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How to Make Your SOX Process Sustainable & Cost-Effective
- 6. Industry Ranking Products / Applications Chemical Cellulose Customized Fibers Source: LMC International, Lockwood-Post, Nonwovens World and Company Estimates Nonwoven Materials Market Leader in Attractive Niches #1 Specialty Cotton Papers #1 Filters #1 Film for Liquid Crystal Display (LCD) #1 Rayon Industrial Cord #1 Food Casings #1 High Purity Cotton Ethers (Thickeners) #1 Airlaid Nonwovens
- 8. SOX UNIVERSE
- 10. SOX METRICS YEARS 1 & 2
- 11. SOX Metrics Years 1 & 2 Significant Items Year 2 Year 1 Accounts 19 30 Processes 28 61 Disclosures 7 8 SAS 70s 5 8 Total 59 107
- 12. SOX Metrics Years 1 & 2 Year 2 Year 1 External Costs (does not include external auditor costs and internal resources) $.5 million $2.0 million F&A Key Controls 318 814 IS Key Controls 397 1,117 Total 715 1,931
- 13. SOX Metrics Years 1 & 2 Year 2 Year 1 Assertions 6 6 F&A Risks (WCGW) 240 240 IS Risks (WCGW) (COBiT Based) 33 84 F&A RACMS (Risk & Control Matrix) 11 11 IS RACMS 3 3
- 14. SOX Metrics Years 1 & 2 Assessment Levels Year 2 Year 1 1 (comprehensive) 4 6 2 (specific) 3 1 3 (internal control review) 2 3 4 (excluded) 4 2
- 15. RATIONALIZE NUMBER of KEY CONTROLS
- 21. RISK & CONTROL MATRIX REDUNDANCY
- 28. SUMMARY
- 31. QUESTIONS
Editor's Notes
- I am very pleased to have the opportunity to talk to you today about Buckeye Technologies, a relatively small company which is the world leader in many value added cellulose based products which contribute to making your everyday life better. As the top of the chart indicates, in the fiscal year just ended on June 30, 2004, our net sales were about $657MM, approximately 2-1/2% above the previous year. Adjusted EBITDA in an unsatisfactory earnings year was $90MM. However, our financial results have recently improved. During the nine months ended March 31, 2005 $529MM, approximately 8.2% greater than the previous year. Adjusted EBITDA for the nine months of $93MM has already exceeded what we earned during all of fiscal 2004. This represents a substantial recovery from the depressed results of the last three years. This success, combined with some significant changes we have made and positive trends in our markets, give us confidence that our future financial performance will continue to strengthen. Before we share with you the reasons we are optimistic about our future, let me briefly describe our business. Buckeye operates in two segments. Thirty-three percent of our sales are nonwovens materials. We manufacture these materials utilizing the airlaid process, which is a modern technology which enables us to produce complex absorbent structures. These materials are used in feminine hygiene products, mops, wipes, and tabletop applications. The remaining 67% of our business is specialty fibers. Fluff pulp, which is used to transport fluid in diapers and feminine hygiene products, accounts for 18% of our sales. In previous years, fluff pulp accounted for a significantly higher percentage of our sales, but over time we have reduced that percentage from the 30% range down to 22% in fiscal year 2003 and 18% last year. Fluff pulp is a near commodity, and although the market for fluff pulp has shown improvement recently, we believe over the long run we will be better served by having more of our sales in high value specialty grades and smaller exposure to the volatile fluff pulp market. Chemical cellulose, which is also called dissolving pulp because our product is dissolved in our customers’ processes, accounts for 32% of our revenue. These fibers provide purity, uniformity, and viscosity in numerous end use markets. Applications include the reinforcing material in high performance automobile tires, the coatings on pharmaceutical tablets which enable them to disperse quickly in the body, the coating on your cellphone screen and laptop computer which reduces the glare, and the tube which is used to form the hot dog prior to cooking. They are also used in a variety of products which range from shampoo to low fat dairy products to paints and lacquers. Customized fibers, 17% of revenue, are our final product category. Our products are not used in ordinary paper, but rather in specialized papers such as prestige documents which are intended to have a long life, like your wedding announcement and the various currencies used around the world. The porosity of our wood cellulose makes it the preferred material for the air and oil filters in your automobile.
- Nice-Pak, Celanese, and Rockline accounted for 9.7% of sales in FY04 vs. 11.2% in FY05.