ATLANTA, Oct. 27 /PRNewswire-FirstCall/ -- Russell Corporation (NYSE:RML) today reported fiscal third quarter 2005 earnings of $15.8 million, or $0.47 per diluted share on sales of $424.6 million versus last year's $422.7 million in revenues. (Logo: http://www.newscom.com/cgi-bin/prnh/20040526/CLW026LOGO) Operating income was $33.9 million in the quarter, down from last year's $44.0 million, as operational issues disclosed in the second quarter were exacerbated by Hurricanes Katrina and Rita. In addition to the previously announced impact of the elimination of the COO position in the third quarter of approximately $0.06 cents per share, the Company experienced significant economic losses attributed to the storms. The Company estimates the equivalent of $0.05 per share of lost earnings associated with missed sales due to the hurricanes plus additional direct costs of $0.02 per share in the third quarter. Excluding the impact of the hurricanes and the elimination of the COO position in the quarter, earnings would have been approximately $0.60 per share, at the top end of the range previously provided by the Company. This compares with third quarter 2004 earnings per share of $0.82 on a fully diluted basis, which included a $0.13 benefit from a favorable tax adjustment. Russell achieved results at the top end of range versus earlier projections due to lower than expected costs in Activewear and strong sales and profit improvements in international apparel, which were partially offset by losses at Huffy Sports. Aggressive Action Yields Results The Company is on track to have the previously announced operational issues resolved by the end of the year. Significant improvements have been made in sewing efficiencies in offshore plants while reducing manufacturing variances associated with the ramp up of production within textile operations in Alexander City, Alabama. According to Jack Ward, chairman and CEO, "We have made significant progress in fixing our short term issues, despite major disruptions due to the recent hurricanes. Having addressed these short term issues, we can now concentrate on building our businesses for the long term." Reduced Hurricane Impact As reported earlier, the Company lost more than 40 containers of product from Katrina, as the Company's primary ports of entry for the export of components (fabric and cut parts) and the import of finished goods were damaged in the storm. Shipping has now returned to more normal levels with the reopening of Gulfport, Mississippi, and the shift of certain shipments through Panama City, Florida. Due to the effects of Katrina, fiber manufacturers increased prices as much as 20 percent. With Russell's traditional strength in poly/cotton blends, higher staple costs are expected to continue to impact the Company's financial results temporarily, but should "normalize," albeit at a higher level, when world supplies are increased, as expected. With aggressive actions, the estimated losses associated with the hurricanes have been reduced to a range of $0.13 to $0.16 on a per share basis. The Company does expect to recover a significant portion of these extra expenses from its insurance carriers. Segment Sales Sales in the Sporting Goods segment increased by 5 percent, or nearly $10 million, with sales from acquisitions owned for less than a year contributing approximately $33 million. Continued strength in Dri-POWER(R) performance products for the Russell Athletic Group partially offset declines due to product availability. Sales in the Spalding Group were down slightly from prior year, while Brooks continued to perform exceptionally well, contributing nearly $32 million in revenues in the quarter and achieving its profit plan. In the Activewear segment, demand remained strong for JERZEES(R) products in the Artwear channel, offsetting declines in the Retail channel, which were primarily due to retail inventory adjustments. Outlook The Company is reaffirming its earnings projections for the full year, and expects fiscal 2005 sales in the $1.45 billion to $1.46 billion range with earnings on a per share basis (excluding the COO position elimination, the impact of the hurricanes, and other potential special charges) in the $1.25 to $1.35 range. The Company is anticipating solid sales increases in most of its businesses next year, which should more than offset the recent Wal-Mart decision to replace the JERZEES(R) brand of boys' sweatshirts and sweatpants for fall 2006. Additionally, expected operational improvements, a full year of the Honduran plant and selective price increases, should offset inflationary trends currently being experienced. Russell is forecasting solid spring business with a number of new products and an expanded presence at retail. Russell Athletic continues to expand its floor space at retail with product line extensions and increased visibility with a new point of sale presence in sporting goods chains. Likewise, Spalding's latest innovation, the new NeverFlat(TM) basketball, has recently been introduced and is being well received by sporting good retailers. This premium priced NeverFlat(TM) basketball holds its pressure ten times longer than an ordinary basketball, and is expected to be on retail shelves this winter. Also, in the Sporting Goods segment, Brooks continues to meet or exceed expectations, with bookings for spring 2006 currently up more than 30 percent. Brooks is experiencing increased demand from national sporting goods accounts in addition to its primary market, specialty running retailers, where Brooks is one of the largest share brands. Ward added, "We feel positive about our long-term potential. We continue to believe in our strategy to become a premier sporting goods company, as demonstrated by our stable of consumer brands built on a heritage of quality athletic products." Conference Call Information Management will have a conference call today, October 27, 2005, 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 1525624. 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 marketing athletic apparel, uniforms, footwear and equipment for a wide variety of sports, outdoor and fitness activities. The Company's major brands included in the Sporting Goods Segment are: Russell Athletic(R), Spalding(R), Brooks(R), Huffy Sports(R), Bike(R), Moving Comfort(R), AAI(R) and Mossy Oak(R). The predominant brand in the Activewear segment is JERZEES(R). The Company's common stock is listed on the New York Stock Exchange under the symbol RML and its web site address is http://www.russellcorp.com/. Forward-Looking Statement This Press Release includes certain "forward-looking" statements (as defined by the Private Securities Litigation Reform Act of 1995 (the "Act")) that describe our beliefs concerning future business conditions, prospects, growth opportunities, and the outlook for the Company based upon currently available information. Wherever possible, we have identified these statements by words such as "anticipate," "believe," "intend," "expect," "continue," "could," "may," "plan," "project," "predict," "will" and similar expressions. We include such statements because we believe it is important to communicate our future expectations to our stockholders, and we therefore make such statements in reliance upon the safe harbor provisions of the Act. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including, but not limited to, any projections of sales and earnings. These forward-looking statements are based upon assumptions that we believe are reasonable. Factors that could cause our actual results to differ materially from those expressed or implied in such forward-looking statements include, but are not limited to: (a) risks associated with (i) our long-term business strategies, (ii) the impact of Hurricane Katrina and other recent hurricanes on the Company's business, (iii) the short- and long-term effects of higher prices for raw materials, energy, and transportation, (iv) the loss of Wal-Mart's boys' fall fleece program, (v) the introduction of new products; (b) our ability to (i) fully resolve current operational issues and implement operational improvements, and (ii) meet planned production schedules; (c) the degree to which we are able to (i) achieve increased sales of our products and (ii) realize increased revenues from announced and planned price increases; and (d) other risk factors listed in our reports filed with the Securities and Exchange Commission from time to time. We undertake no obligation to revise the forward-looking statements included in this Press Release to reflect any future events or circumstances. Our actual results, performance or achievements could differ materially from the results expressed or implied by any forward-looking statements contained in this Press Release. RUSSELL CORPORATION Consolidated Statements of Income (In Thousands Except Share and Per Share Amounts) Quarter-to-Date Year-to-Date 13 Weeks 13 Weeks 39 Weeks 39 Weeks Ended Ended Ended Ended October 2, October 3, October 2, October 3, 2005 2004 2005 2004 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Net sales $424,632 $422,656 $1,079,973 $964,220 Cost of goods sold 307,240 300,853 786,486 697,439 Gross profit 117,392 121,803 293,487 266,781 Selling, general and administrative expenses 84,501 78,445 231,203 196,610 Other (income) expense - net (1,005) (630) (2,573) (5,739) Operating income 33,896 43,988 64,857 75,910 Interest expense, net 10,382 8,222 29,336 23,163 Non-controlling interests 144 666 1,565 940 Income before income taxes 23,370 35,100 33,956 51,807 Provision for income taxes 7,610 8,161 11,351 14,175 Net income $15,760 $26,939 $22,605 $37,632 Weighted-average common shares outstanding: Basic 33,176,005 32,691,064 33,003,348 32,639,512 Diluted 33,380,966 32,901,106 33,318,486 32,861,790 Net income per common share: Basic $ 0.48 $0.82 $0.68 $ 1.15 Diluted $ 0.47 $0.82 $0.68 $ 1.15 RUSSELL CORPORATION Consolidated Balance Sheets (In Thousands Except Share and Per Share Amounts) October 2, 2005 January 1, 2005 October 3, 2004 ASSETS (Unaudited) (Note) (Unaudited) Current assets: Cash $48,581 $29,816 $37,361 Accounts receivable, net 338,578 212,063 289,325 Inventories 426,426 411,701 385,203 Prepaid expenses and other current assets 25,377 17,737 18,354 Income tax receivable 18,234 6,101 2,799 Total current assets 857,196 677,418 733,042 Property, plant & equipment, net 316,226 322,890 316,077 Other assets 254,261 253,801 151,003 Total assets $1,427,683 $1,254,109 $1,200,122 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $214,064 $190,422 $187,781 Deferred income taxes 13,619 4,054 6,615 Short-term debt 10,132 18,190 13,831 Current maturities of long-term debt 2,048 6,938 4,405 Total current liabilities 239,863 219,604 212,632 Long-term debt, less current maturities 497,591 372,921 359,115 Deferred liabilities: Income taxes 33,527 20,286 6,604 Pension and other 53,639 64,351 53,119 Non-controlling interests 14,986 14,096 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 37,253 40,716 40,377 Retained earnings 774,458 755,799 746,801 Treasury stock, at cost (192,214) (201,171) (203,976) Accumulated other comprehensive loss (31,834) (32,907) (27,979) Total stockholders' equity 588,077 562,851 555,637 Total liabilities & stockholders' equity $1,427,683 $1,254,109 $1,200,122 Note: Consolidated balance sheet at January 1, 2005 has been derived from audited financial statements. RUSSELL CORPORATION Consolidated Statements of Cash Flows (In Thousands) 39 Weeks Ended October 2, 2005 October 3, 2004 (Unaudited) (Unaudited) Operating Activities: Net income $22,605 $37,632 Adjustments to reconcile net income to net cash used in operating activities: Depreciation 36,342 34,859 Amortization 2,816 1,000 Earnings of non-controlling interests 1,565 940 Provision for deferred income taxes 20,497 - Gain on sale of assets (788) (4,672) Other 3,741 6,923 Changes in operating assets & liabilities: Trade accounts receivable (133,962) (101,812) Inventories (17,840) (26,973) Prepaid expenses and other current assets (7,390) 639 Other assets (2,140) 5,805 Accounts payable and accrued expenses 29,631 22,950 Income taxes (11,791) 11,905 Pension and other deferred liabilities (10,712) (7,632) Net cash used in operating activities (67,426) (18,436) Investing Activities: Purchases of property, plant & equipment (30,290) (17,717) Proceeds from the sale of property, plant & equipment and other assets 2,911 8,624 Net cash refund from (paid for) acquisitions, joint ventures and other 1,031 (43,293) Other (46) 1,619 Net cash used in investing activities (26,394) (50,767) Financing Activities: Borrowings on credit facility and other - net 118,960 74,990 (Payments) borrowings on short-term debt (7,238) 5,993 Dividends on common stock (3,948) (3,910) Treasury stock re-issued 5,050 2,195 Cost of common stock for treasury (37) (17) Net cash provided by financing activities 112,787 79,251 Effect of exchange rate changes on cash (202) (662) Net increase in cash 18,765 9,386 Increase in cash from consolidating Frontier Yarns, LLC - 7,859 Cash balance at beginning of period 29,816 20,116 Cash balance at end of period $48,581 $37,361 Supplemental schedule of noncash investing and financing activities: Sold building - portion of proceeds in the form of a note $- $1,500 Sold investment - proceeds in the form of stock and cash - 4,945 Noncash investing and financing activities $- $6,445 RUSSELL CORPORATION Financial Data by Reportable Segment (in thousands) Quarter-to-Date Year-to-Date 13 Weeks 13 Weeks 39 Weeks 39 Weeks Ended Ended Ended Ended October 2, October 3, October 2, October 3, 2005 2004 2005 2004 (Unaudited) (Unaudited) (Unaudited) (Unaudited) NET SALES Sporting Goods $201,840 $192,360 $527,425 $438,061 Activewear 207,828 215,064 505,987 484,181 All Other 14,964 15,232 46,561 41,978 TOTAL NET SALES $424,632 $422,656 $1,079,973 $964,220 SEGMENT OPERATING INCOME Sporting Goods $15,518 $23,949 $34,917 $48,504 * Activewear 21,275 25,051 36,240 35,801 All Other 1,423 1,131 5,257 4,287 TOTAL SEGMENT OPERATING INCOME $38,216 $50,131 $76,414 $88,592 Reconciliation of total segment operating income consolidated income before income taxes: Total Segment operating Income $38,216 $50,131 $76,414 $88,592 Unallocated amounts: Corporate Expenses (4,464) (6,809) (13,122) (13,622) Interest Expense, net (10,382) (8,222) (29,336) (23,163) CONSOLIDATED INCOME BEFORE INCOME TAXES $23,370 $35,100 $33,956 $51,807 * Includes one-time gain on the sale of Marmot Mountain, Ltd. of $4.4 million http://www.newscom.com/cgi-bin/prnh/20040526/CLW026LOGO 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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