Russell Corporation reported fiscal 2004 fourth quarter sales of $334.0 million, an increase of 10.5% over the same period a year ago. The Company also reported earnings of $10.3 million, or 31 cents per diluted share. Earnings for the quarter include an approximate 6 cents per share impact from the dilution of Huffy Sports, severance costs associated with cost improvement initiatives and incremental expenses associated with Sarbanes-Oxley related projects. For the fourth quarter of 2003, earnings were $14.5 million, or 44 cents per diluted share.

Sales for the quarter ended January 1, 2005, reflect a 3% increase in the Company’s ongoing businesses in addition to approximately $22 million dollars in incremental sales from acquisitions owned for less than a year. Sales gains were again recorded for the Activewear Group, the Athletic Group and the International apparel segment.

“During the fourth quarter, sales increases in our domestic segment were led by our Athletic Group. Increases in Athletic were driven by our recent acquisitions, which have solidified and grown our position as a leading branded athletic and sporting goods company. Our International apparel segment continued its sales growth pace, with increases of more than 20% for the quarter and the year,” said Jack Ward, chairman and chief executive officer. “For the quarter, our Activewear Group had a 3% increase in revenues, led by our JERZEES(R) sports apparel in the mass channel.”

Gross profit for the fourth quarter of 2004 was $97.1 million, or a 29.1% gross margin, versus a gross profit of $91.3 million, or a 30.2% gross margin, in the prior year. The positive impact of increased volumes and revenues, coupled with ongoing cost improvements, was dampened by higher year-over-year costs of fiber, transportation and energy, lower margins experienced in Huffy Sports and other increased costs, as well as the fourth quarter impact of price reductions in Artwear which were taken in early 2004.

For the 2004 fourth quarter, selling, general and administrative expenses (“SG&A”) were $73.5 million versus $65.0 million in the comparable period last year, resulting in operating income of $24.9 million, versus $25.1 million in the same quarter last year.

For the full year ended January 1, 2005, net sales increased $112 million to $1.298 billion, a 9.4% increase over the prior year’s sales of $1.186 billion. Net income for fiscal 2004 was $47.9 million, or $1.46 per share on a fully diluted basis, within the range of previous guidance.

Gross profit was $363.9 million, or a 28.0% gross margin, for fiscal 2004 versus a gross profit of $344.1 million, or a 29.0% gross margin, in the prior year. SG&A expenses for fiscal 2004 were $269.6 million, or 20.8% of net
sales, versus $246.5 million, also 20.8% of net sales, in fiscal 2003.

Operating income for the full 2004 year increased $7.2 million over fiscal 2003, to $100.8 million. Net income for 2004 increased 11.4%, or $4.9 million, to $47.9 million, or $1.46 per diluted share, versus $43.0 million, or $1.32 per diluted share, in 2003.

“We are pleased with our substantial progress in expanding our position as a leading, authentic sporting goods company,” said Jack Ward, chairman and CEO. “As we capitalize on our acquisitions of sports equipment and athletic footwear, Russell will continue to gain momentum in the sporting goods market. Acquisitions have resulted in our becoming the leading provider of basketballs and basketball equipment, and we expect Brooks to maintain strong growth in the performance running category. Each of these strengthens Russell’s position and is an investment in our future growth.”

Russell expects sales for fiscal 2005 to increase approximately 15% to 17%, to approximately $1.50 billion to $1.52 billion. As previously stated, Russell expects earnings per fully diluted share in the $1.55 to $1.65 range for 2005. For the first quarter of 2005, the Company expects sales to increase in the 20% plus range and now expects earnings per share of 5 cents to 8 cents. For the remaining quarters, the Company expects the following EPS ranges:

  • Second quarter: – Earnings of $0.18 to $0.22 per share
  • Third quarter: – Earnings of $0.70 to $0.78 per share
  • Fourth quarter: – Earnings of $0.52 to $0.60 per share

    Additionally, the Company expects to record an effective tax rate of approximately 35% for the full year of 2005.

                             RUSSELL CORPORATION
                      Consolidated Statements of Income
          (Dollars in Thousands Except Share and Per Share Amounts)

                                13 Weeks    13 Weeks    52 Weeks    52 Weeks
                                 Ended       Ended       Ended       Ended
                                1/01/05     1/03/04     1/01/05     1/03/04

    Net sales                    $334,032    $302,354  $1,298,252  $1,186,263
    Cost of goods sold            236,933     211,032     934,372     842,127
           Gross profit            97,099      91,322     363,880     344,136

    Selling, general and
     administrative expenses       73,509      64,973     269,558     246,477
    Other (income) expense - net   (1,290)      1,218      (6,469)      4,018
           Operating income        24,880      25,131     100,791      93,641

    Interest expense, net           7,680       7,227      30,843      29,663
    Non-controlling interest        1,081          --       2,021          --

           Income before income
            taxes                  16,119      17,904      67,927      63,978

    Provision for income taxes      5,815       3,432      19,991      20,939

            Net income            $10,304     $14,472     $47,936     $43,039

    Weighted-average common
     shares outstanding:
            Basic              32,750,260  32,501,189  32,668,376  32,376,617
            Diluted            33,000,155  32,785,080  32,897,559  32,726,472

    Net income per common
     share:
            Basic                   $0.31       $0.45       $1.47       $1.33
            Diluted                 $0.31       $0.44       $1.46       $1.32