EXHIBIT 99.1
[RUSSELL CORPORATION LOGO]
For Immediate Release: Contact: Roger Holliday (Financial)
(678) 742-8181
Nancy Young (Media)
(678) 742-8118
RUSSELL REPORTS THIRD QUARTER SALES AND EARNINGS
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Sales gains led by Activewear; EPS benefits from lower effective
tax rate; Adjusts full year guidance
ATLANTA, GA (October 28, 2004) - Russell Corporation (NYSE: RML) today reported
fiscal 2004 third quarter sales of $422.7 million, an increase of 8.9% over the
same period a year ago. The Company also reported a 45% increase in earnings to
$26.9 million, or $.82 per diluted share, versus $18.5 million, or $.56 per
diluted share for the third quarter of 2003.
Third quarter sales, a record for any quarter in the company's history, reflect
a 3.7% increase in the Company's ongoing business in addition to approximately
$20.4 million dollars in incremental sales from acquisitions owned for less
than a year. Sales gains were recorded in the Activewear Group, the Athletic
Group and the International segment.
"We are pleased that we have continued to increase sales, profitability and
market share in our Activewear business, where the gains were led by
double-digit sales increases in the Artwear market," said Jack Ward, chairman
and chief executive officer. "Sales increases were more modest in the Athletic
Group, due to some softness at certain retailers."
Gross profit was $121.8 million, or a 28.8% gross margin, for the 2004 third
quarter versus a gross profit of $112.6 million, or a 29.0% gross margin, in
the prior year. The positive impact of increased revenues and cost improvements
was affected by higher year-over-year costs of fiber, transportation, energy
and other increased costs, as well as continued pricing pressure.
Selling, general and administrative expenses ("SG&A") for the 2004 third
quarter were $78.3 million, or 18.5% of net sales, versus $73.6 million, or
19.0% of net sales, in the comparable period last year.
Operating income increased by 17% to $44 million in the third quarter of 2004.
The dilution of the Huffy Sports acquisition amounted to approximately $.02 per
share in the quarter.
For the third quarter of 2004, the effective tax rate was 23.3%, reflecting a
$4.5 million benefit resulting from the closure of federal tax audits for 2002
and prior years.
YEAR-TO-DATE RESULTS
For the nine months ended October 3, 2004, net sales were up $80.3 million to
$964.2 million, a 9.1% increase over the prior year's sales of $883.9 million.
Gross profit was $266.8 million, or a 27.7% gross margin, for the first nine
months of fiscal 2004 versus a gross profit of $252.8 million, or a 28.6% gross
margin, in the prior year. SG&A expenses for the first nine months of fiscal
2004 were $196.1 million, or 20.3% of net sales, versus $181.5 million, or
20.5% of net sales, in the comparable period last year.
Operating income for the first nine months of 2004 increased $7.4 million, or
10.8%, over the like period of 2003.
On a year-to-date basis, for the period ended October 3, 2004, net income
increased $9.0 million to $37.6 million, or $1.15 per diluted share, versus
$28.6 million, or $.87 per diluted share, in the comparable period last year.
OUTLOOK
"We continue to be pleased with our progress in integrating the recent
acquisitions of American Athletic, Inc. ("AAI") and Huffy Sports into our
Spalding organization. In addition to solidifying Russell's position as a
leading branded athletic and sporting goods company, these businesses provide a
broader array of products for both our retail and team partners," said Ward.
"With our current breadth and depth of sporting goods products and brands, we
anticipate additional opportunities across new markets, customers and
categories. We also expect to capitalize on our position as the largest
basketball equipment company in the world."
Russell continues to expect that sales for the 2004-year will fall in the range
of $1.30 billion to $1.33 billion, a 9% to 12% increase over the $1.186 billion
recorded in 2003. Additionally, the Company now expects to report fiscal 2004
earnings of $1.45 to $1.55 on a fully diluted per share basis. Fourth quarter
2004 earnings are now expected to be in the $.30 to $.40 range on a diluted per
share basis, including dilution of approximately 6 cents per share in the
quarter from the acquisition of Huffy Sports and other special projects and
activities.
"The benefits of anticipated sales increases and ongoing savings initiatives
are expected to be offset in the fourth quarter by increases in fiber,
transportation and energy, start-up costs associated with the new Merendon
facility in Honduras and continued pricing pressures in the Artwear market,"
said Ward. Additionally, the Company expects to record an effective tax rate in
the 35% to 36% range in the fourth quarter.
Ward added, "Looking into next year, we intend to provide 2005 guidance of our
expected sales and EPS increases in our year-end conference call, after
completion and approval of the 2005 annual business plan."
For fiscal 2005, the expected sales increases, ongoing cost savings programs,
and the benefits of lower year-over-year cotton prices are expected to be
partially offset by continued pricing pressure, year-
over-year cost increases in polyester fibers, transportation, energy, pension
and medical insurance expenses, as well as other costs. The construction of the
Merendon textile facility in Russell's Honduran operating company continues to
be on schedule for a first quarter 2005 start-up, with full capacity expected
to be achieved in the first half of 2006.
It is further anticipated that the implementation of a new international
operating structure will result in an effective tax rate of 34% or below for
fiscal 2005. The effective tax rate is expected to vary quarter by quarter
based on the actual profit results by entity and country, and does not assume
any tax benefit from the American Jobs Creation Act of 2004.
CONFERENCE CALL INFORMATION
Management will have a conference call today, October 28, 2004, at 8:30 a.m.
Eastern Time to discuss the third quarter results. The call may be accessed at
(877) 264 -7865 (domestically), and (706) 634-4917 (internationally), using
conference call ID number 1659215. The call will also be simultaneously web cast
via the Investor Relations homepage of the Company's website at
http://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 and sporting goods 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), Spalding(R), AAI(R),
Huffy Sports(R), Mossy Oak(R), Bike(R), Moving Comfort(R), Dudley(R),
Sherrin(R), Cross Creek(R) and Discus(R). The Company's common stock is listed
on the New York Stock Exchange under the symbol RML and its website address is
http://www.russellcorp.com.
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
Russell believes are reasonable and relate to its future prospects,
developments and business strategies. Factors that could cause Russell's actual
results to differ materially from those expressed or implied in such
forward-looking statements include, but are not limited to: (a) risks related
to Russell's overall acquisition strategy, including the acquisitions of AAI
and Huffy Sports; (b) risks related to Russell's ability to realize synergies
from the combination of AAI, Huffy Sports and Spalding; (c) Russell's ability
to achieve sales growth through expanded or new business with new or existing
customers; (d) changes in customer demand for Russell's products, significant
competitive activity and related pricing pressure; (e) raw material price
volatility and increases in pension, medical insurance and other operating
costs; (f) risks related to start-up of Russell's textile facility in Honduras;
and (g) other risk factors listed in Russell's reports filed with the
Securities and Exchange Commission from time to time. Russell undertakes no
obligation to revise the forward-looking statements included in this Press
Release to reflect any future events or circumstances. Russell's actual
results, performance or achievements could differ materially from the results
expressed in or implied by these forward-looking statements.
- Tables to follow -
RUSSELL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
13 WEEKS 13 WEEKS 39 WEEKS 39 WEEKS
ENDED ENDED ENDED ENDED
10/3/04 10/5/03 10/3/04 10/5/03
------------ ------------ ------------ ------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
Net sales $ 422,656 $ 388,001 $ 964,220 $ 883,909
Cost of goods sold 300,853 275,394 697,439 631,094
------------ ------------ ------------ ------------
Gross profit 121,803 112,607 266,781 252,815
Selling, general and
administrative expenses 78,258 73,627 196,050 181,504
Other (income) expense - net (443) 1,382 (5,179) 2,801
------------ ------------ ------------ ------------
Operating income 43,988 37,598 75,910 68,510
Interest expense, net 8,222 7,826 23,163 22,436
Non-controlling interest 666 -- 940 --
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Income before income taxes 35,100 29,772 51,807 46,074
Provision for income taxes 8,161 11,313 14,175 17,508
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Net income $ 26,939 $ 18,459 $ 37,632 $ 28,566
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Weighted-average common shares
outstanding:
Basic 32,691,064 32,451,194 32,639,512 32,337,036
Diluted 32,901,106 32,815,822 32,861,790 32,692,172
Net income per common share:
Basic $ 0.82 $ 0.57 $ 1.15 $ 0.88
Diluted $ 0.82 $ 0.56 $ 1.15 $ 0.87
Cash dividends per common share $ 0.04 $ 0.04 $ 0.12 $ 0.12
RUSSELL CORPORATION
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
10/3/04 1/3/04 10/5/03
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(UNAUDITED) (1) (UNAUDITED)
ASSETS
Current assets:
Cash $ 37,361 $ 20,116 $ 22,480
Accounts receivable, net 289,325 175,514 272,927
Inventories 385,203 346,946 357,692
Prepaid expenses and other current assets 18,354 15,938 13,248
Income tax receivable 2,799 14,585 --
----------- ----------- -----------
Total current assets 733,042 573,099 666,347
Property, plant & equipment, net 316,077 303,234 307,858
Other assets 151,003 144,777 142,581
----------- ----------- -----------
Total assets $ 1,200,122 $ 1,021,110 $ 1,116,786
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 102,719 $ 78,368 $ 93,699
Accrued expenses 85,062 76,993 85,870
Deferred income taxes 6,615 5,165 5,647
Income tax payable -- -- 4,319
Short-term debt 13,831 4,088 1,745
Current maturities of long-term debt 4,405 5,000 2,500
----------- ----------- -----------
Total current liabilities 212,632 169,614 193,780
Long-term debt, less current maturities 359,115 272,355 362,581
Deferred liabilities:
Income taxes 6,604 6,609 9,377
Pension and other 53,119 57,668 52,198
Non-controlling interest 13,015 -- --
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 40,377 38,625 40,409
Retained earnings 746,801 713,310 700,028
Treasury stock, at cost (8,752,669 shares at 10/3/04;
8,897,075 shares at 1/3/04 and 8,940,671 shares at 10/5/03) (203,976) (208,038) (209,951)
Accumulated other comprehensive loss (27,979) (29,447) (32,050)
----------- ----------- -----------
Total stockholders' equity 555,637 514,864 498,850
----------- ----------- -----------
Total liabilities & stockholders' equity $ 1,200,122 $ 1,021,110 $ 1,116,786
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(1) - Derived from audited financial statements.
RUSSELL CORPORATION
UNAUDITED FINANCIAL HIGHLIGHTS
(DOLLARS IN THOUSANDS)
13 WEEKS 13 WEEKS 39 WEEKS 39 WEEKS
ENDED ENDED ENDED ENDED
10/3/04 10/05/03 10/3/04 10/05/03
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Domestic Segment
Brand Groupings:
Athletic $182,925 $169,342 $413,981 $355,022
Activewear 208,071 190,697 455,735 450,837
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390,996 360,039 869,716 805,859
International Segment 31,660 27,962 94,504 78,050
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Consolidated total $422,656 $388,001 $964,220 $883,909
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