<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ----- EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ----- EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
--------------- --------------------
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.)
755 Lee Street
Alexander City, Alabama 35011-0272
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (205) 329-4000
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
Name of Each Exchange
Title of Each Class on Which Registered
------------------- ---------------------
<S> <C>
Common Stock, $.01 par value New York Stock Exchange
Pacific Stock Exchange
</TABLE>
Securities registered pursuant to Section 12(g) of the Act: 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, and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of Common Stock, par value $.01, held by
non-affiliates of the registrant, as of March 22, 1996, was approximately
$787,525,448.
As of March 22, 1996, there were 38,942,173 shares of Common Stock,
$.01 par value outstanding (excluding treasury shares).
-Continued-
<PAGE> 2
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Shareholders Report for the year ended December
30, 1995 are incorporated by reference into Parts II and IV.
Portions of the Proxy Statement for the Annual Meeting of Shareholders
to be held on April 24, 1996 are incorporated by reference into Part III.
<PAGE> 3
PART I
ITEM 1. Business
GENERAL
Russell Corporation (together with its subsidiaries, the "Company") is
a vertically integrated international manufacturer and marketer of activewear,
athletic uniforms, better knit shirts, licensed sports apparel, sports and
casual socks, and a comprehensive line of lightweight, yarn-dyed woven fabrics.
The Company's manufacturing operations include the entire process of converting
raw fibers into finished apparel and fabrics. Russell's products are marketed
through five sales divisions--Knit Apparel, Athletic, Licensed Products,
International, and Fabrics--as well as through Cross Creek Apparel, Inc. and
DeSoto Mills, Inc., two wholly owned subsidiaries. Products are marketed to
sporting goods dealers, department and specialty stores, mass merchandisers,
golf pro shops, college bookstores, screen printers, distributors, mail-order
houses, and other apparel manufacturers. There was no material change in the
nature of the business conducted by Russell Corporation during 1995.
Of the Company's total revenues, more than ninety percent are derived
from the sale of completed apparel, with the balance from woven fabrics.
During the two previous fiscal years ending December 31, 1994 and January 1,
1994, completed apparel accounted for more than ninety percent of total
revenues. Foreign and export sales for 1995 and each of the immediately
preceding two years were less than ten percent of total net sales. One
customer, Wal-Mart Stores, Inc., accounted for 15.1 percent of total revenues
in 1995, 13.1 percent in 1994 and 16.1 percent in 1993.
The Company produces athletic uniforms for most recognized sports
activities and for players of all ages and sizes. These products are marketed
to professional, collegiate, high school and other teams as well as to
individuals. Knit apparel, such as T-shirts, fleece sweatshirts and
sweatpants, pullovers, jackets, and other similar knitted products, is produced
for the general consumer market. Knit product lines also include knit placket
shirts, rugby-styled shirts and turtlenecks. The Company also produces sports
and casual socks including tube, quarter anklet and crew socks for men, women
and children. Woven fabrics are produced and sold to other apparel
manufacturers for men's, women's and children's wear.
The Company's principal manufacturing facilities are located in and
around Alexander City, Alabama. It also operates 32 additional plants in other
communities in Alabama, Florida, Georgia, North Carolina and Virginia.
Warehousing and shipping is conducted in Alexander City, Dothan and Montgomery,
Alabama; Marianna and Miami, Florida; Mt. Airy, North Carolina; Columbus,
Georgia; Chicago, Illinois; Sparks, Nevada; and Palisades Park, New Jersey.
The primary manufacturing and distribution facilities for Russell Corp. UK
Limited are located in and around Livingston, Scotland. The Company also
maintains warehouses in Mexico City, Mexico, San Juan del Rio, Mexico and
Melbourne, Australia. In 1996, the Company plans to begin apparel assembly in
a Company-operated facility in Honduras.
As a vertically integrated operation, the Company converts raw fibers
into finished apparel and fabrics utilizing company-owned spinning mills,
knitting and weaving equipment, dyeing and finishing facilities, and cutting
and sewing operations. Generally, the Company produces most of the yarns,
other than
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textured and filament yarns, used in the manufacturing process. As a result of
its integrated production process, substantially all functions required to
produce finished apparel and fabrics can be performed by the Company without
reliance upon outside contractors. The Company did, however, assemble 13
percent of the apparel at domestic and offshore contractors as well as rely on
outside suppliers for headwear and certain outerwear products.
The Company benefits from flexibility in its production scheduling
capability, permitting it to shift product emphasis as markets improve, change
or temporarily decline for particular products. This ability to respond
quickly to market changes has enabled the Company to more effectively manage
the utilization of its manufacturing capacity.
The Company's revenue and income are subject to minor seasonal
variations. However, due to the time which may elapse between the placement of
orders and shipment of goods, prices may or may not immediately reflect changes
in the Company's cost of raw materials and other costs. Working capital needs
may change with the increase or decrease in inventories or accounts receivable
as a result of a variety of credit terms and time between production and
shipments. Production schedules are based upon current orders, the history of
customer orders, market research, and similar factors. The Company has no
meaningful backlog figures.
The Company does not hold any significant patents, franchises or
concessions. The Company's ability to manufacture and sell licensed apparel
products is dependent upon licenses held by the Company to utilize various
trademarks and tradenames on such apparel. These licenses are subject to
periodic renewal and negotiation and certain minimum payments.
MANUFACTURING
The Company has the capability of converting raw fibers into finished
products in major production complexes which are complemented by several
satellite production facilities in the same geographic areas. The Company
emphasizes the utilization of technological advances and devotes a major
portion of its capital expenditure program to keeping its manufacturing
machinery and equipment modern and efficient.
The total process includes spinning of yarn from cotton and blends of
cotton and man-made fibers such as polyester; fabrication of knit and woven
fabrics; dyeing, bleaching, and otherwise finishing those fabrics; and
manufacturing finished apparel in various cutting and sewing operations. These
operations are discussed below:
Yarn Manufacturing - The spinning of yarns, the process by which
fibers of raw cotton and blends of cotton and man-made fibers are converted
into continuous strands, is a key operation in the manufacturing process. Yarn
uniformity and strength are the principal characteristics which materially
affect the efficiency of subsequent manufacturing processes and the quality of
the finished fabrics or apparel. The Company manufactures a variety of yarn
sizes for various end uses.
The Company purchases synthetic fibers from one principal supplier.
There are approximately four major producers of such fibers in the United
States. The Company purchases cotton, primarily grown in the Southeastern
region, from various
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cotton merchants. The Company also purchases all of its requirements of
filament and textured yarns from other manufacturers. The Company has
experienced no material difficulty in purchasing adequate supplies, and does
not presently anticipate any difficulties in the future. The Company has no
long-term contracts for the supply of raw materials and is, therefore, subject
to market price fluctuations.
Fabrication - The yarns described above are converted by the Company
into cloth or fabrics through the processes of single knitting, supplemented by
smaller operations of weaving, double knitting and warp knitting. These
operations are conducted in four plant locations in Alexander City and
Prattville, Alabama. Fabrication facilities for Cross Creek are located in Mt.
Airy and North Wilkesboro, North Carolina. Additional knitting is done on a
contract basis to support the sock line. Similar fabrication facilities in
Livingston, Scotland, service Russell Corp. UK Limited.
Dyeing and Finishing - Fabrics described above are either used in the
production of the Company's own apparel or sold to others. These fabrics are
dyed and finished in company-owned facilities in Alexander City, Sylacauga and
Ft. Payne, Alabama; Mt. Airy, North Carolina; and Livingston, Scotland.
Yarn-dyed fabrics are dyed in the yarn manufacturing stage. The dyeing and
finishing processes impart and affect the appearance, the hand (feel),
colorfastness, uniformity, shade, and stability (retention of shape and form)
of the fabric.
Cutting and Sewing - The Company's cutting and sewing operations are
currently located in 33 plants in the U.S. and two plants in Scotland which
serve its apparel marketing operations. The Company employs an engineering
staff to assist in the design and development of new equipment to improve
efficiencies and automate production facilities in the cutting and sewing
operations which historically have been characterized by high labor costs.
The Company places a major emphasis upon maintaining sufficient modern
cutting and sewing equipment, thereby providing flexibility to accommodate
changing patterns, styles and designs of its apparel products.
MARKETING
Knit Apparel Division - Under the JERZEES label and private labels,
this division designs and markets a wide variety of knitted apparel, including
fleece sportswear, such as sweatshirts, sweatpants and other fashion items, and
lightweight sportswear, such as T-shirts, tank tops, and shorts for children
and adults. The Company signed an exclusive licensing agreement in 1993 to
introduce a line of women's and girls' activewear under the chic(R) brand name
in the United States and in 1995 extended that agreement to include H.I.S.(R)
which is a supplemental license for men's sportswear.
The apparel is sold by a salaried, company-employed salesforce to
distributors, screen printers, mass merchants, craft chains and other
specialized retail outlets. The Division maintains sales offices in Alexander
City, Alabama; New York, New York; Irving, Texas; and Irvine, California.
Athletic Division - RUSSELL ATHLETIC produces and markets high-quality
teamwear and knit activewear through distribution partners including sporting
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goods dealers, specialty stores, department stores, sporting goods chains, and
major mail-order catalogues. Sales are made by Company employees.
The Company has a dominant position as a supplier of team uniforms,
providing practice and game uniforms for both professional and amateur
participants of almost every major sport. Russell is the "official" supplier
of team uniforms for Major League Baseball teams. The Company believes it is
the largest manufacturer of athletic uniforms in the United States.
Activewear such as sweatshirts, sweatpants, T-shirts, tank tops, and
shorts are also sold under the RUSSELL ATHLETIC label. The Company
merchandises the RUSSELL ATHLETIC line in product categories such as NuBlend,
HIGH COTTON, and PRO COTTON.
The Company furnishes most of its own yarn and fabric used in this
division and also supplements its requirements with purchases from outside
suppliers. The uniforms are manufactured in a wide variety of styles, fabrics
and colors, with lettering and numerical arrangements available to customer
specifications.
Licensed Products Division - The Company is a leading factor in the
licensed sports apparel market, selling its products under licenses granted by
Major League Baseball, the National Football League, the National Basketball
Association, the National Hockey League, the National Collegiate Athletic
Association, the 1996 Olympics,the PGA Tour and most major colleges and
universities. Products include various headwear, activewear and outerwear
items. The Company has the exclusive rights to market authentic game jerseys
under Major League Baseball Properties' Authentic Diamond Collection.
These products are sold through commission sales representatives and a
company-employed salesforce to retailers across the nation. Distribution
channels include specialty athleticwear stores, department stores, licensed
product specialty stores, full-line sporting goods stores, college bookstores,
concessionaires, and souvenir and gift stores.
The Licensed Products Division was formed in 1994 to coordinate the
Company's domestic licensed products business, including The Game, the licensed
products of Russell Athletic and the Chalk Line family of brands. As part of
this effort, The Game Inc. subsidiary was merged into Russell Corporation
effective December 31, 1994.
International Division - The International Division markets the
JERZEES, RUSSELL ATHLETIC and CROSS CREEK brands throughout various countries
outside the United States. It also handles the Company's licensed products
efforts outside the U.S. and Canada. The Company's major international market
is Europe with both manufacturing and marketing.
Russell's European production operations include knitting, dyeing and
finishing, cutting and sewing, and distribution facilities in and around
Livingston, Scotland. Russell has developed an international sales
infrastructure with offices in Alicante, Spain; Brussels, Belgium; Frankfurt,
Germany; Paris, France; Prague, Czech Republic; Prato, Italy; Hong Kong; Sao
Paulo, Brazil; and Melbourne, Australia.
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Fabrics Division - The Fabrics Division designs and markets quality
woven fabrics of cotton and blends of cotton and man-made fibers in a wide
variety of patterns, colors and constructions for sale primarily to other
manufacturers of apparel. Most of the woven fabrics are made with dyed yarns to
produce fabrics to meet customer specifications. Sales are made by the
Company's own marketing staff from its Alexander City, Atlanta, and New York
sales offices and also by commission sales representatives located in Dallas,
New York and Toronto.
Cross Creek Apparel, Inc. - Cross Creek designs and markets better
knit apparel including placket shirts, turtlenecks and rugbys. The CROSS CREEK
PRO COLLECTION, designed specifically for golfers, is sold in golf pro shops
and resort areas. The CROSS CREEK retail line is distributed through
department stores and men's specialty shops. The CROSS CREEK COUNTRY COTTONS
and JERZEES lines of placket shirts are marketed through national distributors
to screen printers and embroiderers. CROSS CREEK also manufactures private
label apparel for high-end catalogues and other retailers. In addition to
commission agents, Cross Creek maintains a company-employed sales force with
offices in Mt. Airy, North Carolina and New York, New York.
DeSoto Mills, Inc. - DeSoto Mills, Inc., is a finisher/manufacturer of
popularly priced socks for men, women and children. DeSoto Mills produces and
sells sports and casual socks under the brand names of JERZEES, DeSoto Player's
Club, Athletic Club, Performance Club, and Player's Performance. Socks are
also sold to private label customers and under licensing agreements such as
Beverly Hills Polo Club and Hytest. Sales are made through a Company-employed
sales force principally to the wholesale club market and to discount retailers.
DeSoto Mills, Inc. was acquired March 29, 1994 in a stock transaction
valued at approximately $10,000,000. DeSoto Mills, Inc. is operated as a
wholly owned subsidiary of Russell Corporation.
COMPETITION
The textile-apparel industry is keenly competitive, and the Company
has many domestic and foreign competitors, both large textile-apparel companies
and smaller concerns. While the sales of a number of manufacturers are
substantially greater than those of the Company, no single manufacturer
dominates the industry.
EMPLOYEES
As of December 30, 1995, the Company had 17,766 employees. The
Company has never had a strike or work stoppage and considers its relationship
with its employees to be good.
REGULATION
The Company is subject to federal, state, and local laws and
regulations affecting its business, including those promulgated under the
Occupational Safety
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and Health Act (OSHA), the Consumer Product Safety Act (CPSA), the Flammable
Fabrics Act, the Textile Fiber Product Identification Act, and the rules and
regulations of the Consumer Products Safety Commission (CPSC). The Company
believes that it is in substantial compliance with all applicable governmental
regulations under these statutes. The Company has complied with all known
current environmental requirements and expects no major additional expenditures
in this area in the foreseeable future.
ITEM 2. Properties
The Company's principal executive offices, manufacturing plants and
research facilities are located in Alexander City, Alabama, with additional
plants in Alabama, Florida, Georgia, Nevada, North Carolina, Virginia and (in
and around) Livingston, Scotland. The Company has no material mortgages on any
of its real property or manufacturing machinery except for capitalized lease
obligations (see Note 4 of Notes to Consolidated Financial Statements), and
believes that all of its properties are well maintained and suitable for its
operations and are currently fully utilized for such purposes.
The Company utilizes an aggregate of approximately 10,988,400 square
feet of manufacturing, warehousing and office facilities. The following table
summarizes the approximate areas of such facilities:
<TABLE>
<CAPTION>
Approximate
Primary Use Square Feet
----------- -----------
<S> <C>
Spinning 1,555,500
Knitting and Weaving 842,400
Dyeing and Finishing 705,000
Cutting and Sewing 2,146,100
Warehousing and Shipping 4,480,000
Retail/Outlet Stores 143,400
Executive Offices, Maintenance Shops
and Research and Development 596,700
Scotland 468,900
Mexico 50,400
</TABLE>
All presently utilized facilities in the U.S. are owned, except the
Montgomery and Greenville, Alabama, sewing plants; Columbus, Georgia and
Sparks, Nevada distribution facilities; several regional warehouses; the
regional sales offices; and the majority of the outlet/retail store locations
(see Notes 4 and 11 of Notes to Consolidated Financial Statements).
ITEM 3. Legal Proceedings
The Company is a party to various lawsuits arising out of the conduct
of its business, none of which, if adversely determined, would have a material
adverse affect upon the Company.
ITEM 4. Submission of Matters to a Vote of Security Holders
None
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<PAGE> 9
EXECUTIVE OFFICERS OF THE COMPANY
"Election of Directors" on pages one through four of the Proxy
Statement for the Annual Meeting of Shareholders to be held April 24, 1996 is
incorporated herein by reference.
Additional executive officers who are not directors are as follows:
<TABLE>
<CAPTION>
Officer
Name Age Since Position
---- --- ------- --------
<S> <C> <C> <C>
Fred O. Braswell III 40 1992 Vice President-External Affairs
Steve R. Forehand 40 1987 Secretary
Thomas R. Johnson, Jr. 53 1989 Executive Vice President-Manufacturing
W. J. Spires, Jr. 50 1988 President - Cross Creek Apparel, Inc.
JT Taunton, Jr. 53 1983 Executive Vice President-Sales and Marketing
Larry E. Workman 52 1987 Controller
</TABLE>
Mr. Braswell, employed by the Company in 1992, was Director of the
Alabama Development Office from 1990 until 1992. Prior to 1990, he was
Director of the Alabama Department of Economic and Community Affairs.
Mr. Forehand, employed by the Company in 1985 as Director of Taxes,
served as Assistant Secretary from 1987 to 1988. Prior to joining the Company,
he was engaged in the private practice of law.
Mr. Johnson, employed by the Company since 1989, most recently served
as Vice President, Greige Manufacturing. Prior to joining Russell, he served
as Operations Manager for Eden Yarns, Inc. from 1987 to 1989 and as a Plant
Manager for Avondale Mills from 1984 to 1987. Prior to that, Mr. Johnson was
employed by Chicopee, a division of Johnson & Johnson.
Mr. Spires, employed by the Company in 1969, was elected President,
Cross Creek Apparel, Inc. in 1993. Prior to that, he served from 1988 to 1993
as Vice President, Services, where he directed the Company's Distribution,
Transportation and Information Services activities. Prior to 1988, Mr. Spires
held several management positions with Russell in both sales and operations.
Mr. Taunton, employed by the Company since 1973, most recently served
as President of the Fabrics Division from 1988 to 1993. Prior to that, he
served as Vice President, Operations and as Operations Manager for the Fabrics
Division.
Mr. Workman, employed by the Company since 1969 as an accountant,
served as Manager of Cost Accounting from 1970 to 1987.
All executive officers and all other officers of the Company are
elected by the Board of Directors and serve at the pleasure of the Board of
Directors.
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<PAGE> 10
PART II
ITEM 5. Market for the Registrant's Common Stock and Related Security
Holder Matters
"Dividend and Market Information" on page 33 and in Note 4 to
Consolidated Financial Statements on page 28 of the Annual Shareholders Report
for the year ended December 30, 1995 are incorporated herein by reference.
The approximate number of holders of the Company's common stock at
March 11, 1996 was 12,300.
ITEM 6. Selected Financial Data
"Financial Review" on pages 18 and 19 of the Annual Shareholders
Report for the year ended December 30, 1995 is incorporated herein by
reference.
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" on page 20 of the Annual Shareholders Report for the
year ended December 30, 1995 is incorporated herein by reference.
ITEM 8. Financial Statements and Supplementary Data
The following consolidated financial statements of the registrant and
its subsidiaries, included in the Annual Shareholders Report for the year ended
December 30, 1995 are incorporated herein by reference:
... Consolidated balance sheets - December 30, 1995 and
December 31, 1994
... Consolidated statements of income - Years ended December 30,
1995, December 31, 1994 and January 1, 1994
... Consolidated statements of cash flows - Years ended
December 30, 1995, December 31, 1994 and January 1, 1994
... Consolidated statements of stockholders' equity - Years ended
December 30, 1995, December 31, 1994 and January 1, 1994
... Notes to consolidated financial statements - Years ended
December 30, 1995, December 31, 1994 and January 1, 1994
... Report of Independent Auditors
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
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PART III
ITEM 10. Directors and Executive Officers of the Registrant
"Election of Directors" on pages one through four and "Principal
Shareholders" on pages 13 and 14 of the Proxy Statement for the Annual Meeting
of Shareholders to be held April 24, 1996 is incorporated herein by reference.
"Executive Officers of the Company" on page I-7 of this report is
incorporated herein by reference.
Other significant employees are as follows:
<TABLE>
<CAPTION>
Officer
Name Age Since Position
---- --- ------- --------
<S> <C> <C> <C>
Fletcher D. Adamson 61 1987 Vice President-Research
William P. Dickson, Jr. 55 1974 Vice President-Human Resources
J. Franklin Foy 60 1982 Vice President-Dyeing and Finishing
John E. Frechette 56 1991 Vice President-International
Jerry W. Green 52 1990 Vice President-Apparel Operations
K. Roger Holliday 37 1988 President-Licensed Products Division
Joseph P. Irwin 38 1994 President-Knit Apparel Division
D.W. Wachtel 57 1991 President-Athletic Division
</TABLE>
Mr. Adamson, employed by the Company since 1955, was Director, Machine
Research and Development from 1969 to 1987. He began his career in the cutting
operation for the Athletic Division and was a Supervisor in the division's
sewing operations from 1960 to 1969.
Mr. Dickson, employed by the Company in 1974, was previously
Industrial Relations Manager for the Bibb Company.
Mr. Foy, employed by the Company since 1959, was Operating Vice
President, Dyeing and Finishing prior to 1982.
Mr. Frechette, employed by the Company in 1991, operated J.F. &
Associates from 1986 to 1991. J.F. & Associates provided general management
and marketing consulting with focus on the apparel industry. Prior to 1986, he
was employed by Levi Strauss & Company for 15 years, most recently, as Vice
President and General Manager of the Jeans Division U.S.A.
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Mr. Green, employed by the Company since 1969, has held various
management positions in the apparel operations of the Company. Most recently,
he served as Operating Vice President, Apparel Manufacturing from 1986 to 1990.
Mr. Holliday, employed by the Company since 1986, was named President
of the Licensed Products Division in 1994. He served as President of the Knit
Apparel Division from 1991 until 1994 and Assistant Treasurer from 1988 to 1991.
Mr. Irwin, employed by the Company in 1980, was named President of the
Knit Apparel Division in 1994. Prior to that he served in various capacities
in the Knit Apparel Division including, Vice President, Sales from 1993 to
1994; Vice President, Retail/Private Label from 1991 to 1993; and Vice
President, Operations from 1990 to 1991. From 1988 until 1990, he served as
Sales Manager for the Knit Division.
Mr. Wachtel, employed by the Company in 1976, was promoted to
President of the Athletic Division in 1991. He formed the Mid-South Regional
Office in 1980 and formed the Mid-Southeast Sales Office in 1986. He was
General Manager of Russell Athletic, Inc. in Snellville, Georgia from 1989 to
1990 and Vice President, Sales in the Athletic Division from 1990 to 1991.
"Compliance with Section 16(a) of the Securities Exchange Act of 1934"
on page 15 of the Proxy Statement for the Annual Meeting of Shareholders to be
held April 24, 1996 is incorporated herein by reference.
ITEM 11. Executive Compensation
"Executive Compensation" on pages 4 through 12 of the Proxy Statement
for the Annual Meeting of Shareholders to be held April 24, 1996 is
incorporated herein by reference.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
(a) "Principal Shareholders" on pages 13 and 14 of the Proxy
Statement for the Annual Meeting of Shareholders to be held April 24, 1996 is
incorporated herein by reference.
(b) Information concerning security ownership of management set
forth in the Proxy Statement for the Annual Meeting of Shareholders to be held
April 24, 1996 under the captions "Security Ownership of Management" on page
14 is incorporated herein by reference.
(c) There are no arrangements known to the registrant the
operation of which may at a subsequent date result in a change in control of
the registrant.
ITEM 13. Certain Relationships and Related Transactions
"Transactions with Management and Others" on page 15 of the Proxy
Statement for the Annual Meeting of Shareholders to be held April 24, 1996 is
incorporated herein by reference.
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<PAGE> 13
PART IV
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
(a) List of Documents filed as part of this Report:
(1) Financial Statements
All financial statements of the registrant as
set forth under Item 8 of this Report on Form 10-K
(2) Financial Statement Schedule
<TABLE>
<CAPTION>
Schedule Page
Number Description Number
-------- ----------- ------
<S> <C> <C>
II Valuation and Qualifying
Accounts IV-4
</TABLE>
All other financial statements and schedules not listed have
been omitted since the required information is included in the
consolidated financial statements or the notes thereto, or is not
applicable or required.
(3) Exhibits (numbered in accordance with Item 601 of
Regulation S-K)
<TABLE>
<CAPTION>
Page Number or
Exhibit Incorporation
Numbers Description by Reference to
------- ----------- ---------------
<S> <C> <C>
(3a) Restated Articles of IV-7
Incorporation
(3b) Certificate of Adoption IV-8
of Resolutions by Board
of Directors of Russell
Corporation dated
October 25, 1989
(3c) Bylaws IV-9
(4) Rights Agreement dated Exhibit 1 to Form 8-A dated
October 25, 1989 between October 30, 1989
the Company and First Registration Statement
Alabama Bank, Montgomery, No. 1-5822
Alabama
(10a) Form of Deferred IV-10
Compensation Agreement
with certain officers
</TABLE>
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<PAGE> 14
<TABLE>
<CAPTION>
Page Number or
Exhibit Incorporation
Numbers Description by Reference to
------- ----------- ---------------
<S> <C> <C>
(10b) Fuel supply contract Exhibit 13(c) to
with Russell Lands, Registration Statement
Incorporated dated No. 2-33943
May 21, 1975
(10c) 1978 Stock Option Plan Exhibit 1 to
Registration Statement
No. 2-64496
(10d) October 28, 1981 Amendment IV-11
to Stock Option Plans
January 2, 1988
(10e) 1987 Stock Option Plan Exhibit 1 to
Registration Statement
No. 33-24898
(10f) 1993 Executive Long-Term Exhibit 4(c) to
Incentive Plan Registration Statement
No. 33-69679
(11) Computations of Earnings IV-12
per Common Share
(13) 1995 Annual Report to IV-13
Shareholders
(21) List of Significant IV-14
Subsidiaries
(23) Consent of Ernst & Young LLP, IV-15
Independent Auditors
(27) Financial Data Schedule
(99) Proxy Statement for April 24, 1996 IV-16
</TABLE>
(b) Reports on Form 8-K
No reports on form 8-K were filed during the fourth quarter of
the year ended December 30, 1995.
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<PAGE> 15
For the purpose of complying with the amendments to the rules
governing Form S-8 (effective July 13, 1990) under the Securities Act of 1933,
the undersigned registrant hereby undertakes as follows, which undertaking
shall be incorporated by reference into the undertakings contained in Part II
of the registrant's registration statements on Form S-8 numbers 2-64496 and
33-24898:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that, in the
opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
IV-3
<PAGE> 16
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
RUSSELL CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
BALANCE AT ADDITIONS BALANCE
BEGINNING CHARGED TO COSTS AT END
DESCRIPTION OF PERIOD AND EXPENSES ACQUISITION DEDUCTIONS OF PERIOD
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 30, 1995
Allowance for doubtful accounts $ 8,115,122 $ 4,407,505 $ -0- $ 4,198,033 (1) $ 8,324,594
Reserve for discounts and returns 2,342,719 9,105,828 -0- 9,436,573 (2) 2,011,974
----------- ----------- ---------- ----------- -----------
TOTALS $10,457,841 $13,513,333 $ -0- $13,634,606 $10,336,568
=========== =========== ========== =========== ===========
YEAR ENDED DECEMBER 31, 1994
Allowance for doubtful accounts $ 8,487,284 $ 3,978,303 $ 40,000 $ 4,390,465 (1) $ 8,115,122
Reserve for discounts and returns 2,634,399 17,713,714 -0- 18,005,394 (2) 2,342,719
----------- ----------- ---------- ----------- -----------
TOTALS $11,121,683 $21,692,017 $ 40,000 $22,395,859 $10,457,841
=========== =========== ========== =========== ===========
YEAR ENDED JANUARY 1, 1994
Allowance for doubtful accounts $ 5,579,113 $ 7,852,497 $ 779,198 $ 5,723,524 (1) $ 8,487,284
Reserve for discounts and returns 2,548,190 14,912,255 170,274 14,996,320 (2) 2,634,399
----------- ----------- ---------- ----------- -----------
TOTALS $ 8,127,303 $22,764,752 $ 949,472 $20,719,844 $11,121,683
=========== =========== ========== =========== ===========
</TABLE>
(1) Uncollectible accounts written off, net of recoveries.
(2) Discounts and returns allowed customers during the year.
<PAGE> 17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunder duly authorized.
RUSSELL CORPORATION
(Registrant)
Date 3/22/96 By /s/ John C. Adams
------- --------------------------------------
John C. Adams
Chairman, President and CEO
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report is signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ John C. Adams Chairman, President and CEO 3/22/96
------------------------ -------
John C. Adams Date
/s/ James D. Nabors Executive Vice President and 3/22/96
------------------------ Chief Financial Officer, and -------
James D. Nabors Director (Principal Financial Date
Officer)
/s/ Herschel M. Bloom Director 3/22/96
------------------------ -------
Herschel M. Bloom Date
Director
------------------------ -------
Ronald G. Bruno Date
Director
------------------------ -------
Glenn Ireland II Date
Director
------------------------ -------
Crawford T. Johnson III Date
</TABLE>
IV-5
<PAGE> 18
<TABLE>
<S> <C> <C>
Director
------------------------ -------
Timothy A. Lewis Date
/s/ C. V. Nalley III Director 3/22/96
------------------------ -------
C. V. Nalley III Date
/s/ Benjamin Russell Director 3/22/96
------------------------ -------
Benjamin Russell Date
/s/ John R. Thomas Director 3/22/96
------------------------ -------
John R. Thomas Date
/s/ John A. White Director 3/22/96
------------------------ -------
John A. White Date
/s/ Larry E. Workman Controller 3/22/96
------------------------ (Principal Accounting Officer -------
Larry E. Workman Date
</TABLE>
IV-6
<PAGE> 1
Exhibit 3(a)
RESTATED
ARTICLES OF INCORPORATION
OF
RUSSELL CORPORATION
Composite Restated Articles of Incorporation as adopted
on April 28, 1982 and as amended through March 8, 1989.
<PAGE> 2
RESTATED
ARTICLES OF INCORPORATION
OF
RUSSELL CORPORATION
1. The name of the corporation is Russell Corporation.
2. The period of its duration is perpetual.
3. The purpose or purposes for which the corporation is organized
are the transaction of any or all lawful business for which corporations may be
incorporated under the Alabama Business Corporation Act, including, but not
limited to, the manufacture and sale of textile products.
4. (a) The aggregate number of shares of capital stock which the
corporation shall have authority to issue is one hundred sixty million
(160,000,000) shares, of which ten million (10,000,000) shares, par value $.01
per share, are to be preferred stock (hereinafter called "Preferred Stock"),
and one hundred fifty million (150,000,000) shares, par value $.01 share, are
to be common stock (hereinafter called "Common Stock").
(b) The Preferred Stock may be issued in such one or more
series as shall from time to time be created and authorized to be issued by the
board of directors of the corporation as hereinafter provided.
The board of directors is hereby expressly authorized, by resolution
or resolutions from time to time adopted providing for the issuance of
Preferred Stock, to fix and determine, to the extent not fixed by the
provisions hereinafter set forth, the relative rights and preferences of the
shares of each series of Preferred Stock, including (but without limiting the
generality of the foregoing) any of the following with respect to which the
board of directors may make specific provisions:
(i) the distinctive name and any serial designations;
(ii) the annual dividend rate or rates and the dividend
payment dates;
(iii) with respect to the declaration and payment of
dividends upon each series of the Preferred Stock, whether such
dividends are to be cumulative or noncumulative, preferred,
subordinate or equal to dividends declared and paid upon other
series of the Preferred Stock or upon any other shares of stock
of the corporation, and the participating or other special
rights, if any, of such dividends;
-1-
<PAGE> 3
(iv) the redemption provisions, if any, with respect to
any series, and, if any series is subject to redemption, the
manner and time of redemption and the redemption price or
prices;
(v) the amount or amounts of preferential or other
payment to which any series of Preferred Stock is entitled over
any other series of Preferred Stock or over the Common Stock on
voluntary or involuntary liquidation, dissolution or
winding-up, subject to the provisions set forth in paragraph
(d)(ii) of this Article 4;
(vi) any sinking fund or other retirement provisions and
the extent to which the charges therefor are to have priority
over the payment of dividends on or the making of sinking fund
or other like retirement provisions for shares of any other
series of Preferred Stock or for shares of the Common Stock;
(vii) any conversion, exchange, purchase or other
privileges to acquire shares of any other series of Preferred
Stock or of the Common Stock;
(viii) the number of shares of such series; and
(ix) the voting rights, if any, of such series, subject
to the provisions set forth in paragraph (d)(i) of this Article
4.
Each share of each series of Preferred Stock shall have the same
relative rights and be identical in all respects with all the other shares of
the same series.
Before the corporation shall issue any shares of Preferred Stock of
any series authorized as hereinbefore provided, a statement setting forth a
copy of the resolution or resolutions with respect to such series adopted by
the board of directors of the corporation pursuant to the foregoing authority
vested in the board of directors shall be made, filed and recorded in
accordance with the then applicable requirements, if any, of the laws of the
State of Alabama, or, if no statement is then so required, a certificate shall
be signed and acknowledged on behalf of the corporation by its Chairman of the
Board, President or a Vice-President and its corporate seal shall be affixed
thereto and attested by its Secretary or any Assistant Secretary and such
certificate shall be filed and kept on file at the principal office of the
corporation in the State of Alabama and in such other place or places as the
board of directors shall designate.
(c) The authority of the board of directors to provide for the
issuance of any shares of the corporation's stock shall include, but shall not
be limited to, authority to issue shares of stock of the corporation for any
purpose and in any manner (including issuance pursuant to rights, warrants, or
other options) permitted by law, for delivery as all or part of the
consideration for or in connection with the acquisition of all or part of the
stock of another corporation or of all or part of the assets of another
corporation or enterprise, irrespective of the amount by which the issuance of
such stock shall increase the number of shares outstanding (but not in excess
of the number of shares authorized).
-2-
<PAGE> 4
(d) The following relative rights and preferences of the
capital stock of the corporation are fixed as follows:
(i) Voting Rights.
(A) Common Stock. At all elections of directors of
the corporation, and in respect of all other matters as to
which the vote or consent of shareholders of the corporation
shall be required to be taken, the holders of the Common
Stock shall be entitled to one (1) vote for each share held
by them.
(B) Preferred Stock. The holders of each series of
the Preferred Stock shall have such voting rights as may be
fixed by resolution or resolutions of the board of directors
providing for the issuance of each such series.
(ii) Liquidation, Dissolution, etc. In the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the
corporation, the assets of the corporation available for distribution
to the shareholders (whether from capital or surplus) shall be
distributed among those of the respective series of the outstanding
Preferred Stock, if any, as may be entitled to any preferential
amounts and among the respective holders thereof in accordance with
the relative rights and preferences, if any, fixed and determined for
each such series and the holders thereof by resolution or resolutions
of the board of directors providing for the issue of each such series
of the Preferred Stock; and after payment in full of the amounts
payable in respect of the Preferred Stock, if any, the holders of any
series of the outstanding Preferred Stock who are not entitled to
preferential treatment pursuant to resolutions of the board of
directors providing for the issue thereof and the holders of the
outstanding Common Stock shall be entitled (to the exclusion of the
holders of any series of the outstanding Preferred Stock entitled to
preferential treatment pursuant to resolutions of the board of
directors providing for the issue thereof to share ratably in all the
remaining assets of the corporation available for distribution to its
shareholders.
A merger, consolidation or reorganization of the corporation
with or into one or more corporations, or a sale, lease or other
transfer of all or substantially all the assets of the corporation,
that does not result in the termination of the enterprise and
distribution of the assets to shareholders, shall not be deemed to
constitute a liquidation, dissolution or winding-up of the corporation
within the meaning of this paragraph (d)(ii), notwithstanding the fact
that the corporation may cease to exist or may surrender its Restated
Articles of Incorporation.
(iii) Dividends and Other Distributions. Dividends on any
stock of the corporation shall be payable only out of earnings,
surplus or assets of the corporation legally available for the payment
of such dividends and only as and when declared by the board of
directors. The board of directors of the corporation may, from time to
time, distribute to the shareholders of the corporation out of the
capital surplus of the corporation a portion of the assets of the
corporation to the extent and in the manner provided by law.
-3-
<PAGE> 5
(e) The corporation shall have the right to purchase, take,
receive or otherwise acquire, hold, own, pledge and transfer or otherwise
dispose of its own shares. Purchases by the corporation of its own shares,
whether direct or indirect, may be made to the extent of unreserved and
unrestricted earned surplus and capital surplus of the corporation available
therefor.
(f) No holder of any share or shares of any class of stock of
the corporation shall have any preemptive right to subscribe for any shares of
stock of any class of the corporation now or hereafter authorized or for any
securities convertible into or carrying any optional rights to purchase or
subscribe for any shares of stock of any class of the corporation now or
hereafter authorized.
5. The mailing address of the registered office of the corporation
is Russell Corporation, P. O. Box 272, Alexander City, Alabama 35010, and the
name of its registered agent at such address is James D. Nabors.
6. The number of directors constituting the present board of
directors of the corporation is 11, and the names and addresses of the persons
who are serving as directors until the next annual meeting of shareholders or
until their successors are elected and qualify are as follows:
<TABLE>
<CAPTION>
NAME ADDRESS
<S> <C>
E. C. Gwaltney Russell Corporation
P. O. Box 272
Alexander City, Alabama 35010
Dwight L. Carlisle, Jr. Russell Corporation
P. O. Box 272
Alexander City, Alabama 35010
Frank K. Hall Russell Corporation
P. O. Box 272
Alexander City, Alabama 35010
George W. Hardy Russell Corporation
P. O. Box 272
Alexander City, Alabama 35010
Emil Hess Russell Corporation
P. O. Box 272
Alexander City, Alabama 35010
H. Scott Howell Russell Corporation
P. O. Box 272
Alexander City, Alabama 35010
Glenn Ireland, II Russell Corporation
P. O. Box 272
Alexander City, Alabama 35010
</TABLE>
-4-
<PAGE> 6
<TABLE>
<CAPTION>
NAME ADDRESS
<S> <C>
Crawford T. Johnson, III Russell Corporation
P. O. Box 272
Alexander City, Alabama 35010
Finis Morgan Russell Corporation
P. O. Box 272
Alexander City, Alabama 35010
Benjamin Russell Russell Corporation
P. O. Box 272
Alexander City, Alabama 35010
John R. Thomas Russell Corporation
P. O. Box 272
Alexander City, Alabama 35010
</TABLE>
7. The names and addresses of the original incorporators are as
follows:
<TABLE>
<CAPTION>
NAME ADDRESS
<S> <C>
B. Russell Russell Corporation
P. O. Box 272
Alexander City, Alabama 35010
T. C. Russell Russell Corporation
P. O. Box 272
Alexander City, Alabama 35010
O. C. Thomas Russell Corporation
P. O. Box 272
Alexander City, Alabama 35010
J. H. Henderson Russell Corporation
P. O. Box 272
Alexander City, Alabama 35010
A. L. Harlan Russell Corporation
P. O. Box 272
Alexander City, Alabama 35010
</TABLE>
8. (a) Number, Election and Terms. All corporate powers shall be
exercised by or under the authority of, and the business and affairs of the
corporation shall be managed under the direction of, a board of directors
which, except as otherwise fixed by or pursuant to the provisions of Article 4
hereof relating to the rights of the holders of any series of Preferred Stock
to elect additional directors under specified circumstances, shall consist of
not less than nine nor more than fifteen persons. The exact number of directors
within the minimum and maximum limitations specified in the preceding sentence
shall be fixed from time to time by the board of directors pursuant to a
resolution adopted by a majority of the entire board of directors. At the
annual meeting of shareholders of the corporation held in 1988, the directors
shall be divided into three classes, as nearly equal in number as possible,
with the term of office of the first
-5-
<PAGE> 7
class of directors to expire at the annual meeting of shareholders of the
corporation to be held in 1989, the term of office of the second class of
directors to expire at the annual meeting of shareholders of the corporation to
be held in 1990 and the term of office of the third class of directors to
expire at the annual meeting of shareholders of the corporation to be held in
1991. At each annual meeting of shareholders of the corporation following such
initial classification and election, and except as otherwise so fixed by or
pursuant to the provisions of Article 4 hereof relating to the rights of the
holders of any series of Preferred Stock to elect additional directors under
specified circumstances and except as provided below in this Article 8 in the
case of electing a successor to a director elected by the board of directors to
fill a vacancy occurring in the membership of the board of directors, directors
elected to succeed those directors whose terms expire at such annual meeting
shall be elected for a term of office to expire at the third succeeding annual
meeting of shareholders of the corporation after their election.
(b) Vacancies and Newly Created Directorships. Subject to the
rights of the holders of any series of Preferred Stock then outstanding, any
vacancy occurring in the board of directors may be filled by the affirmative
vote of a majority of the remaining directors though less than a quorum of the
board of directors. A director so elected to fill a vacancy shall be elected to
serve until the next annual meeting of shareholders, at which time a director
shall be elected to fill the unexpired portion of the term of office of the
director whose successor was elected by the remaining directors. Any
directorship to be filled by reason of an increase in the number of directors
shall be filled by election at an annual meeting or at a special meeting of
shareholders called for that purpose, unless applicable law then permits such
directorship to be filled by the affirmative vote of a majority of the remaining
directors (even though less than a quorum of the board of directors). No
decrease in the number of directors constituting the board of directors shall
shorten the term of any incumbent director.
(c) Continuance in Office. Notwithstanding the foregoing
provisions of this Article 8, any director whose term of office has expired
shall continue to hold office until his successor shall be elected and qualify.
(d) Removal. Subject to the rights of the holders of any series
of Preferred Stock then outstanding, any director, or the entire board of
directors, may be removed from office at any time, without cause, but only by
the affirmative vote of at least seventy-five percent (75%) of the total number
of votes entitled to be cast by the holders of all of the shares of capital
stock of the corporation then entitled to vote generally in the election of
directors. The holder of each share of capital stock entitled to vote thereon
shall be entitled to cast the same number of votes as the holder of such shares
is entitled to cast generally in the election of each director. Subject to the
rights of the holders of any series of Preferred Stock then outstanding, a
director, or the entire board of directors, may be removed from office at any
time, with cause in the manner provided by law.
(e) Amendment, Repeal, etc. Notwithstanding any other
provisions of these Restated Articles of Incorporation or the Bylaws of the
corporation (and notwithstanding the fact that some lesser percentage may be
specified by law, these Restated Articles of Incorporation or the Bylaws of the
corporation), the affirmative vote of at least seventy-five percent (75%) of the
total number of votes entitled to be cast by the holders of all of the shares of
capital stock of the corporation then entitled to vote generally in the election
of directors shall be required to amend, alter, change or repeal, or to adopt
any provision as part of these Restated Articles of Incorporation inconsistent
with, this Article 8. The holder of each share of capital stock entitled to vote
thereon shall be entitled to cast the same number of votes as the holder of such
shares is entitled to cast generally in the election of each director.
-6-
<PAGE> 8
9. Certain Provisions Respecting Business Combinations:
Section 9.01. Definitions. For the purposes of this Article 9:
(a) An "Affiliate" of, or a person "Affiliated" with, a
specified person, is a person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the person specified.
(b) "Announcement Date" means, with respect to any Business
Combination, the date of the first public announcement of such Business
Combination.
(c) "Associate," when used to indicate a relationship with any
person, means (i) any corporation or organization (other than the corporation or
a Subsidiary) of which such person is an officer or partner or is, directly or
indirectly, the beneficial owner of 10 percent or more of any class of equity
securities, (ii) any trust or other estate in which such person has a
substantial beneficial interest or as to which such person serves as trustee or
in a similar fiduciary capacity, and (iii) any relative or spouse of such
person, or any relative of such spouse, who has the same home as such person or
who is a director or officer of the corporation or any of its parents or
subsidiaries.
(d) A person shall be a "beneficial owner" of any Voting Stock:
(i) which such person or any of its Affiliates or
Associates beneficially owns, directly or indirectly; or
(ii) which such person or any of its Affiliates or
Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise,
or (B) the right to vote or direct the vote pursuant to any agreement,
arrangement or understanding; or
(iii) which is beneficially owned, directly or indirectly,
by any other person with which such person or any of its Affiliates or
Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of
capital stock of the corporation;
provided, however, that no director or officer of the corporation (nor any
Affiliate or Associate of such director or officer) shall, solely by reason of
any or all of such directors or officers acting in their capacities as such, be
deemed the "beneficial owner" of any shares of Voting Stock that are
beneficially owned by any other such director or officer.
(e) For the purposes of determining whether a person is an
Interested Shareholder pursuant to paragraph (I) of this Section 9.01, the
number of shares of Voting Stock deemed to be outstanding shall include shares
deemed owned by the Interested Shareholder through
-7-
<PAGE> 9
application of paragraph (d) of this Section 9.01, but shall not include any
other shares of Voting Stock which may be issuable pursuant to any agreement,
or upon exercise of conversion rights, warrants or options, or otherwise.
(f) "Board" means the board of directors of the corporation.
(g) A "Business Combination" shall mean any one or more of the
following:
(i) any merger or consolidation of the corporation or any
Subsidiary with or into (A) any Interested Shareholder or (B) any
other corporation (whether or not itself an Interested Shareholder)
which is, or after such merger or consolidation would be, an Affiliate
of an Interested Shareholder; or
(ii) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition (in one transaction or a series of transactions)
to or with any Interested Shareholder or any Affiliate of any
Interested Shareholder of any assets of the corporation or any
Subsidiary having an aggregate Fair Market Value of $1,000,000 or more;
or
(iii) the issuance, pledge, transfer or other disposition
by the corporation or any Subsidiary (in one transaction or a series of
transactions) of any securities of the corporation or any Subsidiary to
any Interested Shareholder or any Affiliate of any Interested
Shareholder in exchange for cash, securities or other property (or a
combination thereof) having an aggregate Fair Market Value of
$1,000,000 or more; or
(iv) the adoption of any plan or proposal for the
liquidation or dissolution of the corporation proposed by or on behalf
of an Interested Shareholder or an Affiliate of any Interested
Shareholder; or
(v) any reclassification of securities (including any
reverse stock split), or recapitalization of the corporation, or any
merger or consolidation of the corporation with any of its Subsidiaries
or any similar transaction (whether or not with or into or otherwise
involving an Interested Shareholder) which has the effect, directly or
indirectly, of increasing the proportionate share of the outstanding
shares of any class of equity securities, or securities convertible
into equity securities, of the corporation or any Subsidiary,
including, without limitation, any class or series of Protected Stock,
which is directly or indirectly owned by any Interested Shareholder or
any Affiliate of any Interested Shareholder; or
(vi) any agreement, contract or other arrangement
providing for any one or more of the actions specified in the foregoing
clauses (i) through (v).
(h) "Consummation Date" means, with respect to any Business
Combination, the date on which such Business Combination is effected.
(i) "Determination Date" means, with respect to any Interested
Shareholder, the date on which such Interested Shareholder first became an
Interested Shareholder.
-8-
<PAGE> 10
(j) "Consummation Date" means any member of the Board who is
not an Affiliate, nominee or representative of the Interested Shareholder and
was a member of the Board prior to the time that the Interested Shareholder
became an Interested Shareholder, and any successor of a Disinterested Director
who is a member of the Board and who is not an Affiliate, nominee or
representative of the Interested Shareholder and was recommended or elected to
succeed a Disinterested Director by a majority of Disinterested Directors on the
Board at the time of such recommendation or election.
(k) "Fair Market Value" means (i) in the case of stock, the
highest closing sale price during the thirty-day period immediately preceding
the date in question of a share of such stock on the Composite Tape for New York
Stock Exchange, Inc. Listed Stocks, or, if such stock is not quoted on the
Composite Tape, on the New York Stock Exchange, Inc., or, if such stock is not
listed on the New York Stock Exchange, Inc., on the principal United States
securities exchange registered under the Securities Exchange Act of 1934 on
which such stock is listed, or, if such stock is not listed on any such
exchange, the highest closing bid quotation with respect to a share of such
stock during the thirty-day period preceding the date in question as reported by
the National Association of Securities Dealers, Inc. Automated Quotations
system or any system then in use, or if no such quotation is available, the fair
market value on the date in question of a share of such stock as determined in
good faith by a majority of the Disinterested Directors; and (ii) in the case of
property other than cash or stock, the fair market value of such property on the
date in question as determined in good faith by a majority of the Disinterested
Directors.
(l) "Interested Shareholder" shall mean, in respect of any
Business Combination, any person (other than the corporation or any wholly-owned
Subsidiary and other than any profit sharing, employee stock ownership or other
employee benefit plan of the corporation or any wholly-owned Subsidiary or any
person organized, appointed or established by the corporation or any
wholly-owned Subsidiary for or pursuant to the terms of any such plan) who or
which, as of the date of the first public announcement of such Business
Combination, or on the day immediately prior to the consummation of any such
Business Combination:
(i) is the beneficial owner, directly or indirectly, of
Voting Stock entitled to cast ten percent or more of the total number
of votes entitled to be cast in respect of all the outstanding shares
of Voting Stock in any vote of shareholders which may be taken pursuant
to this Article 9; or
(ii) is an Affiliate of the corporation and at any time
within two years prior thereto was the beneficial owner, directly or
indirectly, of Voting Stock then entitled to cast ten percent or more
of the total number of votes entitled to be cast in respect of all the
outstanding shares of Voting Stock in any vote of shareholders which
may be taken pursuant to this Article 9; or
(iii) is an assignee of or has otherwise succeeded to any
shares of Voting Stock of the corporation which were at any time
within the two-year period immediately prior to the date in question
beneficially owned by any Interested Shareholder, if such assignment
or succession shall have occurred in the course of a transaction or
series of transactions not involving a public offering within the
meaning of the Securities Act of 1933;
provided, however, there shall be disregarded in determining whether a person
is an
-9-
<PAGE> 11
Interested Shareholder in respect of any Business Combination the beneficial
ownership, both direct and indirect, of the voting power of the Voting Stock
owned beneficially by such person or an ancestor of such person on March
9, 1988, which for purposes of this paragraph (I) shall include any beneficial
ownership of Voting Stock resulting from stock splits (including reverse stock
splits), stock dividends or recapitalizations of such Voting Stock occurring
subsequent to March 9, 1988, unless such person has acquired subsequent to
March 9, 1988, other than by gift, devise, bequest or intestate succession,
beneficial ownership, either direct or indirect, of one percent (1%) or more
of the voting power of the outstanding Voting Stock in addition to the Voting
Stock beneficially owned by such person or such person's ancestor on March
9, 1988.
(m) A "person" shall mean any individual, firm, corporation or
other entity.
(n) "Protected Stock" means all Voting Stock and all other
shares of capital stock of the corporation having, or which may have upon the
happening of some contingency, the right to vote for the election of some or all
of the directors of the corporation, regardless of whether at the time in
question such shares then have a present right to so vote.
(o) "Subsidiary" means any corporation of which a majority of
any class of equity security is owned, directly or indirectly, by the
corporation.
(p) "Voting Stock" means, at any time, all shares of capital
stock of the corporation entitled to vote generally in the election of
directors, which shares shall be considered for the purpose of any vote required
by this Article 9 as, and shall vote together in any such vote as, one class. In
any vote required by this Article 9, the holder of each share of Voting Stock
shall be entitled to cast with respect to such share the same number of votes as
such holder could cast generally in the election of each director with respect
to such share.
(q) In the event of any Business Combination in which the
corporation survives, the phrase "consideration other than cash to be received"
as used in clauses (i) and (ii) of paragraph (b) of Section 9.03 of this Article
9 shall include the shares of Common Stock and/or the shares of any other class
of outstanding Protected Stock retained by the holders of such shares.
Section 9.02. Higher Vote for Certain Business Combinations. In
addition to any affirmative vote required by law or these Restated Articles of
Incorporation, and except as otherwise expressly provided in Section 9.03 of
this Article 9, any Business Combination shall require the affirmative vote of
at least seventy-five percent (75%) of the total number of votes entitled to be
cast in respect of all the outstanding shares of Voting Stock. Such affirmative
vote shall be required notwithstanding the fact that no vote may be required,
or that some lesser percentage or separate class vote may be specified, by law
or under the rules of, or in any agreement with, any United States securities
exchange registered under the Securities Exchange Act of 1934, or any successor
act thereto, on which any of the Voting Stock is listed, or otherwise.
Section 9.03. When Higher Vote Is Not Required. The provisions of
Section 9.02 of this Article 9 shall not be applicable to any particular
Business Combination, and such Business Combination shall require only such
affirmative vote, if any, as is required by law and any
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<PAGE> 12
other Article of these Restated Articles of Incorporation, if all of the
conditions specified in either of the following paragraphs (a) and (b) are met:
(a) Approval by the Disinterested Director. The Business
Combination shall have been approved, either specifically or as a transaction
which is within an approved category of transactions, by a majority of the
Disinterested Directors (whether such approval is made prior to or subsequent to
the acquisition of, or announcement or public disclosure of the intention to
acquire, beneficial ownership of the Voting Stock that caused or will cause the
Interested Shareholder to become an Interested Shareholder).
(b) Price and Procedure Requirements. All of the following
conditions shall have been met:
(i) Common Stock. The aggregate amount of the cash and
the Fair Market Value as of the Consummation Date of consideration
other than cash to be received by holders of the Common Stock of the
corporation in such Business Combination, computed on a per share
basis, shall be at least equal to the higher of the following:
(A) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers'
fees) paid by the Interested Shareholder for any shares of
Common Stock acquired by the Interested Shareholder (I) within
the two-year period immediately prior to the Announcement Date
or (II) in the transaction or transactions by which the
Interested Shareholder became an Interested Shareholder, as
adjusted for any subsequent stock split, stock dividend;
subdivision or reclassification with respect to the Common
Stock, whichever is higher; or
(B) the Fair Market Value per share of the Common Stock on the
Announcement Date or the Determination Date, as adjusted for
any subsequent stock split, stock dividend, subdivision or
reclassification with respect to the Common Stock, whichever
is higher.
(ii) Protected Stock. The aggregate amount of the cash and
the Fair Market Value as of the Consummation Date of consideration
other than cash to be received per share by holders of shares of any
other class of outstanding Protected Stock regardless of whether the
Interested Shareholder has previously acquired any shares of a
particular class of such Protected Stock shall be at least equal to the
highest of the following:
(A) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers'
fees) paid by the Interested Shareholder for any shares of
such class of Protected Stock acquired by the Interested
Shareholders (I) within the two-year period immediately prior
to the Announcement Date or (II) in the transaction or
transactions by which the Interested Shareholder became an
Interested Shareholder, as adjusted for any subsequent stock
split, stock dividend, subdivision or reclassification with
respect to such Protected Stock, whichever is higher;
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<PAGE> 13
(B) the highest preferential amount per share to which the holders
of shares of such class of Protected Stock are entitled in the
event of any voluntary or involuntary liquidation, dissolution
or winding up of the corporation, regardless of whether the
Business Combination to be consummated constitutes such an
event; or
(C) the Fair Market Value per share of such class of Protected
Stock on the Announcement Date or the Determination Date, as
adjusted for any subsequent stock split, stock dividend,
subdivision or reclassification with respect to such Protected
Stock, whichever is higher.
(iii) Form of Consideration. The consideration to be
received by holders of a particular class or series of outstanding
Protected Stock (including Common Stock) shall be in cash or in the
same form paid by or on behalf of the Interested Shareholder for shares
of such class of Protected Stock prior to the Consummation Date. If
there have been varying forms of the consideration so paid for shares
of any class of Protected Stock, the form of consideration to be
received by the holders of such class of Protected Stock shall be
either cash or the form used to acquire the largest number of shares of
such class of Protected Stock previously so acquired.
(iv) Maintain Dividends. After such Interested Shareholder
has become an Interested Shareholder and prior to the consummation of
such Business Combination: (A) except as approved by a majority of the
Disinterested Directors, there shall have been no failure to declare
and pay at the regular date therefor any full quarterly dividends
(whether or not cumulative) on any outstanding Preferred Stock of the
corporation; and (B) there shall have been (I) no reduction in the
annual rate of dividends paid on the Common Stock except as necessary
to reflect any subdivision of the Common Stock, except as approved by a
majority of the Disinterested Directors, and (II) an increase in such
annual rate of dividends as necessary to reflect any reclassification
(including any reverse stock split), recapitalization, reorganization
or any similar transaction which has the effect of reducing the number
of outstanding shares of the Common Stock unless the failure so to
increase such annual rate is approved by a majority of the
Disinterested Directors.
(v) Acquisition of Additional Shares. After such
Interested Shareholder has become an Interested Shareholder and prior
to the consummation of such Business Combination, such Interested
Shareholder shall not have become the beneficial owner of any
additional shares of Voting Stock except (A) as part of the transaction
which results in such Interested Shareholder becoming an Interested
Shareholder or (B) in a transaction which would not result in any
increase in the percentage of beneficial ownership by the Interested
Shareholder of any class or series of Voting Stock.
(vi) No Disproportionate Benefits. After such Interested
Shareholder has become an Interested Shareholder, such Interested
Shareholder shall not have received the benefit, directly or indirectly
(except proportionately as a shareholder), of any loans, advances,
guarantees, pledges or other financial assistance or any tax credits or
other tax advantages provided by the corporation, whether in
anticipation of or in connection with such Business Combination or
otherwise.
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<PAGE> 14
(vii) Furnish Information. A proxy or information statement
describing the proposed Business Combination and complying with the
requirements of the Securities Exchange Act of 1934 and the rules and
regulations thereunder (or any subsequent provisions replacing such
Act, rules or regulations) shall be mailed to all shareholders of the
corporation at least thirty days prior to the consummation of such
Business Combination (whether or not such proxy or information
statement is required to be mailed pursuant to such Act or any such
subsequent provisions). Such proxy or information statement shall
contain on the first page thereof, in a prominent place, any statement
as to the advisability (or inadvisability) of the Business Combination
that the Disinterested Directors, or any of them, may choose to make.
(viii) Absence of Certain Changes. Such Interested
Shareholder shall not have made any substantial change in the business
or equity capital structure of the corporation without the approval of
a majority of the Disinterested Directors.
Section 9.04. Powers of Board of Directors. A majority of the
Disinterested Directors of the corporation shall have the power and duty to
determine for the purposes of this Article 9 on the basis of the information
known to them after reasonable inquiry, (1) the number of shares of Voting
Stock beneficially owned by any person, (2) whether a person is an Interested
Shareholder or is an Affiliate or Associate of another person, (3) whether a
person has an agreement, arrangement or understanding with another as to the
matters referred to in paragraph (d) of Section 9.01 of this Article 9, (4)
whether the assets which are the subject of any Business Combination have, or
the consideration to be received for the issuance or transfer of securities by
the corporation or any Subsidiary in any Business Combination has, an aggregate
Fair Market Value of $1,000,000 or more, or (5) whether the requirements of
paragraph (a) or (b) of Section 9.03 of this Article 9 have been met with
respect to any Business Combination.
Section 9.05. No Effect on Fiduciary Obligations of Interested
Shareholders. Nothing contained in this Article 9 shall be construed to relieve
any Interested Shareholder from any fiduciary obligation imposed by law.
Section 9.06. No Fiduciary Duty Imposed on Board. The fact that any
Business Combination complies with the foregoing sections of this Article 9
shall not be construed to impose any fiduciary duty, obligation or
responsibility on the Board, or any member thereof, to approve such Business
Combination or recommend its adoption or approval to the shareholders of the
corporation nor shall such compliance limit, prohibit or otherwise restrict in
any manner the Board, or any member thereof, with respect to evaluations of or
actions and responses taken with respect to such Business Combination.
Section 9.07. Amendment, Repeal, Etc. Notwithstanding any other
provisions of these Restated Articles of Incorporation or the Bylaws of the
corporation (and notwithstanding the fact that some lesser percentage may be
specified by law, these Restated Articles of Incorporation or the Bylaws of the
corporation), the affirmative vote of at least seventy-five percent (75%) of
the total number of votes entitled to be cast in respect of all of the
outstanding shares of Voting Stock shall be required to amend, alter, change or
repeal, or to adopt any provision as part of these Restated Articles of
Incorporation inconsistent with, this Article 9.
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<PAGE> 15
Section 10. A director of the corporation shall not be liable to the
corporation or its shareholders for money damages for any action taken, or
failure to take action, as a director, except for (i) the amount of a financial
benefit received by such director to which such director is not entitled; (ii)
an intentional infliction of harm by such director on the corporation or its
shareholders; (iii) a violation of Section 10-2B-8.33 of the Code of Alabama of
1975 or any successor provision to such section; (iv) an intentional violation
by such director of criminal law; or (v) a breach of such director's duty of
loyalty to the corporation or its shareholders. If the Alabama Business
Corporation Act, or any successor statute thereto, is hereafter amended to
authorize the further elimination or limitation of the liability of a director
of a corporation, then the liability of a director of the corporation, in
addition to the limitations on liability provided herein, shall be limited to
the fullest extent permitted by the Alabama Business Corporation Act, as
amended, or any successor statute thereto. The limitation on liability of
directors of the corporation contained herein shall apply to liabilities
arising out of acts or omissions occurring subsequent to the adoption of this
Article 10 and, except to the extent prohibited by law, to liabilities arising
out of acts or omissions occurring prior to the adoption of this Article 10.
Any repeal or modification of this Article 10 by the shareholders of the
corporation shall be prospective only and shall not adversely affect any
limitation of the liability of a director of the corporation existing at the
time of such repeal or modification.
<PAGE> 1
Exhibit 3(b)
CERTIFICATE OF ADOPTION OF RESOLUTIONS
BY
BOARD OF DIRECTORS
OF
RUSSELL CORPORATION
TO THE HONORABLE JUDGE PROBATE OF TALLAPOOSA COUNTY, ALABAMA:
In accordance with the provisions of Articles 2 and 12 of Chapter 2A
of Title 10 of the Code of Alabama of 1975 and the provisions of Article 4 of
the Restated Articles of Incorporation, as amended, of Russell Corporation, an
Alabama corporation, Russell Corporation hereby certifies that the following
resolutions were duly adopted by the Board of Directors of Russell Corporation
at a meeting of said Board of Directors held on October 25, 1989:
RESOLVED, that pursuant to the authority conferred upon the Board of
Directors of Russell Corporation (the "Corporation") by Article 4 of the
Restated Articles of Incorporation, as amended, of the Corporation (the
"Restated Articles"), said Board hereby fixes and determines the voting rights
and designations, preferences, qualifications, privileges, limitations,
restrictions, options, and other special and relative rights of 500,000 shares
out of the class of 10,000,000 shares of authorized preferred stock par value
$.01 per share (such class being the "Preferred Stock"), by establishing and
designating a series of such Preferred Stock as follows:
Section 1. Designation and Amount. The shares of such series
shall be designated as the "Series A Junior Participating Preferred Stock"
and the number of shares constituting such series shall be 500,000.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior to
the shares of Series A Junior Participating Preferred Stock with respect to
dividends, the holders of shares of Series A Junior Participating Preferred
Stock shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for that purpose, quarterly dividends
payable in cash on March 31, June 30, September 30 and December 31 in each year
(each such date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series A Junior Participating
Preferred Stock in an amount per share (rounded to the nearest cent) equal to
the greater of (a) $100 or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount of all cash
dividends, and 100 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on the Common Stock, par
value $.01 per share, of the Corporation (the "Common Stock") since the
immediately preceding Quarterly Dividend
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<PAGE> 2
Payment Date, or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of any share or fraction of a share of Series A Junior
Participating Preferred Stock. In the event the Corporation shall at any time
after October 25, 1989 (the "Rights Declaration Date") (i) declare any dividend
on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount to which holders of
shares of Series A Junior Participating Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on
the Series A Junior Participating Preferred Stock as provided in paragraph
(A) above immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock); provided that,
in the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $100 per share on the
Series A Junior Participating Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such shares
of Series A Junior Participating Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall begin to accrue from
the date of issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the determination
of holders of shares of Series A Junior Participating Preferred Stock entitled
to receive a quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series A
Junior Participating Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series A Junor Participating Preferred Stock entitled
to receive payment of a dividend or distribution declared thereon, which record
date shall be no more than 60 days prior to the date fixed for the payment
thereof.
Section 3. Voting Rights. The holders of shares of Series A
Junior Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Junior Participating Preferred Stock shall entitle the
holder thereof to 100 votes on all matters submitted to a vote of the
shareholders of the Corporation. In the event the Corporation shall at any time
after the Rights Declaration Date (i) declare any dividend
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<PAGE> 3
on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding common stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the number of votes per share
to which holders of shares of Series A Junior Participating Preferred Stock
were entitled immediately prior to such event shall be adjusted by multiplying
such number by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series A Junior Participating Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters
submitted to a vote of shareholders of the Corporation.
(C) (i) If at any time dividends on any Series A Junior
Participating Preferred Stock shall be in arrears in an amount equal to
six (6) quarterly dividends thereon, the occurrence of such contingency shall
mark the beginning of a period (herein called a "default period") which shall
extend until such time when all accrued and unpaid dividends for all previous
quarterly dividend periods and for the current quarterly dividend period on all
shares of Series A Junior Participating Preferred Stock then outstanding shall
have been declared and paid or set apart for payment. During each default
period, all holders of Preferred Stock (including holders of the Series A Junior
Participating Preferred Stock) with dividends in arrears in an amount equal to
six (6) quarterly dividends thereon, voting as a class, irrespective of series,
shall, in addition to all other voting rights which the holders of shares of the
Series A Junior Participating Preferred Stock may have, have the right to elect
to elect (2) Directors.
(ii) During any default period, such voting rights of the
holders of Series A Junior Participating Preferred Stock may be exercised
initially at a special meeting called pursuant to subparagraph (iii) of this
Section 3(C) or at any annual meeting of shareholders, and thereafter at annual
meetings of shareholders, provided that neither such voting rights nor the right
of the holders of any other series of Preferred Stock, if any, to increase, in
certain cases, the authorized number of Directors shall be exercised unless
the holders of not less than ten percent (10%) in number of shares of Preferred
Stock outstanding shall be present in person or by proxy at such meeting. The
absence of a quorum of the holders of Common Stock shall not affect the exercise
by the holders of Preferred Stock of such voting rights. At any meeting at which
the holders of Preferred Stock shall exercise such voting rights initially
during an existing default period, they shall have the right, voting as a class,
to elect Directors to fill such vacancies, if any, in the Board of Directors as
may then exist up to two (2) Directors or, if such right is exercised at an
annual meeting, to elect two (2) Directors. If the number which may be so
elected at any special meeting does not amount to the required number, the
holders of the Preferred Stock shall have the right to make such increase in
the number of Directors as shall be necessary to permit the election by them of
the required number. After the holders of the Preferred Stock shall have
exercised their right to elect Directors in any default period and during the
continuance of such period, the number of Directors shall not be increased or
decreased except by vote of the holders of Preferred Stock as herein provided or
pursuant to the rights of any equity securities ranking senior to or pari passu
with the Series A Junior Participating Preferred Stock.
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<PAGE> 4
(iii) Unless the holders of Preferred Stock shall, during an existing
default period, have previously exercised their right to elect Directors, the
Board of Directors may order, or any shareholder or shareholders owning in the
aggregate not less than ten percent (10%) of the total number of shares of
Preferred Stock outstanding, irrespective of series, may request, the calling of
a special meeting of the holders of Preferred Stock, which meeting shall
thereupon be called by the Chairman of the Board of Directors, the President, a
Vice-President or the Secretary of the Corporation. Notice of such meeting and
of any annual meeting at which holders of Preferred Stock are entitled to vote
pursuant to this paragraph (C) (iii) shall be given to each holder of record of
Preferred Stock by mailing a copy of such notice to him at his last address as
the same appears on the books of the Corporation. Such meeting shall be called
for a time not earlier than 20 days and not later than 60 days after such order
or request; or in default of the calling of such meeting within 60 days after
such order or request, such meeting may be called on similar notice by any
shareholder or shareholders owning in the aggregate not less than ten percent
(10%) of the total number of shares of Preferred Stock outstanding.
Notwithstanding the provisions of this paragraph (C) (iii), no such special
meeting shall be called during the period within 60 days immediately preceding
the date fixed for the next annual meeting of the shareholders.
(iv) In any default period, the holders of Common Stock, and other
classes of stock of the Corporation if applicable, shall continue to be entitled
to elect the whole number of Directors until the holders of Preferred Stock
shall have exercised their right to elect two (2) Directors voting as a class,
after the exercise of which right (x) the Directors so elected by the holders of
Preferred Stock shall continue in office until their successors shall have been
elected by such holders or until the expiration of the default period, and (y)
any vacancy in the Board of Directors may (except as provided in paragraph (C)
(ii) of this Section 3) be filled by vote of a majority of the remaining
Directors theretofore elected by the holders of the class of stock which elected
the Director whose office shall have become vacant. References in this paragraph
(C) to Directors elected by the holders of a particular class of stock shall
include Directors elected by such Directors to fill vacancies as provided in
clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Preferred Stock as a class to elect Directors shall
cease, (y) the term of any Directors elected by the holders of Preferred Stock
as a class shall terminate, and (z) the number of Directors shall be such number
as may be provided for in the Restated Articles or Bylaws irrespective of any
increase made pursuant to the provisions of paragraph (C)(ii) of this Section 3
(such number being subject, however, to change thereafter in any manner provided
by law or in the Restated Articles or Bylaws). Any vacancies in the Board of
Directors effected by the provisions of clauses (y) and (z) in the preceding
sentence may be filled by a majority of the remaining Directors.
(D) Except as set forth herein, holders of Series A Junior
Participating Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.
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<PAGE> 5
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Junior Participating Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of
Series A Junior Participating Preferred Stock outstanding shall have
been paid in full, the Corporation shall not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up of the
Corporation) to the Series A Junior Participating Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up of the
Corporation) with the Series A Junior Participating Preferred Stock,
except dividends paid ratably on the Series A Junior Participating
Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up of the
Corporation) with the Series A Junior Participating Preferred Stock,
provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in exchange for
shares of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up of the
Corporation) to the Series A Junior Participating Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Junior Participating Preferred Stock, or any shares
of stock ranking on a parity with the Series A Junior Participating
Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of
the Corporation to purchase or otherwise acquire for consideration any shares
of stock of the Corporation unless the Corporation could, under paragraph (A)
of this Section 4, purchase or otherwise acquire such shares at such time and
in such manner.
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<PAGE> 6
Section 5. Reacquired Shares. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise acquired by the Corporation
in any manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors, subject to the conditions and restrictions on issuance
set forth herein or in the Restated Certificate of Incorporation of the
Corporation.
Section 6. Liquidation. Dissolution or Winding Up. Subject to
the prior and superior rights of the holders of any shares of any series of any
Preferred Stock ranking prior and superior to the shares of Series A Junior
Participating Preferred Stock with respect to distributions upon liquidation,
dissolution or winding-up of the Corporation, upon any voluntary or involuntary
liquidation, dissolution or winding-up of the Corporation, no distribution shall
be made (i) to the holders of shares of Common Stock or any other stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding-up of
the Corporation) to the Series A Junior Participating Preferred Stock unless
prior thereto, the holders of shares of Series A Junior Participating Preferred
Stock shall have received the higher of $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, or an aggregate amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 100 times the aggregate
amount to be distributed per share to the holders of Common Stock or (ii) to the
holders of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding-up of the Corporation) with the Series A
Junior Participating Preferred Stock, except distributions made ratably on the
Series A Junior Participating Preferred Stock and all other such parity stock in
proportion to the total amounts to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding-up. In the event the
Corporation shall at any time declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Series A Junior Participating
Preferred Stock were entitled immediately prior to such event under the
provision in clause (i) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case the shares
of Series A Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 100 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock
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<PAGE> 7
into a smaller number of shares, then in each such case the amount set forth in
the preceding sentence with respect to the exchange or change of shares of
Series A Junior Participating Preferred Stock shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 8. No Redemption. The shares of Series A Junior
Participating Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series A Junior Participating Preferred
Stock shall rank junior to all other series of the Corporation's Preferred Stock
as to the payment of dividends and the distribution of assets and as to the
liquidation, dissolution or winding up of the Corporation, unless the terms of
any such series shall provide otherwise.
Section 10. Amendment. The Restated Articles of Incorporation, as
amended, of the Corporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series A Junior Participating Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of a majority or more of the
outstanding shares of Series A Participating preferred Stock, voting separately
as a class.
Section 11. Fractional Shares. Series A Junior Participating
Preferred Stock may be issued in fractions of a share which shall entitle the
holder, in proportion to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the benefit
of all other rights of holders of Series A Junior Participating Preferred Stock.
IN WITNESS WHEREOF, We have executed and subscribed this Certificate
and do affirm the foregoing as true under the penalties of perjury this 25th
day of October, 1989.
RUSSELL CORPORATION
By: Dwight L. Carlisle, Jr.
------------------------------
Dwight L. Carlisle, Jr.
Its President
By: Steve R. Forehand
------------------------------
Steve R. Forehand
Its Secretary
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STATE OF ALABAMA )
:
COUNTY OF TALLAPOOSA )
Before, me, the undersigned authority in and for said County in said
Stated, personally appeared Dwight L. Carlisle, Jr. who is known to me and who,
being first duly sworn, does depose and say that he is the President of
Russell Corporation; that he signed the foregoing Certification of Adoption of
Resolutions by Board of Directors of Russell Corporation as President of said
corporation and with full authority; and that the statements made in the
foregoing Certificate of Adoption of Resolution by Board of Directors of
Russell Corporation are true and correct.
Dwight L. Carlisle, Jr.
---------------------------
Dwight L. Carlisle, Jr.
Subscribed and sworn to before me on this 25th day of October, 1989,
in witness whereof I hereunder to subscribe my name and attach the seal of my
office.
Ralph E. Mings
---------------------------
Notary Public
[NOTARIAL SEAL] My Commission expires: 6/30/93
8
<PAGE> 1
Exhibit 3(c)
BYLAWS
OF
RUSSELL CORPORATION
AN ALABAMA CORPORATION
Composite Bylaws as adopted
on April 28, 1982 and as
amended through March 15,
1989.
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I OFFICES
ARTICLE II SHAREHOLDERS
Section 2.1 Annual Meetings
Section 2.2 Special Meetings
Section 2.3 Place of Meetings
Section 2.4 Notice of Meetings
Section 2.5 Closing of Transfer Books
or Fixing of Record Date
Section 2.6 Voting Record
Section 2.7 Proxies
Section 2.8 Quorum
Section 2.9 Voting of Shares
Section 2.10 Voting of Shares by Certain
Holders
ARTICLE III BOARD OF DIRECTORS
Section 3.1 General Powers
Section 3.2 Number, Election, Terms and Qualifications
Section 3.3 Vacancies and Newly Created Directorships
Section 3.4 Meetings
Section 3.5 Meeting by Telephone
Section 3.6 Quorum
Section 3.7 Acts of the Board
Section 3.8 Presumption of Assent
Section 3.9 Action Without a Meeting
Section 3.10 Committees of Directors
Section 3.11 Compensation
ARTICLE IV WAIVER OF NOTICE
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ARTICLE V OFFICERS
Section 5.1 Positions
Section 5.2 Election and Term of Office
Section 5.3 Vacancies
Section 5.4 Removal
Section 5.5 Chairman of the Board
Section 5.6 President
Section 5.7 Vice-Presidents
Section 5.8 Secretary
Section 5.9 Treasurer
Section 5.10 Assistant Secretaries and
Assistant Treasurers
Section 5.11 Salaries
ARTICLE VI CERTIFICATES REPRESENTING SHARES
Section 6.1 Certificates Representing Shares
Section 6.2 Legends on Certificates
Section 6.3 Transfer of Shares
Section 6.4 Lost, Stolen, Destroyed, or
Mutilated Certificates
ARTICLE VII INDEMNIFICATION OF DIRECTORS, OFFICERS
AND EMPLOYEES
ARTICLE VIII GENERAL
Section 8.1 Fiscal Year
Section 8.2 Dividends
Section 8.3 Checks
Section 8.4 Corporate Seal
ARTICLE IX AMENDMENT OF BYLAWS
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<PAGE> 4
BYLAWS
OF
RUSSELL CORPORATION
Article 1. OFFICES
The principal office of the corporation shall be located in Alexander
City, Alabama. The corporation may have such other offices, within and without
the State of Alabama, as the board of directors may determine or as the
business of the corporation may require.
The registered office of the corporation, required by the Alabama
Business Corporation Act to be maintained in the State of Alabama, may but
need not be the same as its principal office in the State of Alabama. The
address of the registered office may be changed from time to time by the board
of directors.
Article ll. SHAREHOLDERS
Section 2.1 ANNUAL MEETINGS. The annual meeting of the shareholders
shall be held on the fourth Wednesday of April in each year, or on such other
day within such month as shall be fixed by the board of directors, for the
purpose of electing directors and for the transaction of such other business
as may come before the meeting. If the day fixed for the annual meeting shall
be a legal holiday in the State of Alabama, such meeting shall be held on the
next succeeding business day not a legal holiday. If the election of directors
shall not be held on the day designated herein for the annual meeting of the
shareholders, or at any adjournment thereof, the board of directors shall
cause the election to be held at a special meeting of the shareholders as soon
thereafter as may be conveniently held.
Section 2.2 SPECIAL MEETINGS. Special meetings of the shareholders may
be called by the board of directors, the chairman of the board, the president
or the holders of not less than one-tenth of all shares of the corporation
entitled to vote at the meeting.
Section 2.3 PLACE OF MEETINGS. Annual and special meetings of the
shareholders shall be held at the principal office of the corporation in the
State of Alabama, or at such other place, within or without the State of
Alabama, as may be designated by the board of directors and stated in the
notice of the meeting.
Section 2.4 NOTICE OF MEETINGS. Written notice of shareholder
meetings, stating the place, day and hour of the meeting and, in case of a
special meeting, the purpose or purposes for which the meeting is called,
shall, unless otherwise prescribed by statute, be delivered not less than ten
nor more than fifty days before the date of the meeting, either personally or
by mail, by or at the direction of the chairman of the board, the president,
the secretary, or the officer or other persons calling the meeting, to each
shareholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail,
addressed to the shareholder at his address as it appears on the stock
transfer books of the corporation, with postage thereon prepaid.
Notwithstanding the provisions of this section, the stock or bonded
indebtedness of the corporation shall not be increased at a meeting unless
notice of such meeting shall have been given as may be required by section 234
of the Constitution of Alabama as the same may be amended from time to time.
Section 2.5 CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For
the purpose of determining shareholders entitled to notice of or to vote at
any meeting of shareholders, or shareholders entitled to receive payment of
any dividend, or in order to make a deter-
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<PAGE> 5
mination of shareholders for any other proper purpose, the board of directors
of the corporation may provide that the stock transfer books shall be closed
for a stated period but not to exceed fifty days. If the stock transfer books
shall be closed for the purpose of determining shareholders entitled to notice
of or to vote at a meeting of shareholders, such books shall be closed for at
least ten days immediately preceding such meeting. In lieu of closing the
stock transfer books, the board of directors may fix in advance a date as the
record date for any such determination of shareholders, such date to be not
more than fifty days and, in case of a meeting of shareholders, not less than
ten days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the board of directors
declaring such dividend is adopted, as the case may be, shall be the record
date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof except where the determination has been made through the closing of
the stock transfer books and the stated period of closing has expired.
Section 2.6 VOTING RECORD. The officer or agent having charge of the
stock transfer books for shares of the corporation shall make, at least ten
days before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting, arranged in alphabetical order with the
address of and the number of shares held by each. Such list shall be kept on
file at the principal office of the corporation for a period of ten days prior
to such meeting of shareholders, and shall be subject to inspection by any
shareholder making written request therefor at any time during usual business
hours. Such list shall also be produced and kept open at the time and place of
the meeting and shall be subject to the inspection of any shareholder during
the whole time of the meeting. The original stock transfer books shall be prima
facie evidence as to who are the shareholders entitled to examine such list or
transfer books or to vote at any meeting of shareholders.
Section 2.7 PROXIES. At all meetings of shareholders, a shareholder
may vote in person or by proxy executed in writing by the shareholder or by
his duly authorized attorney-in-fact. Such proxy shall be filed with the
secretary of the corporation before or at the time of the meeting. No proxy
shall be valid after eleven months from the date of its execution, unless
otherwise provided in the proxy.
Section 2.8 QUORUM. Unless otherwise provided in the articles of
incorporation, a majority of the shares of the corporation entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders. If a quorum is not present at a meeting, a majority of the
shares so represented may adjourn the meeting from time to time without
further notice, other than announcement at the meeting. At such adjourned
meeting at which a quorum shall be present, any business may be transacted
which might have been transacted at the meeting as originally noticed. The
shareholders present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
Section 2.9 VOTING OF SHARES. Subject to the provisions of the next
sentence of this Section 2.9, each outstanding share entitled to vote shall be
entitled to one vote upon each matter submitted to a vote at a meeting of
shareholders. At each election for directors every shareholder entitled to vote
at such election shall have the right to vote, in person or by proxy, the
number of shares owned by him for as many persons as there are directors to be
elected and for whose election he has a right to vote, OR, if cumulative voting
is authorized by the articles of incorporation, to cumulate his votes by
giving one candidate as many votes as the number of such directors multiplied
by the number of his shares
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shall equal, or by distributing such votes on the same principle among any
number of such candidates. If a quorum is present, the affirmative vote of the
majority of the shares represented at the meeting and entitled to vote on the
subject matter shall be the act of the shareholders, unless the vote of a
greater number or voting by classes is required by the Constitution of Alabama,
the Alabama Business Corporation Act, the articles of incorporation or bylaws.
Section 2.10 VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in
the name of another corporation, domestic or foreign, may be voted by such
officer, agent or proxy as the bylaws of such other corporation may prescribe,
or, in the absence of such provision, as the board of directors of such other
corporation may determine.
Shares held by an administrator, executor, guardian or conservator may
be voted by him, either in person or by proxy, without a transfer of such
shares into his name. Shares standing in the name of a trustee may be voted by
him, either in person or by proxy, but no trustee shall be entitled to vote
shares held by him without a transfer of such shares into his name and no
corporate trustee shall be entitled to vote in the election of directors
shares held by it solely in a fiduciary capacity if such shares are shares
issued by the corporate trustee itself.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted
by such receiver without the transfer thereof into his name if authority to do
so is contained in an appropriate order of the court by which such receiver
was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee,
and thereafter the pledgee shall be entitled to vote the shares so
transferred.
Neither treasury shares of its own stock held by the corporation, nor
shares held by another corporation if a majority of the shares entitled to
vote for the election of directors of such other corporation is held by the
corporation, shall be voted at any meeting or counted in determining the total
number of outstanding shares at any given time.
ARTICLE III. BOARD OF DIRECTORS
Section 3.1 GENERAL POWERS. The business and affairs of the
corporation shall be managed by its board of directors.
Section 3.2 NUMBER, ELECTION, TERMS AND QUALIFICATIONS. Except as
otherwise fixed by or pursuant to the provisions of Article 4 of the
corporation's Restated Articles of Incorporation relating to the rights of the
holders of any series of Preferred Stock to elect additional directors under
specified circumstances, the Board of Directors of the corporation shall
consist of not less than nine nor more than fifteen persons. The exact number
of directors within the minimum and maximum limitations specified in the
preceding sentence shall be fixed from time to time by the Board of Directors
pursuant to a resolution adopted by a majority of the entire Board of
Directors. The directors shall be divided into three classes, as nearly equal
in number as possible. At the Annual Meeting of the Shareholders to be held on
April 27, 1988, directors shall be elected for each class with the term of
office of the first class of directors to expire at the Annual Meeting of
Shareholders of the corporation to be held in 1989, the term of office of the
second class of directors to expire at the Annual Meeting of Shareholders of
the corporation to be held in 1990, and the term of office of the third class
of directors to expire at the Annual Meeting of Shareholders of the corporation
to be held in 1991. At each Annual Meeting of Shareholders of the corporation
following such initial classification and election, and except as otherwise so
fixed by or pursuant to the provisions of Article 4 of the corporation's
Restated Articles of Incorpora-
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tion relating to the rights of the holders of any series of Preferred Stock to
elect additional directors under specified circumstances and except as provided
in Section 3.3 hereof in the case of electing a successor to a director elected
by the Board of Directors to fill a vacancy occurring in the membership of the
Board of Directors, directors elected to succeed those directors whose terms
expire at such annual meeting shall be elected for a term of office to expire
at the third succeeding annual meeting of shareholders of the corporation after
their election. Any director whose term of office has expired shall continue to
hold office until his successor shall be elected and qualify. Directors need
not be shareholders of the corporation or residents of the State of Alabama.
Section 3.3 VACANCIES AND NEWLY CREATED DIRECTORSHIPS. Subject to the
rights of the holders of any series of Preferred Stock then outstanding, any
vacancy occurring in the Board of Directors may be filled by the affirmative
vote of a majority of the remaining directors though less than a quorum of the
Board of Directors. A director so elected to fill a vacancy shall be elected to
serve until the next annual meeting of shareholders, at which time a director
shall be elected to fill the unexpired portion of the term of office of the
director whose successor was elected by the remaining directors. Any
directorship to be filled by reason of an increase in the number of directors
shall be filled by election at an annual meeting of shareholders or at a
special meeting of shareholders called for that purpose, unless applicable law
then permits such directorship to be filled by the affirmative vote of a
majority of the remaining directors (even though less than a quorum of the
Board of Directors). No decrease in the number of directors constituting the
Board of Directors shall shorten the term of any incumbent director.
Section 3.4 MEETINGS. Meetings of the board of directors, regular or
special, may be held either within or without the State of Alabama. A regular
meeting of the board of directors shall be held without notice immediately
after, and at the same place as, the annual meeting of shareholders. Other
regular meetings may be held upon such notice and at such time and place as
shall be determined by the board. Special meetings of the board of directors
may be called by the chairman of the board, the president, or the secretary at
the request of two directors, on one day written notice to each director,
delivered personally or mailed to each director at his business address or by
telegram. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail, so addressed, with postage thereon prepaid. If by
telegram, such notice shall be deemed to be delivered when the telegram is
delivered to the telegraph company. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the board of directors
need be specified in the notice of such meeting.
Section 3.5 MEETING BY TELEPHONE. Members of the board of directors or
any committee designated thereby may participate in a meeting of such board or
committee by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other at the same time and participation by such means shall constitute
presence in person at a meeting.
Section 3.6 QUORUM. A majority of the whole number of directors of the
board shall constitute a quorum for the transaction of business at any meeting
of the board of directors. If less than a majority is present at a meeting, a
majority of the directors present may adjourn the meeting from time to time
without further notice. If a quorum is present when the meeting is convened,
the directors present may continue to do business, taking action by a vote of a
majority of a quorum, until adjournment, notwithstanding the withdrawal of
enough directors to leave less than a quorum present or the refusal of any
director present to vote.
Section 3.7 ACTS OF THE BOARD. The act of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors.
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Section 3.8 PRESUMPTION OF ASSENT. A director of the corporation who
is present at a meeting of the board of directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
taken unless his dissent shall be entered in the minutes of the meeting or
unless he shall file his written dissent to such action with the person acting
as the secretary of the meeting before the adjournment thereof or shall forward
such dissent by registered mail to the secretary of the corporation immediately
after the adjournment of the meeting. Such right to dissent shall not apply to
a director who voted in favor of such action.
Section 3.9 ACTION WITHOUT A MEETING. Any action required or permitted
to be taken by the board of directors or a committee thereof at a meeting may
be taken without a meeting if a consent in writing, setting forth the action so
taken, shall be signed by all of the directors or all of the members of the
committee, as the case may be.
Section 3.10 COMMITTEES OF DIRECTORS. The board of directors, by
resolution passed by a majority of the whole board of directors, may designate
one or more committees, each committee to consist of one or more of the
directors of the corporation. Each such committee, to the extent provided in
the resolution of the board of directors, shall have and may exercise all the
powers and authority of the board of directors, except that no such committee
shall have the authority of the board in reference to declaring a dividend or
distribution from capital stock, issuing capital stock, amending the articles
of incorporation, adopting a plan of merger or consolidation, recommending to
the shareholders the sale, lease, mortgage, exchange or other disposition of
all or substantially all of the property and assets of the corporation other
than in the usual and regular course of business, recommending to the
shareholders a voluntary dissolution of the corporation or a revocation of a
dissolution, filling vacancies in the board of directors, or amending the
bylaws of the corporation. Such committee or committees shall have such name or
names as may be determined from time to time by resolution adopted by the board
of directors. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.
Section 3.11 COMPENSATION. By resolution of the board of directors,
each director may be paid his expenses, if any, of attendance at each meeting
of the board of directors, and may be paid a stated salary as director or a
fixed sum for attendance at each meeting of the board of directors or both. No
such payment shall preclude any director from serving the corporation in any
other capacity and receiving compensation therefor.
Article IV. WAIVER OF NOTICE
Whenever any notice is required to be given to any shareholder or
director of the corporation under the provisions of the Constitution of
Alabama, the Alabama Business Corporation Act, the articles of incorporation,
or these bylaws, a waiver thereof in writing signed by the person or persons
entitled to such notice, whether before or after the time stated therein, shall
be deemed equivalent to the giving of such notice. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the board
of directors or shareholders need be specified in the waiver of notice. The
attendance of a director or a shareholder at a meeting shall constitute a
waiver of notice of such meeting, except where a director or shareholder
attends a meeting for the express purpose of objecting to the transaction of
any business because the meeting is not lawfully called or convened.
Article V. OFFICERS
Section 5.1 POSITIONS. The officers of the corporation shall be
elected by the board of directors and shall consist of a chairman of the board,
a president, a secretary, and such
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other officers and assistant officers as may be deemed necessary by the board
of directors. Any two or more offices may be held by the same person.
Section 5.2 ELECTION AND TERM OF OFFICE. The officers of the
corporation shall be elected annually by the board of directors at the first
meeting of the board of directors held after each annual meeting of the
shareholders. If the election of officers shall not be held at such meeting,
such election shall be held as soon thereafter as may be convenient. Each
officer shall hold office until his successor shall have been elected and shall
have qualified or until his death or he shall resign or shall have been removed
in the manner hereinafter provided.
Section 5.3 VACANCIES. A vacancy in any office may be filled by the
board of directors.
Section 5.4 REMOVAL. Any officer or agent may be removed by the board
of directors whenever in its judgment the best interests of the corporation
will be served thereby, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Election or appointment of
an officer or agent shall not of itself create contract rights.
Section 5.5 CHAIRMAN OF THE BOARD. The chairman of the board shall
perform such duties as may be prescribed by the board of directors and shall,
when present, preside at all meetings of the shareholders and of the board of
directors. In the absence of the president, he shall perform the duties of the
president. he may sign certificates for shares of the corporation and deeds,
mortgages, bonds, contracts, or other instruments on behalf of the corporation,
except where required by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
board of directors to some other officer or agent of the corporation.
Section 5.6 PRESIDENT. The president shall be the chief executive
officer of the corporation and shall, subject to the direction of the board of
directors, supervise and control the business and affairs of the corporation.
In the absence of the chairman of the board or in the event of his death or
inability to act, the president shall perform the duties of the chairman of the
board, and when so acting, shall have all the powers of and be subject to all
the restrictions upon the chairman of the board. The president may sign
certificates for shares of the corporation and deeds, mortgages, bonds,
contracts or other instruments on behalf of the corporation except where
required by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation. In general, he
shall perform all duties incident to the office of president and chief
executive officer and such other duties as may be prescribed by the board of
directors.
Section 5.7 VICE PRESIDENTS. The vice-president (or in the event there
be more than one vice-president, the vice-presidents) shall perform such duties
as from time to time may be assigned to such persons by the president or the
board of directors. Any vice-president may sign certificates for shares of the
corporation.
Section 5.8 SECRETARY. The secretary shall keep the minutes of the
proceedings of the shareholders and of the board of directors in one or more
books provided for that purpose; see that all notices are duly given in
accordance with the provisions of these bylaws or as required by law; be
custodian of the corporate records and of the seal of the corporation; see that
the seal of the corporation is affixed to all documents, the execution of which
on behalf of the corporation under its seal is duly authorized; keep a register
of the post office address of each shareholder which shall be furnished to the
secretary by such shareholder; sign with the chairman of the board, the
president, any vice-president, or the treasurer certificates for shares of the
corporation, the issuance of which shall have been authorized by resolution of
the board of directors; have general charge of the stock
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transfer books of the corporation; and in general perform all duties incident
to the office of secretary and such other duties as from time to time may be
assigned to him by the president or the board of directors.
Section 5.9 TREASURER. The treasurer shall have charge and custody of
and be responsible for all funds and securities of the corporation, receive and
give receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies or other depositaries as may be designated by the board
of directors, and in general perform all of the duties incident to the office
of treasurer and such other duties as from time to time may be assigned to him
by the president or the board of directors. The treasurer may sign certificates
for shares of the corporation. If required by the board of directors, the
treasurer shall give a bond for the faithful discharge of his duties in such
sum and with such surety or sureties as the board of directors shall determine.
Section 5.10 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The
assistant secretary, or if there shall be more than one, the assistant
secretaries in the order determined by the board of directors, shall, in the
absence or disability of the secretary, perform the duties and exercise the
powers of the secretary. The assistant treasurer, or, if there shall be more
than one, the assistant treasurers in the order determined by the board of
directors, shall, in the absence or disability of the treasurer, perform the
duties and exercise the powers of the treasurer. The assistant secretaries and
assistant treasurers shall all perform such other duties as shall be assigned
to them by the secretary and treasurer, respectively, or by the president or
the board of directors.
Section 5.11 SALARIES. The salaries of the officers shall be fixed
from time to time by the board of directors, and no officer shall be prevented
from receiving such salary by reason of the fact that he is also a director of
the corporation.
Article VI. CERTIFICATES REPRESENTING SHARES
Section 6.1 CERTIFICATES REPRESENTING SHARES. Certificates
representing shares of the corporation shall be in such form as shall be
determined by the board of directors. Such certificates shall be signed by the
chairman of the board, the president any vice president, or the treasurer, and
by the secretary, an assistant secretary, or an assistant treasurer, and sealed
with the corporate seal or a facsimile thereof. The signatures of such officers
upon a certificate may be facsimiles if the certificate is manually signed on
behalf of a transfer agent or a registrar, other than the corporation itself or
one of its employees. Each certificate for shares shall be consecutively
numbered or otherwise identified. The name and address of the person to whom
the shares represented thereby are issued, with the number and class of shares
and date of issue, shall be entered on the stock transfer books of the
corporation. All certificates surrendered to the corporation for transfer shall
be cancelled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered and
cancelled, except that in case of a lost, destroyed or mutilated certificate a
new one may be issued therefor upon such terms and indemnity to the corporation
as the board of directors may prescribe.
Section 6.2 LEGENDS ON CERTIFICATES. Any written restriction on the
transfer of shares of the corporation must be noted conspicuously on the
certificate representing such shares. In addition, if the corporation is
authorized to issue shares of more than one class, there shall be set forth
upon the face or back of every certificate, or every certificate shall have a
statement that the corporation will furnish to any shareholder upon request and
without charge, a full statement of the designations, preferences,
limitations, and relative rights of the shares of each class authorized to be
issued, and if the corporation is authorized to issue any preferred or special
class in series, the variations in the relative rights and
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preferences between the shares of each such series so far as the same have been
fixed and determined and the authority of the board of directors to fix and
determine the relative rights and preferences of subsequent series.
Section 6.3 TRANSFER OF SHARES. Transfer of shares of the corporation
shall be made only on the stock transfer books of the corporation by the holder
of record thereof or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the secretary of the
corporation, and on surrender for cancellation of the certificate for such
shares. The person in whose name shares stand on the books of the corporation
shall be deemed by the corporation to be the owner thereof for all purposes.
Section 6.4 LOST, STOLEN, DESTROYED, OR MUTILATED CERTIFICATES. The
board of directors may direct a new certificate to be issued in place of any
certificate theretofore issued by the corporation alleged to have been lost or
destroyed. When authorizing such issue of a new certificate, the board of
directors, in its discretion and as a condition precedent to the issuance
thereof, may prescribe such terms and conditions as it deems expedient, and may
require such indemnities as it deems adequate, to protect the corporation from
any claim that may be made against it with respect to any such certificate
alleged to have been lost or destroyed.
Article VII. INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES
Section 7.1 The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending, or
completed claim, action, suit or proceeding, whether civil, criminal,
administrative or investigative, including appeals, (other than an action by or
in the right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
claim, action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
claim, action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of NOLO CONTENDERE or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best interests of
the corporation, and with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
Section 7.2 The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed claim, action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred
by him in connection with the defense of settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue, or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the corporation unless and only to
the extent that the court in which such action or suit was brought shall
determine upon application that, despite
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the adjudication of liability but in view of all circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which such court shall deem proper.
Section 7.3 To the extent that a director, officer, employee or agent
of the corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in sections 7.1 and 7.2, or in
defense or any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith, notwithstanding that he has not been successful on any
other claim, issue or matter in any such action, suit or proceeding.
Section 7.4 Any indemnification under sections 7.1 and 7.2 (unless
ordered by a court) shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in sections 7.1 and 7.2. Such
determination shall be made (a) by the board of directors by a majority vote of
a quorum consisting of directors who were not parties to, or who have been
wholly successful on the merits or otherwise with respect to, such claim,
action, suit or proceeding, or (b) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (c) by the shareholders.
Section 7.5 Expenses (including attorneys' fees) incurred in defending
a civil or criminal action, suit, or proceeding may be paid by the corporation
in advance of the final disposition of such claim, action, suit, or proceeding
as authorized in the manner provided in section 7.4 upon receipt of an
undertaking by or on behalf of the director, officer, employee or agent to
repay such amount if and to the extent that it shall be ultimately determined
that he is not entitled to be indemnified by the corporation as authorized in
this Article VII.
Section 7.6 The indemnification provided by this Article VII shall not
be deemed exclusive of and shall be in addition to any other rights to which
those indemnified may be entitled under any statute, rule of law, provisions of
articles of incorporation, bylaw, agreement, vote of shareholders or
disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Section 7.7 The corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, partner, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or arising out
of his status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of this Article VII.
Article VIII. GENERAL
Section 8.1 FISCAL YEAR. The fiscal year of the corporation shall be a
52-53 week year, ending on the Saturday nearest to January 1 of each year, or
as otherwise determined by resolution of the board of directors.
Section 8.2 DIVIDENDS. The board of directors, from time to time, may
declare, and the corporation may pay, dividends on its outstanding shares in
the manner and upon the terms and conditions provided by law.
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Section 8.3 CHECKS. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
Section 8.4 CORPORATE SEAL. The board of directors shall select a
corporate seal which shall have inscribed thereon the name of the corporation,
the words "Alabama" and "Corporate Seal," and such seal may include the date of
incorporation of the corporation. The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or in any manner reproduced.
Article IX. AMENDMENT OF BYLAWS
These bylaws may be altered, amended or repealed and new bylaws may be
adopted by the board of directors or by the shareholders at any regular or
special meeting thereof; provided, however, that the board of directors may not
alter, amend or repeal any bylaw establishing what constitutes a quorum at
shareholders' meetings.
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Exhibit 10(a)
EMPLOYMENT AGREEMENT
This Employment Agreement, entered into as of the 1st day of May, 1988
between Russell Corporation, an Alabama corporation (hereinafter called
"Employer") and Dwight L. Carlisle hereinafter called "Employee");
RECITALS:
Employee is presently serving as the President and Chief Executive
Officer of Employer, and Employer and Employee desire to enter into this
Agreement setting out certain terms and conditions concerning the employment of
Employee.
Now, Therefore, in consideration to the premises and mutual covenants
hereinafter set forth and other good and valuable consideration, it is agreed
as follows:
1. Employer will employ Employee and Employee agrees to remain
in the fulltime employment of Employer for a period of three years beginning
May 1, 1988 and ending April 30, 1991, unless this Agreement is terminated as
otherwise herein provided.
2. During the period of this Agreement, Employee shall devote the
whole of his time during business hours, and other times, when called upon by
Employer, for the benefit of the Employer. Employee should do his best to
promote the interests and welfare of Employer in every way determined by the
board of directors of Employer. Employee shall exercise and carry out all such
duties and powers and shall observe all restrictions as the bylaws and the board
of directors of Employer may, from time to time, confer or impose upon him.
3. As compensation for his services, Employee shall be paid an
annual salary of $250,000, payable in equal monthly installments or as normally
provided by Employer for its employees. In addition, Employee will be entitled
to participate with other management employees under the Employer's incentive
compensation plan. Employer will also provide Employee with such pension,
retirement, insurance, vacation and other fringe benefits as normally provided
management employees of Employer.
4. If Employee were to die or become totally disabled during the
above three-year period, all obligations of Employer under this Agreement
shall cease, with the only obligation of the Company being to pay Employee
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<PAGE> 2
any accrued but unpaid salary during his last month of employment. If Employee
voluntarily terminates his employment with Employer during the above
three-year period, then all obligations of the Company to make payments under
this Agreement shall cease in the month of his voluntary resignation from
employment. If the employment of Employee is terminated by the Company during
the three-year period without cause, then Employer shall be obligated to
continue to pay Employee his salary for the three-year period. For purposes of
this agreement, the term "cause" means conviction of a crime of moral terpitude.
5. During the period of this Agreement, Employee, without the
written consent of Employer, shall not be associated with any business or have
any job which will in any way conflict or interfere or be competitive with
Employer's business or Employee's performance of his duties hereunder.
6. This Agreement shall be binding upon and inure to the benefit
of any successor or assigns of the Employer. This Agreement is concerned with
personal services of Employee and, accordingly, may not be assigned by
Employee.
7. This agreement shall be governed by the laws of the State of
Alabama.
IN WITNESS WHEREOF Employer and Employee have executed this
Agreement as of the 8th day of August, 1988 but effective as of May 1, 1988.
RUSSELL CORPORATION
[SEAL] By E.C. Gwaltney
------------------------------------------
Its Chairman of the Board
Attest:
Steve R. Forehand
- -------------------------------------
Dwight L. Carlisle
-----------------------------------------
Dwight L. Carlisle
Witness:
Steve R. Forehand
- --------------------------------------
-2-
<PAGE> 3
AGREEMENT
This Agreement, dated this 10th day of March, 1993, among Russell
Corporation, an Alabama corporation ("Employer") and E. C. Gwaltney, an
individual residing in Alexander City, Alabama ("Employee"), and Nancy R.
Gwaltney, an individual residing in Alexander City, Alabama.
RECITALS:
Employee has served Employer in a number of officer capacities for
many years and is currently serving in the capacity of Chairman of the Board.
Nancy R. Gwaltney is the wife of Employee. Employee is a party to an Agreement
with Employer dated May 1, 1988 (the "May 1, 1988 Agreement"), which provides,
among other things, for certain compensation and benefits to be paid to Employee
while he is an employee of Employer and while he is a consultant to the Company
after his retirement. Employee will retire from the employment of Employer
effective April 28, 1993, and Employer and Employee desire to amend the May 1,
1988 Agreement to set forth a new agreement between Employer and Employee
concerning his services as an employee and the compensation and benefits to be
paid to or for the benefit of Employee in the future following his retirement
and upon his death. The parties intend by this agreement to rescind and replace
the May 1, 1988 Agreement.
Now, Therefore, in consideration of the premises and the mutual
covenants of the parties and the cancellation of the May 1, 1988 Agreement, the
parties agree as follows:
1. This Agreement supersedes and cancels the May 1, 1988
Agreement and any and all previous contracts, arrangements or understandings
between Employer and Employee with respect to all employment relationships
between them and services to be rendered by, and compensation to be paid to,
Employee following his retirement from Employer and compensation to be paid with
respect to Employee upon his death. This Agreement also sets forth all
understandings and agreements by the parties concerning amounts to be paid in
the future to Nancy R. Gwaltney upon the death of Employee or otherwise.
2. (a) While Employee is in the employment of Employer
until his retirement, he shall continue to receive his salary at the annual
rate of $350,000, payable in the manner normally paid to employees of Employer.
All obligations of Employer under
1
<PAGE> 4
this Paragraph 2 (a) shall cease upon the death of Employee while an employee
of Employer, with the limitation that Employer shall pay to the estate of
Employee any accrued but unpaid salary due at the time of Employee's death.
Employee shall faithfully perform all duties and obligations as Chairman of the
Board of Employer as determined by the bylaws of Employer and by the board of
directors of Employer. Employee agrees that he will exert his best efforts and
work to the best of his ability to promote the interest and welfare of Employer
in every proper way.
(b) If Employee should die while an employee of
Employer and prior to his retirement, Employer shall pay to Nancy R. Gwaltney
an amount at the annual rate of $300,000 for a period of ten years or until her
earlier death. If Nancy R. Gwaltney shall be living upon the expiration of such
ten-year period, Employer shall pay Nancy R. Gwaltney an amount at the annual
rate of $100,000 for the remainder of her lifetime until her death. Upon the
death of Nancy R. Gwaltney, all obligations to make payments under this
Paragraph 2(b) shall cease. The amounts to be paid under this Paragraph 2(b)
shall be paid on a monthly basis.
3. (a) In addition to Employee's normal retirement
benefits, for his services while an Employee, Employer shall pay to Employee
after his retirement and during his lifetime until his death an amount at the
annual rate of $300,000. Upon the death of Employee, all obligations of
Employer to make payments under this Paragraph 3(a) shall cease, subject to the
provisions of Paragraph 3(b) below in the event Nancy R. Gwaltney survives
Employee. The amounts to be paid under this Paragraph 3(a) shall be paid on a
monthly basis.
(b) If Employee should die after his retirement
survived by Nancy R. Gwaltney, but before receiving payments of $300,000 under
Paragraph 3(a) for a period of ten years, Employer will pay to Nancy R. Gwaltney
an amount at the annual rate of $300,000 per year until the expiration of
such ten-year period or until her earlier death; and, upon the expiration of
such ten-year period, if Nancy R. Gwaltney is then living, Employer will pay
Nancy R. Gwaltney an amount at the annual rate of $100,000 for the remainder of
her life until her death. If Employee should die more than ten years after the
date of his retirement survived by Nancy R. Gwaltney, then, upon the death of
Employee, Employer will pay Nancy R. Gwaltney an amount at the annual rate of
$100,000 during her lifetime until her death. Upon the death of Nancy R.
Gwaltney, all obligations to make payments under this Paragraph 3(b) shall
cease. The amounts to be paid under this Paragraph 3(b) shall be paid on a
monthly basis.
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<PAGE> 5
4. Upon the retirement of Employee,
(a) Employee may have the use during his lifetime,
subject to availability, of Employer's aircraft for his personal use (as
opposed to business use) for a total of 50 hours annually, with the
understanding that Employee will be personally present on such aircraft during
such use.
(b) Employer will provide, during the lifetimes of
Employe and Nancy R. Gwaltney, at Employer's vehicle maintenance garage in
Alexander City, Alabama, routine maintenance service up to $1,000 annually on
two automobiles owned and used by Employee and/or Nancy R. Gwaltney.
(c) Employer will provide secretarial services to
Employee for one half day a week upon request of Employee.
(d) Employee shall receive the desk in his office
which he is currently using, along with any personal items or other personal
effects of Employee.
5. Following the retirement of Employee, without the
written consent of Employer, Employee shall not, directly or indirectly, as
a principal, employee, partner, shareholder, officer, director, agent or in any
other capacity, engage in any business competitive in any manner with that of
Employer or any subsidiary of Employer (collectively "Employer" for purposes of
this Paragraph 5) while he is receiving payments under this Agreement, and he
shall further preserve in due secrecy and hold confidential all of the special
knowledge, customer lists, and trade secrets heretofore and hereafter gained by
him during the course of his relationship with Employer. Following the
retirement of Employee, without the prior written consent of Employer, Employee
shall not, directly or indirectly, on his own behalf or on behalf of others,
solicit, induce or attempt to solicit or induce, any employee of Employer to
leave the employment of Employer to enter into a business competitive with
Employer. Upon a unanimous determination by all of the members of the board of
directors of Employer that Employee has breached his obligations under this
Paragraph 5, Employer may suspend the payments under Paragraph 3(a) and 3(b), in
which event the parties shall, within 30 days of the suspension of such
payments, move for a judicial determination of the matter if a resolution of the
matter cannot otherwise be reached by the parties.
6. This Agreement shall be binding upon and inure to the
benefit of Employer, its respective successors and assigns. Since this
Agreement relates to personal services of Employee, Employee may not assign his
interest, or any part thereof, under this Agreement.
3
<PAGE> 6
7. This Agreement shall be governed by the laws of the
State of Alabama.
IN WITNESS WHEREOF, the parties have executed this Agreement
effective as of the date first set forth above.
RUSSELL CORPORATION
By
John C. Adams
----------------------------------------
Its President
Attest:
Steven R. Forehand
- -------------------------
Its Secretary
Witness:
Steven R. Forehand E. C. Gwaltney
- --------------------------- -------------------------------
Steven R. Forehand E.C. Gwaltney
Witness:
George D. Pyle Nancy R. Gwaltney
- --------------------------- -------------------------------
George D. Pyle Nancy R. Gwaltney
4
<PAGE> 1
EXHIBIT (10d)
OCTOBER 28, 1981 AMENDMENT
TO STOCK OPTIONS PLANS
IV-11
<PAGE> 2
RUSSELL CORPORATION
REVISED
1978 STOCK OPTION PLAN
Section 1. Purpose. The purpose of this Stock Option
Plan (the "Plan") is to provide incentive to and to encourage stock ownership
by certain key employees of Russell Corporation, an Alabama corporation (the
"Company"), and to encourage such employees to remain in the employ of the
Company.
Section 2. Administration. The Plan shall be
administered by a committee appointed by the Board of Directors of the Company
(the "Committee"). The Committee shall consist of not less than three members
of the Board of Directors of the Company. The Board of Directors may from time
to time remove members from, or add members to, the Committee. Vacancies on
the Committee shall be filled by the Board of Directors. No director, while a
member of the Committee, shall be eligible to receive an option under the
Plan. The Committee shall, from time to time at its discretion, make
recommendations to the Board of Directors with respect to the employees who
shall be granted options and the amount of stock to be optioned to each.
The interpretation and construction by the Committee of any
provisions of the Plan or of any option granted under it shall be final unless
otherwise determined by the Board of Directors. No member of the Board
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<PAGE> 3
of directors or the Committee shall be liable for any action or determination
made in good faith with respect to the Plan or any option granted under it.
Section 3. Eligibility. The persons who shall be
eligible to receive options shall be officers of the Company and other
employees in full-time executive, administrative, and technical positions
considered to be key positions with the Company, as the Board of Directors
shall select from time to time from among those nominated by the Committee,
provided that such employees must not have attained the age of 65 years as of
the date that the options are granted. An optionee may hold more than one
option, but only on the terms and subject to the restrictions hereafter set
forth. A director who is not an officer or full-time employee shall not be
entitled to participate in the Plan.
Section 4. Stock. The stock subject to the option shall
be shares of the authorized and unissued, or reacquired, common stock of the
Company, $0.01 par value (the "Common Stock"). The aggregate number of shares
which may be issued under options shall not exceed 200,000 shares of Common
Stock; provided, however, that the aggregate number of shares which may be
issued under options shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock of the Company
resulting from a subdivision or consolidation of shares or the payment of a
stock dividend (but only on the Common Stock) or any other increase or decrease
in the number of such shares effected without receipt of consideration by the
Company.
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<PAGE> 4
In the event that any outstanding option under the Plan for
any reason expires or is terminated, the shares of Common Stock allocable to the
unexercised portion of such option may again be subjected to an option under
the Plan.
Section 5. Terms and Conditions of Options. Stock
Options granted pursuant to the Plan shall be authorized by the Board of
Directors and shall be evidenced by agreements in such form as the Committee
shall from time to time recommend and the Board of Directors shall from time to
time approve, which agreements shall comply with and be subject to the following
terms and conditions:
5.1 Number of Shares. Each option shall state the number
of shares to which it pertains. In the case of options granted after December
31, 1980, no optionee may be granted options during any calendar year covering
stock having a fair market value (as hereinafter defined) on the date of grant
in excess of $100,000 plus the amount of any "unused limit carryover" as
defined in Section 251 of the Economic Recovery Tax Act of 1981. "Fair market
value," as used herein, shall mean the mean between the high and low price of
the Common Stock on the American Stock Exchange on the date in question.
5.2 Option Price. The option price of each share subject
to an option shall be at least 100% of the mean between the high and low price
of the Common Stock on the American Stock Exchange on the date of the grant of
the option, and in the case of an optionee who owns in excess of
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<PAGE> 5
10% of the voting stock of the Company at the time the option is granted, the
option price of each share subject to an option shall be at least 110% of the
mean between the high and low price of the Common Stock on the American Stock
Exchange on the date of the grant of the option.
5.3 Medium and Time Payment. The option price shall be
payable upon the exercise of the option in cash.
5.4 Terms and Exercise of Options. No option shall be
exercisable either in whole or in part prior to two (2) years or more than ten
(10) years from the date it is granted, except in the case of an optionee who
owns 10% or more of the voting stock of the Company at the time the option is
granted, in which case the option may not be exercised prior to two (2) years
or more than five (5) years from the date of its grant. No option may be
exercised while there is outstanding, as hereinafter defined, any incentive
stock option which was granted before the granting of such option to the
optionee to purchase Common Stock of the Company. For purposes hereof, an
option shall be considered outstanding until it is exercised in full or expires
by reason of lapse of time.
During the lifetime of the optionee, the option shall be
exercisable only by him and shall not be assignable or transferable by him and
no other person may acquire any rights therein.
5.5 Termination of Employment Except Death. If, prior to
the expiration of two (2) years from the date an option is granted, an
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<PAGE> 6
optionee shall cease to be a full-time employee of the Company for any reason,
such optionee shall have no right to exercise an option. Subsequent to the
expiration of two (2) years from the date an option is granted, in the event of
cessation of full-time employment by an optionee, such optionee may (subject to
the condition that no option may be exercised after the expiration of ten (10)
years from the date of its grant) exercise such option at any time within three
(3) months after such termination of full-time employment (or twelve (12)
months if termination is due to disability) to the extent his right to exercise
such option had accrued pursuant to paragraph 5.4 of the Plan and had not
previously been exercised at the date of such termination. Neither authorized
leave of absence nor absence on account of military or governmental service
shall constitute termination of full-time employment for the purpose of the
Plan. Termination of full-time employment shall be determined by the Committee,
which determination, unless overruled by the Board of Directors, shall be final
and conclusive.
5.6 Death of Optionee and Transfer of Option. If the
optionee shall die while in the full-time employ of the Company or within a
period of three (3) months after the termination of his full-time employment
with the Company and shall not have fully exercised an option which otherwise
would be exercisable by such optionee, the option may be exercised, subject to
the condition that no option shall be exercisable after the expiration of ten
(10) years from the date it is granted, to the extent that the optionee's right
to exercise such option had accrued pursuant to paragraph 5.4 of the Plan at the
time of his death and had not previously
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<PAGE> 7
been exercised, at any time within three (3) months after the optionee's death,
by the executors or administrators of the optionee's estate.
No option shall be transferable by the optionee otherwise than
by will or the laws of descent and distribution.
5.7 Recapitalization. Subject to any required action by
the stockholders, the number of shares of Common Stock covered by each
outstanding option, and the price per share thereof, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock of the Company resulting from a subdivision or consolidation of shares or
the payment of a stock dividend (but only on the Common Stock) or any other
increase or decrease in the number of such shares effected without receipt of
consideration of the Company.
Subject to any required action by the stockholders, if the
Company shall be the surviving corporation in any merger or consolidation, each
outstanding option shall pertain to and apply to the securities to which a
holder of the number of shares of Common Stock subject to the option would have
been entitled. A dissolution or liquidation of the Company or a merger or
consolidation in which the Company is not the surviving corporation, shall
cause each outstanding option to terminate, provided that such optionee shall,
in such event, if a period of two (2) years from the date of the grant of the
option shall have expired, have the right immediately prior to such dissolution
or liquidation, or merger or consolidation in which the corporation is not the
surviving corporation, to exercise his option in
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<PAGE> 8
whole or in part without regard to any installment provisions contained in such
option.
To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Committee,
whose determination in that respect shall be final, binding and conclusive.
Except as hereinbefore expressly provided in this paragraph
5.7, the optionee shall have no rights by reason of any subdivision or
consolidation of shares of stock of any class or the payment of any stock
dividend or any other increase or decrease in the number of shares of stock of
any class or by reason of any dissolution, liquidation, merger, or
consolidation or spinoff or sale of assets, and any issuance by the Company for
consideration of shares or stock of any class, or securities convertible into
shares of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of Common
Stock subject to the option.
The grant of an option pursuant to the Plan shall not affect
in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge or to consolidate or to dissolve, liquidate or sell, or
transfer all or any part of its business or assets.
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<PAGE> 9
5.8 No Rights as a Stockholder. An optionee, or (where
permitted by the terms of the Plan) a transferee of an option, shall have no
rights as a stockholder with respect to any shares covered by his option until
the date of the issuance of a stock certificate to him for such shares. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to the date such stock certificate is issued, except as
provided in paragraph 5.7 hereof.
5.9 Modification, Extension and Renewal of Options.
Subject to the terms and conditions and within the limitations of the Plan, the
Board of Directors may modify, extend or renew outstanding options granted
under the Plan, or accept the surrender of outstanding options (to the extent
not theretofore exercised) and authorize the granting of new options in
substitution therefor (to the extent not theretofore exercised). The Board of
Directors shall not, however, modify any outstanding options so as to specify a
different price or accept the surrender of outstanding options and authorize
the granting of New Options in substitution therefor specifying a different
price, except as otherwise provided in paragraph 5.7. Notwithstanding the
foregoing, however, no modification of an option shall, without the consent of
the optionee, alter or impair any rights or obligations under any option
theretofore granted under the Plan.
5.10 Compliance with Securities and Exchange Commission
Regulations. Shares purchased by an optionee shall only be subject to sale by
such optionee in accordance with any rules or regulations which may
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<PAGE> 10
apply thereto that may have been issued by the Securities and Exchange
Commission, the American Stock Exchange or any State Securities Administrator.
If such shares are registered under the Securities Act of 1933, they may be
sold subject to any limitations on such sale by rules of the Securities and
Exchange Commission, the American Stock Exchange or any State Securities
Administrator.
5.11 Other Provisions. The option agreements authorized
under the Plan shall contain such other provisions, including, without
limitation, restrictions under the exercise of the option, as the Committee and
the Board of Directors shall deem advisable.
Section 6.1 Term of Plan. Options may be granted
pursuant to the Plan from time to time within a period of ten (10) years from
the date the Plan is adopted, or the date the Plan is approved by the
stockholders, whichever is earlier.
Section 7. Indemnification of Committee. In addition to
such other rights of indemnification as they may have as directors or as
members of the Committee, the members of the Committee shall be indemnified by
the Company against the reasonable expenses, including attorneys' fees,
actually and necessarily incurred in connection with the defense of any action,
suit or proceeding, or in connection with any appeal therein, to which they or
any of them may be a party by reason of any action taken or failure to act
under or in connection with the Plan or any option granted thereunder, and
against all amounts paid by them in
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<PAGE> 11
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgment
in any such action, suit or proceeding, except in relation to matters as to
which it shall be adjudged in such action, suit or proceeding that such
Committee member is liable for negligence or misconduct in the performance of
his duties; provided, that within sixty (60) days after institution of any such
action, suit or proceeding a Committee member shall in writing offer the
Company the opportunity, at its own expense to handle and defend the same.
Section 8. Amendment of the Plan. The Board of
Directors of the Company may, insofar as permitted by law, from time to time,
with respect to any shares at the time not subject to options, suspend or
discontinue the Plan or revise or amend it in any respect whatsoever except
that, with approval of the stockholders, no such revision or amendment shall
change the number of shares subject to the Plan, change the designation of the
class of employees eligible to receive options, decrease the price at which
options may be granted, remove the administration of the Plan from the
Committee, or render any member of the Committee eligible to receive an option
under the Plan while serving thereon.
Section 9. Application of Funds. The proceeds received
by the Company from the sale of Common Stock pursuant to options will be used
for general corporate purposes.
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<PAGE> 12
Section 10. No Obligation to Exercise Option. The
granting of an option shall impose no obligation upon the optionee to exercise
such option.
Section 11. Approval of Stockholders. The Plan shall be
effective upon its approval by the holders of a majority of the outstanding
shares of Common Stock of the Company present at a regular or special meeting
thereof.
Date Plan adopted by Board of Directors: March 17, 1978
Date Plan approved by Stockholders: April 26, 1978
Date Revised Plan approved by Board of Directors: ____________
Date Revised Plan approved by Stockholders: __________________
-11-
<PAGE> 1
Exhibit (11)
COMPUTATIONS OF EARNINGS PER COMMON SHARE
RUSSELL CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Year Ended
--------------------------------------------
December 30 December 31 January 1
1995 1994 1994
----------- ----------- ----------
<S> <C> <C> <C>
Primary:
Average shares outstanding 39,097,574 39,949,604 40,847,222
Net effect of dilutive stock
options--based on the treasury
stock method using
average market price 208,981 278,146 374,950
----------- ----------- -----------
TOTALS 39,306,555 40,227,750 41,222,172
=========== =========== ===========
Net income applicable to
common shareholders $54,117,229 $78,826,012 $49,079,599
=========== =========== ===========
Per share amount $ 1.38 $ 1.96 $ 1.19
=========== =========== ===========
Fully diluted:
Average shares outstanding 39,097,574 39,949,604 40,847,222
Net effect of dilutive stock
options--based on the treasury
stock method using the year-end
market price, if higher than
average market price 208,981 300,833 374,950
----------- ----------- -----------
TOTALS 39,306,555 40,250,437 41,222,172
=========== =========== ===========
Net income applicable to
common shareholders $54,117,229 $78,826,012 $49,079,599
=========== =========== ===========
Per share amount $ 1.38 $ 1.96 $ 1.19
=========== =========== ===========
</TABLE>
IV-12
<PAGE> 1
Exhibit (13)
1995 ANNUAL REPORT TO SHAREHOLDERS
IV-13
<PAGE> 2
CASH FLOWS
FROM OPERATIONS
Dollars in millions
(CHART)
'91 '92 '93 '94 '95
In spite of increased C.O.G.S. as a percent of sales, the Company continues to
generate healthy cash flow, funding future growth.
RETURN ON EQUITY
Percent
(CHART)
'91 '92 '93 '94 '95
Pricing pressures and raw materials costs impacted return on equity in 1995.
Commitment to customer service and operating efficiencies should have a
positive impact as industry dynamics improve.
WORKING CAPITAL
Dollars in millions
(CHART)
'91 '92 '93 '94 '95
Working capital increased by $127.8 million (41 percent)
over 1994.
DEBT TO EQUITY
Percent
(CHART)
'91 '92 '93 '94 '95
Russell borrowed $175 million of long-term debt in 1995 to reduce short-term
debt and to take advantage of historically low long-term rates. Capital
structure remains strong.
FINANCIAL OUTLOOK
Our financial strategy focuses on enhancing the economic value of the Company
through profitable sales growth, operating margin improvements and effective
capital management. Russell's capital position and balance sheets are strong.
The Company will continue to leverage its vertical integration for lower
operating costs and manage its financial structure to achieve lowest possible
costs of capital and maintain access to all capital markets to supplement its
own returns from operations.
<TABLE>
<CAPTION>
CONTENTS
- ----------------------------------------------------------
<S> <C>
Financial Review 18
Management's Discussion and Analysis of
Financial Condition and Results of Operations 20
Consolidated Balance Sheets 22
Consolidated Statements of Income 23
Consolidated Statements of Cash Flows 24
Consolidated Statements of Stockholders' Equity 25
Notes to Consolidated Financial Statements 26
Report of Independent Auditors 32
- ----------------------------------------------------------
</TABLE>
1995 Annual Report 17
<PAGE> 3
FINANCIAL REVIEW
RUSSELL CORPORATION AND SUBSIDIARIES
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS
Net sales $1,152,633 $1,098,259 $ 930,787 $ 899,136 $ 804,585
Cost of goods sold 816,834 739,700 613,325 592,837 553,160
Interest expense 21,698 19,434 16,948 15,841 18,097
Income before income taxes(c) 87,733 127,585 80,717 129,507 90,866
Income taxes(c) 33,616 48,759 31,619 47,269 34,027
Net income applicable to common shares(c) 54,117 78,826 49,080 81,945 56,279
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL DATA
Depreciation and amortization $ 68,010 $ 67,042 $ 66,226 $ 60,444 $ 56,594
Net income plus depreciation and amortization 122,127 145,868 115,306 142,389 112,873
Capital expenditures 86,556 38,562 83,979 109,161 89,532
Working capital 438,070 310,330 277,993 285,469 255,392
Long-term debt and redeemable preferred stock 287,878 144,163 163,334 186,122 185,923
Stockholders' equity 632,558 628,662 587,651 570,003 502,501
Capital employed 920,436 772,825 750,985 756,125 688,424
Total assets 1,118,164 1,046,577 1,017,044 964,933 818,220
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK DATA(a)
Net income(c) $ 1.38 $ 1.96 $ 1.19 $ 1.99 $ 1.38
Dividends .48 .42 .39 .34 .32
Book value 16.34 15.84 14.54 13.97 13.97
Price Range:
High 31.25 32.63 36.87 40.37 40.37
Low 22.00 24.00 26.00 27.75 27.75
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATISTICS
Net sales times:
Receivables(b) 5.3 5.6 5.3 5.8 5.8
Inventories(b) 3.8 3.9 3.7 4.6 4.6
Capital employed(b) 1.4 1.4 1.2 1.2 1.2
Interest coverage(c) 5.0 7.6 5.8 9.2 6.0
Income before income taxes as a percent of sales(c) 7.6% 11.6% 8.7% 14.4% 11.3%
Net income as a percent of sales(c) 4.7% 7.2% 5.3% 9.1% 7.0%
Net income as percent of stockholders' equity(b)(c) 8.6% 13.0% 8.5% 15.3% 11.7%
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER DATA
Net common shares outstanding(a) (000s omitted) 38,715 39,689 40,405 40,810 40,569
Approximate number of common shareholders 12,300 13,000 13,000 13,000 18,000
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Adjusted for a stock distribution in 1986.
(b) Average of amounts at beginning and end of each fiscal year.
(c) Fiscal 1993 includes a non-cash, pre-tax charge of $34,583,080
associated with the write-down of certain fixed assets and goodwill.
The after-tax impact of this write-down on 1993 earnings was $.56 per
common share.
18 RUSSELL CORPORATION
<PAGE> 4
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS
Net sales $ 713,812 $ 687,954 $ 531,136 $ 479,880 $437,520
Cost of goods sold 461,281 457,875 344,109 316,738 284,965
Interest expense 18,885 15,643 8,788 6,892 4,051
Income before income taxes(c) 109,672 102,728 85,793 80,145 80,382
Income taxes(c) 41,725 37,994 32,028 33,811 37,100
Net income applicable to common shares(c) 67,378 64,163 53,728 46,334 43,282
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL DATA
Depreciation and amortization $ 52,539 $ 45,633 $ 33,368 $ 26,039 $ 22,850
Net income plus depreciation and amortization 119,917 109,796 87,096 72,373 66,132
Capital expenditures 113,617 87,410 118,476 77,502 40,113
Working capital 249,683 267,178 124,263 162,931 148,188
Long-term debt and redeemable preferred stock 196,857 210,470 90,023 73,545 38,043
Stockholders' equity 456,352 402,216 345,086 279,611 248,347
Capital employed 653,209 612,686 435,109 353,156 286,390
Total assets 794,521 720,806 560,969 445,252 351,041
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK DATA(a)
Net income(c) 1.65 $ 1.57 $ 1.36 $ 1.17 $ 1.08
Dividends .32 .28 .23 .19 .16
Book value 11.29 9.95 8.55 7.16 6.33
Price Range:
High 31.00 26.50 17.75 20.50 19.62
Low 16.00 15.62 11.37 10.62 9.31
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATISTICS
Net sales times:
Receivables(b) 5.3 5.9 5.6 5.8 6.0
Inventories(b) 5.1 6.8 6.4 6.9 6.6
Capital employed(b) 1.1 1.3 1.3 1.5 1.6
Interest coverage(c) 6.8 7.6 10.8 12.6 20.8
Income before income taxes as a percent of sales(c) 15.4% 14.9% 16.2% 16.7% 18.4%
Net income as a percent of sales(c) 9.4% 9.3% 10.1% 9.7% 9.9%
Net income as percent of stockholders' equity(b)(c) 15.7% 17.2% 17.2% 17.6% 18.5%
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER DATA
Net common shares outstanding(a) (000s omitted) 40,407 40,427 40,360 39,050 39,214
Approximate number of common shareholders 18,000 18,000 18,000 18,600 13,600
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Adjusted for a stock distribution in 1986.
(b) Average of amounts at beginning and end of each fiscal year.
(c) Fiscal 1993 includes a non-cash, pre-tax charge of $34,583,080 associated
with the write-down of certain fixed assets and goodwill.
The after-tax impact of this write-down on 1993 earnings was $.56 per
common share.
1995 ANNUAL REPORT 19
<PAGE> 5
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RUSSELL CORPORATION AND SUBSIDIARIES
1995 vs 1994
- --------------------------------------------------------------------------------
Net sales for 1995 increased 5% to $1,152,633,000. This record level of sales
was achieved in spite of a soft retail environment. The Company's core domestic
business, while impacted by the slowdown at retail, posted solid growth in
units. International and export sales grew 31% and represented 9.3% of sales in
1995.
1995 saw cotton prices reach post Civil-War highs. While the Company had
covered a substantial portion of its cotton requirements through the purchase
of cotton futures contracts, the effect of these record prices on the remaining
requirements, along with competitive pricing pressures and increased cost
associated with contracted domestic apparel assembly, resulted in a decline in
gross margins to 29.1% from 32.6% in 1994. The Company expects that lower raw
material prices, additions to Company-owned capacity, and a continued
commitment to cost containment will yield favorable results in gross margins
for 1996.
The Company utilizes cotton futures contracts to set sales prices
which are generally set six months to a year in advance of the selling seasons.
Depending upon market conditions, these contracts may be purchased at the time
prices are set. Purchasing futures contracts not only limits the risk of price
increases, but also limits the Company's ability to benefit from price
decreases. At December 30, 1995, the Company had outstanding futures contracts
that, when combined with other contracts and inventory, represented 100% of the
Company's anticipated 1996 cotton requirements.
Selling, general and administrative expenses rose both in gross dollars
and as a percent of sales. The Company continued to increase advertising
expenditures in 1995 in order to gain market share in an increasingly
competitive domestic market. Customer service expenditures and higher royalty
rates associated with our licensed product business, also contributed to the
increase over 1994.
The Company utilizes two interest rate swap agreements in the management of
its interest rate exposure. These agreements effectively convert a portion of
the Company's interest rate exposure from a fixed to a floating rate basis, and
from a floating rate to a fixed rate basis. The effect of these agreements was
to lower the effective interest rate on the Company's long-term debt from 7.34%
to 7.07% and from 7.48% to 7.32% in 1995 and 1994, respectively. Interest
expense increased in 1995 due to increased borrowings and higher rates on
short-term debt. During 1995, the Company borrowed an additional $175 million
of long-term debt. The proceeds from the borrowings were used to reduce
short-term debt and for other general corporate purposes.
The balance sheet continues to reflect the strong financial condition of the
Company. Working capital increased by $128 million in 1995. Accounts receivable
increased in line with sales growth and inventories increased by 15%, in line
with projected requirements for 1996. At December 30, 1995, the current ratio
was 4.5:1 vs. 2.5:1 at the end of 1994. Debt to total capitalization was 31.3%
at the end of 1995 vs. 18.7% at the end of 1994, reflecting the aforementioned
issuance of long-term debt.
During 1995, the Company adopted Statement of Financial Accounting Standards
No. 121, "Accounting for Long-Lived Assets and for Long-Lived Assets to be
Disposed of." The Company records impairment losses on long-lived assets used
in operations when events and circumstances indicate that the assets might be
impaired and the undiscounted cash flows estimated to be generated by those
assets are less than the carrying amounts of those assets. An impairment loss
would be recorded based on the excess of the carrying amount of the asset over
the asset's fair value. There was no impact on the Company's financial
statements from the adoption of Statement 121.
Net income plus non-cash charges of approximately $121 million, along with
long-term borrowings of $175 million, provided the majority of cash
requirements in 1995. This cash was used for working capital, capital
expenditures, dividends, treasury stock purchases and the repayment of debt.
1995 capital expenditures of $87 million brings the five year total to $408
million reflecting the Company's continuing commitment to customer service and
manufacturing efficiencies. Capital expenditures of $163 million are
anticipated in 1996. These 1996 expenditures are principally for expansion and
modernization of manufacturing and distribution facilities. The Company
maintains $209 million in informal lines of credit. The Company does not
anticipate issuing any additional long-term debt or equity securities in 1996.
There were no material acquisitions in 1995. In 1994, acquisitions totaled
approximately $10 million with the purchase of DeSoto Mills, Inc. The Company
also acquired the trademarks and licenses of Chalk Line, Inc., and its
affiliates, for approximately $5.6 million in 1994.
In 1995, the Board of Directors adjusted the stock repurchase authorization
upward to a total of two million shares. Purchases of the Company's Common
Stock totaled $30,137,858 in 1995 representing 1,071,435 shares, compared to
1,205,527 shares at a total cost of $33,898,976 in 1994.
20 RUSSELL CORPORATION
<PAGE> 6
1994 vs 1993
- --------------------------------------------------------------------------------
Net sales for 1994 increased 18% to $1,098,259,000. Sales benefited from
increased unit volumes of fleecewear, T-shirts, placket shirts and teamwear;
revenues from acquisitions; and solid growth in international operations.
Record sales were achieved without assistance from higher average selling
prices. The year included $79,305,000 sales from the acquisitions of The Game
Inc. and DeSoto Mills, Inc. Excluding the effect of the acquisitions, sales
rose 10%. International and export revenues grew 43% and represented 8.5% of
the Company's 1994 net sales.
Gross margin of 32.6% was lower than the prior year's 34.1% principally as a
result of higher raw material costs, competitive pricing pressures and less
than optimal plant operating schedules during the first quarter of 1994.
Selling, general and administrative expenses were higher principally due to
the inclusion of acquisitions in 1994's results. The benefits of higher unit
volumes and continuing expense management resulted in a decline in selling,
general and administrative expenses as a percent of sales for the year.
In anticipation of higher cotton prices in 1994, the Company purchased
futures contracts to cover a portion of its cotton requirements. Cotton prices
rose significantly during the year, and those contracts mitigated the effect of
such increases for a major portion of the period. At December 31, 1994, the
Company had outstanding futures contracts that, when combined with other
contracts and inventory, represented approximately 75% of the anticipated 1995
cotton requirements.
Implementation of the results of the Company's 1993 strategic review of its
operations continued in 1994 and resulted in reduced annual pre-tax
depreciation and amortization charges of approximately $5 million and had an
immaterial impact on sales.
Working capital increased by $32 million in 1994. Accounts receivable
increased at a rate in line with sales growth and receivables turnover
improved. Excluding acquisitions, inventories declined year-over-year. Other
assets increased principally due to goodwill arising from the acquisition of
DeSoto Mills, Inc. and the purchase of the licenses and trademarks of Chalk
Line, Inc. and its affiliates.
The combination of net income plus non-cash charges, $145 million in 1994,
continued to be a major source of funds. Net income plus non-cash charges,
along with short-term borrowing, primarily provided cash requirements for
capital expenditures, working capital, dividend payments, treasury share
purchases and repayment of debt. At year-end 1994, the Company maintained $284
million in informal lines of credit. Long-term debt as a percentage of total
capital employed was 18.7% vs 21.7% in 1993.
Cash expenditures for capital projects were $39 million in 1994, compared to
$84 million in 1993. This brought the five year total to $435 million.
Acquisitions totaled approximately $10 million in 1994 with the purchase of
DeSoto Mills, Inc., a manufacturer and marketer of sports and casual socks.
This transaction was completed through an exchange of the Company's common
stock with approximately $5.8 million recorded as goodwill. The Company also
acquired the trademarks and licenses of Chalk Line, Inc., and its affiliates,
for approximately $5.6 million. Acquisitions totaled $35 million in 1993.
Common stock repurchases totaled $33,898,976 in 1994, representing 1,205,527
shares, compared to 549,360 shares at a cost of $15,196,000 in 1993.
1995 ANNUAL REPORT 21
<PAGE> 7
CONSOLIDATED BALANCE SHEETS
RUSSELL CORPORATION AND SUBSIDIARIES
December 30, 1995 and December 31, 1994
(In thousands, except share data)
<TABLE>
<CAPTION>
1995 1994
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 4,485 $ 4,141
Trade accounts receivable, less allowances of $10,337 in 1995 and
$10,458 in 1994 224,375 211,976
Inventories 321,209 279,393
Prepaid expenses and other current assets 6,824 7,088
Future income tax benefits 7,984 8,277
- ------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 564,877 510,875
PROPERTY, PLANT AND EQUIPMENT:
Land 10,649 10,443
Buildings 253,950 238,339
Machinery and equipment 719,543 684,835
Construction-in-progress 28,785 5,860
- ------------------------------------------------------------------------------------------------------------------
1,012,927 939,477
Less allowances for depreciation and amortization (531,193) (472,433)
- ------------------------------------------------------------------------------------------------------------------
481,734 467,044
OTHER ASSETS 71,553 68,658
- ------------------------------------------------------------------------------------------------------------------
$1,118,164 $1,046,577
==================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt $ 7,389 $ 97,941
Accounts payable and accrued expenses:
Trade accounts 45,613 45,004
Employee compensation 18,080 20,228
Other 17,649 11,075
- ------------------------------------------------------------------------------------------------------------------
81,342 76,307
Income taxes 6,793 6,824
Current maturities of long-term debt and capital lease obligations 31,283 19,473
- ------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 126,807 200,545
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, LESS CURRENT MATURITIES 287,878 144,163
DEFERRED LIABILITIES:
Income taxes 48,747 50,840
Pension and other 22,174 22,367
- ------------------------------------------------------------------------------------------------------------------
70,921 73,207
COMMITMENTS
STOCKHOLDERS' EQUITY:
Common Stock, par value $.01 per share; authorized 150,000,000 shares,
issued 41,419,958 shares 414 414
Paid-in capital 52,405 53,511
Retained earnings 664,163 628,836
Treasury Stock (1995 - 2,704,537 and 1994 - 1,730,889 shares) (76,378) (48,598)
Currency translation adjustment (8,046) (5,501)
- ------------------------------------------------------------------------------------------------------------------
632,558 628,662
- ------------------------------------------------------------------------------------------------------------------
$1,118,164 $1,046,577
==================================================================================================================
</TABLE>
See notes to consolidated financial statements.
22 RUSSELL CORPORATION
<PAGE> 8
CONSOLIDATED STATEMENTS OF INCOME
RUSSELL CORPORATION AND SUBSIDIARIES
Years ended December 30, 1995, December 31, 1994 and January 1, 1994
(In thousands, except per share data)
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
NET SALES $ 1,152,633 $ 1,098,259 $ 930,787
Cost of goods sold 816,834 739,700 613,325
- -----------------------------------------------------------------------------------------------------
335,799 358,559 317,462
Selling, general and administrative expenses 229,347 213,025 185,108
Write-down of assets - - 34,583
- -----------------------------------------------------------------------------------------------------
106,452 145,534 97,771
OTHER DEDUCTIONS (INCOME):
Interest expense 21,698 19,434 16,948
Other - net (2,979) (1,485) 106
- -----------------------------------------------------------------------------------------------------
18,719 17,949 17,054
- -----------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 87,733 127,585 80,717
PROVISION FOR INCOME TAXES:
Currently payable 35,416 48,123 38,772
Deferred (1,800) 636 (7,153)
- -----------------------------------------------------------------------------------------------------
33,616 48,759 31,619
- -----------------------------------------------------------------------------------------------------
NET INCOME 54,117 78,826 49,098
Preferred stock dividends - - 18
- -----------------------------------------------------------------------------------------------------
NET INCOME APPLICABLE TO COMMON SHAREHOLDERS $ 54,117 $ 78,826 $ 49,080
=====================================================================================================
NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE $ 1.38 $ 1.96 $ 1.19
=====================================================================================================
</TABLE>
See notes to consolidated financial statements.
1995 ANNUAL REPORT 23
<PAGE> 9
CONSOLIDATED STATEMENTS OF CASH FLOWS
RUSSELL CORPORATION AND SUBSIDIARIES
Years ended December 30, 1995, December 31, 1994 and January 1, 1994
(In thousands)
<TABLE>
<CAPTION>
1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 54,117 $ 78,826 $ 49,098
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 68,010 67,042 66,226
Deferred income taxes (1,800) 636 (7,153)
Loss (gain) on sale of property, plant and equipment 560 (610) 1,153
Write-down of assets - - 34,583
Changes in assets and liabilities:
Trade accounts receivable (13,604) (30,760) 4,612
Inventories (43,414) 2,474 (21,298)
Prepaid expenses and other current assets 175 (45) 591
Other assets (4,872) (8,219) (3,769)
Accounts payable and accrued expenses 6,027 8,728 (4,469)
Income taxes (31) (14,647) 10,810
Pension and other deferred liabilities (1,103) 1,955 5,668
- -----------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 64,065 105,380 136,052
INVESTING ACTIVITIES
Acquisition (net of cash acquired) - - (34,548)
Purchase of property, plant and equipment (86,556) (38,562) (83,979)
Proceeds from sale of property, plant and equipment 5,984 1,821 5,610
- -----------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (80,572) (36,741) (112,917)
FINANCING ACTIVITIES
Payments on notes payable - (4,562) (400)
Short-term borrowings - 5,547 27,700
Payments on short-term debt (90,493) - -
Payments on long-term debt (19,475) (21,863) (22,877)
Long-term borrowings 175,000 - -
Dividends on Preferred Stock - - (18)
Retirement of Preferred Stock - - (622)
Dividends on Common Stock (18,790) (16,780) (15,950)
Distribution of treasury shares 1,252 3,151 2,105
Cost of Common Stock for treasury (30,138) (33,750) (15,196)
- -----------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 17,356 (68,257) (25,258)
Effect of exchange rate changes on cash (505) (138) (75)
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash 344 244 (2,198)
Cash balance at beginning of year 4,141 3,897 6,095
- -----------------------------------------------------------------------------------------------------------------------
CASH BALANCE AT END OF YEAR $ 4,485 $ 4,141 $ 3,897
=======================================================================================================================
</TABLE>
See notes to consolidated financial statements.
24 RUSSELL CORPORATION
<PAGE> 10
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
RUSSELL CORPORATION AND SUBSIDIARIES
Years ended December 30, 1995, December 31, 1994 and January 1, 1994
(In thousands, except share data)
<TABLE>
<CAPTION>
1995 1994 1993
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK
BALANCE AT BEGINNING AND END OF YEAR $ 414 $ 414 $ 414
========================================================================================================
PAID-IN CAPITAL
Balance at beginning of year $ 53,511 $ 49,040 $ 49,023
Exercise of stock options (1,106) (96) 17
Acquisitions - 4,567 -
- --------------------------------------------------------------------------------------------------------
BALANCE AT END OF YEAR $ 52,405 $ 53,511 $ 49,040
========================================================================================================
RETAINED EARNINGS
Balance at beginning of year $ 628,836 $ 566,790 $ 533,660
Net income for the year 54,117 78,826 49,098
- --------------------------------------------------------------------------------------------------------
682,953 645,616 582,758
Cash dividends - Preferred Stock - - 18
Cash dividends - Common Stock (1995 - $.48; 1994 -
$.42; 1993 - $.39) 18,790 16,780 15,950
- --------------------------------------------------------------------------------------------------------
BALANCE AT END OF YEAR $ 664,163 $ 628,836 $ 566,790
========================================================================================================
TREASURY STOCK
Balance at beginning of year $ 48,598 $ 23,040 $ 9,932
Cost of shares acquired (1995 - 1,071,435; 1994 -
1,205,527; 1993 - 549,360) 30,138 33,899 15,196
Shares distributed (1995 - 97,787; 1994 - 489,255;
1993 - 144,537) (2,358) (8,341) (2,088)
- --------------------------------------------------------------------------------------------------------
BALANCE AT END OF YEAR $ 76,378 $ 48,598 $ 23,040
========================================================================================================
CURRENCY TRANSLATION ADJUSTMENT
Balance at beginning of year $ (5,501) $ (5,552) $ (3,162)
Translation (loss) gain(2,545) (2,545) 51 (2,390)
- --------------------------------------------------------------------------------------------------------
BALANCE AT END OF YEAR $ (8,046) $ (5,501) $ (5,552)
========================================================================================================
</TABLE>
See notes to consolidated financial statements.
1995 ANNUAL REPORT 25
<PAGE> 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
RUSSELL CORPORATION AND SUBSIDIARIES
Years ended December 30, 1995, December 31, 1994 and January 1, 1994
NOTE 1.
DESCRIPTION OF BUSINESS AND
SIGNIFICANT ACCOUNTING POLICIES
Russell Corporation is a vertically integrated international designer,
manufacturer and marketer of activewear, athletic uniforms, better knit shirts,
leisure apparel, licensed sports apparel, sports and casual socks, and a
comprehensive line of lightweight, yarn-dyed woven fabrics. The Company
operates in a single business segment. Apparel products are marketed to
sporting goods dealers, department and specialty stores, mass merchandisers,
golf pro shops, college bookstores, screen printers, distributors, mail order
houses, and other apparel manufacturers.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Russell
Corporation and its subsidiaries after the elimination of intercompany accounts
and transactions.
USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
INVENTORIES
Inventories of finished goods, work-in-process and raw materials are carried at
the lower of cost or market, with cost for a substantial portion of inventories
determined under the Last-In, First-Out (LIFO) method. Certain inventories are
carried under the First-In, First-Out (FIFO) method, or the average cost
method, and were valued at approximately $51,000,000 in 1995 and $64,000,000 in
1994. Inventories are summarized as follows:
<TABLE>
<CAPTION>
(In thousands) 1995 1994
- -------------------------------------------------------------
<S> <C> <C>
Finished goods $274,035 $227,625
Work-in-process 43,476 37,639
Raw materials and supplies 62,099 47,868
- -------------------------------------------------------------
379,610 313,132
Less LIFO reserve 58,401 33,739
- -------------------------------------------------------------
$321,209 $279,393
=============================================================
</TABLE>
PROPERTY, PLANT AND EQUIPMENT
Provision for depreciation of the principal items of property, plant and
equipment (recorded at cost), including those items held under capital lease
agreements, has been computed generally on the straight-line method at rates
based upon their estimated useful lives.
OTHER ASSETS
Included in other assets is goodwill of approximately $36,900,000 and
$37,600,000, which is net of accumulated amortization of $6,700,000 and
$4,800,000 at December 30, 1995 and December 31, 1994, respectively. Goodwill
is being amortized over fifteen to twenty-five years on a straight-line basis.
The carrying value of goodwill is reviewed if the facts and circumstances
suggest that it may be impaired. If this review indicates that goodwill will
not be recoverable based upon the undiscounted cash flows of the entity
acquired over the remaining amortization period, the Company's carrying value
of the goodwill is reduced by the excess of the carrying value over the fair
value of the entity acquired.
INCOME TAXES
The Company accounts for income taxes under the provisions of Financial
Accounting Standards Board (FASB) Statement No. 109, "Accounting for Income
Taxes." Under Statement 109, deferred tax assets and liabilities are determined
based upon differences between financial reporting and tax bases of assets and
liabilities and are measured at the enacted tax rates and laws that will be in
effect when the differences are expected to reverse.
ADVERTISING, MARKETING AND PROMOTIONS EXPENSE
The cost of advertising, marketing and promotions is expensed as incurred. The
Company incurred $40,281,000, $35,625,000 and $33,930,000 in such costs during
1995, 1994 and 1993, respectively.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
Postemployment benefits are recorded under the provisions of FASB Statement No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions."
The cost of such benefits is accrued over the service lives of the employees
expected to be eligible to receive such benefits.
STOCK-BASED COMPENSATION
Under incentive compensation plans, the Company issues awards in several forms
as described in Note 9. These stock options and awards are accounted for in
accordance with Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees." In October 1995, the FASB issued Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," which provides an alternative to Opinion No. 25 in accounting
for stock-based compensation issued to employees. The Statement allows for a
fair value based method of accounting for employee stock options and similar
equity instruments. However, for companies that continue to account for
stock-based compensation arrangements under Opinion No. 25, Statement 123
requires disclosure of the pro forma effect on net income and earnings per
share of its fair value based accounting for those arrangements. These
disclosure requirements are effective for fiscal years beginning after December
15, 1995,
26 RUSSELL CORPORATION
<PAGE> 12
or upon initial adoption of the Statement, if earlier. The Company continues to
evaluate the provisions of Statement 123 and has not determined whether it will
adopt the recognition and measurement provisions of that Statement.
ADOPTION OF NEW ACCOUNTING PRONOUNCEMENT
During 1995, the Company adopted FASB Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of."
In accordance with Statement 121, the Company records impairment losses on
long-lived assets used in operations when events and circumstances indicate
that the assets might be impaired and the undiscounted cash flows estimated to
be generated by those assets are less than the carrying amounts of those
assets. An impairment loss would be recorded based on the excess of the
carrying amount of the asset over the asset's fair value. There was no impact
on the Company's financial statements from the adoption of Statement 121.
CONCENTRATIONS OF CREDIT RISK AND FINANCIAL INSTRUMENTS
Financial instruments which subject the Company to credit risk are primarily
trade accounts receivable. Concentrations of credit risk with respect to trade
accounts receivable are limited due to the large number and diversity of
customers comprising the Company's customer base. Management believes that any
risk associated with trade accounts receivable is adequately provided for in
the allowance for doubtful accounts (Note 6).
Sales to a major customer, and its affiliates, represented 15.1% and 13.1%
of the Company's net sales for the years ended December 30, 1995 and December
31, 1994, respectively. Accounts receivable from this customer represented
17.7% and 15.9% of the Company's net accounts receivable at December 30, 1995
and December 31, 1994, respectively.
The Company periodically enters into futures contracts as hedges for its
purchases of cotton inventory. Gains and losses on these hedges are deferred
and reflected in cost of sales as such inventory is sold. The Company also
utilizes forward purchase contracts in its international operations to limit
the currency risks associated with purchase obligations. The effects of
movements in currency exchange rates on these instruments are recognized in the
period in which the purchase obligations are satisfied (Note 6).
The Company utilizes two interest rate swap agreements in the management of
interest rate exposure on long-term debt. The differential to be received, or
paid, under the agreements is accrued as interest rates change and recorded as
an adjustment to interest expense. The related amount payable to, or receivable
from, the counterparties to the agreements is included in other liabilities or
assets. The Company believes that the possibility of credit losses associated
with these agreements, resulting from third-party non-performance, is remote.
EARNINGS PER COMMON SHARE
Earnings per common share are computed by using the average number of shares of
Common Stock outstanding, plus equivalent shares (employee stock options), with
net income adjusted for Preferred Stock dividends. Earnings per common share,
assuming full conversion, have not been reported since any difference is
minimal.
FISCAL YEAR
The Company's fiscal year ends on the Saturday nearest to January 1, which
periodically results in a fiscal year of 53 weeks. Fiscal years 1995, 1994 and
1993 ended on December 30, 1995, December 31, 1994 and January 1, 1994,
respectively.
NOTE 2.
ACQUISITIONS
On March 29, 1994, the Company acquired DeSoto Mills, Inc., a manufacturer and
marketer of sports and casual socks, through an exchange of approximately
356,000 shares of the Company's Common Stock. The transaction of approximately
$10,000,000 was accounted for as a purchase. The excess of the purchase price
over the fair value of the assets and liabilities acquired, approximately
$5,800,000, was recorded as goodwill. The consolidated income statements
include the results of operations of DeSoto Mills, Inc. subsequent to March 29,
1994.
On December 23, 1993, the Company acquired The Game Inc. The Game Inc. is a
leading designer, producer and marketer of high-quality, licensed sports
headwear and apparel for colleges and universities and the four major
professional sports leagues (National Football League, National Basketball
Association, Major League Baseball and National Hockey League). The all cash
transaction, of approximately $35,000,000, was accounted for as a purchase. The
excess of the purchase price over the fair value of the assets and liabilities
acquired, approximately $18,000,000, was recorded as goodwill. The consolidated
income statements include the results of operations of The Game Inc. subsequent
to December 23, 1993.
The following unaudited pro forma information shows the results of the
Company's operations as if the acquisitions had occurred on January 3, 1993.
These pro forma results of operations are not necessarily indicative of the
actual results of operations that would have occurred had the acquisitions been
made at the beginning of fiscal 1993.
<TABLE>
<CAPTION>
(In thousands, except per share data) 1994 1993
- ------------------------------------------------------------------------
<S> <C> <C>
Net sales $1,109,952 $1,036,370
Net income 78,885 43,086
Net income per common share 1.96 1.04
- ------------------------------------------------------------------------
</TABLE>
1995 RUSSELL CORPORATION 27
<PAGE> 13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
RUSSELL CORPORATION AND SUBSIDIARIES
Years ended December 30, 1995, December 31, 1994 and January 1, 1994
NOTE 3.
WRITE-DOWN OF ASSETS
During the third quarter of 1993, the Company completed a strategic review of
its operations and concluded that certain property, plant and equipment and
goodwill had a net realizable value substantially less than the book value of
such assets. As a result, during the third quarter the Company recognized a
non-cash, pre-tax charge totaling approximately $35 million, which principally
involved the Company's textile operations and its Cross Creek Apparel, Inc.
subsidiary. The charge included a write-off of $7 million in goodwill
associated with its 1988 purchase of Cross Creek Apparel, Inc. The remaining
charges were for property, plant and equipment primarily used to manufacture
fabrics that go into higher priced specialty markets including placket shirts,
slacks, dress shorts and dress shirts. The Company overestimated the market's
potential for these items as volumes did not materialize. Implementation of the
results of the Company's strategic review resulted in reduced pre-tax
depreciation and amortization charges of approximately $5 million in each of
the fiscal years 1995 and 1994 and had an immaterial impact on net sales.
NOTE 4.
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
Long-term debt and capital lease obligations include the following:
<TABLE>
<CAPTION>
(In thousands) 1995 1994
- -------------------------------------------------------------------------------------
<S> <C> <C>
Notes payable to financial institutions:
6.72% notes due annually
1996 through 2002 $ 75,000 $ 75,000
8.83% notes due annually through 1999 42,900 53,600
8.01% notes due annually through 1997 17,500 26,000
6.95% to 8.50% notes due
1996 through 1998 361 636
6.78% notes due annually
2003 through 2008 100,000 -
Variable rate (6.24% at December 30,
1995) note due annually 1999
through 2005 75,000 -
Capital lease obligations (5.35% to 6.00%)
due annually 1996 through 2002 8,400 8,400
- -------------------------------------------------------------------------------------
319,161 163,636
Less current maturities 31,283 19,473
- -------------------------------------------------------------------------------------
$ 287,878 $ 144,163
=====================================================================================
</TABLE>
The notes are unsecured and contain restrictions on the payment of
dividends; incurrence of indebtedness, liens or leases; acquisition of
investments; retirement of capital stock; and the maintenance of working
capital. At December 30, 1995, $119,761,076 of retained earnings was
unrestricted for payment of dividends.
The capital lease obligations relate to land, buildings and machinery and
equipment financed primarily by industrial revenue bonds. The property
collateralized under the capital lease obligations is included in property,
plant and equipment with a net carrying value of $6,450,122 and $6,998,097 at
December 30, 1995 and December 31, 1994, respectively.
The following summarizes the maturities of long-term debt and capital lease
obligations: 1996 - $31,283,356; 1997 - $31,943,036; 1998 - $22,627,747; 1999 -
$33,364,286; 2000 - $22,564,286; and thereafter - $177,378,570.
NOTE 5.
SHORT-TERM DEBT
The Company may borrow up to approximately $209 million under informal line of
credit arrangements with six banks, on such terms as the Company and the banks
may mutually agree. Generally, the arrangements may be canceled by either party
at any time. At December 30, 1995, amounts outstanding under the line of credit
arrangements totaled $7.4 million. The average interest rates of bank
borrowings during 1995, 1994 and 1993 were 6.3%, 4.6% and 3.5%, respectively.
The weighted average interest rates of bank borrowings outstanding at December
30, 1995, December 31, 1994 and January 1, 1994 were 7.3%, 6.4% and 3.9%,
respectively.
NOTE 6.
FINANCIAL INSTRUMENTS
COTTON FUTURES
The Company utilizes commodity futures contracts in connection with estimating
product sales prices in advance of the selling seasons. These transactions
effectively limit the Company's risk associated with future cotton price
increases as well as the benefits of future price decreases. At December 30,
1995, the Company had outstanding futures contracts that, when combined with
other contracts and inventories, represented approximately 100% of its
anticipated 1996 cotton requirements.
CURRENCY HEDGES
At December 30, 1995, the Company had contracts in various European currencies
and U.S. dollars totaling the equivalent of $3,911,600. There were no material
gains or losses associated with these contracts.
28 RUSSELL CORPORATION
<PAGE> 14
INTEREST RATE SWAP AGREEMENTS
The Company utilizes two interest rate swap agreements in the management of
interest rate exposure on long-term debt. The Company entered into a fixed to
floating rate swap agreement in 1992. Under this agreement, which expires
August 31, 2002, the Company receives a fixed rate payment of 6.14% on $75
million and pays a floating rate based upon LIBOR, as determined at six month
intervals.
In 1995, the Company entered into a floating to fixed rate swap
agreement. Under this agreement, which expires June 30, 2005, the Company
receives a variable rate based upon LIBOR plus .29%, as determined quarterly,
and pays a fixed rate of 6.67% on $75 million.
These agreements, when combined, effectively lowered the weighted
average interest rate on the Company's long-term debt from 7.34% to 7.07% and
7.48% to 7.32% in 1995 and 1994, respectively. The Company believes that future
changes in interest rates will not have a material impact on the Company's
consolidated financial position or results of operations. The fair value of the
swap agreements, as indicated below, is the estimated termination value of the
agreements at the balance sheet date and may not be indicative of the current
termination values. Any gain or loss on the agreements will be recognized when
realized.
OTHER FINANCIAL INSTRUMENTS
At December 30, 1995 and December 31, 1994, the carrying value of financial
instruments such as cash, trade accounts receivable and payables approximated
their fair values, based on the short-term maturities of these instruments. The
fair value of the Company's long-term debt is estimated using discounted cash
flow analyses, based upon the Company's current incremental borrowing rates for
similar types of borrowing arrangements. The following table summarizes fair
value information for the Company's long-term debt and interest rate swap
agreements:
<TABLE>
<CAPTION>
1995 1994
- -------------------------------------------------------------------------------
CARRYING FAIR CARRYING FAIR
(In thousands) VALUE VALUE VALUE VALUE
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Long-term debt $319,161 $320,070 $163,636 $157,270
Interest-rate swap
agreement
terminating
August 31, 2002 1,640 5,020 1,110 (6,550)
Interest-rate swap
agreement
terminating
June 30, 2005 - (2,438) - -
- -------------------------------------------------------------------------------
</TABLE>
NOTE 7.
EMPLOYEE RETIREMENT BENEFITS
The Company has a qualified noncontributory pension plan (Retirement Plan)
covering substantially all of its United States employees, a non-qualified
supplemental retirement plan (Supplemental Plan) which provides the excess
benefits that are limited under the Retirement Plan for certain individuals as
a result of compensation levels, and a savings plan that is qualified under
Section 401(k) of the Internal Revenue Code (Savings Plan).
Benefits for the Retirement Plan and Supplemental Plan are based upon years
of service and the employees' highest consecutive five years of compensation
during the last ten years of employment. The Company's funding policy for the
Retirement Plan is to contribute annually the maximum amount that can be
deducted for federal income tax purposes. Contributions are intended to provide
not only for benefits attributed to service to date, but also for those
expected to be earned in the future. Net pension cost for the Retirement Plan
included the following components:
<TABLE>
<CAPTION>
(In thousands) 1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 5,134 $ 5,007 $ 4,709
Interest cost 7,106 6,147 6,181
Actual return on plan assets (10,496) (1,345) (5,068)
Net amortization and deferral 1,846 (7,066) (2,688)
- -------------------------------------------------------------------------------
NET PENSION COST $ 3,590 $ 2,743 $ 3,134
===============================================================================
</TABLE>
The Retirement Plan's funded status is as follows:
<TABLE>
<CAPTION>
(In thousands) 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefit obligations:
ACCUMULATED BENEFIT OBLIGATION
INCLUDING VESTED BENEFITS OF $76,145
AND $61,874, RESPECTIVELY $ (80,000) $(65,135)
===============================================================================
Projected benefit obligation $(102,471) $(89,727)
Plan assets at fair value 98,205 87,756
- -------------------------------------------------------------------------------
Underfunded status (4,266) (1,971)
Unrecognized net gain (7,378) (10,772)
Unrecognized prior service cost 4,485 4,848
Unrecognized net transition asset (5,734) (6,412)
- -------------------------------------------------------------------------------
ACCRUED PENSION EXPENSE $ (12,893) $(14,307)
===============================================================================
</TABLE>
<PAGE> 15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
RUSSELL CORPORATION AND SUBSIDIARIES
Years ended December 30, 1995, December 31, 1994 and January 1, 1993
Plan assets at December 30, 1995, are invested primarily in U.S. government
securities and listed corporate bonds and stocks, including 600,960 shares of
the Company's Common Stock having a market value of $16,676,640. Dividends paid
to the plan by the Company were $288,000 and $252,000 for 1995 and 1994,
respectively. The weighted average discount rates used in determining the
actuarial present value of the projected benefit obligation were 7.25% in 1995,
8.00% in 1994 and 7.25% in 1993. The rates of increase in future compensation
levels were 4.00% in 1995, 4.75% in 1994 and 4.00% in 1993. The expected
long-term rate of return on plan assets was 9.00% in 1995 and 8.75% in 1994 and
1993.
Net pension cost for the Supplemental Plan during 1995 included the
following components (in thousands):
<TABLE>
<S> <C>
Service cost $ 92
Interest cost 131
Amortization of transition obligation 110
- ------------------------------------------------------------
NET PENSION COST $333
============================================================
</TABLE>
At December 30, 1995, the Supplemental Plan's accumulated benefit obligation
was $888,929, including vested benefits of $878,459. The projected benefit
obligation and unrecognized prior service cost associated with this plan was
$2,929,240 and $1,533,802, respectively, at December 30, 1995. The Supplemental
Plan is unfunded.
During 1995, the Company implemented the Savings Plan which allows
substantially all of the Company's United States employees to defer portions of
their annual compensation. The Company provides additional matching and
discretionary contributions. Compensation expense associated with this plan was
$1,456,000 for 1995.
NOTE 8.
INCOME TAXES
Foreign operations contributed approximately $8,000,000, $4,000,000 and
$1,500,000 to the Company's income before income taxes in 1995, 1994 and 1993,
respectively. Significant components of the provision for income taxes are as
follows (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
- ---------------------------------------------------------------------------------------------
CURRENTLY CURRENTLY CURRENTLY
PAYABLE DEFERRED PAYABLE DEFERRED PAYABLE DEFERRED
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Federal $29,580 $(1,596) $41,719 $567 $35,900 $(6,658)
State 3,788 (204) 5,184 69 2,684 (495)
Foreign 2,048 - 1,220 - 188 -
- ---------------------------------------------------------------------------------------------
TOTALS $35,416 $(1,800) $48,123 $636 $38,772 $(7,153)
=============================================================================================
</TABLE>
The reconciliation of income tax computed by applying the statutory federal
income tax rate of 35% to income before income taxes to total income tax
expense is:
<TABLE>
<CAPTION>
(In thousands) 1995 1994 1993
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Taxes at statutory rate on
income before income taxes $30,707 $44,655 $28,251
State income taxes, net of
federal income tax benefit 2,329 3,415 1,421
Goodwill 425 391 2,729
Adoption of FASB Statement No. 109 - - (1,989)
Effect of tax rate change on
temporary differences - - 1,183
Other-net 155 298 24
- -----------------------------------------------------------------------------
$33,616 $48,759 $31,619
=============================================================================
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Company's deferred tax liabilities and assets as of December 30, 1995
and December 31, 1994, are as follows:
<TABLE>
<CAPTION>
(In thousands) 1995 1994
- ---------------------------------------------------------------------------
<S> <C> <C>
Deferred tax liabilities:
Property, plant and equipment $54,578 $54,905
Other 847 3,468
- ---------------------------------------------------------------------------
Total deferred tax liabilities 55,425 58,373
Deferred tax assets:
Pension and postemployment obligations 6,642 7,031
Inventory 3,739 4,233
Accounts receivable 2,883 2,677
Employee benefits 1,398 1,869
Capital loss and credit carryforwards 593 1,073
- ---------------------------------------------------------------------------
Total deferred tax assets 15,255 16,883
Valuation allowance for deferred tax assets (593) (1,073)
- ---------------------------------------------------------------------------
Net deferred tax assets 14,662 15,810
- ---------------------------------------------------------------------------
NET DEFERRED TAX LIABILITIES $40,763 $42,563
===========================================================================
</TABLE>
30 RUSSELL CORPORATION
<PAGE> 16
NOTE 9.
STOCK RIGHTS PLAN AND
EXECUTIVE LONG-TERM INCENTIVE PLAN
On October 25, 1989, the Board of Directors declared a dividend of one Right
for each share of Common Stock outstanding, which, when exercisable, entitles
the holder to purchase a unit of one one-hundredth share of Series A Junior
Participating Preferred Stock, par value $.01, at a purchase price of $85. Upon
certain events relating to the acquisition of, or right to acquire, beneficial
ownership of 20% or more of the Company's outstanding Common Stock by a
third-party, or a change in control of the Company, the Rights entitle the
holder to acquire, after the Rights are no longer redeemable by the Company,
shares of Common Stock for each Right held at a significant discount to market.
The Rights will expire on October 25, 1999, unless redeemed earlier by the
Company at $.01 per Right under certain circumstances.
During 1993, the Company's shareholders approved the 1993 Executive
Long-Term Incentive Plan (1993 Plan). Persons eligible to participate in the
1993 Plan include all officers and key employees of the Company and its
subsidiaries. The 1993 Plan permits the issuance of awards in several forms
including restricted stock, incentive stock options, nonqualified stock
options, stock appreciation rights (SARs) and performance shares and
performance unit awards.
Under the 1993 Plan and predecessor stock option plans, a total
of 2,878,127 shares of Common Stock are reserved for issuance. The options are
granted at a price equal to the stock's fair market value at the date of grant.
The options are exercisable two years after the date of grant and expire ten
years after the date of grant. The following table summarizes the status of
options under the 1993 Plan and predecessor plans:
<TABLE>
<CAPTION>
1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------
Number of Number of Number of
Shares Option Price Shares Option Price Shares Option Price
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding 1,425,730 $11.88 to $30.00 1,334,427 $11.88 to $29.00 1,253,068 $11.88 to $29.00
Exercisable 934,730 $11.88 to $29.00 858,527 $11.88 to $29.00 1,023,068 $11.88 to $29.00
Granted 278,600 $30.00 245,900 $27.44 to $28.75 230,000 $27.50
Exercised 97,787 $11.88 to $26.38 148,541 $11.88 to $26.38 144,537 $ 8.88 to $26.38
Canceled 89,510 $22.06 to $30.00 16,000 $27.44 to $27.50 3,600 $26.38
Available for future grants 1,354,610 1,543,700 1,773,600
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SARs which have been awarded to officers and management of the Company amount
to 1,532,600 shares at December 30, 1995. SARs permit the optionee to surrender
an exercisable option for a cash or Company stock award equal to the difference
between the market price and option price when the right is exercised. No
compensation expense with respect to these rights was earned during 1995, 1994
or 1993.
NOTE 10.
CASH FLOWS
SUPPLEMENTAL CASH FLOW INFORMATION
Net cash provided by operating activities in the consolidated statements of
cash flows reflects cash payments for interest and income taxes as follows:
<TABLE>
<CAPTION>
(In thousands) 1995 1994 1993
- --------------------------------------------------------
<S> <C> <C> <C>
Interest $21,849 $19,773 $18,088
Income taxes 35,001 61,019 29,631
- --------------------------------------------------------
</TABLE>
Excluded from the consolidated statements of cash flows was the effect of
the exchange of the Company's Common Stock valued at approximately $10,000,000
for DeSoto Mills, Inc., acquired in 1994.
NOTE 11.
COMMITMENTS
At December 30, 1995, the Company had commitments for the acquisition of
property and equipment totaling $55,454,141 and was committed, under
noncancelable operating leases with initial or remaining terms of one year or
more, to minimum rental payments aggregating $16,883,611, summarized by fiscal
year periods as follows: 1996 - $5,338,712; 1997 - $4,016,106; 1998 -
$3,245,903; 1999 - $1,900,695; 2000 - $1,080,654; and thereafter - $1,301,541.
The Company had $24,800,000 and $17,600,000 outstanding under letters of
credit for the purchase of inventories at December 30, 1995 and December 31,
1994, respectively.
Lease and rental expense for fiscal years 1995, 1994 and 1993 was
$11,272,538, $10,096,501 and $6,724,000, respectively.
1995 ANNUAL REPORT 31
<PAGE> 17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
RUSSELL CORPORATION AND SUBSIDIARIES
Years ended December 30, 1995, December 31, 994 and January 1, 1994
NOTE 12.
SUMMARY OF QUARTERLY RESULTS
OF OPERATIONS (UNAUDITED)
The following is a summary of unaudited quarterly results of operations:
YEAR ENDED DECEMBER 30, 1995:
(In thousands, except per share data)
<TABLE>
<CAPTION>
QUARTER ENDED
- -------------------------------------------------------------
Apr. 2 Jul. 2 Oct. 1 Dec. 30
- -------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $248,315 $268,731 $333,820 $301,767
Gross profit 76,880 77,537 89,412 91,970
Net income 12,232 12,480 12,943 16,462
Net income per common
and common
equivalent share 0.31 0.32 0.33 0.42
- -------------------------------------------------------------
</TABLE>
Year ended December 31, 1994:
(In thousands, except per share data)
<TABLE>
<CAPTION>
Quarter ended
- -------------------------------------------------------------
Apr. 3 Jul. 3 Oct. 2 Dec. 31
- -------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $232,118 $243,505 $317,131 $305,505
Gross profit 76,235 73,862 100,309 108,153
Net income 13,366 12,715 24,204 28,541
Net income per common
and common
equivalent share 0.33 0.32 0.60 0.71
- -------------------------------------------------------------
</TABLE>
REPORT OF INDEPENDENT AUDITORS
BOARD OF DIRECTORS AND SHAREHOLDERS
RUSSELL CORPORATION
We have audited the accompanying consolidated balance sheets of Russell
Corporation and Subsidiaries as of December 30, 1995 and December 31, 1994, and
the related consolidated statements of income, stockholders' equity and cash
flows for each of the three fiscal years in the period ended December 30, 1995.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Russell
Corporation and Subsidiaries at December 30, 1995 and December 31, 1994, and
the consolidated results of their operations and their cash flows for each of
the three fiscal years in the period ended December 30, 1995, in conformity
with generally accepted accounting principles.
ERNST & YOUNG LLP
Birmingham, Alabama
January 24, 1996
32 RUSSELL CORPORATION
<PAGE> 1
EXHIBIT (21)
LIST OF SIGNIFICANT SUBSIDIARIES
Cross Creek Apparel, Inc. (incorporated in North Carolina)
DeSoto Mills, Inc. (incorporated in Alabama)
Russell Corp. UK Limited (organized under the laws of the United Kingdom)
IV-14
<PAGE> 1
EXHIBIT (23)
Consent of Ernst & Young LLP, Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Russell Corporation of our report dated January 24, 1996, included in the
1995 Annual Report to Shareholders of Russell Corporation.
Our audits also included the financial statement schedule of Russell
Corporation listed in Item 14(a). This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
We also consent to the incorporation by reference in Russell Corporation's
Post-Effective Amendment Number 1 to Registration Statement Number 2-64496 on
Form S-8, Registration Statement Number 33-24898 on Form S-8, Registration
Statement Number 33-47906 on Form S-3, Registration Statement Number 33-54361
on Form S-3, and Registration Statement Number 33-69679 on Form S-8 of our
report dated January 24, 1996, with respect to the consolidated financial
statements incorporated herein by reference, and our report in the preceding
paragraph with respect to the financial statement schedule included in this
Annual Report (Form 10-K) of Russell Corporation.
/S/ Ernst & Young LLP
Birmingham, Alabama
March 22, 1996
IV-15
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-END> DEC-30-1995
<CASH> 4,485
<SECURITIES> 1,570
<RECEIVABLES> 234,712
<ALLOWANCES> 10,337
<INVENTORY> 321,209
<CURRENT-ASSETS> 564,877
<PP&E> 1,012,927
<DEPRECIATION> 531,193
<TOTAL-ASSETS> 1,118,164
<CURRENT-LIABILITIES> 126,807
<BONDS> 287,878
0
0
<COMMON> 414
<OTHER-SE> 632,144
<TOTAL-LIABILITY-AND-EQUITY> 1,118,164
<SALES> 1,152,633
<TOTAL-REVENUES> 1,152,633
<CGS> 816,834
<TOTAL-COSTS> 816,834
<OTHER-EXPENSES> 221,960
<LOSS-PROVISION> 4,408
<INTEREST-EXPENSE> 21,698
<INCOME-PRETAX> 87,733
<INCOME-TAX> 33,616
<INCOME-CONTINUING> 54,117
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 54,117
<EPS-PRIMARY> 1.38
<EPS-DILUTED> 1.38
</TABLE>
<PAGE> 1
EXHIBIT (99)
PROXY STATEMENT FOR APRIL 24, 1996
ANNUAL SHAREHOLDERS' MEETING
IV-16
<PAGE> 2
[LOGO]
RUSSELL
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
RUSSELL CORPORATION
To the Shareholders of Russell Corporation:
Notice is hereby given that the Annual Meeting of the Shareholders
(the "Annual Meeting") of Russell Corporation (the "Company") will be held on
Wednesday, April 24, 1996 at 10:00 a.m., Central Time, at the general offices
of the Company in Alexander City, Alabama, for the following purposes:
(1) To elect two directors to the Board of Directors for terms of
three years each;
(2) To transact such other business as may properly come before
the meeting.
Holders of the common stock of the Company at the close of business on
March 6, 1996 are entitled to notice of and to vote upon all matters at the
Annual Meeting.
The Annual Meeting may be adjourned from time to time without notice
other than announcement at the Annual Meeting, or at any adjournment thereof,
and any business for which notice is hereby given may be transacted at any such
adjournment.
You are cordially invited to attend the Annual Meeting so that we may
have the opportunity to meet with you and discuss the affairs of the Company.
WHETHER YOU PLAN TO ATTEND THE MEETING OR NOT, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY SO THAT THE COMPANY MAY BE ASSURED OF THE PRESENCE OF A QUORUM
AT THE ANNUAL MEETING. A stamped, addressed envelope is enclosed for your
convenience in returning your proxy.
By Order of The Board of Directors
Steve R. Forehand
Secretary
Russell Corporation
Alexander City, Alabama 35011
March 20, 1996
<PAGE> 3
RUSSELL CORPORATION
- --------------------------------------------------------------------------------
PROXY STATEMENT FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD APRIL 24, 1996
- --------------------------------------------------------------------------------
This Proxy Statement is furnished by and the accompanying proxy is
solicited on behalf of the Board of Directors of Russell Corporation, an
Alabama corporation (the "Company"), for use at its Annual Meeting of
Shareholders to be held at the general offices of the Company in Alexander
City, Alabama, on Wednesday, April 24, 1996 at 10:00 a.m., Central Time, and at
any adjournment thereof (the "Annual Meeting"). It is contemplated that the
Proxy Statement and accompanying proxy will be mailed on or about March 20,
1996.
Shares represented by a properly executed proxy in the accompanying
form will be voted at the meeting and, when instructions have been given by the
shareholder, will be voted in accordance with those instructions. In the
absence of contrary instructions, the proxies received by the Board of
Directors will be voted FOR the election of all nominees for director of the
Company. A shareholder who has given a proxy may revoke it at any time prior to
its exercise by giving written notice of such revocation to the Secretary of
the Company, executing and delivering to the Company a later dated proxy
reflecting contrary instructions or appearing at the Annual Meeting and taking
appropriate steps to vote in person.
ELECTION OF DIRECTORS
The Bylaws of the Company ("Bylaws") provide for a Board of Directors
of not less than nine nor more than 15 members. In addition, the Bylaws also
provide that the Board of Directors shall set the number of Directors within
the specified limitations by resolution adopted by a majority of the entire
Board of Directors and that the Board will be divided into three classes, as
nearly equal in number as possible, each of which will serve for three years.
On February 28, 1996, a majority of the Board of Directors adopted a resolution
which established the size of the Board of Directors at ten members, effective
April 24, 1996. It is proposed to elect two directors to serve until the Annual
Meeting of Shareholders in 1999 and until their successors have been duly
elected and qualified. Proxies cannot be voted for more than two persons. It is
intended that shares represented by the Board of Directors' proxies will be
voted for the election of the following two persons:
NOMINEES TO SERVE UNTIL ANNUAL MEETING OF SHAREHOLDERS IN 1999:
<TABLE>
<CAPTION>
YEAR FIRST SHARES
NAME, AGE AND ELECTED DIRECTOR BENEFICIALLY
PRINCIPAL OCCUPATION OF THE OWNED AS OF PERCENT
OF NOMINEE COMPANY MARCH 6, 1996 OF CLASS
----------------------------- ---------------- ------------- -----------
<S> <C> <C> <C>
Herschel M. Bloom (52) 1986 5,542 .01
Partner
King & Spalding
Atlanta, Georgia
attorneys
Ronald G. Bruno (44) 1992 5,200 .01
President
Bruno Capital
Management Corporation
Birmingham, Alabama
an investment company
</TABLE>
-1-
<PAGE> 4
EACH OF THE DIRECTORS NAMED BELOW WILL CONTINUE IN OFFICE AFTER THE ANNUAL
MEETING UNTIL HIS TERM EXPIRES AS INDICATED:
<TABLE>
<CAPTION>
ANNUAL MEETING YEAR FIRST SHARES
AT WHICH ELECTED DIRECTOR BENEFICIALLY
NAME, AGE AND TERM OF THE OWNED AS OF PERCENT
PRINCIPAL OCCUPATION EXPIRES COMPANY MARCH 6, 1996 OF CLASS
- --------------------------- --------------- ---------------- ---------------- ----------
<S> <C> <C> <C> <C>
John C. Adams (57) 1997 1991 716,560 (1)(2) 1.85
Chairman, President and Chief
Executive Officer of the Company
Crawford T. Johnson III (71) 1997 1978 15,000 .04
Chairman of the Board
Coca-Cola Bottling Company
United, Inc.
Birmingham, Alabama
James D. Nabors (53) 1997 1988 1,398,758 (1)(2)(3) 3.62
Executive Vice President and
Chief Financial Officer
of the Company
Benjamin Russell (58) 1997 1963 5,890,186 (4) 15.22
Chairman and
Chief Executive Officer
Russell Lands, Incorporated
Alexander City, Alabama
a land and timber company
C.V. Nalley III (53) 1998 1989 1,000 -
Chief Executive Officer of
The Nalley Companies,
Atlanta, Georgia
automobile and truck sales
and leasing companies
John R. Thomas (59) 1998 1966 570,983 (5) 1.52
Chairman, President and
Chief Executive Officer of
Aliant National Corporation
Alexander City, Alabama
a bank holding company
John A. White (56) 1998 1992 1,650 -
Dean of Engineering
Georgia Institute of Technology
Atlanta, Georgia
Timothy A. Lewis (40) 1998 1995 100 -
President of
T.A. Lewis & Associates, Inc.
Birmingham, Alabama
telecommunications consultants
</TABLE>
(1) The shares of the Company's Common Stock owned by Messrs. Adams and
Nabors include 51,200 and 38,200 shares, respectively, which may be
acquired by them pursuant to options granted under the Company's
existing stock option plans described below, which options may be
exercised within sixty days of the date of this Proxy Statement. See
also Security Ownership of Management on page 14.
(2) Messrs. Adams and Nabors are two of the trustees of the Company's
pension plan which owns 600,960 shares of the Company's Common Stock.
As such trustees, they have the right to vote such shares. These
shares are included in the shares shown as beneficially owned by each
of such persons.
-2-
<PAGE> 5
(3) Includes 731,296 shares held by the Benjamin and Roberta Russell
Foundation, Incorporated, a charitable corporation of which Mr. Nabors
is one of seven directors, and 9,921 shares owned by the Thomas D.
Russell Marital Trust, of which Mr. Nabors is one of two trustees, as
to which shares Mr. Nabors disclaims any beneficial ownership.
(4) Includes 731,296 shares held by the Benjamin and Roberta Russell
Foundation, Incorporated, a charitable corporation of which Mr.
Russell is one of seven directors; 3,945,024 shares held by a trust
created under the will of Benjamin C. Russell, of which Mr. Russell is
one of four trustees, and 100,000 shares held by the Adelia Russell
Charitable Foundation, of which Mr. Russell is one of three trustees.
(5) Includes 116,734 shares owned directly and 454,249 shares owned
indirectly by Mr. Thomas as a general and limited partner in two
limited partnerships.
With the exceptions of John C. Adams, John A. White, Timothy A. Lewis
and Ronald G. Bruno, each of the above named persons has been a director of the
Company for at least the last five years. Except as noted in the remainder of
this paragraph, each of the above named persons has held the same or comparable
positions with the indicated entities for at least the last five years. Mr.
Adams was named Chairman, President and Chief Executive Officer of the Company
effective April 28, 1993. He had previously served as President and Chief
Executive Officer since April 22, 1992, as President and Chief Operating
Officer since May 6, 1991, as Senior Vice President, Apparel Operations of the
Company since July, 1989, and as President of the Knit Apparel Division from
1983 to 1989. Dr. White has served since July 1, 1991, as Dean of Engineering
at Georgia Institute of Technology, having been a member of the faculty since
1975. During the three years prior to 1991 he served as Assistant Director of
the National Science Foundation in Washington, D.C. through an
Intergovernmental Personnel Agreement with Georgia Tech. Mr. Bruno was elected
President of Bruno Capital Management Corporation in September, 1995. From 1991
until September, 1995, Mr. Bruno served as Chairman of the Board and Chief
Executive Officer of Bruno's, Inc. Prior to that time he had served as
President and Chief Executive Officer since 1990 and President and Chief
Operating Officer since 1986. Mr. Lewis has served since 1987 as President of
T.A. Lewis &Associates, Inc., a telecommunications consulting company. From
1983 to 1987 he served as a marketing and sales executive for Signal
Communications, a national long distance telecommunications company.
Glenn Ireland II has announced his retirement from the Board of
Directors effective at the Annual Meeting and will not stand for re-election.
John R. Thomas is a director of Alfa Corporation. Ronald G. Bruno is a
director of Bruno's, Inc., SouthTrust Bank of Alabama, N.A. and
Books-A-Million, Inc. Herschel M. Bloom is a director of Post Properties, Inc.
John C. Adams is a director of The Southern Company. John A. White is a
director of Motorola, Inc. and Eastman Chemical Company.
Should any nominee be unable or unwilling to accept election, it is
expected that the proxies will vote for the election of such other person for
the office of director as the Board of Directors of the Company may then
recommend. The Board of Directors has no reason to believe that any of the
persons named will be unable or will decline to serve if elected.
The Company has an Executive Committee consisting of John C. Adams and
James D. Nabors, which is authorized to act in place of the Board of Directors
between meetings of the Board. The Executive Committee held fourteen meetings
during 1995.
The Company has an Executive Compensation Committee consisting of
Glenn Ireland II, Crawford T. Johnson III, Ronald G. Bruno, and C.V. Nalley
III, which supervises the Company's Executive Incentive Program. The
Compensation Committee held one meeting during 1995.
The Company also has an Audit Committee consisting of Herschel M.
Bloom, Glenn Ireland II, Ronald G. Bruno, Crawford T. Johnson III, C.V. Nalley
III, John A. White, John R. Thomas, Timothy A. Lewis and Benjamin Russell,
which recommends to the Board of Directors the independent accountants selected
to be the Company's auditors and reviews the audit plan, financial statements
and audit results. The Audit Committee held two meetings during 1995.
-3-
<PAGE> 6
The Company has a Nominating Committee which recommends candidates for
election to the Company's Board of Directors. The Nominating Committee consists
of Crawford T. Johnson III, Herschel M. Bloom, Benjamin Russell, John R.
Thomas and John A. White and held one meeting in 1995.
During the year ended December 30, 1995, the Board of Directors of the
Company held four regular meetings. Each member of the Board attended at least
75% of the meetings of the Board and the committees of which they are members.
Members of the Board who are not employees or affiliates of the Company receive
a quarterly retainer of $3,750 and a fee of $1,000 for each meeting attended.
Members of the Board who are affiliates of the Company, but not employees
receive a quarterly retainer of $1,100. Members of committees of the Board who
are not employees of the Company receive $650 per quarter (except the chairman
who receives $1,300 per quarter).
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY AND OBJECTIVES
The Company's shareholders adopted the 1993 Executive Long-Term
Incentive Plan (the "1993 Plan")on April 28, 1993. The 1993 Plan is a key
component of the Executive Incentive Program (the "Program") which encompasses
all elements of compensation. The goals of the Program are to support our
overall objectives of enhancing shareholder value, maintaining and improving
our quality standards and maximizing our competitive advantage resulting from
vertical integration. This is accomplished through the following practices:
1) Hiring and retaining the caliber of executive talent needed to
manage the Company currently as well as to position it strategically for the
future. A management team that is both stable and performance-oriented, with a
focus on teamwork, is critical to our success;
2) Having a pay-for-performance philosophy throughout the Company
that integrates our compensation program with annual and long-term strategic
planning and that links incentive compensation not only to Company performance
but also to individual and overall market performance;
3) Enhancing the pay-for-performance philosophy by placing a
substantial portion of pay for senior executives "at-risk"; and
4) Establishing the proper mix of program elements to appropriately
balance our financial, quality, customer and strategic goals for both the
short-term and long-term.
The Program is designed to optimize the connection between executive
pay, corporate strategy and return to shareholders. Specifically, the Program
is intended to meet these objectives:
- Establish target awards
- Set corporate and business unit goals in concert with the
strategic planning process
- Communicate award opportunities in advance
- Focus executives' actions on appropriate needs and reward true
success
- Motivate participants
The Executive Compensation Committee (the "Committee") believes these
objectives are met by the Program.
ELEMENTS OF THE PROGRAM
The Program is comprised of the following elements:
Base salaries;
Short-term incentives; and
Long-term incentives.
The following describes the elements of the Program, as well as the
1993 Plan, in more detail.
-4-
<PAGE> 7
BASE SALARIES
The Company's practice is to target base salaries for executives at
the 50th percentile of the market. For salary comparison purposes, the "market"
includes companies in the Company's industry, in similar industries and those
with headquarters in smaller cities. The companies used for this market
analysis of compensation are different than those included in the Value Line
Apparel Index shown in the performance graph contained in this Proxy Statement.
The Committee believes the market for executive talent extends beyond the
textile and apparel industry and includes individuals whose experience includes
a manufacturing focus similar to the Company's. In addition, due to the
Company's location, the Committee does not believe market compensation amounts
for executives should be influenced by compensation at companies in areas with
higher costs of living.
During 1995, the Committee continued the program implemented in 1993
to adjust its salary administration practices, and to increase executive
salaries to market levels, over time. As reported in prior years, the Committee
concluded this program was appropriate based upon a 1992 study of pay conducted
by an independent consulting firm. In deciding the amount of specific
increases, factors such as overall responsibility, tenure, internal equity,
market levels of pay and, most importantly, job performance, are considered. No
specific weighting is assigned to these factors. Salaries for executive
officers remained slightly below the market median during 1995.
To ensure that executive salary levels continue to reflect the
Committee's philosophy, the Company intends to periodically conduct similar pay
comparisons, and did so late in 1995. The Committee believes that maintaining
competitive compensation will ensure that the Company has the executive
management expertise required for the future. Considering the entire
compensation package, the Committee believes that targeting base salaries at
the 50th percentile of the market is a key element in the overall program to
attract and retain talented executives.
SHORT-TERM INCENTIVE PLAN
The Program is designed to motivate participants to achieve
predetermined goals for Return on Assets Employed ("ROAE") and quality. The
Committee believes the Program's performance orientation represents an
improvement over other plans used in prior years. Specifically, the short-term
incentive program includes the following elements:
1) Eligible participants include not only executives but also other
employees who fulfill key roles in the Company;
2) Target awards are established at the beginning of the year to
motivate participants and guide their efforts; and
3) Cash awards that reflect ROAE, quality and individual performance
results for the year are paid after the end of the year.
The plan's financial performance measure, ROAE, is measured at the
overall level for executives in corporate staff and manufacturing positions.
For this purpose, ROAE is defined as (a) net income before taxes and interest,
divided by (b) the sum of assets used in the business.
Target awards for executive officers are based upon the median of the
competitive market (as described in "Base Salaries" above). In assigning target
awards, the relative responsibility of each position also is considered. Based
upon this, target awards for some positions may be adjusted, on a subjective
basis, to be slightly above or below market levels. Executives at the business
unit level are measured on ROAE results at the single business unit level, with
a 75% weighting. Based upon their respective business unit, the executives'
remaining 25% of the financial performance portion of the award is based either
upon overall corporate ROAE results, or upon ROAE results for a combination of
select business units.
-5-
<PAGE> 8
Target level awards are paid if the target ROAE goal is achieved. In
addition, if actual ROAE results are less than target ROAE but equal a
predetermined threshold, awards will be paid at one-half of target amounts. If
actual ROAE results are greater than target ROAE and equal or exceed a
predetermined maximum, awards will be paid at one and one-half times target
amounts. Awards for performance between these levels are made based upon an
interpolation within the range. Awards otherwise earned based upon financial
results may be adjusted up or down by a maximum of 20% (in increments of 10%),
to reflect participants' contributions toward the Company's quality goals, and
also to reflect their individual performance.
Incentive awards for all but one of the executives named in the
Summary Compensation Table in this proxy statement were based solely upon
overall corporate ROAE results. The incentive award for the other executive was
based upon both corporate and business unit ROAE results. Adjustments based upon
individual performance were made to the payouts for certain of the named
officers in accordance with the provisions of the plan.
For 1995, overall corporate ROAE performance was below the level at
which threshold awards would be paid. Based upon this, none of the named
executive officers earned awards for the portion of incentive awards based upon
corporate ROAE. ROAE results were below threshold for most business units.
However, ROAE results for the business unit under the supervision of one of the
named executive officers were slightly above target but below maximum. Payments
made to the named executives shown in the Summary Compensation Table elsewhere
in this proxy statement reflect these results.
LONG-TERM INCENTIVE PLAN
The long-term incentive element of the 1993 Plan includes a variety of
stock based performance awards. The Committee presently intends that long-term
incentives be granted in the form of stock options and, for corporate officers
only, performance units. The Committee intends to balance the short-term
incentive payments with long-term stock options and performance units to reward
executives and key employees when superior returns are provided to
shareholders.
With these elements, the Committee believes it has established a
strong link between the participants' long-term financial interests and the
long-term interests of our shareholders in the following manner:
1) Stock Options. Pay will be closely aligned with return to
shareholders since no benefit is received by participants unless the stock
price increases.
2) Performance Units. The long-term incentive element of the 1993
Plan focuses on the Company's Total Shareholder Return ("TSR"), relative to
both a broad market index (the S & P Industrials) as well as to the Company's
historical performance. TSR includes stock price increases plus dividends,
divided by beginning stock price for the period of measurement. When the
Company's TSR is at the median of the S & P Industrials, and also at a
predetermined absolute level, target awards will be paid.
Stock option grants have been a component of previous incentive
programs. Under the 1993 Plan, the Committee made grants of stock options and
performance units at competitive levels to executive officers during 1995.
Award sizes for each position were established at the median of the competitive
market described under "Base Salaries" above. The economic value of the total
long-term grants comes half from stock options and half from performance units.
The Committee worked with an independent consultant when this plan was designed
to determine these values and the resulting award sizes. In making these
grants, the Committee's intent was to make awards that were competitive with
the market on an annualized basis. For this reason, the Committee did not
consider existing stock holdings of executives, or prior grants, in deciding
the number of stock options or performance units to grant to an executive
officer. These awards are consistent with the Committee's goals for the overall
compensation program.
Payment of performance units would be made depending upon the
measurement of the Company's TSR over a three-year period, with a new
three-year period beginning each fiscal year. The primary comparison would
focus on the Company's TSR against that of the S & P Industrials Index (the
"Index"). A secondary
-6-
<PAGE> 9
comparison against the Company's historical performance could result in a
maximum reduction of 50% of awards otherwise earned. (The Committee's
determination of the amount of target awards is discussed above.) This
secondary comparison focuses on TSR for the period of measurement against the
Company's own historical performance.
Preliminary awards will be based upon comparing the Company's actual
TSR for a three-year performance period to the TSRs of each company in the
Index. If the Company's TSR ranks at the median of the Index companies, target
awards will be earned. If the Company's TSR is at a predetermined maximum
percentile (the 90th percentile), maximum awards (at two times target) will be
earned. Minimum nonzero awards, at 50% of target awards, will be earned if the
Company's TSR is at a predetermined threshold percentile (the 33rd percentile).
If the Company's TSR ranks above threshold but below median, or above median but
below maximum, awards earned for performance between points will be
interpolated on a straight-line basis.
Next, the Company's actual TSR for the three-year period will be
compared against an absolute benchmark established at the inception of the plan
determined by using the Company's historical performance and the historical
performance of the Index. If the Company's actual three-year TSR is at or above
this absolute level, the preliminary awards earned based upon the relative TSR
comparison will be paid. However, if actual TSR is below this benchmark,
preliminary awards earned may be reduced by a maximum of 50%.
By measuring relative TSR, the Committee believes this plan rewards
executives for their contributions to Company performance, isolated from broad
stock market performance. By measuring absolute TSR, the Committee believes
this plan rewards executives appropriately based upon actual returns received
by shareholders.
When the performance at each level is taken into account, the 1993
Plan provides market pay opportunities if target awards are set at market
levels. The performance factors ensure that above-market pay is only earned for
better-than-average performance and that poor performance earns below-market
pay.
As with the stock option element of the 1993 Plan, the Committee
intends to adjust awards of performance units so that total pay opportunities
for both elements are at market levels. The target percentage of compensation
represented by performance units is not intended to change annually, but it may
change periodically as the Committee makes adjustments to keep long-term pay
opportunities at market levels.
The first three-year performance cycle for the performance unit plan
included the years 1993 through 1995. Because the Company's three-year TSR was
below the 33rd percentile TSR of the Index companies, no awards were earned for
this plan cycle.
SPECIFICS OF 1995 CEO COMPENSATION
During 1995, the compensation of the Chief Executive Officer, Mr.
Adams, consisted of the following:
Base salary of $540,000 was derived by reference to executive pay at
the market companies described earlier in this report. This amount is still
below the median base salary for the market base salary for the market. Mr.
Adams' salary increase of $74,000 from 1994 to 1995 was intended to move him
closer to the market median amount. Although no one factor was weighted more
than any other by the Committee, this increase generally was based upon the
Committee's assessment of his performance during 1994 and his contributions to
the performance of the Company. In assessing Mr. Adams' performance, the
Committee considered a number of corporate performance measures, including
increase in revenue, net income, return on assets, earnings per share and stock
price performance. The Committee evaluates these factors subjectively in making
decisions about Mr. Adams' base salary.
For 1995, Mr. Adams' annual incentive target award remained at 60% of
salary, as in prior years. However, because corporate ROAE was below the
threshold performance level established, Mr. Adams received no bonus payment
for 1995 performance.
-7-
<PAGE> 10
Mr. Adams' stock option grant during 1995 was 18,000 shares. The
number of stock options granted to Mr. Adams was determined in the same manner
as stock option grants to all other executive officers. For a discussion of the
Committee's determination of the number of stock options granted to a named
executive officer, see the discussion above under the caption "Long-Term
Incentive Plan."
Mr. Adams also received a grant of performance units at a target award
level equal to 45% of base salary. The performance period over which these
units can be earned is 1995 through 1997. As noted earlier, no performance unit
awards were earned for the 1993-1995 plan cycle.
POLICY WITH RESPECT TO THE $1 MILLION DEDUCTION LIMIT
During 1993, a new section - Section 162(m) - was added to the
Internal Revenue Code that generally limits to $1 million amounts that can be
deducted for compensation paid to executives, unless certain requirements are
met. This Committee has carefully considered the impact of this new provision.
Because no executive receives pay greater than $1 million, the Committee has
concluded that no compensation amounts are nondeductible at present. The
Committee will continue to monitor the applicability of this provision to its
programs and will determine, at the appropriate time, what action it intends to
take.
Executive Compensation Committee
C.V. Nalley III, Ronald G. Bruno,
Glenn Ireland II, Crawford T. Johnson III
COMPARATIVE FIVE-YEAR TOTAL RETURNS
RUSSELL CORPORATION, S&P 500, VALUE LINE APPAREL INDEX
PERFORMANCE RESULTS THROUGH 12/31/95
[GRAPH]
VALUE OF $100 INVESTED ON 12/31/89 AT:
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Russell Corporation $100.00 $158.64 $141.10 $128.68 $144.92 $130.38
S&P 500 100.00 130.55 140.72 154.91 157.30 216.42
Value Line Apparel Index 100.00 175.16 215.29 161.90 149.46 159.99
- ---------------------------------------------------------------------------------------------------------
</TABLE>
-8-
<PAGE> 11
NOTES
1) Assumes that the value of the investment in the Company's Common Stock
and in each index was $100 on the last trading day preceding the first day of
the fifth preceding fiscal year and that all dividends were reinvested.
2) The Value Line Apparel Index presently includes: Farah, Incorporated;
Fruit of the Loom, Inc.; Garan, Incorporated; Oshkosh B'Gosh, Inc.; Hartmarx
Corporation; Kellwood Company; Liz Claiborne, Inc.; Oxford Industries, Inc.;
Phillips-Van Heusen Corporation; Tultex Corporation; VF Corporation; and the
Company.
SUMMARY COMPENSATION TABLE
The following information is furnished for the years ended December
30, 1995, December 31, 1994 and January 1, 1994 with respect to the Company's
Chief Executive Officer and each of the four other most highly compensated
executive officers of the Company during 1995 whose salary and bonus exceeded
$100,000.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
--------------------------------------- -----------------------------------
AWARDS PAYOUTS
---------------------- -------
NAME AND OTHER RESTRICTED
PRINCIPAL ANNUAL(B) STOCK OPTIONS/ LTIP ALL OTHER
POSITION YEAR SALARY BONUS(A) COMPENSATION AWARDS SAR'S PAYOUTS COMPENSATION
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John C. Adams 1995 $540,000 $ -0- $6,187 - 18,000 - -
Chairman, 1994 466,000 321,000 5,500 - 16,900 - -
President 1993 400,000 131,700 - - 14,300 - -
and CEO
James D. Nabors 1995 304,000 -0- - - 6,600 - -
Exec. V.P. 1994 286,000 147,600 - - 6,800 - -
and CFO 1993 270,000 67,900 - - 6,400 - -
JT Taunton, Jr. 1995 261,000 -0- - - 5,600 - -
Exec. V.P. - Sales 1994 221,000 114,000 - - 4,000 - -
and Marketing 1993 155,000 38,400 - - 3,100 - -
John E. Frechette 1995 245,100 85,600 - - 4,100 - -
V.P. - International 1994 202,600 72,600 - - 3,300 - -
1993 152,600 8,500 - - 2,800 - -
Thomas R. Johnson, Jr. 1995 221,000 -0- - - 4,800 - -
Exec. V.P. - 1994 192,667 90,700 - - 2,200 - -
Manufacturing 1993 139,100 27,500 - - 2,000 - -
</TABLE>
(A) Bonus payments are reported for the year in which related services
were performed.
(B) Value of personal use of aircraft.
-9-
<PAGE> 12
OPTION/SAR GRANTS IN 1995
The following information concerns grants of incentive stock options
to the named executives for the year ended December 30, 1995. No SARgrants were
made during 1995.
<TABLE>
<CAPTION>
- -------------------------INDIVIDUAL GRANTS (1)----------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
NUMBER OF PRICE APPRECIATION
SECURITIES %OF TOTAL FOR OPTION TERM
UNDERLYING OPTIONS/SARS -------------------------
OPTIONS/SARS GRANTED EXERCISE
GRANTED TO EMPLOYEES PRICE EXPIRATION
NAME IN 1995 IN 1995 PER SHARE DATE 5% 10%
- ---------------- ------------ ------------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
John C. Adams 18,000 6.46 $30.00 1/25/05 $837,717 $1,273,292
James D. Nabors 6,600 2.37 30.00 1/25/05 307,162 466,873
JT Taunton, Jr. 5,600 2.01 30.00 1/25/05 260,623 396,135
John E. Frechette 4,100 1.47 30.00 1/25/05 190,813 290,028
Thomas R. Johnson, Jr. 4,800 1.72 30.00 1/25/05 223,391 339,544
</TABLE>
(1) The stock options were granted at an exercise price equal to the fair
market value of the Company's common stock on the date of the grant.
The stock options become exercisable in full on the second anniversary
of the grant. No other instruments were granted in tandem with the
options, nor do they carry either reload or tax reimbursement
features.
AGGREGATED OPTION/SAR EXERCISES IN 1995 AND YEAR-END VALUE TABLE
The following information is furnished for the year ended December 30,
1995 with respect to the Company's Chief Executive Officer and each of the four
other most highly compensated executive officers of the Company for stock
option exercises which occurred during 1995.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
SHARES AT DECEMBER 30, 1995 AT DECEMBER 30, 1995 (2)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John C. Adams 6,000 $66,375 51,200 37,800 $147,106 $9,900
James D. Nabors - - 38,200 13,800 206,225 3,600
JT Taunton, Jr. 6,000 $97,319 17,300 11,800 88,550 3,100
John E. Frechette - - 11,900 7,800 1,731 1,850
Thomas R. Johnson, Jr. - - 16,400 10,000 48,168 2,600
</TABLE>
(1) This amount represents the aggregate of the market value of the
Company's Common Stock at the time each option was exercised, less the
exercise price for such option.
(2) This amount represents the aggregate of the number of options
multiplied by the difference between the closing price of the
Company's Common Stock on the New York Stock Exchange, Inc. on
December 29, 1995, less the exercise price for such option.
-10-
<PAGE> 13
LONG-TERM INCENTIVE PLAN AWARDS IN 1995
The 1993 Executive Long-Term Incentive Plan provides for the award of
long-term cash incentives to officers of the Company. Performance units may be
awarded based upon achievement of target goals over a three year period.
Performance units were awarded in accordance with the following schedule:
<TABLE>
<CAPTION>
PERFORMANCE OR
NUMBER OF OTHER PERIOD ESTIMATED FUTURE PAYOUTS UNDER NON-STOCK
SHARES, UNTIL PRICE-BASED PLANS
UNITS OR MATURATION --------------------------------------------
NAME OTHER RIGHTS OR PAYOUT THRESHOLD TARGET MAXIMUM
- ----------------- ------------ ---------------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
John C. Adams 243,000 1995-1997 $60,750 $243,000 $486,000
James D. Nabors 90,900 1995-1997 22,725 90,900 181,800
JT Taunton, Jr. 78,000 1995-1997 19,500 78,000 156,000
John E. Frechette 40,840 1995-1997 10,210 40,840 81,680
Thomas R. Johnson, Jr. 66,000 1995-1997 16,500 66,000 132,000
</TABLE>
Performance units are earned based upon Company Total Shareholder
Return ("TSR") relative to a peer group, the S &PIndustrials. Threshold, target
and maximum awards are earned when TSR is at the 33rd percentile, the median
percentile or the 90th percentile of the peer group. Awards earned based upon
relative TSRperformance may be decreased by up to 50% if the Company's absolute
TSRfor the performance period is less than a predetermined level.
For further discussion of the 1993 Executive Long-Term Incentive Plan,
see the discussion above under the caption "EXECUTIVE COMPENSATION - Executive
Compensation Committee Report on Executive Compensation - Long-Term Incentive
Plan".
PENSION PLAN
Officers of the Company are covered by the Russell Corporation Revised
Pension Plan (the "Plan"), a defined benefit plan covering all employees of the
Company. The amount of contributions made by the Company to the Plan is not
reflected in the cash compensation table above, since the amount of the
contribution with respect to a specified person is not and cannot readily be
separately or individually calculated by the regular actuaries for the Plan.
Benefits under the Plan are based upon years of credited service at
retirement and upon "Final Average Earnings," which is the average base
compensation for the highest sixty consecutive months out of the final 120
months of employment. This compensation consists only of salary and excludes
any bonus and any form of contribution to other benefit plans or any other form
of compensation. Normal or delayed retirement benefits are payable upon
retirement on the first day of any month following attainment of age 65 and
continue for the life of the employee (and his spouse, if any) or in accordance
with other elections permitted by the Plan.
On January 26, 1994, the Board of Directors adopted a supplemental
retirement plan covering any participant's compensation in excess of the
limitation amount specified in Section 401 et seq., of the Internal Revenue
Code. This plan is a non-qualified plan, thereby rendering any benefits subject
to claims of general creditors and not deductible until paid.
The following table presents estimated annual benefits payable from
the Plan and the supplemental retirement plan mentioned above upon normal or
delayed retirement to participants in specified remuneration and
years-of-credited service classifications. The amounts shown assume the current
maximum social security benefit and that the participant has elected for
benefits to be payable for a single life only.
-11-
<PAGE> 14
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
5 YEAR AVERAGE ---------------------------------------------------------------------------------------------
REMUNERATION 15 20 25 30 35 40
----------------- --------- --------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
$ 150,000 $ 23,612 $ 31,483 $ 39,354 $ 47,225 $ 55,096 $ 59,221
175,000 27,737 36,983 46,229 55,475 64,721 69,533
200,000 31,862 42,483 53,104 63,725 74,346 79,846
225,000 35,987 47,983 59,979 71,975 83,971 90,158
250,000 40,112 53,483 66,854 80,225 93,596 100,471
300,000 48,362 64,483 80,604 96,725 112,846 121,096
350,000 56,612 75,483 94,354 113,225 132,096 141,721
400,000 64,862 86,483 108,104 129,725 151,346 162,346
450,000 73,112 97,483 121,854 146,225 170,596 182,971
500,000 81,362 108,483 135,604 162,725 189,846 203,596
600,000 97,862 130,483 163,104 195,725 228,346 244,846
700,000 114,362 152,483 190,604 228,725 266,846 286,096
800,000 130,862 174,483 218,104 261,725 305,346 327,346
900,000 147,362 196,483 245,604 294,725 343,846 368,598
1,000,000 163,862 218,483 273,104 327,725 382,346 409,846
</TABLE>
Years of service credited under the Plan for individuals shown in the
summary compensation table on page 9 are as follows: Mr. Adams, 19 years; Mr.
Nabors, 25 years; Mr. Taunton, 20 years; Mr. Johnson, 6 years; and Mr.
Frechette, 4 years.
STOCK OPTION PLANS
The Company has previously adopted the 1978 Stock Option Plan and the
1987 Stock Option Plan (the "Stock Option Plans") pursuant to which the Company
grants to key employees of the Company either incentive stock options ("ISO's")
or nonqualified stock options ("NQSO's"). The term of the options cannot exceed
ten years from the date of grant, and the option price must equal fair market
value of the shares covered at the time of grant. No further options are
subject to being granted under the Stock Option Plans.
The 1993 Executive Long Term Incentive Plan (the "1993 Plan")
previously discussed herein is a flexible plan which will give the Executive
Compensation Committee broad discretion to fashion the terms of awards in order
to provide eligible participants with stock based incentives as the Committee
deems appropriate. It will permit the issuance of awards in a variety of forms,
including: (a) restricted stock (b) incentive stock options (c) non-qualified
stock options (d) stock appreciation rights and (e) performance share and
performance unit awards.
The 1993 Plan provides for the grant of up to 2,000,000 shares of the
Common Stock of the Company and issuance of awards under the 1993 Plan will
cease as of January 1, 2003.
OTHER MATTERS
The Board of Directors of the Company does not know at this time of
any other matters to come before the Annual Meeting.
-12-
<PAGE> 15
PRINCIPAL SHAREHOLDERS
The following table sets forth each person who, to the Company's
knowledge, had sole or shared voting or investment power over more than five
percent of the outstanding shares of Common Stock of the Company as of March 6,
1996.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- -------------------------------- --------------------------- ----------
<S> <C> <C>
Edith L. Russell 4,686,320 shares (1) 12.11
755 Lee Street
P.O. Box 272
Alexander City, Alabama 35011-0272
Benjamin Russell 5,890,186 shares (2) 15.22
755 Lee Street
P.O. Box 272
Alexander City, Alabama 35011-0272
Roberta A. Baumgardner 8,192,246 shares (3) 21.17
755 Lee Street
P.O. Box 272
Alexander City, Alabama 35011-0272
Helen Alison 2,064,192 shares (4) 5.33
755 Lee Street
P.O. Box 272
Alexander City, Alabama 35011-0272
Nancy R. Gwaltney 4,690,016 shares (5) 12.12
755 Lee Street
P.O. Box 272
Alexander City, Alabama 35011-0272
FMR Corp. 4,701,311 shares (6) 12.15
82 Devonshire Street
Boston, Massachusetts 02109
</TABLE>
(1) Includes 10,000 shares as to which Mrs. Russell has sole voting and
investment power, and 4,676,320 shares as to which she has shared
voting and investment power consisting of 731,296 shares held by the
Benjamin and Roberta Russell Foundation, Incorporated, a charitable
corporation of which Mrs. Russell is one of seven directors, and
3,945,024 shares held of record and beneficially owned by a trust
created under the will of Benjamin C. Russell of which Mrs. Russell is
one of four trustees. The trustees of the trust created under the will
of Benjamin C. Russell can invade the corpus of the trust for the
benefit of Mrs. Russell.
(2) Includes 1,113,866 shares as to which Mr. Russell has sole voting and
investment power and 4,776,320 shares as to which he has shared voting
and investment power. See Note (4) on page 3.
-13-
<PAGE> 16
(3) Includes 1,451,734 shares as to which Mrs. Baumgardner has sole voting
and investment power and 6,740,512 shares as to which she has shared
voting and investment power, consisting of 731,296 shares held by the
Benjamin and Roberta Russell Foundation, Incorporated, a charitable
corporation of which Mrs. Baumgardner is one of seven directors,
3,945,024 shares held of record and beneficially owned by a trust
created under the will of Benjamin C. Russell of which Mrs.
Baumgardner is one of four trustees, and 2,064,192 shares held by the
estate of J. C. Alison of which Mrs. Baumgardner is one of three
co-executors.
(4) Includes 2,064,192 shares held by the estate of J. C. Alison, of which
Mrs. Alison is one of three trustees and with respect to which Mrs.
Alison has shared voting and investment power.
(5) Includes 731,296 shares held by the Benjamin and Roberta Russell
Foundation, Incorporated, a charitable corporation of which Mrs.
Gwaltney is one of seven directors; 3,945,024 shares held by a trust
created under the will of Benjamin C. Russell of which Mrs. Gwaltney
is one of four trustees; and 13,696 shares as to which Mrs. Gwaltney
has sole voting and investment power.
(6) Information contained in Schedule 13G filed with the Company on
February 14, 1996. The Schedule 13G states that FMR Corp. has sole
voting power with respect to 66,669 shares, sole dispositive power
with respect to 4,701,311 shares, and shared voting and dispositive
power respect to 0 shares.
SECURITY OWNERSHIP OF MANAGEMENT
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
-----------------------------------------
SOLE VOTING OPTIONS
AND EXERCISABLE OTHER PERCENT
INVESTMENT WITHIN BENEFICIAL OF
NAME OF INDIVIDUAL OR GROUP POWER 60 DAYS OWNERSHIP CLASS
- --------------------------- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
John C. Adams 39,016 51,200 626,344 (1)(2) 1.85
James D. Nabors 18,381 38,200 1,342,177 (2)(3) 3.62
Timothy A. Lewis 100 0 0 -
Herschel M. Bloom 5,542 0 0 .01
Glenn Ireland II 14,000 0 0 .04
Crawford T. Johnson III 15,000 0 0 .04
C.V. Nalley III 1,000 0 0 -
Ronald G. Bruno 5,200 0 0 .01
John A. White 1,650 0 0 -
John R. Thomas 116,734 0 454,249 (4) 1.48
Benjamin Russell 1,113,866 0 4,776,320 (5) 15.22
JT Taunton, Jr. 12,669 14,000 0 .07
Thomas R. Johnson, Jr. 500 15,900 0 .04
John E. Frechette 0 11,900 0 .03
All Executive Officers and Directors
as a Group (26 persons) 1,996,500 295,047 7,199,090 24.53
</TABLE>
(1) Includes 25,384 shares owned by Mr. Adams' spouse.
(2) See Note (2) on page 2.
(3) See Note (3) on page 3.
(4) See Note (5) on page 3.
(5) See Note (4) on page 3.
-14-
<PAGE> 17
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
Based solely upon review of Forms 3, 4 and 5 and amendments thereto
related to the Company's most recent fiscal year, and written representations
from certain reporting persons that no Form 5 was required, the Company
believes that Edith L. Russell, John R. Thomas and W.J. Spires each had one
late Form 4 filing in 1995.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
The Company entered into a fuel supply contract with Russell Lands,
Incorporated on May 21, 1975, under which Russell Lands, Incorporated provides
sawdust, bark, shavings, chips, and other wood materials for use in the
Company's wood chip boilers. The initial term of the contract was four years,
and may be renewed by agreement of the parties from year-to-year thereafter. In
addition, the contract may be cancelled by either party during any renewal
period upon 30 days notice following the occurrence of certain specified
conditions. Benjamin Russell is Chairman, Chief Executive Officer and a
director of Russell Lands, Incorporated, and owns beneficially approximately
70% of the equity interest in such company. Management believes this contract
is in the best interest of the Company's shareholders. During the fiscal year
ended December 30, 1995, the Company paid Russell Lands, Incorporated
approximately $1,128,000 for wood materials to operate these boilers.
The Company purchased miscellaneous building materials and supplies
from Russell Do-It Center, a building supply retailer. The Company also
purchased concrete for various construction and repair projects from Area
Concrete, Inc. Russell Do-It Center is a division of and Area Concrete, Inc. is
a wholly owned subsidiary of Russell Lands, Incorporated. Benjamin Russell is
Chairman, Chief Executive Officer and a director of Russell Lands, Incorporated
and owns beneficially approximately 70% of the equity interest in such company.
Management believes these purchases to be in the best interest of the Company's
shareholders. During the fiscal year ended December 30, 1995, the Company paid
Russell Do-It Center and Area Concrete, Inc. approximately $74,000 and $70,000,
respectively, for the purchases described above.
AUDITORS
Ernst & Young LLP, independent accountants, was selected as the
Company's auditors for 1995 after having previously served in the same capacity
since 1930. Representatives of Ernst & Young will be in attendance at the
Annual Meeting and will be given the opportunity to make a statement and to
respond to appropriate questions.
PROPOSALS BY SHAREHOLDERS
The next annual meeting of shareholders is scheduled to be held on
April 23, 1997, and shareholders of the Company may submit proposals for
consideration for inclusion in the proxy statement of the Company relating to
such annual meeting of shareholders. However, in order for such proposals to be
considered for inclusion in the proxy statement of the Company relating to such
annual meeting, such proposals must be received by the Company not later than
November 21, 1996.
-15-
<PAGE> 18
GENERAL INFORMATION
The Board of Directors of the Company has fixed the close of business
on March 6, 1996, as the record date for determining the holders of the Common
Stock of the Company entitled to notice of and to vote at the Annual Meeting.
As of such date, the Company had issued and outstanding and entitled to vote at
the Annual Meeting an aggregate of 38,692,750 shares of Common Stock, each
share of which is entitled to one (1) vote on all matters to be considered at
the Annual Meeting.
As of the date of the Proxy Statement, the Board of Directors does not
intend to present, and has not been informed that any other person intends to
present, any matter for action at the Annual Meeting other than those matters
stated in the Notice of the Annual Meeting. If other matters should properly
come before the Annual Meeting, it is intended that the holders of the proxies
will act in respect thereto in accordance with their best judgment.
Pursuant to Section 10-2B-7.25 of the Code of Alabama 1975, as
amended, and the Company's bylaws, a majority of the Common Stock shares
entitled to vote, represented in person or by proxy, will constitute a quorum
at a meeting of the Shareholders. Section 10-2B-7.28 of the Code of Alabama
1975, as amended, requires that each of the nominees to be elected to the Board
of Directors receive the affirmative vote of the majority of the votes cast by
the holders of shares of Common Stock represented at the Annual Meeting as part
of the quorum. The vote for election of directors does not include shares which
abstain from voting on a matter or which are not voted on such matter by a
nominee because such nominee is not permitted to exercise discretionary voting
authority and the nominee has not received voting instructions from the
beneficial owner of such shares. Generally, brokers who act as nominees will be
permitted to exercise discretionary voting authority where they have received
no instructions in uncontested elections for directors and on certain other
matters which are not contested where the brokers have complied with Rule 451
concerning the delivery of proxy materials to beneficial owners of the
Company's Common Stock held by such brokers.
In addition to the use of the mails, proxies may be solicited by
personal interview or by telephone or telegraph. The cost of solicitation of
proxies will be borne by the Company. The Company may request brokerage houses,
nominees, custodians, and fiduciaries to forward soliciting material to the
beneficial owners of the stock held of record and will reimburse such persons
for any reasonable expense incurred in forwarding the material.
Copies of the Company's Annual Report on Form 10-K for the year ended
December 30, 1995, in form as filed with the Securities and Exchange
Commission, may be obtained from Steve R. Forehand, the Secretary of the
Company, without charge, by persons who were shareholders beneficially or of
record as of March 6, 1996.
RUSSELL CORPORATION
Steve R. Forehand
Secretary
Alexander City, Alabama
March 20, 1996
-16-
<PAGE> 19
APPENDIX A
RUSSELL CORPORATION
Alexander City, Alabama
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS -- APRIL 24, 1996
(This Proxy is solicited by the Board of Directors of the Company)
This undersigned shareholder of Russell Corporation (the "Company")
hereby appoints C.V. Nalley III and John A. White, and each of them, with full
power of substitution, proxies to vote the shares of stock which the
undersigned could vote if personally present at the Annual Meeting of
Shareholders of Russell Corporation to be held at the general offices of the
Company in Alexander City, Alabama, on April 24, 1996 at 10:00 a.m., Central
Time, or any adjournment thereof:
(1) ELECTION OF DIRECTORS
For the term expiring with the Annual Meeting of shareholders
in 1999:
Herschel M. Bloom, Ronald G. Bruno
<TABLE>
<S> <C>
[ ] FOR all nominees above [ ] WITHHOLD AUTHORITY
(except as marked to the contrary) to vote for all nominees above
</TABLE>
INSTRUCTION: To withhold authority to vote for an individual
nominee, write the nominee's name in the space provided below.
(over)
(2) IN THEIR DISCRETION UPON SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR
ELECTION OF THE PERSONS NOMINATED BY THE BOARD OF DIRECTORS
AS DIRECTORS.
Please date and sign exactly as name appears on the envelope in which
this material was mailed. If shares are held jointly, each shareholder should
sign. Executors, administrators, trustees, etc. should use full title and, if
more than one, all should sign. If the shareholder is a corporation, please
sign full corporate name by an authorized officer.
---------------------------------------
Signature(s) of Shareholder(s)
---------------------------------------
Dated , 1996
--------------------------
