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Previous: REPUBLIC NEW YORK CORP, 424B5, 1994-05-18 |
Next: SAUL B F REAL ESTATE INVESTMENT TRUST, 424B3, 1994-05-18 |
<PAGE> 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 3, 1994 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 16, 1994
- - - -------------------------------------- ---------------------------
Common Stock, Par Value $.01 Per Share 40,060,929 shares
(Excludes Treasury)
<PAGE> 2
RUSSELL CORPORATION
Index
Page No.
--------
Part I. Financial Information:
Consolidated Condensed Balance Sheets--
April 3, 1994 and January 1, 1994 2
Consolidated Condensed Statements of Income--
Thirteen Weeks Ended April 3, 1994 and
April 4, 1993 3
Consolidated Statements of Cash Flows--
Thirteen Weeks Ended April 3, 1994 and
April 4, 1993 4
Notes to Consolidated Condensed Financial
Statements 5
Management's Discussion and Analysis of
Results of Operations and Financial
Condition 6
Part II. Other Information 8
Index to Exhibits 10
Exhibit 11 - Computation of Earnings Per
Share 11
-1-
<PAGE> 3
PART I - FINANCIAL INFORMATION
RUSSELL CORPORATION
Consolidated Condensed Balance Sheets
(Dollars in Thousands)
<TABLE>
<CAPTION>
April 3 January 1
1994 1994
----------- ---------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
------
Current Assets:
Cash $ 4,080 $ 3,897
Accounts receivable, net 194,863 176,949
Inventories:
Finished goods 245,446 243,876
In process 35,572 30,382
Raw materials and supplies 40,808 41,102
---------- ----------
321,826 315,360
LIFO reserve (33,006) (36,740)
---------- ----------
288,820 278,620
Prepaid expenses and other current assets 11,972 14,122
---------- ----------
Total current assets 499,735 473,588
Property, Plant and Equipment, net 481,153 490,886
Other Assets 63,291 52,570
---------- ----------
Total assets $1,044,179 $1,017,044
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Short-term debt $ 129,125 $ 95,188
Accounts payable and accrued expenses 66,809 58,787
Federal and state income taxes 9,040 21,471
Current maturities of long-term debt 20,111 20,150
---------- ----------
Total current liabilities 225,085 195,596
Long-term debt, less current maturities
and unamortized debt discount 163,276 163,334
Deferred Liabilities 68,578 70,463
Shareholders' Equity:
Common Stock, at par value 414 414
Paid-in capital 53,870 49,040
Retained earnings 576,171 566,789
Currency translation adjustment ( 5,891) ( 5,552)
---------- ----------
624,564 610,691
Treasury Stock, at cost (37,324) (23,040)
---------- ----------
Total shareholders' equity 587,240 587,651
---------- ----------
Total liabilities & shareholders' equity $1,044,179 $1,017,044
========== ==========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
-2-
<PAGE> 4
RUSSELL CORPORATION
Consolidated Condensed Statements of Income
(Dollars in Thousands Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
13 Weeks Ended
--------------------------------
April 3 April 4
1994 1993
----------- -----------
<S> <C> <C>
Net sales $ 232,118 $ 204,654
Costs and expenses:
Cost of goods sold 155,883 134,003
Selling, general and
administrative expenses 50,669 43,147
Interest expense 4,010 4,242
Other - net (income) (587) 701
----------- -----------
209,975 182,093
----------- -----------
Income before income taxes 22,143 22,561
Provision for income taxes 8,777 6,528
----------- -----------
Net income after taxes 13,366 16,033
Preferred Stock dividends -- 6
----------- -----------
Net income applicable
to Common Shares $ 13,366 $ 16,027
=========== ===========
Weighted average number of common and
common equivalent shares outstanding 40,189,143 41,277,150
Earnings per common and
common equivalent share $ .33 $ .39
Cash dividends per common share $ .10 $ .09
</TABLE>
See accompanying notes to consolidated condensed financial statements.
-3-
<PAGE> 5
RUSSELL CORPORATION
Consolidated Statements of Cash Flows
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
13 Weeks Ended
-----------------------------
April 3 April 4
1994 1993
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities
Net income $ 13,366 $ 16,033
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization 17,314 17,651
Deferred income taxes 1,130 857
Gain on sale of equipment (765) (25)
Changes in Assets and Liabilities:
Accounts receivable (18,131) (21,675)
Inventories (10,620) (40,436)
Prepaid expenses 2,903 1,684
Accounts payable & accrued expenses 4,836 5,483
Income taxes payable (12,431) (407)
Accrued liabilities (3,757) (4,871)
Other assets (989) 1,230
-------- --------
Net cash used in operating activities ( 7,144) (24,476)
Cash Flows from Investing Activities
Purchases of property, plant & equipment ( 7,575) (24,373)
Proceeds from sale of equipment 923 194
-------- --------
Net cash used in investing activities ( 6,652) (24,179)
Cash Flows from Financing Activities
Cost of Common Stock for treasury (20,457) --
Payments on long-term debt (92) (1,382)
Short-term borrowings 37,553 51,872
Dividends on Common Stock (3,985) (3,677)
Dividends on Preferred Stock -- (6)
Distribution of treasury shares 1,003 658
-------- --------
Net cash provided by financing activities 14,022 47,465
Effect of exchange rate changes on cash (43) (16)
-------- --------
Net increase (decrease) in cash 183 (1,206)
Cash balance at beginning of period 3,897 6,095
-------- --------
Cash balance at end of period $ 4,080 4,889
======== ========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
-4-
<PAGE> 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 3, 1994, and January 1, 1994, and the
results of operations and cash flows for the thirteen weeks ended April 3,
1994 and April 4, 1993.
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 January 1, 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 3, 1994,
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, results in DeSoto Mills, Inc. becoming a
wholly owned subsidiary of the Company.
-5-
<PAGE> 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:
<TABLE>
<CAPTION>
Comparison of
------------------------------------------------------------
Quarter Ended Quarter Ended
April 3, 1994 and April 3, 1994 and
April 4, 1993 January 1, 1994
------------------------------------------------------------
Increase (Decrease)
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Net sales $ 27,464 13.4% $ (18,332) (7.3)%
Cost of goods sold 21,880 16.3 (3,161) (2.0)
Selling, general and
administrative expenses 7,522 17.4 1,222 2.5
Interest expense (232) (5.5) 147 3.8
Other - net (1,288) N/A (967) N/A
Income before income taxes (418) (1.9) (15,573) (41.3)
Provision for income taxes 2,249 34.5 (4,814) (35.4)
Net income applicable
to common shares (2,661) (16.6) (10,756) (44.6)
</TABLE>
Sales increases for the first quarter of 1994 reflect solid demand for
the Company's cotton T-shirts, strong international growth and the effect of the
acquisition of The Game Inc. which occurred on December 23, 1993. Higher sales
levels were achieved despite pricing promotions initiated during the quarter on
T-shirts by other activewear manufacturers.
Gross margins were impacted by the aforementioned price competition on
T-shirts and by less than optimal plant operating schedules. Selling, general
and administrative expenses rose primarily as a result of the inclusion of The
Game Inc. Advertising expense was comparable to that in last year's first
quarter.
Interest expense declined due to slightly lower levels of short-term
debt. Other income was derived mainly from interest, rental income and the
disposition of certain fixed assets. The provision for income tax was higher
principally due to the adoption of FASB 109 which reduced the first quarter 1993
provision.
-6-
<PAGE> 8
FINANCIAL CONDITION
The Company's financial condition remained strong with long-term debt to
total capitalization of 21.8%. The statement of cash flows reflects that $7.6
million was invested in the capital program during the first quarter of 1994.
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 $238 million in informal lines of credit.
Other assets increased due to goodwill arising from the acquisition of
The Game Inc. and due to the $10 million stock acquisition of DeSoto Mills, Inc.
on April 1, 1994. DeSoto is one of the top ten sock manufacturers, making
sports and casual socks for men, women and children. The purchase price of
DeSoto was included in other assets pending allocation of the total purchase
price.
During the quarter, the Company agreed to acquire the trademarks and
licenses of Chalk Line, Inc. for $5.8 million. This transaction is expected to
close in the second quarter and will add brand names including Chalk Line(R),
Stadium Club(R) and Locker Line(R).
As mentioned in the annual report, the Company placed some of its
operations on reduced work schedules as a result of industry-wide inventory
imbalances. Based upon the improved outlook for activewear demand, the
Company's plants are now operating at more normal rates.
-7-
<PAGE> 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 27, 1994.
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
---- --- --------
John C. Adams 38,180,031 283,770
Crawford T. Johnson III 38,179,437 284,364
James D. Nabors 38,180,381 283,420
Benjamin Russell 38,180,278 283,523
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
b) Reports on Form 8-K - there were no reports on Form 8-K filed for the
period ended April 3, 1994.
-8-
<PAGE> 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 17, 1994 /S/James D. Nabors
------------------- --------------------------------
James D. Nabors
Executive Vice President and
Chief Financial Officer
(For the Registrant and as
Principal Financial Officer)
-9-
<PAGE> 11
Index to Exhibits
Exhibit No. Page No.
- - - ----------- --------
11 Computation of Earnings Per Share 11
-10-
<PAGE> 1
EXHIBIT 11
RUSSELL CORPORATION
Computation of Earnings Per Share
(Dollars in Thousands Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
13 Weeks Ended
-------------------------
4/3/94 4/4/93
----------- ----------
<S> <C> <C>
Net income $ 13,366 $ 16,027
=========== ===========
Shares:
Weighted average common
shares outstanding 39,971,389 40,842,898
Net common shares issuable
on exercise of certain
stock options 217,754 434,252
----------- -----------
Average common and common
equivalent shares
outstanding 40,189,143 41,277,150
=========== ===========
Earnings per common and
common equivalent share $ .33 $ .39
</TABLE>
-11-
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