RML Russell CP Delaware

Russell Reports Third Quarter Sales and Earnings Sales gains led by Activewear; EPS benefits from lower effective tax rate; Adjusts full year guidance ATLANTA, Oct. 28 /PRNewswire-FirstCall/ -- Russell Corporation (NYSE:RML) today reported fiscal 2004 third quarter sales of $422.7 million, an increase of 8.9% over the same period a year ago. The Company also reported a 45% increase in earnings to $26.9 million, or $.82 per diluted share, versus $18.5 million, or $.56 per diluted share for the third quarter of 2003. (Logo: http://www.newscom.com/cgi-bin/prnh/20030630/RMLCORPLOGO ) Third quarter sales, a record for any quarter in the company's history, reflect a 3.7% increase in the Company's ongoing business in addition to approximately $20.4 million in incremental sales from acquisitions owned for less than a year. Sales gains were recorded in the Activewear Group, the Athletic Group and the International segment. "We are pleased that we have continued to increase sales, profitability and market share in our Activewear business, where the gains were led by double-digit sales increases in the Artwear market," said Jack Ward, chairman and chief executive officer. "Sales increases were more modest in the Athletic Group, due to some softness at certain retailers." Gross profit was $121.8 million, or a 28.8% gross margin, for the 2004 third quarter versus a gross profit of $112.6 million, or a 29.0% gross margin, in the prior year. The positive impact of increased revenues and cost improvements was affected by higher year-over-year costs of fiber, transportation, energy and other increased costs, as well as continued pricing pressure. Selling, general and administrative expenses ("SG&A") for the 2004 third quarter were $78.3 million, or 18.5% of net sales, versus $73.6 million, or 19.0% of net sales, in the comparable period last year. Operating income increased by 17% to $44 million in the third quarter of 2004. The dilution of the Huffy Sports acquisition amounted to approximately $.02 per share in the quarter. For the third quarter of 2004, the effective tax rate was 23.3%, reflecting a $4.5 million benefit resulting from the closure of federal tax audits for 2002 and prior years. Year-to-date Results For the nine months ended October 3, 2004, net sales were up $80.3 million to $964.2 million, a 9.1% increase over the prior year's sales of $883.9 million. Gross profit was $266.8 million, or a 27.7% gross margin, for the first nine months of fiscal 2004 versus a gross profit of $252.8 million, or a 28.6% gross margin, in the prior year. SG&A expenses for the first nine months of fiscal 2004 were $196.1 million, or 20.3% of net sales, versus $181.5 million, or 20.5% of net sales, in the comparable period last year. Operating income for the first nine months of 2004 increased $7.4 million, or 10.8%, over the like period of 2003. On a year-to-date basis, for the period ended October 3, 2004, net income increased $9.0 million to $37.6 million, or $1.15 per diluted share, versus $28.6 million, or $.87 per diluted share, in the comparable period last year. Outlook "We continue to be pleased with our progress in integrating the recent acquisitions of American Athletic, Inc. ("AAI") and Huffy Sports into our Spalding organization. In addition to solidifying Russell's position as a leading branded athletic and sporting goods company, these businesses provide a broader array of products for both our retail and team partners," said Ward. "With our current breadth and depth of sporting goods products and brands, we anticipate additional opportunities across new markets, customers and categories. We also expect to capitalize on our position as the largest basketball equipment company in the world." Russell continues to expect that sales for the 2004-year will fall in the range of $1.30 billion to $1.33 billion, a 9% to 12% increase over the $1.186 billion recorded in 2003. Additionally, the Company now expects to report fiscal 2004 earnings of $1.45 to $1.55 on a fully diluted per share basis. Fourth quarter 2004 earnings are now expected to be in the $.30 to $.40 range on a diluted per share basis, including dilution of approximately 6 cents per share in the quarter from the acquisition of Huffy Sports and other special projects and activities. "The benefits of anticipated sales increases and ongoing savings initiatives are expected to be offset in the fourth quarter by increases in fiber, transportation and energy, start-up costs associated with the new Merendon facility in Honduras and continued pricing pressures in the Artwear market," said Ward. Additionally, the Company expects to record an effective tax rate in the 35% to 36% range in the fourth quarter. Ward added, "Looking into next year, we intend to provide 2005 guidance of our expected sales and EPS increases in our year-end conference call, after completion and approval of the 2005 annual business plan." For fiscal 2005, the expected sales increases, ongoing cost savings programs, and the benefits of lower year-over-year cotton prices are expected to be partially offset by continued pricing pressure, year-over-year cost increases in polyester fibers, transportation, energy, pension and medical insurance expenses, as well as other costs. The construction of the Merendon textile facility in Russell's Honduran operating company continues to be on schedule for a first quarter 2005 start-up, with full capacity expected to be achieved in the first half of 2006. It is further anticipated that the implementation of a new international operating structure will result in an effective tax rate of 34% or below for fiscal 2005. The effective tax rate is expected to vary quarter by quarter based on the actual profit results by entity and country, and does not assume any tax benefit from the American Jobs Creation Act of 2004. Conference Call Information Management will have a conference call today, October 28, 2004, at 8:30 a.m. Eastern Time to discuss the third quarter results. The call may be accessed at (877) 264 -7865 (domestically), and (706) 634-4917 (internationally), using conference call ID number 1659215. The call will also be simultaneously web cast via the Investor Relations homepage of the Company's website at http://www.russellcorp.com/ . A replay of the call will be available through the website for 30 days. In addition, you can register through the above referenced website if you would like to receive press releases, conference call reminders and other notices. About Russell Corporation Russell Corporation is a leading branded athletic and sporting goods company with over a century of success in marketing athletic uniforms, apparel and equipment for a wide variety of sports, outdoor and fitness activities. The Company's brands include Russell Athletic(R), JERZEES(R), Spalding(R), AAI(R), Huffy Sports(R), Mossy Oak(R), Bike(R), Moving Comfort(R), Dudley(R), Sherrin(R), Cross Creek(R) and Discus(R). The Company's common stock is listed on the New York Stock Exchange under the symbol RML and its website address is http://www.russellcorp.com/ . Forward Looking Statement This Press Release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some of these statements can be identified by terms and phrases such as "anticipate," "believe," "intend," "expect," "continue," "could," "may," "plan," "project," "predict," "will" and similar expressions and include references to assumptions that Russell believes are reasonable and relate to its future prospects, developments and business strategies. Factors that could cause Russell's actual results to differ materially from those expressed or implied in such forward-looking statements include, but are not limited to: (a) risks related to Russell's overall acquisition strategy, including the acquisitions of AAI and Huffy Sports; (b) risks related to Russell's ability to realize synergies from the combination of AAI, Huffy Sports and Spalding; (c) Russell's ability to achieve sales growth through expanded or new business with new or existing customers; (d) changes in customer demand for Russell's products, significant competitive activity and related pricing pressure; (e) raw material price volatility and increases in pension, medical insurance and other operating costs; (f) risks related to start-up of Russell's textile facility in Honduras; and (g) other risk factors listed in Russell's reports filed with the Securities and Exchange Commission from time to time. Russell undertakes no obligation to revise the forward-looking statements included in this Press Release to reflect any future events or circumstances. Russell's actual results, performance or achievements could differ materially from the results expressed in or implied by these forward-looking statements. RUSSELL CORPORATION Consolidated Statements of Income (Dollars in Thousands Except Share and Per Share Amounts) 13 Weeks 13 Weeks 39 Weeks 39 Weeks Ended Ended Ended Ended 10/3/04 10/5/03 10/3/04 10/5/03 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Net sales $422,656 $388,001 $964,220 $883,909 Cost of goods sold 300,853 275,394 697,439 631,094 Gross profit 121,803 112,607 266,781 252,815 Selling, general and administrative expenses 78,258 73,627 196,050 181,504 Other (income) expense - net (443) 1,382 (5,179) 2,801 Operating income 43,988 37,598 75,910 68,510 Interest expense, net 8,222 7,826 23,163 22,436 Non-controlling interest 666 -- 940 -- Income before income taxes 35,100 29,772 51,807 46,074 Provision for income taxes 8,161 11,313 14,175 17,508 Net income $26,939 $18,459 $37,632 $28,566 Weighted-average common shares outstanding: Basic 32,691,064 32,451,194 32,639,512 32,337,036 Diluted 32,901,106 32,815,822 32,861,790 32,692,172 Net income per common share: Basic $0.82 $0.57 $1.15 $0.88 Diluted $0.82 $0.56 $1.15 $0.87 Cash dividends per common share $0.04 $0.04 $0.12 $0.12 RUSSELL CORPORATION Consolidated Balance Sheets (Dollars in Thousands Except Share and Per Share Amounts) 10/3/04 1/3/04 10/5/03 ASSETS (Unaudited) (1) (Unaudited) Current assets: Cash $37,361 $20,116 $22,480 Accounts receivable, net 289,325 175,514 272,927 Inventories 385,203 346,946 357,692 Prepaid expenses and other current assets 18,354 15,938 13,248 Income tax receivable 2,799 14,585 -- Total current assets 733,042 573,099 666,347 Property, plant & equipment, net 316,077 303,234 307,858 Other assets 151,003 144,777 142,581 Total assets $1,200,122 $1,021,110 $1,116,786 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $102,719 $78,368 $93,699 Accrued expenses 85,062 76,993 85,870 Deferred income taxes 6,615 5,165 5,647 Income tax payable -- -- 4,319 Short-term debt 13,831 4,088 1,745 Current maturities of long-term debt 4,405 5,000 2,500 Total current liabilities 212,632 169,614 193,780 Long-term debt, less current maturities 359,115 272,355 362,581 Deferred liabilities: Income taxes 6,604 6,609 9,377 Pension and other 53,119 57,668 52,198 Non-controlling interest 13,015 -- -- Commitments and contingencies -- -- -- Stockholders' equity: Common stock, par value $.01 per share; authorized 150,000,000 shares, issued 41,419,958 shares 414 414 414 Paid-in capital 40,377 38,625 40,409 Retained earnings 746,801 713,310 700,028 Treasury stock, at cost (8,752,669 shares at 10/3/04; 8,897,075 shares at 1/3/04 and 8,940,671 shares at 10/5/03) (203,976) (208,038) (209,951) Accumulated other comprehensive loss (27,979) (29,447) (32,050) Total stockholders' equity 555,637 514,864 498,850 Total liabilities & stockholders' equity $1,200,122 $1,021,110 $1,116,786 (1) - Derived from audited financial statements. RUSSELL CORPORATION Unaudited Financial Highlights (Dollars in Thousands) 13 Weeks 13 Weeks 39 Weeks 39 Weeks Ended Ended Ended Ended 10/3/04 10/05/03 10/3/04 10/05/03 Domestic Segment Brand Groupings: Athletic $182,925 $169,342 $413,981 $355,022 Activewear 208,071 190,697 455,735 450,837 390,996 360,039 869,716 805,859 International Segment 31,660 27,962 94,504 78,050 Consolidated total $422,656 $388,001 $964,220 $883,909 http://www.newscom.com/cgi-bin/prnh/20030630/RMLCORPLOGO http://photoarchive.ap.org/ DATASOURCE: Russell Corporation CONTACT: Financial, Roger Holliday, +1-678-742-8181, or Media, Nancy Young, +1-678-742-8118, both of Russell Corporation Web site: http://www.russellcorp.com/

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