long-term Uincentives).S. ~~dollar~~The ~~denominated~~Compensation ~~sales/receivables~~Committee ~~and/or~~generally atargeted ~~portion~~total ofdirect ~~our~~compensation ~~foreign~~at currency net investment utilizing foreign exchange forward and option contracts. These contracts are designated as cash flow or net investment hedges and accounting for these hedge instruments requires that they be recorded on the ~~balance~~50th ~~sheet~~percentile asrelative ~~either~~to ancomparable ~~asset~~organizations orat a ~~liability~~target ~~measured~~level ~~at fair value as~~ of ~~the reporting date~~performance. ~~The~~ ~~effective~~Actual ~~portion~~pay oflevels ~~the~~may ~~hedge~~be ~~gain~~higher or lower, ~~loss~~based ison ~~reported~~our asactual aversus ~~component~~planned ofperformance ~~accumulated~~and other ~~comprehensive~~factors ~~income~~as ~~(loss)~~noted ~~and subsequently reclassified into gain (loss) on exchange rates when the hedged exposure affects earnings~~below. ~~Any~~ ~~ineffective portions of related gains or losses are recorded in the statements of operations immediately.~~ In the ~~event~~second ~~the underlying forecasted transaction does not occur~~phase, ~~or it becomes probable that it will not occur,~~ we ~~will~~considered ~~reclassify~~many ~~the~~factors ~~gain~~in ordetermining ~~loss~~appropriate oncompensation ~~the~~levels ~~related~~for ~~cash~~each ~~flow~~executive ~~hedge~~officer. ~~from~~These ~~accumulated~~considerations ~~other~~may ~~comprehensive~~include: ~~income (loss) to gain (loss) on exchange rates on our consolidated statement of operations.~~

At• ~~times, we have entered into contracts for the purchase or option to purchase natural gas at a fixed rate to manage the price risk associated with a portion of~~ our ~~forecasted~~analyses ~~purchases. The objective~~ of ~~these~~competitive ~~hedges~~compensation ~~is to provide supply assurance for contracted volumes at either a pre-determined or maximum price~~practices; provide a systemic method of purchasing commodities which enables us the opportunity to take advantage of forward price trends based on historical data; provide a methodology to bring price stability that will contribute to improved price forecasting and budgeting assumptions; and reduce the variability of cash flows associated with the purchase of natural gas at certain plants. These contracts are designated as cash flow hedges.

~~Our~~• ~~derivative~~the ~~activity~~Compensation ~~for~~Committee’s ~~2012,~~evaluation ~~2011~~of ~~and 2010 was not material to~~ the ~~consolidated~~named ~~financial~~executive ~~statements.~~officers;

~~Labor~~• ~~Agreements~~individual performance and contributions to performance goals;

As• ofBuckeye ~~June 30~~performance, ~~2012,~~including wecomparisons ~~employed~~to ~~approximately~~market 1,270 employees. Approximately 50% of the global workforce is covered under collective bargaining agreements. These employees are represented by unions at three plants, two in the U.S. at Perry, Florida (the “Foley Plant”) and ~~Memphis,~~peer Tennessee and one in Canada at Delta, British Columbia. Our Foley Plant’s labor agreement is in effect through December 1, 2012. The agreement for the Memphis Plant is in effect through March 18, 2013. On November 7, 2010, union employees at our Canadian facility ratified a new labor agreement. The agreement has been extended through December 31, 2012 to coincide with the plant closure.benchmarks;

~~Environmental~~• ~~Costs~~operational management, such as project milestones and process improvements;

~~Based~~• oninternal ~~ASC~~working ~~410 “Asset Retirement~~ and ~~Environmental~~reporting ~~Obligations,”~~relationships ~~we capitalize environmental contamination treatment costs if (1) the costs extend the life, increase the capacity, or improve the safety or efficiency of property~~ and ~~the~~our ~~condition~~desire ~~of that property after the costs are incurred is improved as compared~~ to ~~its~~encourage ~~condition~~collaboration ~~when originally constructed or acquired, if later, (2) the costs mitigate or prevent environmental contamination that has yet to occur~~ and ~~that~~teamwork ~~otherwise~~among ~~may~~our ~~result~~executive from future operations or activities and the costs improve the property compared to its condition when originally constructed or acquired, if later, or (3) the costs are incurred in preparing a property for sale. A liability is recorded for such capital expenditures when incurred.officers;

~~Liabilities~~• ~~for~~individual ~~environmental~~expertise, ~~expenses~~skills ~~are recorded when probable~~ and the cost can be reasonably estimated. Generally, the timing of these accruals coincides with the earlier of completion of a feasibility study or our commitment to a plan of action based on the then known facts.knowledge;

~~Revenue~~• ~~Recognition~~leadership, including developing and motivating employees, collaborating within the company, attracting and retaining employees and personal development;

We• ~~recognize~~labor ~~revenue~~market ~~when~~conditions, the ~~following~~need ~~criteria are met: persuasive evidence of an agreement exists: (i) delivery has occurred; (ii) our price~~ to ~~the~~retain ~~buyer is fixed~~ and ~~determinable;~~motivate, ~~and~~the ~~(iii)~~potential ~~collectability is reasonably assured. Delivery is not considered~~ to ~~have~~assume ~~occurred~~increased ~~until~~responsibilities ~~the customer takes title~~ and ~~assumes~~ the ~~risks~~perceived ~~and~~long-term ~~rewards~~value ofto ~~ownership. The~~the ~~timing~~company; ~~of revenue recognition is largely dependent on shipping terms. Discounts~~ and ~~allowances reduce net sales and are comprised of trade allowances, cash discounts and sales returns.~~

F• information and advice from an independent, third-12party compensation consultant engaged by the Compensation Committee.

~~Shipping~~35 ~~and Handling Costs~~

AmountsTable related to shipping and handling which are billed to a customer in a sales transaction have been classified as revenue. Costs incurred for shipping and handling have been classified as costs of goods sold.Contents

~~Repairs~~We did not have a pre-defined framework that determines which of these factors may be more or less important, and ~~Maintenance~~the ~~Costs~~emphasis placed on specific factors varied among the executive officers. Ultimately, it was the Compensation Committee’s judgment of these factors along with competitive data that formed the basis for determining the Chief Executive Officer’s compensation. The Compensation Committee and our Chief Executive Officer followed a similar practice to determine the basis of the other named executive officers’ compensation.

~~Repairs~~Compensation ~~and~~Benchmarking ~~maintenance costs are expensed as incurred.~~

~~Foreign~~The Compensation ~~Currency~~Committee ~~Translation~~used a peer group to evaluate the targeted compensation levels and types of reward programs offered to our named executive officers against those of comparable companies in a peer group recommended by the compensation consultant and approved by our Compensation Committee. The selection of a peer group generally was driven by selecting organizations that:

~~Management~~• ~~has~~are ~~determined~~similar ~~that~~to ~~the~~Buckeye ~~local~~in ~~currency~~terms of ~~our~~size ~~German~~(i.e., ~~Canadian~~revenue, ~~and~~net ~~Brazilian subsidiaries is the functional currency~~income, ~~and~~market ~~accordingly European euro~~capitalization), ~~Canadian~~industry ~~dollar,~~ and/or ~~Brazilian~~global ~~real~~presence; ~~denominated balance sheet accounts are translated into United States dollars at the rate of exchange in effect at fiscal year end. Income~~ and ~~expense activity for the period is translated at the average exchange rate during the period. Translation adjustments are included as a separate component of stockholders' equity.~~

~~Transaction~~• ~~gains~~have ~~and~~executive ~~losses~~officer positions that ~~arise from exchange rate fluctuations on transactions denominated in a currency other than the local functional currency~~ are ~~included~~comparable into ~~“Foreign~~Buckeye ~~exchange and other”~~ in ~~the~~terms ~~results~~ of ~~operations. Transaction gains of $507~~breadth, ~~$1,741~~complexity and ~~$194~~scope ~~were~~of ~~recorded during 2012, 2011 and 2010, respectively~~responsibilities.

~~Use~~The peer group approved and used by the Compensation Committee for the most recent market pay analysis was comprised of ~~Estimates~~the following publicly traded companies, most of which are in the pulp and paper industry:

~~The~~Aep ~~preparation~~Industries, ofInc. ~~the~~P. ~~consolidated~~H. ~~financial~~Glatfelter ~~statements~~Company inKapStone ~~conformity~~Paper ~~with~~& ~~accounting~~Packaging ~~principles~~Corporation ~~generally~~Fuller ~~accepted in the United States~~ (~~“GAAP”~~H.B.) ~~requires~~Co. ~~management~~Neenah toPaper ~~make~~Inc. ~~estimates~~Omnova ~~and~~Solutions ~~assumptions~~Inc. ~~that~~Louisiana-Pacific ~~affect~~Corp. ~~the~~Rayonier ~~amounts~~Inc. ~~reported~~Schweitzer-Mauduit inInternational, ~~the~~Inc. ~~consolidated~~Packaging ~~financial~~Corporation ~~statements~~of ~~and~~America ~~accompanying~~Wausau ~~notes~~Paper Corp. ~~Actual~~ ~~results~~Tredegar ~~could~~Corporation ~~differ~~Clearwater ~~from~~Paper ~~the estimates and assumptions used~~Corp.

~~Changes~~Management inand ~~estimates~~the ~~are~~Compensation ~~recognized~~Committee, inwith ~~accordance~~assistance ~~with~~from ~~the~~our ~~accounting~~independent ~~rules~~compensation ~~for~~consultant, regularly evaluated the ~~estimate,~~marketplace ~~which~~to isensure ~~typically~~that inour ~~the~~compensation ~~period~~programs ~~when~~remained ~~new~~competitive. ~~information~~Data ~~becomes~~from ~~available~~published tocompensation ~~management. Areas~~surveys ~~where~~were used generally to assess the ~~nature~~competitiveness ofand the ~~estimate~~reasonableness ~~makes~~of itawards. ~~reasonably~~Composite ~~possible~~market ~~that~~values developed ~~actual~~by ~~results~~our ~~could~~independent ~~materially~~compensation ~~differ~~consultant ~~from~~for ~~amounts~~our ~~estimated~~named ~~include:~~executive ~~impairment~~officers ~~assessments~~were generally based on ~~long-lived~~an ~~assets~~equally ~~(including~~weighted ~~goodwill),~~blend ~~allowance~~of peer group proxy pay data and published survey data for ~~doubtful~~comparably-sized ~~accounts,~~organizations. ~~inventory~~The ~~reserves~~Compensation Committee, ~~deferred~~however, ~~tax~~did ~~assets,~~not ~~income~~believe ~~tax~~that ~~liabilities~~compensation levels and design should be based exclusively on benchmarking and, therefore, considered various business factors and ~~contingent~~committee ~~liabilities~~members’ own experiences.

~~Earnings~~Base ~~Per~~salary ~~Share~~and overall compensation were generally targeted to be within a competitive range of the 50th percentile of comparable organizations, although individual variances may have occurred depending on a named executive officer’s experience and performance. In making pay determinations, the Compensation Committee also took other factors into consideration, such as corporate and individual performance, the specific roles, responsibilities and qualifications of each executive officer, time in position, and macroeconomic conditions. The Compensation Committee believed that executive officer compensation should be aligned with our near-term and long-term business objectives and performance in order to ensure the commitment of our executive officers to our continued success. Consequently, a significant portion of executive officer annual compensation was “at risk” and depended upon Buckeye’s and each individual executive’s performance against quantitative and qualitative performance criteria established annually. To encourage each executive officer’s contribution to our long-term growth and profitability and to further enhance stockholder value and promote alignment with stockholder interests, the compensation program included an equity-based component. In establishing the specific components of executive compensation for fiscal 2013, the Compensation Committee based its decisions in part on the information and recommendations provided to it by Pearl Meyer & Partners.

~~Certain~~Consideration ofand ~~our~~Effect ~~restricted~~of ~~stock awards granted are considered participating securities as they receive non-forfeitable rights to dividends at~~ the ~~same~~Results ~~rate~~of ~~as common stock. As participating securities, we include these instruments in~~ the ~~earnings~~Most ~~allocation~~Recent inStockholder ~~computing~~Advisory ~~earnings~~Vote ~~per share (“EPS”) under the two-class method described in ASC 260 “Earnings Per Share”. Prior to the declaration of our first corporate dividend~~ on ~~August~~Executive 3,Compensation ~~2010, restricted stock was included~~ in ~~our~~Determining ~~diluted~~Compensation ~~EPS~~Policies ~~calculation~~and Decisions ~~using the treasury stock method.~~

~~Stock-Based~~In ~~Compensation~~determining executive compensation for 2013, our Board of Directors considered our stockholders’ overwhelming approval of our executive compensation program at our October 23, 2012 Annual Meeting of Stockholders, with our “say on pay” proposal receiving the support of approximately 96% of all votes cast. We believed that our stockholders appreciated and recognized the relationship between compensation and our Company’s performance. As a result, our Board of Directors continued to apply the same principles and philosophy it has used in previous years in determining executive compensation.

WeOur ~~have~~stockholders ~~stock-based~~voted ~~compensation~~in ~~related~~favor toof ~~stock~~an ~~option~~advisory ~~grants,~~vote ~~restricted~~on ~~stock~~executive ~~grants,~~compensation ~~and~~every ~~other~~year ~~transactions~~at ~~under~~the ~~our~~Annual ~~stock~~Meeting ~~plans. We~~of Stockholders ~~recognize~~held ~~compensation~~on ~~expense~~October 23, ~~for~~2012; ~~our~~however, ~~stock-based~~due ~~payments~~to ~~based on~~ the ~~fair~~closing ~~value~~ of the ~~awards. This~~transaction ~~compensation~~contemplated ~~expense~~by isthe ~~recorded~~merger onand abecause ~~straight-line~~no ~~basis~~annual ~~over~~meeting ~~the~~will ~~vesting~~be ~~period~~held ~~within~~this ~~selling~~year, ~~research and administrative expenses in~~ the ~~consolidated~~Company ~~statements~~will ofnot ~~operations. See~~be ~~Note~~holding ~~15,~~an ~~Stock~~advisory ~~Based~~vote ~~Compensation,~~on ~~for~~executive ~~further~~compensation this ~~discussion~~year.

~~Dividends~~36 ~~declared per common share~~

OnTable August 7, 2012, our Board of Directors declared a quarterly dividend of $0.08 per share of common stock. The dividend is payable on September 14, 2012 to stockholders of record as of the close of business on August 14, 2012. Each quarterly dividend payment is subject to review and approval by our Board of Directors, and we evaluate our dividend payment amount on an annual basis at the end of each fiscal year.Contents

~~F-13~~Roles of Executive Officers, Consultants and Advisers in Establishing Compensation

~~NOTE~~The 2:Compensation ~~RECENT~~Committee’s ~~ACCOUNTING~~Role. ~~PRONOUNCEMENTS~~The Compensation Committee’s primary responsibility was the establishment and approval of compensation levels and compensation programs for our executive officers. In the case of our Chief Executive Officer, the Compensation Committee made recommendations to the independent directors of the Board with respect to equity awards. Compensation decisions were designed to promote the achievement of our business objectives and strategy; therefore, the planning and evaluation of performance were continuous processes. Many of the compensation decisions for the executive officers generally were made annually during the July and August meetings of the Compensation Committee and the Board of Directors. Prior to the completion of the merger with Georgia-Pacific, the Compensation Committee’s Charter was posted on our corporate website (www.bkitech.com). The Compensation Committee met as necessary to enable it to fulfill its responsibilities. The Chairperson of the Compensation Committee was responsible for leadership of the Compensation Committee, presiding over its meetings, making committee assignments and reporting the Compensation Committee’s actions to the Board from time to time (but were at least once each year) as requested by the Board. The Chairperson, with the assistance of management, also set the agenda for Compensation Committee meetings.

InAmong ~~June~~other ~~2011~~things, the ~~Financial~~Compensation ~~Accounting~~Committee ~~Standards~~was ~~Board~~authorized (“FASB”) issued Accounting Standards Update No. 2011-05, “Presentation of Comprehensive Income” (“ASU 2011-05”) which amends ASC Topic 220, Comprehensive Income. The objective of ASU 2011-05 is to ~~improve~~conduct ~~the~~or commission ~~comparability,~~studies ~~consistency and transparency~~ of ~~financial~~matters ~~reporting~~within ~~and~~its toscope ~~increase the prominence~~ of ~~items~~responsibilities ~~reported in other comprehensive income. The update will require entities to present items of net income, items of other comprehensive income~~ and ~~total~~was ~~comprehensive income in one continuous statement or two separate consecutive statements, and entities will no longer be~~ allowed to ~~present~~retain, ~~items~~at ~~of other comprehensive income in~~ the ~~statement of stockholders~~Company’s ~~equity.~~expense, ~~Reclassification~~independent ~~adjustments~~counsel ~~between~~or other ~~comprehensive~~consultants ~~income~~necessary ~~and~~to ~~net~~assist ~~income will be presented separately on~~ the ~~face~~Compensation ofCommittee ~~the~~in ~~financial~~any ~~statements.~~such ~~We do not expect the provisions of ASU 2011-05 to have a material impact to our consolidated financial statements~~studies. ~~This~~ ~~update will be effective for our fiscal year ending June 30, 2013.~~

~~There~~In ~~were~~developing noits ~~other~~views, ~~accounting~~the ~~standards~~Compensation ~~issued~~Committee ~~during~~believed that it was advisable to obtain input from management and from consultants retained by the ~~year~~Compensation ~~that~~Committee. ~~had~~While orthe ~~are~~recommendations ~~expected~~of management and the Compensation Committee’s consultants provided valuable guidance, the Compensation Committee ultimately made all final decisions in carrying out its responsibilities and determining compensation levels and structure. While the Compensation Committee was allowed to ~~have~~delegate any of its responsibilities to a ~~material~~subcommittee ~~impact~~comprised onof ~~our~~two ~~financial~~or ~~position~~more members of the Compensation Committee, and was allowed to delegate authority to make grants and awards under any equity-based plan to the Chief Executive Officer with such limitations as determined by the Compensation Committee and as may be required by law or ~~results~~the listing standards of ~~operations~~the NYSE, the Compensation Committee made no such delegation of its responsibilities. Prior to completion of the merger with Georgia-Pacific, all members of the Compensation Committee were independent non-employee directors.

~~NOTE~~Management’s 3Role. The significant aspects of management’s role in the compensation process were: ~~GOODWILL~~

As• aRecommending ~~result of a decision to pursue the sale of the nonwoven materials Merfin Systems converting~~ business inperformance ~~King,~~targets ~~North~~and ~~Carolina~~objectives ~~during 2012, the goodwill of $2,425 associated with this facility was considered impaired~~ and ~~was~~providing ~~written~~background ~~off~~information ~~resulting~~about inthe anunderlying ~~impairment~~strategic ~~charge. At June 30, 2012 there was no goodwill recorded on our consolidated balance sheet.~~objectives;

~~There~~• ~~were~~Evaluating noemployee ~~changes in the carrying amount of goodwill for 2011 and 2010.~~performance;

~~NOTE~~• ~~4: IMPAIRMENT~~Recommending OFcash ~~LONG-LIVED~~compensation ~~ASSETS~~levels and equity awards;

~~King,~~• ~~North~~The ~~Carolina~~General ~~facility~~Counsel worked with the Compensation Committee Chairperson to establish the agenda for Compensation Committee meetings;

As• aThe ~~result~~Chief ofExecutive aOfficer ~~decision~~generally tomade ~~pursue~~recommendations the sale of Merfin Systems, our nonwoven materials converting business, in King, North Carolina during the quarter ended December 31, 2011, we evaluated the recoverability of the long-lived assets. Our decision was due to ~~Merfin Systems being a non-core business and our desire to redeploy~~ the ~~proceeds~~Compensation ~~into~~Committee ~~strategic~~regarding ~~operations. The~~salary ~~results~~increases offor ~~the~~executive ~~recoverability~~officers ~~test~~(other ~~indicated that the facility’s assets were impaired as the estimated future undiscounted cash flows were less~~ than the ~~carrying~~Chief ~~value. Based~~Executive onOfficer) ~~this~~during ~~evaluation, and after reducing~~ the ~~value~~regular ofmerit ~~certain~~increase other assets by $391, we determined that the long-lived assets associated with this operation, which have a carrying value of $1,434, were impaired and wrote them down to their fair value of $152, resulting in an impairment charge of $1,282. The fair value was estimated based on the value in exchange for the facility. The total loss of $1,673 was recorded in asset impairment loss on the consolidated statements of operations. On January 31, 2012, we completed the sale of Merfin Systems and received proceeds of $5,459 from the sale. As a result of the sale, we recorded additional impairment of $421 based on the negotiated purchase price.process;

~~Delta,~~• ~~Canada~~The ~~facility~~Chief Executive Officer provided his perspective on recommendations provided by the consulting firm hired by the Compensation Committee regarding compensation program design issues; and

On• ~~June~~Other ~~17,~~executive ~~2011~~officers, ~~we announced our decision to cease production~~ at ~~our Delta, B.C., Canada airlaid nonwovens facility by~~ the ~~end~~request of ~~calendar~~the ~~2012. Our~~Compensation ~~decision~~Committee, ~~was~~worked ~~due~~with tothe ~~several~~outside ~~factors~~consultants ~~including~~hired ~~unfavorable~~by ~~site~~the ~~location~~Compensation ~~relative~~Committee, to ~~customers~~provide ~~and~~data ~~raw~~about ~~material~~past ~~suppliers~~practices, aawards, ~~strong~~costs ~~Canadian dollar~~ and ~~low~~participation ~~capacity~~in ~~utilization. We~~various ~~plan~~plans, toas ~~consolidate~~well aas ~~portion~~information ofabout ~~the Delta Facility’s production at~~ our ~~two~~annual ~~other airlaid nonwovens facilities. We believe that this closure~~ and ~~consolidation~~longer-term ~~of business will improve capacity utilization, profitability and return on invested capital for our Nonwovens business~~goals.

AsWhen arequested ~~result~~by ~~of this decision, we evaluated~~ the ~~recoverability~~Compensation ~~of the long-lived assets at the Delta facility in accordance with ASC 360~~Committee, selected ~~“Impairment~~executive orofficers ~~Disposal~~may ofhave ~~Long-Lived~~been ~~Assets”. The~~asked ~~results~~to ofalso ~~this~~review ~~test~~consultant ~~indicated~~recommendations ~~that~~on ~~the~~plan ~~Delta~~design ~~assets~~and ~~were~~structure ~~impaired~~and asprovide ~~the~~a ~~sum~~perspective ~~of the undiscounted cash flow analysis was less than the carrying amount of the long-lived assets. As such, the impairment test was performed~~ to ~~determine~~ the ~~estimated~~Compensation ~~fair~~Committee ~~value~~on ofhow ~~the~~these ~~long-lived~~recommendations ~~assets~~affected ~~compared~~us tofrom ~~their carrying value. We engaged~~ an ~~independent~~administrative, accounting, ~~valuation~~tax ~~firm~~or tosimilar ~~assist with this impairment testing and fair value determination~~perspective. The ~~impairment~~other ~~recognized~~named ~~was~~executive ~~the~~officers ~~amount~~did ~~that~~not ~~the~~play ~~carrying~~a ~~value~~role ~~exceeded the fair value of the assets estimated as the value~~ in ~~exchange~~their ofown ~~the~~compensation ~~underlying asset group using market and cost valuation approaches which exceeded the operating value of the asset group. Based on this evaluation~~determination, weother ~~determined~~than ~~that~~discussing ~~these~~individual ~~long-lived~~performance ~~assets,~~objectives with ~~a carrying amount of $38,447, were impaired and wrote them down to their estimated fair value of $25,440, resulting in an impairment charge of $13,007 in~~ the ~~fourth~~Chief ~~quarter~~Executive ~~of 2011~~Officer.

InThe ~~June~~Role ~~2012,~~of weAdvisors ~~entered~~and ~~into~~Consultants. anBy ~~agreement~~the terms of ~~purchase~~its ~~and~~charter, ~~sale~~the ~~for~~Compensation ~~our~~Committee ~~Delta~~was ~~facility’s~~permitted ~~land~~to retain and ~~buildings. As~~dismiss compensation aconsultants ~~result~~and ofto ~~this~~approve ~~agreement~~their compensation, and the ~~land~~consultants ~~and~~reported ~~building~~directly ~~assets~~to the Compensation Committee. The Compensation Committee’s compensation consultant is authorized to communicate with members of ~~$12~~management as necessary. For executive compensation awarded in 2013,~~374~~ ~~have~~Mr. Crowe ~~been~~was ~~reclassified~~assisted onby ~~the~~certain ~~balance~~members ~~sheet~~of tosenior ~~other~~management ~~current~~as ~~assets~~well as the ~~sale~~Compensation ofCommittee’s ~~these~~compensation ~~assets~~consultant isin ~~expected~~reviewing tothe ~~occur~~competitive ~~within~~landscape for executive talent and structuring the ~~next~~types ~~twelve~~and ~~months~~levels of executive compensation for review by the Compensation Committee.

~~F-14~~37

NOTETable 5:of RESTRUCTURING COSTSContents

OnUse ~~January 31, 2012, we completed the sale~~ of ~~Merfin~~Tally ~~Systems. In~~Sheets ~~conjunction with this sale, four positions were eliminated.~~

~~During~~As ~~the~~part ~~second quarter~~ of ~~fiscal~~the ~~year~~Compensation ~~2011,~~Committee’s weefforts ~~completed~~to ~~the~~review ~~consolidation~~and ofstructure ~~all~~executive ~~production at our Delta~~compensation, ~~British~~the ~~Columbia,~~Compensation ~~Canada~~Committee ~~airlaid~~reviewed ~~facility~~tally sheets onfor ~~the~~executive ~~newer~~compensation, inclusive of the ~~two~~value ~~machines~~of atequity ~~that~~awards. ~~site,~~The ~~which~~tally ~~resulted~~sheets inassisted the ~~elimination~~Compensation ofCommittee 34in ~~positions. The~~understanding ~~cost~~the levels of ~~this~~executive ~~program~~compensation ~~was~~and ~~$839~~benefits ~~which~~that ~~was~~have ~~expensed~~been, inand ~~2011. In~~may ~~June 2011~~be, wereceived ~~announced~~by our ~~decision~~executive officers, toas ~~close~~well ~~the~~as ~~Delta~~realized ~~plant~~and atunrealized ~~the~~gains ~~end~~from ofequity ~~calendar~~awards ~~2012. This~~and ~~closure~~potential ~~will~~payouts ~~result~~upon invarious ~~additional~~termination ~~restructuring~~of ~~costs~~employment ~~in fiscal year 2013~~scenarios.

During 2010, we implemented a restructuring program to sharpen our focus on key priorities which included restructuring our Ultra Fiber sales force, aligning capacity utilization with current market conditions at our Memphis Plant, and reducing selling, research and administrative expenses. As a result Timing of ~~this~~Awards restructuring, 32 positions were eliminated and 8 employees were transferred from selling, research and administrative positions to management positions at our Foley Plant. The total cost of this program was $3,609, of which $243 and $3,366 were expensed in 2011 and 2010, respectively.

~~Restructuring~~We ~~expenses~~never ~~are~~“back-dated” ~~included~~any inequity ~~“Restructuring~~awards ~~costs”~~and inhad ~~our~~a ~~condensed~~policy ~~consolidated~~against ~~statements~~“backdating” of ~~operations. The~~stock ~~charges~~options ~~below~~or ~~reflect~~other such ~~severance~~awards. ~~and~~In ~~employee~~addition, ~~benefits~~we ~~accrued~~adhered ~~over~~to the ~~retention~~following ~~period,~~policies ~~relocation~~as ~~expenses~~to ~~and~~the ~~other~~granting ~~miscellaneous~~of ~~expenses. Accrual~~equity ~~balances~~awards ~~are~~(please ~~included~~note, inas ~~“Accrued~~of ~~expenses”~~April 23, in2013, pursuant to the ~~balance~~terms ~~sheet. The~~of ~~following~~the ~~table~~Merger ~~summarizes~~Agreement, the ~~expenses~~Company ~~and~~was ~~accrual~~precluded ~~balances~~from bygranting ~~reporting~~any ~~segment~~equity ~~for~~awards ~~2012.~~to its employees, including its named executive officers):

	Accrual Balance as of June 30, 2011		Additional Charges		Impact of Foreign Currency				Payments			Accrual Balance as of June 30, 2012	Program Charges to Date		Total Estimated Charges
2012 Restructuring Program
Severance and employee benefits – nonwoven materials	$	-	$	109	$	-		$	(109	)	$	-	$	109	$	109
Other miscellaneous costs – nonwoven materials		-		125		-			(8	)		117		125		125
Total nonwoven materials		-		234		-			(117	)		117		234		234
Total 2012 Program		-		234		-			(117	)		117		234		234
2011 Restructuring Program
Severance and employee benefits
Nonwoven materials		96		-		(4	)		(35	)		57		839		839
Total 2011 Program		96		-		(4	)		(35	)		57		839		839
2010 Restructuring Program
Severance and employee benefits
Specialty fibers		163		-		(6	)		(157	)		-		1,193		1,193
Corporate		-		-		-			-			-		1,310		1,310
Other miscellaneous expenses		-		-		-			-			-		1,106		1,106
Total 2010 Program		163		-		(6	)		(157	)		-		3,609		3,609
Total All Programs	$	259	$	234	$	(10	)	$	(309	)	$	174	$	4,682	$	4,682

•

The exercise price of each stock option awarded to our senior executives and other employees was the closing price of our stock on the date of grant, which generally was the date of the Compensation Committee meeting at which equity awards were approved. Board and committee meetings generally were scheduled at least one year in advance. Scheduling decisions were made without regard to anticipated earnings or other major announcements by us. We prohibited the re-pricing of stock options without prior stockholder approval.

~~F-15~~• The grant date for equity awards, including stock options, was the date of approval of the grants, or a specified later date.

~~NOTE~~• ~~6. DISCONTINUED~~Except ~~OPERATIONS~~as set forth above, we did not have any program, plan or practice to time stock option grants to executive officers in coordination with the release of material non-public information.

InRecovery ~~June 2012, we completed the sale~~ of ~~our~~Compensation Americana, Brazil facility and recorded proceeds of $6,301. During 2012, we recorded pre-tax charges of $49,174 related to impairment of long-lived assets at this facility. We also recognized tax benefits totaling $23,357 in ~~2012~~Certain ~~associated~~Instances with our exit of the business. The operating results, as well as the impairment charges and tax benefits, are reported in discontinued operations in the consolidated statements of operations on an after-tax basis.

~~Below~~If ~~are~~the Compensation Committee and the ~~amounts~~Board ~~attributed~~of Directors determined that an executive officer had engaged in fraudulent behavior or intentional misconduct, including with regard to the ~~Americana~~reporting ~~sale~~of ~~included~~our inperformance, ~~discontinued~~the ~~operations~~Compensation Committee and the Board of Directors would have immediately taken corrective action to remedy the misconduct, prevent its recurrence, and impose such discipline on the wrongdoer as would be appropriate. Discipline could have varied depending on the facts and circumstances, and could include, without limitation, (1) termination of employment, (2) initiating an action for breach of fiduciary duty, and (3) if the misconduct resulted in a significant restatement of our financial results, seeking reimbursement of any portion of performance-based or incentive compensation paid or awarded to the ~~consolidated~~executive ~~statements~~that was greater than would have been paid or awarded if calculated based on the restated financial results. Additionally, pursuant to the Amended and Restated Buckeye Technologies Inc. 2007 Omnibus Incentive Compensation Plan, any awards granted after adoption of ~~operations~~such plan were specifically subject to such clawback or recoupment policies that the Compensation Committee may have adopted from time to time. These remedies would be in addition to, and not in lieu of, any actions imposed by law enforcement agencies, regulators or other authorities. As a public company, we had never determined that an executive officer had engaged in fraudulent behavior or intentional misconduct.

	2012			2011			2010
Net sales	$	14,288		$	24,845		$	22,533
Gross margin	$	(587	)	$	(4,424	)	$	(2,136	)
Impairment and restructuring charges	$	51,911		$	-		$	-
Operating loss	$	(52,498	)	$	(4,424	)	$	(2,136	)
Earnings before taxes	$	(52,244	)	$	(4,538	)	$	(1,902	)
Income tax benefit	$	23,357		$	-		$	-
Loss from discontinued operations, net of tax	$	(28,887	)	$	(4,538	)	$	(1,902	)

Stock Ownership Guidelines

~~NOTE~~At 7:the recommendation ~~ALTERNATIVE~~of ~~FUEL~~the ~~MIXTURE~~Compensation ~~CREDITS~~Committee, /the ~~CELLULOSIC~~Board ~~BIOFUEL~~adopted ~~CREDITS~~stock ownership guidelines for our senior executives to further align their interests with stockholders by promoting long-term equity ownership. Although the guidelines were initially expressed as a multiple of each executive’s base salary (ranging from 1X to 3X base salary), the Board approved a policy of translating the stock ownership guidelines into a specific number of shares based on the price of our stock at a specific point in time to minimize the impact of stock price volatility on required ownership levels. The Board initially established the stock ownership requirements on April 29, 2008. However, the Compensation Committee periodically reviews and re-evaluates these targets. Based on the Compensation Committee’s recommendation, in August 2011, the Board approved the following revised guidelines:

The U.S. Internal Revenue Code of 1986, as amended permitted a refundable excise tax credit (until December 31, 2009, when the credit expired) under certain circumstances for the production and use of alternative fuels and alternative fuel mixtures in lieu of fossil-based fuels (the “AFMC”) equal to $0.50 per gallon of alternative fuel contained in the mixture. We qualified for the AFMC because we produce liquid fuels derived from biomass, by-products of our wood pulping process, and utilize those fuels to power our Foley Plant. We began producing and consuming alternative fuel mixtures on February 12, 2009 and recorded $77,677 in AFMC, which was net of expenses, in our consolidated statements of operations related to credits earned for 2010. We treated the credits received in cash as taxable income and the income tax credits as non-taxable income. The AFMCs are subject to audit by the IRS.


Officer		Required Ownership of Company Stock
Chief Executive Officer		Lesser of 6X annual base salary or 240,864 shares
Executive Vice Presidents		Lesser of 4X annual base salary or 2X base salary / $9.03
Senior Vice Presidents		Lesser of 2X annual base salary or 1X base salary / $9.03

OnThe ~~July~~guidelines 9,doubled ~~2010,~~ the ~~IRS~~original ~~Office~~required ofownership ~~Chief~~levels ~~Counsel~~to ~~released~~be ~~legal~~more ~~advice~~in ~~concluding~~line ~~that~~with ~~black~~competitive ~~liquor~~practice. The ~~sold~~revised orguidelines ~~used~~are ~~before~~also ~~January~~intended 1,to ~~2010~~provide ~~qualifies~~more ~~for~~flexibility ~~the~~to ~~cellulosic~~covered ~~biofuel~~executives ~~credit~~in ~~(“CBC”). Each~~terms ~~gallon~~ of ~~black~~required ~~liquor~~ownership ~~produced~~levels ~~and~~instead ~~used~~of asmerely autilizing ~~fuel~~fixed byshare uslevels inas ~~our~~the ~~business~~original ~~operations~~program ~~during calendar 2009 qualified for CBC~~did. ~~For~~ ~~2011,~~Share weownership ~~recognized~~levels anassociated ~~income~~with ~~tax~~the revised ~~benefit~~salary inmultiples ~~our~~were ~~consolidated~~calculated ~~statement~~each ofyear ~~operations~~based ofon ~~$20,327~~our ~~related~~30 today ~~the~~average ~~CBC~~closing ~~claimed~~stock ~~for~~price ~~the~~leading ~~period~~up ~~from January 1, 2009~~ to ~~February~~the ~~11,~~fiscal ~~2009~~year ~~before we began mixing diesel with black liquor~~end.

We38 also received Form 637 CB Registration approval during the year ended June 30, 2011, which included additional guidance on converting alternative fuel mixture credits (“AFMC”) for gallons of black liquor produced and used by us from February 12, 2009 through December 31, 2009, the time period that we mixed diesel with black liquor to claim AFMCs. Converting the AFMCs to CBC for all gallons of the black liquor mixed with diesel would produce an additional benefit of approximately $56,278, less interest paid to the IRS. Utilization of this additional benefit is dependent on cash tax liabilities subject to annual tax credit limitations on taxable income for tax years ending June 30, 2011 through June 30, 2016 when the credit carryforward period would expire. We intend to amend our tax returns for 2009 and 2010, as necessary, to exchange the AFMC previously claimed during those years for the more advantageous CBC to the extent we believe the CBC can be utilized prior to expiration.

ForTable 2011, we recognized $31,131 of income tax benefit in our consolidated statement of operations related to the expected incremental benefit from exchanging previously claimed AFMC for CBC based upon our expected ability to utilize the CBC prior to expiration. This amount is net of $1,521 of interest that would be owed the U.S. government for the use of funds from the date that the AFMC refunds, expected to be exchanged for CBC, were received to July 9, 2010 when the IRS ruled that these credits could be exchanged for CBC.Contents

~~F-16~~For the purpose of these guidelines, stock ownership included shares over which an individual has direct or indirect ownership or control, including restricted stock, but did not include unexercised stock options or unearned performance shares. Management had five years from the later of the date the Board adopted the guidelines and the date on which an individual first became subject to the guidelines to accumulate the required stock ownership.

~~For~~Base ~~2012,~~Salary weDetermination ~~recognized $9,040 of income tax benefit in our consolidated statement of operations related to the expected incremental benefit from exchanging previously claimed AFMC~~ for ~~CBC~~Executive Officers based upon our expected ability to utilize the CBC prior to expiration. We will continue to evaluate our ability to utilize the CBC and will amend our tax returns for 2009 and 2010 in order to convert appropriate amounts of AFMC to CBC until such time that the statute of limitations expires for 2009 and 2010. We may recognize up to an additional $16,076 of tax benefit if future earnings forecasts project that we will be able to utilize CBC prior to the expiration of the credit carryforward period on June 30, 2016.

~~Estimating~~Prior ~~the~~to ~~amount~~completion of the ~~CBC~~merger ~~benefit~~with ~~recognized~~Georgia-Pacific, ~~requires~~in usdetermining tobase ~~make~~salaries, ~~assumptions~~the ~~and~~Compensation ~~estimates~~Committee ~~about~~considered individual ~~future~~and ~~taxable~~corporate ~~income~~performance, ~~affecting~~levels ~~the realization~~ of ~~these~~responsibility, ~~tax~~length ~~benefits. The~~of ~~key~~time ~~assumptions~~ in ~~estimating~~the ~~future profitability relate to future selling prices and volumes~~position, ~~operating~~prior ~~reliability~~experience, ~~raw~~breadth ~~material,~~of ~~energy~~knowledge, ~~chemical~~competitive ~~and~~pay ~~freight~~practice ~~costs, and various other projected economic factors as reflected~~ in ~~our~~the ~~internal~~pulp ~~planning models including interest cost~~ and ~~the~~paper ~~impact~~industry ~~of currency exchange rates. These models take into account recent sales~~ and ~~cost~~related ~~data~~industries, ~~as well as macroeconomic drivers~~ including ~~gross~~the ~~domestic~~peer ~~product~~group compensation ~~growth~~information, ~~customer demand~~ and ~~industry~~the ~~capacity. Other~~level ~~assumptions affecting estimates~~ of ~~future~~competition ~~taxable~~among ~~income~~companies ~~include:~~in ~~significant~~our ~~book-~~industry to~~-tax~~ ~~differences~~attract ~~impacting future credit utilization, cost recovery of existing~~ and ~~future~~retain ~~capital~~talented ~~assets~~leaders. ~~and~~Additionally, the ~~domestic~~Compensation ~~manufacturing~~Committee ~~deduction. Our~~also ~~current~~factored ~~forecasts~~in ofpromotions ~~these~~a ~~book-to-tax~~named ~~differences~~executive ~~are~~officer ~~based~~may ~~on expected capital acquisitions and operating results. Significant changes to any of these key assumptions could~~ have areceived ~~material~~or increases ~~impact on the estimate of CBC utilization. As key factors~~ in ~~these~~responsibilities ~~models~~that ~~change~~a innamed ~~future~~executive ~~periods,~~officer wemay ~~will~~have ~~update~~been ~~our~~asked ~~projections and revise the estimate of the CBC benefit expected~~ to beundertake ~~utilized. Such~~in ~~changes~~setting tosuch ~~the~~named ~~estimate~~executive ~~may~~officer’s bebase ~~significant~~compensation.

AsThe ofCompensation ~~June~~Committee ~~30,~~reviewed ~~2012~~executive ~~and~~officers’ ~~June~~salaries ~~30,~~annually ~~2011,~~at wethe ~~had~~end ~~recorded~~of athe ~~liability~~fiscal ofyear ~~$61,661~~ and ~~$57,850,~~considered ~~respectively,~~the ~~related~~base tosalaries for the ~~repayment~~upcoming offiscal ~~AFMC~~year, ~~refunds~~taking tointo ~~the~~consideration ~~U.S.~~market ~~government~~data inprovided ~~exchange~~by ~~for~~the ~~CBC. The~~compensation ~~current~~consultant ~~portion~~and of the ~~liability~~executives’ asroles ofand ~~June 30~~responsibilities, ~~2012~~performance and ~~June~~experience ~~30,~~in ~~2011~~their ~~was~~respective ~~$11,920~~positions. ~~and~~Our ~~$18,356,~~policy ~~respectively,~~was ~~included~~to inreview ~~accrued expenses,~~ and adjust the ~~noncurrent~~salaries ~~portion~~of ~~was~~our ~~$49,741~~United ~~and~~States ~~$39~~based employees,~~494,~~ ~~respectively. We~~including ~~forecast~~our ~~expected~~named ~~repayment~~executive ofofficers, ~~the~~on ~~liability~~October 1 ~~annually~~of ineach ~~amounts~~year, ~~needed~~provided tothat, ~~generate~~as ~~sufficient~~in ~~CBC~~the tocurrent ~~offset~~fiscal ~~each respective~~ year’s, ~~cash~~if ~~tax~~a ~~liability~~named ~~subject~~executive toofficer ~~annual~~received ~~tax~~a ~~credit~~promotion ~~limitations~~or ~~imposed~~an byincrease ~~law. Based~~in responsibilities onoff ~~our current forecasts~~cycle, wethen ~~anticipate~~ the ~~noncurrent~~Compensation ~~liability~~Committee towas bepermitted ~~paid~~to ~~during~~adjust ~~the~~such ~~period~~officer’s ~~from~~base ~~fiscal~~compensation ~~year~~at ~~2014~~such ~~through fiscal year 2016~~time.

OnFor ~~August~~fiscal ~~22,~~year ~~2012~~2013, the ~~Internal~~Compensation ~~Revenue~~Committee ~~Service~~established ~~Chief~~the ~~Counsel~~following ~~Office~~base ~~released~~salaries, ~~legal~~effective ~~advice~~as ~~concluding~~of ~~that~~October 1, no2012, ~~interest~~except isthat with ~~due~~respect onto ~~the~~Mr. Dean ~~AFMC~~and ~~cash refunds in the CBC exchange~~Mr. ~~Consequently,~~ Dowdell in the ~~fourth~~base ~~quarter~~salary ~~ending~~increases ~~June~~were 30effective August 1, 2012, weand ~~reversed~~were ~~our~~made ~~accrual of related interest~~ in ~~the~~connection ~~amount~~with oftheir $8respective promotions,~~093~~ ~~and~~to ~~the~~our ~~related~~named ~~deferred~~executive ~~tax~~officers: ~~asset in the amount of $2,928.~~

NOTE 8: INVENTORIES


Named Executive Officer	Prior Base Salary		Base Salary as of October 1, 2012
John B. Crowe	$	750,000	$	772,500
Steven G. Dean	$	365,000	$	390,000
Kristopher J. Matula*	$	485,000	$	0
Paul N. Horne	$	360,000	$	375,000
Douglas L. Dowdell	$	345,000	$	375,000
Sheila Jordan Cunningham	$	340,000	$	360,000

Components of inventories
	June 30
	2012		2011
Raw materials	$	31,155	$	30,602
Finished goods		32,915		33,968
Storeroom and other supplies		26,113		26,454
	$	90,183	$	91,024

*	Mr. Matula’s employment with the Company terminated on August 31, 2012, prior to the date reflected in the table.

~~NOTE~~The 9:Compensation ~~PROPERTY~~Committee took into account the results of the Pearl Meyer & Partners engagement, ~~PLANT~~each ~~AND~~component ~~EQUIPMENT~~of compensation, and the average salary increase company-wide, and increased the executive officers’ base salaries to the levels indicated in the above table. Based on the most recent Pearl Meyer & Partners study, fiscal 2013 salaries fell within a competitive range (defined as +/- 15%) of the market 50th percentile for all named executive officers.

Components of property, plant and equipment
	June 30
	2012			2011
Land and land improvements	$	40,520		$	23,775
Buildings		131,003			150,975
Machinery and equipment		867,770			939,647
Construction in progress		77,984			36,648
		1,117,277			1,151,045
Accumulated depreciation		(625,168	)		(620,577	)
	$	492,109		$	530,468

On August 1, 2012, Mr. Dean was promoted from Senior Vice President and Chief Financial Officer to the position of Executive Vice President and Chief Financial Officer and Mr. Dowdell was promoted from Senior Vice President, Specialty Fibers Division, to Executive Vice President, Specialty Fibers Division. Each such executive received increased responsibilities in light of these promotions. Accordingly, the Compensation Committee determined their respective increases in base salary based in large part to these respective promotions.

FWhat Buckeye’s Short-17Term Incentive Compensation Programs are Designed to Reward and How they Work

~~NOTE~~During ~~10:~~fiscal ~~ACCRUED~~2013, ~~EXPENSES~~our short-term incentive compensation programs consisted of the “All Employee Bonus” plan that allowed most of our employees, including our executive officers, to earn bonuses of up to 15% of their base salary depending upon our business performance measured against specific annual targets. Executive officers and certain other employees also participated in our At-Risk Compensation, or “ARC,” bonus plan. The primary purpose of the ARC program is to align a meaningful portion of pay to the attainment of short-term goals in support of our annual business plan. ARC participants were eligible to receive a bonus (with maximum award opportunities in fiscal 2013 ranging from 30% to as much as 165% of the actual amount paid to an employee as salary during the measurement period, depending on position) based on a combination of Buckeye’s business performance and the individual’s role in contributing to the success of Buckeye.

Components of accrued expenses
	June 30
	2012		2011
Income taxes	$	5,798	$	17,585
Interest		379		5,067
Retirement plans		7,386		7,067
Salaries and incentive pay		13,680		25,512
Customer incentive programs		3,575		5,299
Vacation pay		5,102		5,292
Other		7,215		5,900
	$	43,135	$	71,722

NOTETable 11:of LONG-TERM DEBTContents

~~Senior~~The ~~Notes~~short-term incentive compensation programs were intended to compensate named executive officers and other participants for achieving our annual financial and operating goals at corporate and business unit levels. The Compensation Committee believed that this feature of compensation motivated executive officers to strive to attain our annual goals. Our Board of Directors annually reviewed and approved an overall business strategy for Buckeye. The Compensation Committee reviewed our financial and operating results in order to determine the performance level achieved in connection with the executive’s attainment of quantitative goals. The weight of each performance factor varied by participant in the plan. When setting the goals for these performance metrics, the Compensation Committee established levels that were both challenging and realistic, taking into consideration management plans and forecasts, our prior performance, peer company results, macroeconomic conditions and market expectations for Buckeye. The Compensation Committee generally set target award funding, associated with achieving budgeted goals at 50% of maximum award opportunities for fiscal 2013.

OnAll ~~October~~Employee 1,Bonus ~~2010,~~Plan. To wealign ~~redeemed~~employees with the ~~remaining~~Company’s ~~$140,000~~strategic goals and to foster an environment of Company-wide teamwork and a sense of site cohesiveness, the “All Employee Bonus” for fiscal year 2013 ~~notes~~had ~~using~~two ~~cash~~components: a Company-wide portion and a ~~borrowings~~site-specific onportion. ~~our~~Under ~~former~~the ~~credit~~Company-wide ~~facility. We~~component, ~~recorded~~employees were eligible to earn a ~~$3,649~~bonus ~~loss~~of ~~related~~up to 6% of their annual salary if we achieved a Company-wide performance target. Under the ~~early~~site-specific ~~extinguishment~~component, employees were eligible to earn an additional bonus of ~~this~~up ~~debt,~~to ~~which~~9% ~~included~~of their annual salary based on achieving performance targets related to particular business objectives tailored to their specific site. Each site had a $1safety goal,~~984~~ ~~premium~~a ~~paid~~cash flow goal, and a quality goal pertinent to the ~~note~~site’s ~~holders~~business ~~and $1~~situation,~~665~~ ofas ~~unamortized~~shown ~~deferred~~in ~~financing~~the ~~costs.~~following table:

Revolving Credit Facility


“All Employee Bonus”
	Measure	Percentage of Annual Salary*
Company-wide Portion	Adjusted earnings before interest and taxes (EBIT)	Up to 6%
Site-Specific Portion	Safety Site Cash Flow Quality/Customer Satisfaction	Up to 3% Up to 3% Up to 3%
	Potential Total Bonus	Up to 15%

On* ~~October~~The ~~22,~~cash ~~2010,~~flow weincentive ~~entered into a Second Amended and Restated Credit Agreement (“credit facility”) which increased our maximum committed borrowing capacity to $300,000 and extended the maturity date~~ of ~~the~~one facility to October 22, 2015. We used the proceeds from the credit facility to pay the outstanding balance on the former credit facility plus fees and expenses. The interest rate applicable to borrowings under the credit facility is the agent’s prime rate plus 0.75% to 1.75%, or a LIBOR-based rate ranging from LIBOR plus 1.75% to LIBOR plus 2.75%, based on a grid related to our leverage ratio. The current interest rate on the credit facility is LIBOR plus 1.75%. The credit facility is secured by substantially all of our ~~assets~~sites ~~located~~was inup ~~the United States. The costs for the issuance of this credit facility were $2,586 and are being amortized~~ to ~~interest~~6% ~~expense~~with ~~using the effective interest method over the life of the facility. There are~~ no ~~scheduled~~quality ~~payments~~goal ~~for~~due ~~the~~to ~~credit~~minimal ~~facility~~off-quality ~~until~~production ~~its~~at ~~maturity~~that ~~in 2016~~site.

~~The~~We ~~credit~~set ~~facility~~challenging ~~contains~~performance ~~covenants~~targets ~~customary~~under our incentive compensation plans and required demanding performance targets to be significantly exceeded in order for ~~financing~~maximum ofpotential ~~this~~bonus ~~type~~opportunities to be earned. ~~The~~ ~~financial~~Thus, ~~covenants~~for ~~include:~~a ~~maximum~~named ~~total~~executive ~~leverage~~officer ~~ratio~~to receive the full bonus potential of ~~consolidated~~15% ~~total~~of ~~debt~~salary, the challenging corporate and site impact performance targets had to ~~consolidated~~be ~~earnings~~exceeded. ~~before~~For purposes ~~interest,~~of ~~taxes,~~determining ~~depreciation~~fiscal 2013 award opportunities under this and ~~amortization~~other ~~(“EBITDA”)~~incentive compensation plans, ~~and~~the aCompensation ~~minimum~~Committee ~~consolidated~~used ~~fixed~~actual ~~charge~~base ~~coverage~~salary ~~ratio~~earned during the fiscal year including the sum of any lump sum payments. At ~~June~~For 30each named executive officer, ~~2012~~the annual incentive compensation, weas ~~were~~a inpercentage ~~compliance~~of ~~with~~base ~~the~~salary, ~~financial~~and ~~covenants~~the ~~under~~weighting among the ~~credit~~individual ~~facility.~~criteria, is outlined below:

Outstanding borrowings against the credit facility as of June 30, 2012 and 2011 were $58,578 and $96,921, respectively. At June 30, 2012, we had $237,371 borrowing capacity under the credit facility. The commitment fee on the unused portion of the credit facility is 0.375% per annum.


	Maximum Bonus Opportunity
	Adjusted EBIT(1)			Cash Flow (2)			Safety (3)			Quality (4)			Total
John B. Crowe		6	%		3	%		3	%		3	%		15	%
Steven G. Dean		6	%		3	%		3	%		3	%		15	%
Kristopher J. Matula*		—			—			—			—			—
Paul N. Horne		6	%		3	%		3	%		3	%		15	%
Douglas L. Dowdell		6	%		3	%		3	%		3	%		15	%
Sheila Jordan Cunningham		6	%		3	%		3	%		3	%		15	%

~~Other~~* Because Mr. Matula ceased to be an officer on August 7, 2012, and ceased to be a Buckeye employee on August 31, 2012, the Compensation Committee did not set any bonus targets for Mr. Matula in fiscal 2013.

~~Total~~(1) ~~cash~~Earnings before interest ~~payments~~and ~~for~~taxes ~~2012,~~adjusted ~~2011~~to ~~and~~exclude ~~2010~~certain ~~were~~amounts $2such as amortization of intangibles,~~997~~ restructuring charges, $9asset impairment,~~521~~ and ~~$21,391,~~unbudgeted ~~respectively~~expenses related to strategic growth initiatives (primarily related to Georgia-Pacific merger).

~~NOTE~~(2) ~~12:~~Operating ~~LEASES~~cash flow excluding restructuring costs, unallocated selling, research and administrative expense, interest expense and income tax expense.

We40 lease office and warehouse facilities and equipment under various operating leases. Operating lease expense was $2,962, $2,612 and $2,773 during 2012, 2011 and 2010, respectively. The aggregate commitments under the operating leases at June 30, 2012 were as follows: 2013—$1,544; 2014—$1,344; 2015—$1,301; 2016—$627; and 2017—$4.

F-18Table of Contents

~~NOTE~~(3) ~~13: FAIR~~Our ~~VALUE~~safety ~~MEASUREMENTS~~goals as measured by total incident rate, or TIR, which is a mathematical calculation that describes the number of recordable job-related injuries and diseases that occurred per 100 full-time employees in any given time frame. It is based on a rate of 200,000 labor hours, which equates to 100 employees, who work 40 hours per week, and who work 50 weeks per year.

~~Assets~~(4) The quality measure for specialty fibers facilities was based on the relationship of imperfect tons produced to total tons produced. An imperfect ton is any material which is rejected or requires deviation/concession for the customer to accept. The quality measure for nonwoven materials facilities was based on yield. Yield measures the percentage of tons produced in relation to the raw materials that are used in the production process. The quality performance was determined for each of our facilities and ~~Liabilities~~each ~~Measured~~facility’s atbonus ~~Fair~~amount ~~Value~~was based on that facility’s quality performance target. The quality performance bonus payout for our four largest facilities was averaged and that average quality performance bonus payout determined the amount of bonus paid to the named executive officers for the quality portion of the “All Employee Bonus.”

WeFor ~~estimate~~each ~~fair~~component, ~~values~~the inCompensation ~~accordance~~Committee ~~with~~established ~~ASC~~threshold, ~~820.~~target ~~ASC 820 provides a framework for measuring fair value~~ and ~~expands~~superior ~~disclosures~~performance ~~required~~goals ~~about fair value measurements. Specifically, ASC 820 sets forth a definition of fair value~~ and acorresponding ~~hierarchy prioritizing the inputs to valuation techniques~~award opportunities. ~~ASC~~ ~~820~~For ~~defines~~results ~~fair~~in ~~value~~between as the ~~price~~designated ~~that~~performance ~~would~~targets, bestraight ~~received~~line ~~from~~interpolation ~~the~~was ~~sale~~used ~~of an asset or paid~~ to ~~transfer~~determine aaward ~~liability~~payout inlevels. ~~the~~The ~~principal~~percentage orof ~~most advantageous market for~~ the ~~asset~~fiscal or2013 ~~liability~~maximum inaward anopportunity ~~orderly~~earned ~~transaction~~at ~~between~~various ~~market~~levels ~~participants~~of onperformance ~~the~~is reflected ~~measurement~~in ~~date. Additionally, ASC 820 defines levels within~~ the ~~hierarchy~~following ~~as follows~~table:

· Level 1 – Unadjusted quoted prices for identical assets and liabilities in active markets;


	Percent of Criteria Opportunity Earned
Threshold		0	%
Target		50	%
Superior		100	%

·The ~~Level~~performance 2targets –established ~~Quoted prices~~ for similar instruments in active markets, quoted prices for identical or similar instruments in inactive markets, and model-based valuation techniques for which all significant assumptions are observable in the ~~market~~All orEmployee ~~can~~Bonus ~~be corroborated by observable market data~~ for ~~substantially~~fiscal ~~the~~2013 ~~full~~were: ~~term of the assets or liabilities; and~~

· Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Such inputs typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.


	All Employee Bonus Plan Goals
	(dollars in millions)
Bonus Performance Level	Buckeye Adjusted EBIT		Company Cash Flow		Company Safety		Company Quality
Threshold	$	138.0	$	140.0		2.6		0	%
Target	$	154.1	$	222.4		2.2		50	%
Superior	$	170.2	$	250.0		1.8		100	%

AsUnder ofthe ~~June~~All 30Employee Bonus plan, ~~2012~~15% ~~and~~of ~~June~~company-wide ~~30,~~Adjusted ~~2011,~~EBIT ~~there~~above ~~were~~a nodesignated ~~significant~~threshold ~~financial~~level ~~instruments~~goes into ~~measured~~the ataward ~~fair~~pool ~~value~~up ~~recorded~~to ina maximum of $170.2 million. For fiscal year 2013, the ~~consolidated~~threshold ~~balance~~Adjusted ~~sheet~~EBIT level was $138 million. Site-specific goals vary by location.

~~Financial~~After ~~Instruments~~reviewing ~~not~~Buckeye’s ~~Recognized~~performance atunder ~~Fair~~the ~~Value~~metrics described above, the Compensation Committee concluded that awards were earned between threshold and target levels for all measures. Resulting total award payouts for named executive officers were equal to approximately 7.48% of salary.

~~Financial~~41 instruments not recognized at fair value on a recurring or nonrecurring basis include cash and cash equivalents, short-term investments, accounts receivable, accounts payable, short-term debt, and long-term debt. With the exception of long-term debt, the carrying amounts of these financial instruments approximate their fair values due to their short maturities. The carrying value and fair value of long-term debt at June 30, 2012 were both $58,578 and at June 30, 2011 were both $96,921. The fair value of the long-term debt at June 30, 2012 and June 30, 2011 approximates the carrying amount on those dates as all outstanding borrowings are under our credit facility which has variable interest rates that re-price frequently at current market rates.

FairTable Value of Nonfinancial Assets and Nonfinancial LiabilitiesContents

WeThe ~~measure~~table ~~certain~~below ~~nonfinancial~~sets ~~assets~~forth ~~and~~the ~~nonfinancial~~amounts ~~liabilities~~received atunder ~~fair~~each ~~value~~specific oncomponent aof ~~nonrecurring~~the ~~basis. These~~“All Employee ~~assets~~Bonus” ~~and~~by ~~liabilities~~our ~~include~~named ~~assets~~executive ~~acquired~~officers ~~and~~based ~~liabilities~~upon ~~assumed~~the inachievement anof ~~acquisition~~the orperformance inlevels adiscussed ~~nonmonetary~~above. ~~exchange~~These ~~and~~amounts ~~property,~~also ~~plant and equipment and intangible assets that~~ are ~~written~~reported ~~down~~in tothe ~~fair~~“Non-Equity ~~value~~Incentive ~~when~~Plan ~~they~~Compensation ~~are~~(All ~~held~~Employee ~~for~~Bonus)” ~~sale~~column orof ~~determined~~the Summary toCompensation beTable ~~impaired~~below. ~~During~~ ~~2012 and 2011, we did not have any significant nonfinancial assets or nonfinancial liabilities that were measured at fair value on a nonrecurring basis in periods subsequent to initial recognition.~~

NOTE 14: INSURANCE RECOVERIES


Named Executive Officer	Adjusted EBIT		Cash Flow		Safety		Quality		Total
John B. Crowe		8,666	$	6,365	$	23,006	$	19,325	$	57,362
Steven G. Dean	$	4,383	$	3,220	$	11,638	$	9,775	$	29,016
Kristopher J. Matula*		—		—		—		—	$	0
Paul N. Horne	$	4,238	$	3,112	$	11,250	$	9,450	$	28,050
Douglas L. Dowdell	$	4,209	$	3,092	$	11,175	$	9,387	$	27,863
Sheila Jordan Cunningham	$	4,011	$	2,947	$	10,650	$	8,946	$	26,554

On* ~~June~~Because ~~17,~~Mr. ~~2012,~~Matula ~~our~~ceased ~~Foley Plant experienced a significant failure of a steam drum on the fluff pulp machine, causing damage~~ to ~~multiple~~be ~~drums and structural damage to the paper machine building and structure. This resulted in~~ an ~~unplanned,~~officer ~~complete~~on ~~shutdown~~August ~~of the facility. On June 22~~7, 2012, ~~the specialty pulp production line was restarted~~ and ~~was~~ceased ~~operated~~to ~~at target rates, since optimum rates could not~~ be ~~achieved~~a ~~until~~Buckeye ~~the~~employee ~~fluff~~on ~~pulp~~August ~~machine was back in operation. On July 4~~31, 2012, the ~~fluff~~Compensation ~~pulp~~Committee ~~machine~~did ~~was~~not ~~restarted~~set ~~and~~any onbonus ~~July~~targets ~~5, 2012 the Foley facility was back to full operation. On June 29, 2012, we received a letter from our insurance company stating that we would receive an advance payment on our claim~~ for ~~a total of $5,000, including property damage and business interruption~~Mr. We ~~recognized~~Matula ~~$3,984 of this advance payment as an offset to cost of goods sold~~ in ~~2012~~fiscal 2013.

InAt ~~February~~Risk ~~2012,~~Incentive ~~our~~Compensation ~~Foley~~Plan. ~~Plant~~The ~~experienced~~primary apurpose ~~power~~of ~~failure~~the ~~and~~ARC ~~electrical~~program ~~surge~~was ~~triggered~~to byalign a ~~malfunction~~meaningful inportion of apay ~~high~~to ~~voltage~~the ~~electrical~~attainment ~~line~~of ~~and~~short-term ~~subsequent~~goals ~~transformer~~in ~~failure~~support inof ~~its~~our ~~power~~annual ~~house~~business plan. ~~This~~ ~~resulted~~ARC inparticipants anwere ~~unplanned,~~eligible ~~complete~~to ~~shutdown~~receive ofa ~~the~~bonus ~~facility. In~~based ~~June~~on ~~2012,~~a wecombination ~~reached~~of anBuckeye’s ~~agreement~~business ~~with~~performance ~~our~~and ~~insurance~~the ~~carrier~~individual’s ~~that~~role ~~determined~~in ~~our~~contributing ~~loss~~ to the besuccess ~~$3,701,~~of ~~including~~Buckeye. ~~property~~Any ~~damage~~bonuses ~~and~~payable ~~business~~under ~~interruption. We~~the ~~received~~ARC ato ~~settlement~~any ofparticipant ~~$1,701,~~at ~~net~~the level of ~~our~~Senior ~~deductible,~~Vice ~~which~~President weand ~~recorded~~above aswere atied ~~reduction~~solely to ~~cost~~objective ~~of goods sold in 2012~~measures.

InEach ~~September~~named ~~2010,~~executive ~~one~~officer’s ofgoals ~~the~~and ~~turbine~~target ~~generators~~performance atlevels ~~our~~were ~~Foley~~established ~~Plant~~based ~~suffered~~on a ~~winding~~mix ~~insulation~~of ~~failure~~company-wide measures and, in certain cases, performance measures more directly linked to the ~~entire~~executive’s ~~plant~~specific ~~lost~~role ~~power~~and responsibilities. We ~~experienced~~The ~~approximately~~Chief 19Executive ~~hours~~Officer ofrecommended ~~downtime~~to onthe ~~our~~Compensation ~~production~~Committee ~~lines. In~~proposed ~~December~~measures ~~2010,~~and wetargets ~~reached~~for aneach ~~agreement~~executive ~~with~~officer (other ~~our~~than ~~insurance~~the ~~carrier~~Chief ~~that~~Executive ~~determined~~Officer). ~~our~~The ~~loss~~Compensation toCommittee bethen ~~$2,353,~~reviewed ~~including~~and ~~property~~approved ~~damage~~the measures and ~~business~~targets ~~interruption. We~~based ~~received~~on aassessment ~~settlement~~of probability of ~~$353~~attainment, ~~net~~market ofconditions and our ~~deductible~~overall performance. Fiscal year 2013 ARC performance goals and targets for executive officers were approved by the Compensation Committee at its meeting held in August 6, ~~which~~2012. weWhen ~~recorded~~setting asARC agoals ~~reduction~~and corresponding award opportunities, the intent was to ~~cost~~provide offor ~~goods~~total ~~sold~~cash compensation ~~during~~levels ~~2011~~that were comparable with the market median when challenging performance goals were achieved and above the market median when goals were exceeded.

~~F-19~~Fiscal 2013 maximum ARC bonus opportunities were equal to 165% of base salary for the Chief Executive Officer, 120% of base salary for the Executive Vice Presidents, and 90% of base salary for other named executive officers. The following table summarizes the breakout of maximum award opportunities across the various performance metrics for each named executive officer:

On June 17, 2010, our Foley Plant experienced a failure on our utility provider’s incoming line that sent a voltage surge to most of our electrical components, resulting in losses of variable frequency drives and other electrical control components. This power failure caused an unplanned, complete shutdown of the facility. Both production lines were returned to full production by June 23, 2010. In July 2010, we experienced 27 hours of do

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