-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, biWq+jxrLzQeZpRQ1Yt8+XRUVoGxC7j8ns5Hem9ZnrHcww6o8AZEI7/WXNjhRx6s RE600McvPasvEHXe3UThlA== 0000950144-95-001458.txt : 19950518 0000950144-95-001458.hdr.sgml : 19950518 ACCESSION NUMBER: 0000950144-95-001458 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950402 FILED AS OF DATE: 19950517 SROS: MSE SROS: NYSE SROS: PHLX SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: RUSSELL CORP CENTRAL INDEX KEY: 0000085812 STANDARD INDUSTRIAL CLASSIFICATION: KNITTING MILLS [2250] IRS NUMBER: 630180720 STATE OF INCORPORATION: AL FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05822 FILM NUMBER: 95540481 BUSINESS ADDRESS: STREET 1: 1 LEE ST STREET 2: P.O. BOX 272 CITY: ALEXANDER CITY STATE: AL ZIP: 35010 BUSINESS PHONE: 2053294000 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 10-Q 1 RUSSELL CORPORATION 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended April 2, 1995 Commission file number 0-1790 RUSSELL CORPORATION (Exact name of registrant as specified in its charter) Alabama 63-0180720 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1 Lee Street, Alexander City, Alabama 35010 (Address of principal executive offices) (Zip Code) (205) 329-4000 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ------ The number of shares outstanding of each of the issuer's classes of common stock. Class Outstanding at May 15, 1995 ----- --------------------------- Common Stock, Par Value $.01 Per Share 39,016,332 shares (Excludes Treasury) 2 RUSSELL CORPORATION Index
Page No. -------- Part I. Financial Information: Consolidated Condensed Balance Sheets-- April 2, 1995 and December 31, 1994 2 Consolidated Condensed Statements of Income-- Thirteen Weeks Ended April 2, 1995 and April 3, 1994 3 Consolidated Statements of Cash Flows-- Thirteen Weeks Ended April 2, 1995 and April 3, 1994 4 Notes to Consolidated Condensed Financial Statements 5 Management's Discussion and Analysis of Results of Operations and Financial Condition 6 Exhibit 11 - Computation of Earnings Per Share 8 Part II. Other Information 9 Index to Exhibits 11
-1- 3 PART I - FINANCIAL INFORMATION RUSSELL CORPORATION Consolidated Condensed Balance Sheets (Dollars in Thousands)
April 2 December 31 1995 1994 ----------- ----------- ASSETS (Unaudited) (Audited) ------ Current Assets: Cash $ 7,332 $ 4,141 Accounts receivable, net 204,972 211,976 Inventories: Finished goods 261,366 227,625 In process 43,334 37,639 Raw materials and supplies 47,261 47,868 ---------- ---------- 351,961 313,132 LIFO reserve (38,706) (33,739) ---------- ---------- 313,255 279,393 Prepaid expenses and other current assets 18,143 15,365 ---------- ---------- Total current assets 543,702 510,875 Property, Plant and Equipment, net 460,780 467,044 Other Assets 74,680 68,658 ---------- ---------- Total assets $1,079,162 $1,046,577 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Current Liabilities: Short-term debt $ 131,820 $ 97,941 Accounts payable and accrued expenses 79,647 76,307 Federal and state income taxes 4,164 6,824 Current maturities of long-term debt 19,471 19,473 ---------- ---------- Total current liabilities 235,102 200,545 Long-term debt, less current maturities and unamortized debt discount 144,100 144,163 Deferred Liabilities 75,860 73,207 Shareholders' Equity: Common Stock, at par value 414 414 Paid-in capital 53,238 53,511 Retained earnings 636,324 628,836 Currency translation adjustment (4,589) (5,501) ---------- ---------- 685,387 677,260 Treasury Stock, at cost (61,287) (48,598) ---------- ---------- Total shareholders' equity 624,100 628,662 ---------- ---------- Total liabilities & shareholders' equity $1,079,162 $1,046,577 ========== ==========
See accompanying notes to consolidated condensed financial statements. -2- 4 RUSSELL CORPORATION Consolidated Condensed Statements of Income (Dollars in Thousands Except Per Share Amounts) (Unaudited)
13 Weeks Ended -------------------------------------- April 2 April 3 1995 1994 ------------- --------------- Net sales $ 248,315 $ 232,118 Costs and expenses: Cost of goods sold 171,435 155,883 Selling, general and administrative expenses 52,747 50,669 Interest expense 4,594 4,010 Other - net (income) (622) (587) ------------- ------------- 228,154 209,975 ------------- ------------- Income before income taxes 20,161 22,143 Provision for income taxes 7,929 8,777 Net income applicable to Common Shares $ 12,232 $ 13,366 ============= ============= Weighted average number of common and common equivalent shares outstanding 39,744,794 40,189,143 Earnings per common and common equivalent share $ .31 $ .33 Cash dividends per common share $ .12 $ .10
See accompanying notes to consolidated condensed financial statements. -3- 5 RUSSELL CORPORATION Consolidated Statements of Cash Flows (Dollars in Thousands) (Unaudited)
13 Weeks Ended --------------------------------- April 2 April 3 1995 1994 ---------- ------------ Cash Flows from Operating Activities Net income $ 12,232 $ 13,366 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 17,646 17,314 Deferred income taxes 1,669 1,130 Gain on sale of equipment ( 391) ( 765) Changes in Assets and Liabilities: Accounts receivable 7,479 (18,131) Inventories (33,717) (10,620) Prepaid expenses ( 2,483) 2,903 Accounts payable & accrued expenses 2,865 4,836 Income taxes payable ( 2,660) (12,431) Accrued liabilities 700 ( 3,757) Other assets ( 5,423) ( 989) -------- -------- Net cash used in operating activities ( 2,083) ( 7,144) Cash Flows from Investing Activities Purchases of property, plant & equipment (10,376) ( 7,575) Proceeds from sale of equipment 550 923 -------- -------- Net cash used in investing activities ( 9,826) ( 6,652) Cash Flows from Financing Activities Short-term borrowings 33,325 37,553 Payments on long-term debt ( 76) ( 92) Dividends on Common Stock ( 4,744) ( 3,985) Cost of Common Stock for treasury (13,193) (20,457) Distribution of treasury shares 231 1,003 -------- -------- Net cash provided by financing activities 15,543 14,022 Effect of exchange rate changes on cash ( 443) ( 43) -------- -------- Net increase in cash 3,191 183 Cash balance at beginning of period 4,141 3,897 -------- -------- Cash balance at end of period $ 7,332 $ 4,080 ======== ========
See accompanying notes to consolidated condensed financial statements. -4- 6 RUSSELL CORPORATION Notes to Consolidated Condensed Financial Statements 1. In the opinion of Management, the accompanying audited and unaudited consoli dated condensed financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of April 2, 1995, and December 31, 1994, and the results of operations and cash flows for the thirteen weeks ended April 2, 1995 and April 3, 1994. The accounting policies followed by the Company are set forth in Note A to the Company's consolidated financial statements in Form 10-K for the year ended December 31, 1994. 2. Effective January 3, 1993, the Company adopted Financial Accounting Standards Board Statement 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" and Statement 109, "Accounting for Income Taxes". The effect of the adoption of these standards was not material. 3. The results of operations for the thirteen weeks ended April 2, 1995, are not necessarily indicative of the results to be expected for the full year. 4. On April 1, 1994, the Company acquired DeSoto Mills, Inc. The stock transaction, valued at $10 million, resulted in DeSoto Mills, Inc. becoming a wholly owned subsidiary of the Company. -5- 7 RUSSELL CORPORATION Management's Discussion and Analysis of Results of Operations and Financial Condition RESULTS OF OPERATIONS The following is Management's Discussion and Analysis of certain significant factors which have affected the Company's earnings during the periods included in the accompanying consolidated condensed statements of income. A summary of the period to period changes in the principal items included in the consolidated statements of income is shown below:
Comparison of ------------------------------------------- Quarter Ended Quarter Ended April 2, 1995 and April 2, 1995 and April 3, 1994 December 31, 1994 ----------------- ------------------- Increase (Decrease) (Dollars in Thousands) Net sales $ 16,197 7.0 % $(57,190) (18.7)% Cost of goods sold 15,552 10.0 (25,917) (13.1) Selling, general and administrative expenses 2,078 4.1 ( 4,089) ( 7.2) Interest expense 584 (14.6) ( 502) ( 9.9) Other - net 3.5 6.0 1,099 N/A Income before income taxes ( 1,982) ( 9.0) (25,583) (55.9) Provision for income taxes ( 848) ( 9.7) ( 9,274) (53.9) Net income applicable to common shares ( 1,134) ( 8.5) (16,309) (57.1)
Sales increases for the first quarter of 1995 reflect higher activewear volumes, strong international growth and the effect of the DeSoto Mills, Inc. acquisition. This acquisition accounted for $9,083,000 of the quarterly increase. Gross margins were impacted by less than planned sales and earnings in the Russell Athletic and Licensed Products Divisions. Russell Athletic experienced reduced re-order rates at the department store level in January and February, principally, as a result of weather related issues. Spillover from the baseball and hockey strikes affected the licensed product market and that business will continue to be soft for the foreseeable future. Also, DeSoto Mills operated at margins lower than other company divisions. Selling, general and administrative expenses increased 4%, but decreased as a percentage of sales. Interest expense increased primarily as a result of higher short-term borrowing rates. Other income was derived mainly from interest, rental income and the disposition of certain fixed assets. -6- 8 FINANCIAL CONDITION The Company's financial condition remained strong with long-term debt to total capitalization of 18.8%. The statement of cash flows reflects that $10.4 million was invested in the capital program during the first quarter of 1995. Capital expenditures, working capital needs, dividends and treasury stock purchases were met with internally generated funds and short-term bank loans. At quarter-end, the Company maintained $284 million in informal lines of credit. The Company utilizes an interest rate swap agreement to effectively convert a portion of its interest rate exposure to a floating rate basis. That agreement effectively lowered the weighted average interest rate on the Company's long-term debt during the first quarter. The Company utilizes cotton futures contracts to set sales prices which are generally set six months to a year in advance of the selling season. Depending upon market conditions, futures may be purchased to cover the Company's cotton requirements, generally, at the time that prices are set. Purchasing futures not only reduces the risks of adverse price fluctuations, but also limits the Company's ability to benefit from positive price fluctuations over the terms of the agreements. In anticipation of higher cotton prices in 1995, the Company purchased futures contracts to cover its cotton requirements. Cotton prices rose in the first quarter of 1995 and the aforementioned futures favorably mitigated cotton prices for this period. The carrying value of goodwill is reviewed by management when facts and circumstances suggest that it may be impaired. Should this review indicate that goodwill will not be recoverable, based upon undiscounted cash flows of the entity, the Company's carrying value of the goodwill is reduced by the estimated shortfalls of the cash flows. -7- 9 PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders a) The Annual Meeting of Shareholders was held on April 26, 1995. c) At the Annual Meeting, shareholders voted upon the election of Directors serving a three-year term. For Director, the following nominees received the following votes:
Name For Withheld ---- --- -------- C.V. Nalley III 34,632,115 59,539 John R. Thomas 34,631,572 60,082 John A. White 34,632,201 59,453 Tim Lewis 34,618,721 72,933
All nominees were elected. Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K a) Exhibits - 11 Computation of Earnings Per Share 27 Financial Data Schedule (for SEC use only) b) Reports on Form 8-K - there were no reports on Form 8-K filed for the period ended April 2, 1995. -8- 10 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 thereunto duly authorized. RUSSELL CORPORATION ------------------------------------- (Registrant) Date May 16, 1995 /S/James D. Nabors ------------------ ------------------------------------- James D. Nabors Executive Vice President and Chief Financial Officer (For the Registrant and as Principal Financial Officer) -9- 11 Index to Exhibits
Exhibit No. Page No. - ----------- -------- 11 Computation of Earnings Per Share 11 27 Financial Data Schedule (for SEC use only)
-10- EX-11 2 COMPUTATION OF EARNINGS PER SHARE 1 Exhibit 11 RUSSELL CORPORATION Computation of Earnings Per Share (Dollars in Thousands Except Per Share Amounts) (Unaudited)
13 Weeks Ended ---------------------- 4/2/95 4/3/94 -------- -------- Net income $12,232 $13,366 ======= ======= Shares: Weighted average common shares outstanding 39,460,758 39,971,389 Net common shares issuable on exercise of certain stock options 284,036 217,754 ---------- ---------- Average common and common equivalent shares outstanding 39,744,794 40,189,143 ========== ========== Earnings per common and common equivalent share $ .31 $ .33
-11- EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF RUSSELL CORPORATION FOR THE THREE MONTHS ENDED APRIL 2, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-30-1995 APR-02-1995 7,332 1,446 215,578 10,606 313,255 543,702 949,887 489,107 1,079,162 235,102 144,100 414 0 0 623,686 1,079,162 248,315 248,315 171,435 171,435 50,949 1,176 4,594 20,161 7,929 12,232 0 0 0 12,232 0.31 0.31
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