|
|
|
|
|
|
|
|
|
|
|
|
|
<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 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)
<PAGE> 2
RUSSELL CORPORATION
Index
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
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
</TABLE>
-1-
<PAGE> 3
PART I - FINANCIAL INFORMATION
RUSSELL CORPORATION
Consolidated Condensed Balance Sheets
(Dollars in Thousands)
<TABLE>
<CAPTION>
April 2 December 31
1995 1994
----------- -----------
ASSETS (Unaudited) (Audited)
------
<S> <C> <C>
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
========== ==========
</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 2 April 3
1995 1994
------------- ---------------
<S> <C> <C>
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
</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 2 April 3
1995 1994
---------- ------------
<S> <C> <C>
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
======== ========
</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 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-
<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 2, 1995 and April 2, 1995 and
April 3, 1994 December 31, 1994
----------------- -------------------
Increase (Decrease)
(Dollars in Thousands)
<S> <C> <C> <C> <C>
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)
</TABLE>
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-
<PAGE> 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-
<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 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:
<TABLE>
<CAPTION>
Name For Withheld
---- --- --------
<S> <C> <C>
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
</TABLE>
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-
<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 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-
<PAGE> 11
Index to Exhibits
<TABLE>
<CAPTION>
Exhibit No. Page No.
- ----------- --------
<S> <C>
11 Computation of Earnings Per Share 11
27 Financial Data Schedule (for SEC use only)
</TABLE>
-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
----------------------
4/2/95 4/3/94
-------- --------
<S> <C>
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
</TABLE>
-11-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
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.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-END> APR-02-1995
<CASH> 7,332
<SECURITIES> 1,446
<RECEIVABLES> 215,578
<ALLOWANCES> 10,606
<INVENTORY> 313,255
<CURRENT-ASSETS> 543,702
<PP&E> 949,887
<DEPRECIATION> 489,107
<TOTAL-ASSETS> 1,079,162
<CURRENT-LIABILITIES> 235,102
<BONDS> 144,100
<COMMON> 414
0
0
<OTHER-SE> 623,686
<TOTAL-LIABILITY-AND-EQUITY> 1,079,162
<SALES> 248,315
<TOTAL-REVENUES> 248,315
<CGS> 171,435
<TOTAL-COSTS> 171,435
<OTHER-EXPENSES> 50,949
<LOSS-PROVISION> 1,176
<INTEREST-EXPENSE> 4,594
<INCOME-PRETAX> 20,161
<INCOME-TAX> 7,929
<INCOME-CONTINUING> 12,232
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,232
<EPS-PRIMARY> 0.31
<EPS-DILUTED> 0.31
</TABLE>
|
|