-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EE1aQtSe+d1pq3ztC5KUzoHmlvLVYSxuYEJY+1thYjN87yHHpmmMFhSSAbkd5nuo 2mfi6MuDkwx0laNYxgMR5Q== 0000950144-03-011987.txt : 20031030 0000950144-03-011987.hdr.sgml : 20031030 20031030064226 ACCESSION NUMBER: 0000950144-03-011987 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20031030 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20031030 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RUSSELL CORP CENTRAL INDEX KEY: 0000085812 STANDARD INDUSTRIAL CLASSIFICATION: KNIT OUTERWEAR MILLS [2253] IRS NUMBER: 630180720 STATE OF INCORPORATION: AL FISCAL YEAR END: 0104 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05822 FILM NUMBER: 03965089 BUSINESS ADDRESS: STREET 1: 755 LEE STREET STREET 2: P.O. BOX 272 CITY: ALEXANDER CITY STATE: AL ZIP: 35011 BUSINESS PHONE: 2565004000 MAIL ADDRESS: STREET 1: 1 LEE ST STREET 2: P O BOX 272 CITY: ALEXANDER CITY STATE: AL ZIP: 35010 FORMER COMPANY: FORMER CONFORMED NAME: RUSSELL MILLS INC DATE OF NAME CHANGE: 19730809 8-K 1 g85491e8vk.txt RUSSELL CORPORATION SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------------------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): October 30, 2003 RUSSELL CORPORATION (Exact name of registrant as specified in its charter) ALABAMA 0-1790 63-0180720 (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) 3330 CUMBERLAND BLVD., SUITE 800, ATLANTA, GEORGIA 30339 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (678) 742-8000 Former name or former address, if changed since last report: NONE ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits Exhibit No. Description ----------- ------------ 99.1 Press Release issued October 30, 2003 ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION On October 30, 2003, Russell Corporation issued a press release announcing its results of operations for the fiscal 2003 Third Quarter. The press release is attached as Exhibit 99.1 hereto and is hereby incorporated by reference. The information in this report (including Exhibit 99.1) is being furnished pursuant to Item 12 and shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that Section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such filing. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. RUSSELL CORPORATION October 30, 2003 By: /s/ Robert D. Martin --------------------------- Robert D. Martin Senior Vice President and Chief Financial Officer EX-99.1 3 g85491exv99w1.txt EX-99.1 PRESS RELEASE DATED OCTOBER 30, 2003 EXHIBIT 99.1 [R RUSSELL CORPORATION LOGO] For Immediate Release: Contact: Thomas Johnson (Financial) (678) 742-8181 Nancy Young (Media) (678) 742-8118 RUSSELL CORPORATION REPORTS 2003-THIRD QUARTER RESULTS ------------------------------- INCREASES GUIDANCE FOR FULL-YEAR 2003 ATLANTA, GA (October 30, 2003) - Russell Corporation (NYSE: RML) today reported fiscal 2003-third quarter net income of $18.5 million, or $.56 per diluted share, versus $23.4 million, or $.72 per diluted share, in the prior year. The 2003-third quarter results included an after-tax charge of ($.03) per share associated with the Company's Operational Improvement Program (discussed below). Excluding this item, net income in the quarter would have been $19.3 million, or $.59 per share. Prior year earnings per share included an after-tax charge of ($.10) per share related to increasing the Company's bad debt reserve. Excluding this item, net income for the 2002-third quarter would have been $26.5 million, or $.82 per share. First Call reports analysts' estimates for the Company's 2003-third quarter earnings ranged between $.45 and $.51 per share, with a consensus estimate of $.48 per diluted share. For the 2003-third quarter, net sales were $388.0 million, an increase of $1.0 million from last year's third quarter sales of $387.0 million. In the U.S., net sales were $360.0 million compared to $362.7 million in the year ago quarter. For the 2003-third quarter, net sales in the Athletic channel were up over 20%, driven by the Company's acquisitions of Spalding and Bike. Net sales in the Mass Retail channel were up less than 1% from the year-ago quarter. Net sales in the Artwear/Careerwear channel were down over 20%, reflecting lower pricing and the reduction of inventories in the distributor market. International net sales were $28.0 million, an increase of 15% or $3.7 million, reflecting the positive effects of foreign currency translation and sales growth in markets such as Europe and Japan. Gross profit was $112.6 million, or a 29.0% gross margin, for the 2003-third quarter versus a gross profit of $120.5 million, or a 31.1% gross margin, in the prior year. During the 2003-third quarter, gross profit was positively impacted by the acquisitions of Spalding, Bike and Moving Comfort, and by on-going cost savings initiatives. However, these positive impacts were more than offset by: (i) pricing pressures and lower volumes, primarily in the distributor market of the Artwear channel; (ii) additional costs for new product features; (iii) higher pension and medical insurance costs; and (iv) higher raw material costs for cotton and polyester. 1 Selling, general and administrative expenses ("SG&A") for the 2003-third quarter were $73.6 million, or 19.0% of net sales, versus $74.7 million, or 19.3% of net sales, in the comparable period last year. SG&A expenses in the 2003-third quarter decreased $1.1 million, or 1.5%, versus the year-ago quarter, principally as a result of lower bad debt reserves and the benefits of various costs savings initiatives across the organization. These improvements allowed the Company to offset the incremental SG&A expenses from its acquisitions as well as the additional expenses for marketing and advertising. For the 2003-third quarter, total marketing expenses increased approximately $5 million over the comparable period last year. YEAR-TO-DATE RESULTS For the nine months ended October 5, 2003, net sales were up $28.0 million to $883.9 million, a 3.3% increase over the prior year's sales of $855.9 million. Gross profit was $252.8 million, or a 28.6% gross margin, for the first nine months of fiscal 2003 versus a gross profit of $246.5 million, or a 28.8% gross margin, in the prior year. SG&A expenses for the first nine months of fiscal 2003 were $181.5 million, or 20.5% of net sales, versus $174.5 million, or 20.4% of net sales in the comparable period last year. For the first nine months of fiscal 2003, net income was $28.6 million, or $.87 per diluted share, versus $19.8 million, or $.62 per diluted share, in the comparable period last year. Excluding the after-tax charge of ($.03) per share associated with the Operational Improvement Program in the 2003-third quarter, net income for the first nine months of fiscal 2003 would have been $29.4 million, or $.90 per diluted share. For the first nine months of fiscal 2002, earnings per share included an after-tax charge of ($.39) per share associated with the early retirement of debt, an after-tax gain of $.05 per share associated with the sale of non-core assets, and an after-tax charge of ($.10) per share related to increasing the Company's bad debt reserve. Excluding these items, net income in the period would have been $34.0 million, or $1.05 per diluted share. OUTLOOK Previously, the Company indicated that sales for the 2003-fiscal year were expected to be in the range of $1.22 billion to $1.25 billion and net income in the range of $1.25 to $1.35 per share. The Company now anticipates sales for the 2003-fiscal year to be in the range of $1.21 billion to $1.23 billion. For the 2003-fiscal year, net income, before any expenses associated with the Company's Operational Improvement Program, is now forecasted to be in the range of $1.31 to $1.39 per share. This range does not include anticipated after-tax expenses of approximately $4 million to $5 million, or $.14 per share to $.16 per share related to the Operational Improvement Program. The anticipated costs of the Program include severance and other cash expenses associated with a workforce reduction, as well as non-cash expenses related to the disposal of various idle assets. Approximately 40% of these expenses are expected to be non-cash. "For the 2003-fourth quarter, we are forecasting sales to be in the range of $325 million to $345 million, an increase of 7% to 12%, due to the expected strong performance of Spalding and the successful marketing campaigns for Russell Athletic and JERZEES," said Jack Ward, chairman and CEO. "We anticipate that our 2003-fourth quarter net income, before any expenses 2 associated with our Operational Improvement Program, will be in the range of $0.41 to $0.49 per share." First Call reports analysts' estimates for Russell's 2003-fourth quarter earnings range between $0.41 and $0.49 per share, with a consensus estimate of $0.45 per share. "As we look ahead, Russell will continue its aggressive actions to build sales and profits for both the Athletic and Activewear sides of the business," said Ward. "For example, in the Athletic Group, Russell Athletic has made excellent progress with an exciting marketing partnership with ESPN ABC Sports and several new product introductions, such as Dri-POWER(R), which have helped drive sales up more than 5% year-to-date. In fact, "Sporting Goods Business" magazine recently described Russell Athletic's Dri-POWER(R) product as `exceptional' in a comparison of leading moisture-management products. "The Spalding acquisition has continued to perform well, and we believe there are substantial upside opportunities for the brand," continued Ward. "We also see the future potential for the BIKE and MOVING COMFORT brands beginning to take shape. For Bike, we are building on its rich heritage and leadership position in the youth and recreation sports apparel and sports medicine/ protective markets. For Moving Comfort, we already have six new test programs in 2004 with major retailers. "In the Activewear Group, our Jerzees Spotshield(TM) sweatshirts that were introduced at Wal-Mart for the Fall 2003/Winter 2004 seasons have been selling well," said Ward. "In the Artwear market, we are the leader in fleece and plan to continue to grow our business. For 2004, we have added a major new distributor in the Artwear market. In addition, the two largest distributors, Broder and Alpha, have completed their merger and have expanded their offering of Russell products for next year." Russell is believed to be the largest supplier for Broder/Alpha and they are Russell's second largest customer. "As we forecast sales and earnings for 2004, we are approaching our business cautiously, given the highly competitive pricing environment in the Activewear business coupled with significantly higher fiber costs," said Ward. "We are preliminarily forecasting 2004 sales to be in the range of $1.28 billion to $1.32 billion. With our 2004 fiber costs currently projected to be about 25% to 30% higher than 2003, we are forecasting net income to be in the range of $1.35 to $1.55 per share." OPERATIONAL IMPROVEMENT PROGRAM "Over the past five years, we have aggressively reduced costs in all areas of our business," said Ward. "In conjunction with the realignment of the organization, we are announcing an additional Operational Improvement Program targeting $50 million in pre-tax cost reductions to offset anticipated price decreases, higher fiber costs and other cost increases for fiscal 2004. This comprehensive plan includes improving operating efficiencies and asset utilization, while streamlining processes in both our manufacturing and administrative areas such as: (i) expanded production in Haiti versus higher cost contractors; (ii) lower sourcing costs; (iii) increased efficiencies in domestic textile operations; and (iv) improved distribution costs." 3 As part of this initiative, Russell announced that by December 31, 2003, it expects to reduce its salaried and administrative office staff by approximately 10%, or by 100 to 110 positions. This organizational change is expected to result in annualized pre-tax savings of $8 million to $10 million and will cost approximately $3 million after-tax in severance and other expenses, of which approximately 30% was incurred in the 2003-third quarter and approximately 70% will be incurred in the 2003-fourth quarter. Russell has also realigned its operations to increase focus on both its athletic and activewear businesses. Under this structure, manufacturing, distribution and some administrative functions will be combined with sales and marketing to create a separate Athletic Group and an Activewear Group. "As previously announced, Julio Barea, one of the most experienced CEO's in the industry, will lead the Activewear Group, creating a fully integrated marketing and supply chain," said Ward. In addition, Russell recently announced the construction of a new textile plant in Honduras for both tee shirts and fleece production, which will support the realignment with a fully-integrated, low-cost production facility. Once fully operational in 2006, the annual pre-tax savings from Phase I of the Merendon Plant in Choloma, Honduras should be approximately $15 million to $20 million. "These announcements reflect our continued efforts to better align the Company's manufacturing strategies, processes and facilities with today's global marketplace and are consistent with similar actions that we have taken in the past five years," added Ward. "All of these actions have been designed to build sales, drive quality, reduce costs and optimize asset utilization. We believe that these changes will contribute to the long-term success of the Company, which is our goal for stockholders and employees alike." CONFERENCE CALL INFORMATION Management will have a conference call today (October 30, 2003) at 8:30 a.m. eastern time to discuss the third quarter results. The call may be accessed at (877) 264-7865 (domestically), or (706) 634-4917 (internationally), and use conference ID number 3207079. The call will also be simultaneously webcast via the Investor Relations homepage of the Company's website at www.russellcorp.com. A replay of the call will be available through the website for 30 days. In addition, you can register through the above referenced website if you would like to receive press releases, conference call reminders and other notices. ABOUT RUSSELL CORPORATION Russell Corporation is a leading branded athletic, outdoor and activewear company with over a century of success in marketing athletic uniforms, apparel and equipment for a wide variety of sports, outdoor and fitness activities. The Company's brands include: Russell Athletic(R), JERZEES(R), Mossy Oak(R), Cross Creek(R), Discus(R), Moving Comfort(R), Bike(R), Spalding(R), and Dudley(R). The Company's common stock is listed on the New York Stock Exchange under the symbol RML and its website address is www.russellcorp.com. 4 FORWARD LOOKING STATEMENT This Press Release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some of these statements can be identified by terms and phrases such as "anticipate", "believe", "intend", "expect", "continue", "could", "may", "plan", "project", "predict", "will" and similar expressions and include references to assumptions that we believe are reasonable and relate to our future prospects, developments and business strategies. Factors that could cause our actual results to differ materially from those expressed or implied in such forward-looking statements include, but are not limited to: (a) economic conditions; (b) risks related to the Spalding business; (c) risks related to our overall acquisition strategy; (d) foreign currency exchange rates; (e) significant competitive activity, including promotional and price competition; (f) changes in customer demand for our products and our ability to protect and/or expand customer relationships; (g) price volatility of raw materials; (h) our ability to implement and achieve the goals of our Operational Improvement Program; (i) the success of our marketing and advertising programs; (j) risks associated with new products and new product features; (k) the collectibility of receivables from our customers; (l) risks associated with our planned textile plant in Honduras; (m) pension expenses; (n) the costs of insurance and other selling, general and administrative expenses; (o) risks associated with our organization changes; and (p) other risk factors listed in our reports filed with the Securities and Exchange Commission from time to time. We undertake no obligation to revise the forward-looking statements included in this Press Release to reflect any future events or circumstances. Our actual results, performance or achievements could differ materially from the results expressed or implied by these forward-looking statements. - Tables to follow - 5 RUSSELL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
13 WEEKS ENDED 39 WEEKS ENDED 10/5/03 9/29/02 10/5/03 9/29/02 ------------ ------------ ------------ ------------ (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) Net sales $ 388,001 $ 386,987 $ 883,909 $ 855,882 Cost of goods sold 275,394 266,458 631,094 609,421 ------------ ------------ ------------ ------------ Gross profit 112,607 120,529 252,815 246,461 Selling, general and administrative expenses 73,627 74,724 181,504 174,484 Other expense (income) - net 1,382 225 2,801 (2,533) ------------ ------------ ------------ ------------ Operating income 37,598 45,580 68,510 74,510 Interest expense 7,826 8,379 22,436 22,807 Debt retirement charge (1) -- -- -- 20,097 ------------ ------------ ------------ ------------ Income before income taxes 29,772 37,201 46,074 31,606 Provision for income taxes 11,313 13,838 17,508 11,757 ------------ ------------ ------------ ------------ Net income $ 18,459 $ 23,363 $ 28,566 $ 19,849 ============ ============ ============ ============ Weighted-average common shares outstanding: Basic 32,451,194 32,164,310 32,337,036 32,094,366 Diluted 32,815,822 32,323,490 32,692,172 32,261,775 Net income per common share: Basic $ 0.57 $ 0.73 $ 0.88 $ 0.62 Diluted $ 0.56 $ 0.72 $ 0.87 $ 0.62 Cash dividends per common share $ 0.04 $ 0.04 $ 0.12 $ 0.12
(1) The charge for the early retirement of debt, associated with our debt refinancing in 2002, has been reclassified to conform with Statement of Financial Accounting Standard No. 145 ("SFAS No. 145"). Prior to the adoption of SFAS No. 145, this charge was properly classified net of tax as an extraordinary item. 6 RUSSELL CORPORATION UNAUDITED FINANCIAL HIGHLIGHTS (DOLLARS IN THOUSANDS)
13 WEEKS ENDED 39 WEEKS ENDED 10/5/03 9/29/02 10/5/03 9/29/02 -------- -------- -------- -------- NET SALES BY DISTRIBUTION CHANNEL Domestic Athletic $121,108 $100,543 $277,805 $220,100 Domestic Mass Retail 147,796 147,509 258,564 248,787 Domestic Artwear/Careerwear 91,135 114,681 269,490 321,628 International Activewear 27,962 24,254 78,050 65,367 -------- -------- -------- -------- Consolidated total $388,001 $386,987 $883,909 $855,882 ======== ======== ======== ========
7 RUSSELL CORPORATION CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
10/5/03 1/4/03 9/29/02 ----------- ----------- ----------- ASSETS (UNAUDITED) (NOTE 1) (UNAUDITED) ------ Current assets: Cash $ 22,480 $ 68,619 $ 21,921 Accounts receivable, net 272,927 148,915 261,651 Inventories 357,692 306,658 331,101 Prepaid expenses and other current assets 15,236 15,373 21,655 Deferred income taxes -- -- 4,815 Income tax receivable -- 11,280 -- ----------- ----------- ----------- Total current assets 668,335 550,845 641,143 Property, plant & equipment, net 307,858 332,009 335,948 Other assets 142,581 80,261 77,907 ----------- ----------- ----------- Total assets $ 1,118,774 $ 963,115 $ 1,054,998 =========== =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Accounts payable $ 93,699 $ 71,291 $ 82,677 Accrued expenses 90,189 75,678 99,018 Deferred income taxes 5,647 6,505 -- Short-term debt 1,745 7,253 6,866 Current maturities of long-term debt 2,500 5,000 2,500 ----------- ----------- ----------- Total current liabilities 193,780 165,727 191,061 Long-term debt, less current maturities 362,581 265,000 343,485 Deferred liabilities: Income taxes 9,377 9,384 19,595 Pension and other 54,186 55,751 28,187 Commitments and contingencies -- -- -- Stockholders' equity: Common Stock, par value $.01 per share; authorized 150,000,000 shares, issued 41,419,958 shares 414 414 414 Paid-in capital 40,409 42,877 43,128 Retained earnings 700,028 675,448 662,278 Treasury stock, at cost (8,940,671 shares at 10/5/03; 9,233,545 shares at 1/4/03 and 9,246,560 shares at 9/29/02) (209,951) (218,113) (218,563) Accumulated other comprehensive loss (32,050) (33,373) (14,587) ----------- ----------- ----------- Total stockholders' equity 498,850 467,253 472,670 ----------- ----------- ----------- Total liabilities & stockholders' equity $ 1,118,774 $ 963,115 $ 1,054,998 =========== =========== ===========
Note 1 - Derived from audited financial statements. 8 -----END PRIVACY-ENHANCED MESSAGE-----