SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Amendment No.1)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended April 2, 2006
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 1-5822
RUSSELL CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
| Delaware | 63-0180720 | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
| 3330 Cumberland Blvd., Suite 800, Atlanta, Georgia | 30339 | |
| (Address of Principal Executive Offices) | (Zip Code) |
(678) 742-8000
(Registrant’s Telephone Number, Including Area Code)
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report: None
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 (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 x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (check one):
Large accelerated filer ¨ Accelerated filer x Non-accelerated filer ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ¨ No x
The number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class | Outstanding at May 10, 2006 | |
Common Stock, Par Value $0.01 Per Share | 33,263,145 shares (Excludes Treasury) |
| 3 | ||
PART I. –FINANCIAL INFORMATION | 3 | |
ITEM 1.FINANCIAL STATEMENTS | 3 | |
| 3 | ||
PART II -OTHER INFORMATION | 5 | |
ITEM 6.EXHIBITS | 5 | |
| 6 |
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This Amendment on Form 10-Q/A is being filed solely to correct certain typographical errors in “Note 3 Inventories” contained in the Notes to Condensed Consolidated Financial Statements to Russell Corporation’s (the “Company’s) Consolidated Financial Statements as of and for the thirteen weeks ended April 2, 2006, included in the Company’s Quarterly Report on Form 10-Q filed on May 12, 2006 (the “Form 10-Q”). In the table contained in Note 3, brackets were omitted from several amounts reported as changes in inventories and retained earnings associated with the Company’s change from the Last-in, First-out (LIFO), to the First-in, First-out (FIFO), method of accounting for inventories. The Company is amending Part I, Item 1 of its Form 10-Q to correct these typographical errors; the amended Note 3 to Condensed Consolidated Financial Statements is presented below. Part II, Item 6 of the Form 10-Q also is being amended to provide updated Exhibits 15, 31, and 32. All other information in the Form 10-Q, including but not limited to the financial statements and notes thereto in Part I, Item 1 of the Form 10-Q, remains unchanged and has not been repeated in this Amendment. Accordingly, this Form 10-Q/A should be read in conjunction with the Form 10-Q.
PART I. - FINANCIAL INFORMATION
RUSSELL CORPORATION
Notes to Condensed Consolidated Financial Statements
3. INVENTORIES
The components of inventories consist of the following (in thousands):
| April 2, 2006 | December 31, 2005 | April 3, 2005 | ||||||||||
| (As Adjusted (Note 3)) | (As Adjusted (Note 3)) | |||||||||||
Finished goods | $ | 369,618 | $ | 340,752 | $ | 354,793 | ||||||
Work in process | 82,751 | 77,231 | 66,261 | |||||||||
Raw materials and supplies | 26,809 | 26,524 | 25,944 | |||||||||
| 479,178 | 444,507 | 446,998 | ||||||||||
Lower-of-cost or market adjustments, net | (41,186 | ) | (43,945 | ) | (42,253 | ) | ||||||
| $ | 437,992 | $ | 400,562 | $ | 404,745 | |||||||
Effective January 1, 2006, the Company changed its method of accounting for certain finished goods, work-in-process and raw material inventories from the last-in, first-out (“LIFO”) method to the first-in, first-out (“FIFO”) method. The Company believes the change is preferable because its primary competitors currently use the FIFO inventory method; therefore, the change will make the comparison of results among these companies more consistent. In addition, the Company believes that the FIFO method provides a more meaningful presentation of financial position because it reflects more recent costs in the balance sheet, especially in light of the decline in costs of apparel inventory since the late 1990’s. Moreover, the change also conforms all of the Company’s raw materials, work-in-process and finished goods inventories to a single costing method.
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The Company applied this change in method of inventory costing retrospectively by adjusting the prior years’ financial statements. The impact of the change in method on certain financial statement line items is as follows (in thousands):
| Increase/(Decrease) | 13 Weeks Ended April 2, 2006 | 13 Weeks Ended April 3, 2005 | 52 Weeks Ended December 31, 2005 | 52 Weeks Ended January 1, 2005 | 52 Weeks Ended January 3, 2004 | 53 Weeks Ended January 4, 2003 | ||||||||||||||||||
| (A) | ||||||||||||||||||||||||
Balance Sheet: | ||||||||||||||||||||||||
Inventories | $ | (37,064 | ) | $ | (41,080 | ) | $ | (39,757 | ) | $ | (39,817 | ) | $ | (44,549 | ) | $ | (36,879 | ) | ||||||
Current deferred taxes | 15,390 | 16,382 | 16,516 | 14,660 | 17,063 | 14,125 | ||||||||||||||||||
Retained earnings | (21,674 | ) | (24,698 | ) | (23,241 | ) | (25,157 | ) | (27,486 | ) | (22,754 | ) | ||||||||||||
Income Statement: | ||||||||||||||||||||||||
Cost of goods | (2,693 | ) | 1,263 | (60 | ) | (4,732 | ) | 7,671 | (3,658 | ) | ||||||||||||||
Operating income | 2,693 | (1,263 | ) | 60 | 4,732 | (7,671 | ) | 3,658 | ||||||||||||||||
Provision for income taxes | 1,126 | (1,721 | ) | (1,855 | ) | 2,402 | (2,938 | ) | 1,401 | |||||||||||||||
Net income | 1,567 | 458 | 1,915 | 2,330 | (4,732 | ) | 2,257 | |||||||||||||||||
Net income per common share | ||||||||||||||||||||||||
Basic | $ | 0.05 | $ | 0.01 | $ | 0.06 | $ | 0.07 | $ | (0.15 | ) | $ | 0.07 | |||||||||||
Diluted | $ | 0.05 | $ | 0.01 | $ | 0.06 | $ | 0.07 | $ | (0.15 | ) | $ | 0.07 | |||||||||||
Cash Flow Statement: | ||||||||||||||||||||||||
Net income | 1,567 | 458 | 1,915 | 2,330 | (4,732 | ) | 2,257 | |||||||||||||||||
Change in inventories | (2,693 | ) | 1,263 | (60 | ) | (4,732 | ) | 7,671 | (3,658 | ) | ||||||||||||||
Other | 1,126 | (1,721 | ) | (1,855 | ) | 2,402 | (2,938 | ) | 1,401 | |||||||||||||||
Net cash provided by (used in) operating activities | — | — | — | — | — | — | ||||||||||||||||||
| (A) | The disclosure is selective in nature and only addresses the specific accounting impact from the change in inventory accounting methods. The disclosure does not address other potential effects (whether financial or operational) that could have impacted the Company’s results of operations or financial position if the Company had elected to remain on the LIFO accounting method for inventories during the thirteen weeks ended April 2, 2006. |
As a result of the accounting change, retained earnings as of December 29, 2001 (2001 fiscal year end), decreased by $25 million from $646 million, as originally reported using the LIFO method, to $621 million using the FIFO method.
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Exhibit Numbers | Description | |
| (2) | Agreement and Plan of Merger, dated as of April 17, 2006, by and among Russell Corporation, Berkshire Hathaway Inc., and F Subsidiary, Inc., (incorporated by reference to Exhibit 2.1 to Current Report on Form 8-K dated April 18, 2006). | |
| (4) | Amendment No. 2 to Rights Plan dated as of April 17, 2006, by and between Russell Corporation and Sun Trust Bank, as rights agent (incorporated by reference to Exhibit 4.3 to the Company’s Form 8-A, dated April 17, 2006). | |
| (10a) | Amendment to the Amended and Restated Employment Agreement by and between John F. Ward and Russell Corporation (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated May 4, 2006). | |
| (10b) | Form of Amendment to the Change of Control Employment Agreement for Tier I officers, (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K dated May 4, 2006). | |
| (10c) | Form of Amendment to the Change of Control Employment Agreement for Tier II officers, (incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K dated May 4, 2006). | |
| (15) | Letter re/ unaudited interim financial information. | |
| (18) | Letter dated May 5, 2006, from Ernst & Young LLP regarding change in method of accounting for inventories (incorporated by reference to Exhibit 18 to Quarterly Report on Form 10-Q filed on May 12, 2006). | |
| (31a) | Rule 13a-14(a)/15d-14(a) CEO Certification. | |
| (31b) | Rule 13a-14(a)/15d-14(a) CFO Certification. | |
| (32) | Section 1350 Certifications. | |
| (99) | As Adjusted Condensed Financial Information for 2005, 2004, 2003, and 2002 (incorporated by reference to Exhibit 99 to Quarterly Report on Form 10-Q filed on May 12, 2006). | |
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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, 2006 | By: | /s/ Robert D. Koney, Jr. | ||
| Robert D. Koney, Jr. | ||||
| Senior Vice President, Chief Financial Officer | ||||
| (Principal Financial Officer) | ||||
| Date: May 16, 2006 | By: | /s/ Victoria W. Beck | ||
| Victoria W. Beck | ||||
| Vice President, Corporate Controller | ||||
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