Russell Corporation reported fiscal 2004 third quarter sales of $422.7 million, an increase of 8.9% over the same period a year ago. RML also reported a 45% increase in earnings to $26.9 million, or 82 cents per diluted share, versus $18.5 million, or 56 cents per diluted share, for the third quarter of 2003.

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.

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.

“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.