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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(X)    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

(   )  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

RUSSELL CORPORATION
(Exact name of registrant as specified in its charter)

3330 Cumberland Blvd. Suite 800, Atlanta, Georgia 30339
and

(678) 742-8000
(Registrant’s telephone number, including area code)

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     

The number of shares outstanding of each of the issuer’s classes of common stock.

RUSSELL CORPORATION
INDEX

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PART I — FINANCIAL INFORMATION
RUSSELL CORPORATION
Consolidated Condensed Balance Sheets
(In Thousands Except Share and Per Share Amounts)
(Unaudited)

See accompanying notes to consolidated condensed financial statements.

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RUSSELL CORPORATION
Consolidated Condensed Statements of Operations
(In Thousands Except Share and Per Share Amounts)
(Unaudited)

See accompanying notes to consolidated condensed financial statements.

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RUSSELL CORPORATION
Consolidated Condensed Statements of Operations
(In Thousands Except Share and per Share Amounts)
(Unaudited)

See accompanying notes to consolidated condensed financial statements.

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RUSSELL CORPORATION
Consolidated Condensed Statements of Cash Flows
(Dollars in Thousands)
(Unaudited)

See accompanying notes to consolidated condensed financial statements.

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RUSSELL CORPORATION
Notes to Consolidated Condensed Financial Statements

1.		BASIS OF PRESENTATION
		The accompanying unaudited, consolidated, condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In our opinion, the accompanying interim, consolidated, condensed financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly our financial position as of September 29, 2002, and the results of our operations for the thirteen week and thirty-nine week periods ended September 29, 2002 and September 30, 2001, and our cash flows for the thirty-nine week periods ended September 29, 2002 and September 30, 2001.
		The balance sheet at December 29, 2001, has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.
		For further information, refer to the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 29, 2001.
		Our revenues and income are subject to seasonal variations. Consequently, the results of operations for the thirteen and thirty-nine week periods ended September 29, 2002, are not necessarily indicative of the results to be expected for the full year.
2.		INVENTORIES
		The components of inventories consist of the following: (in thousands)

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3.		LONG-TERM DEBT
		Long-term debt includes the following:

		On April 18, 2002, we entered into two new financing agreements to replace our existing revolving credit facility due October 14, 2004, which bore a weighted average interest rate of 4.03% at December 29, 2001; and other long term indebtedness including: 6.72% notes due annually through 2002 (which bore interest at the rate of 6.97% per annum at April 18, 2002); 6.65% notes due annually 2001 through 2007 (which bore interest at the rate of 7.65% per annum at April 18, 2002); 6.78% notes due annually 2003 through 2008 (which bore interest at the rate of 7.78% per annum at April 18, 2002); and a variable rate note due semi-annually through 2005 (which bore interest at the rate of 5.09% at December 29, 2001).
		We issued $250 million in principal amount of 9.25% Senior Notes (the “Senior Notes”) that will mature in 2010. We sold these notes for 100% of their face amount. The Senior Notes were issued pursuant to an Indenture, dated as of April 18, 2002, between us and Wachovia Bank, National Association and are fully and unconditionally guaranteed, jointly and severally, by most of our domestic subsidiaries. The Senior Notes (i) have interest payment dates of May 1 and November 1 of each year; (ii) are redeemable after the dates and at the prices (expressed in percentages of principal amount on the redemption date) as set forth below:

		and (iii) are senior unsecured obligations and are senior in right of payment to any of our future subordinated obligations.
		We also entered into new senior secured credit facilities (the “Facilities”) concurrently with the closing of the Senior Notes offering. The new Facilities provide for a $300 million senior secured revolving credit facility (the “Revolver”) which is dependent on the levels of our eligible accounts receivable and inventory and a $25 million senior secured term loan (the “Term Loan”). The new Facilities mature on April 18, 2007. The Facilities provide for variable interest on the Revolver through December 29, 2002 at LIBOR plus 2.50% (4.32% at September 29, 2002) and on the Term Loan at LIBOR plus 3.00% (4.82% at September 29, 2002), with an annual commitment fee on the unused portion of the Facilities of 0.50%. After this initial period, pricing will be adjusted quarterly based on our consolidated fixed charge coverage ratio and will range from LIBOR plus 1.75% to LIBOR plus 2.75% or Fleet National

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		Bank’s base rate plus 0.25% to the base rate plus 1.25% for the Revolver, and LIBOR plus 2.25% to LIBOR plus 3.25% or Fleet National Bank’s base rate plus 0.75% to base rate plus 1.75% for the Term Loan. The commitment fee on the unused portion of the Revolver will range from 0.375% to 0.500%. We may choose LIBOR or base rate pricing and may elect interest periods of one, two, three or six months for LIBOR borrowings, except that all swing line loans managed by the Administrative Agent, under the Revolver will have base rate pricing. The Term Loan has a scheduled 5-year amortization period with payments of $2.5 million each September 30 and December 31 until maturity, beginning on September 30, 2002. We prepaid our September 30, 2002 and December 31, 2002 principal payments in the aggregate amount of $5.0 million prior to September 29, 2002 without penalty.
		The Facilities and the indenture governing the Senior Notes impose certain restrictions on us, including restrictions on our ability to: incur debt; grant liens; provide guarantees in respect of obligations of any other person; pay dividends; make loans and investments; sell our assets; issue redeemable preferred stock and non-guarantor subsidiary preferred stock; make redemptions and repurchases of capital stock; make capital expenditures; prepay, redeem or repurchase debt; engage in mergers or consolidation; engage in sale/leaseback transactions and affiliate transactions; change our business; amend certain debt and other material agreements, including the indenture governing the Senior Notes; issue and sell capital stock of subsidiaries; and restrict distributions from subsidiaries. The new Facilities require us to meet a fixed charge coverage ratio, which is 1.15 to 1.0 through the next to last day of fiscal year 2003 and 1.2 to 1.0 through the next to last day of fiscal year 2004 and 1.25 to 1.0 thereafter, and a maximum leverage ratio, which is 4.0 to 1.0 through the next to last day of fiscal year 2002, and 3.75 to 1.0 through the next to last day of fiscal year 2003 and 3.5 to 1.0 thereafter.
		If we violate these covenants and are unable to obtain waivers from our lenders, our debt under these agreements would be in default and could be accelerated by our lenders. If our indebtedness is accelerated, we may not be able to repay our debt or borrow sufficient funds to refinance it. Even if we are able to obtain new financing, it may not be on commercially reasonable terms, or terms that are acceptable to us. Cross default provisions exist in the indenture governing the 9.25% senior notes whereby a default on the senior notes would occur if we default on any covenant of any other debt agreement (which has an outstanding balance in excess of $25 million) and such default causes an acceleration of the maturity date of the other indebtedness. Also, under cross default provisions in the new credit facility, a default would occur if we default on any covenant of any other debt agreement (which has an outstanding balance in excess of $5 million) and such default causes an acceleration of the maturity date of the other indebtedness.
		As of September 29, 2002, we had approximately $96.0 million in outstanding borrowings ($76 million under the Revolver and $20 million under the Term Loan) and $12.6 million in outstanding letters of credit under the Facilities with approximately $184.9 million in additional borrowing availability under the Revolver.
		We used the proceeds from the offering of the Senior Notes, together with $132.4 million of the initial borrowings under our new Facilities to pay fees and expenses associated with the new Facilities, as described below, and the Senior Notes, to repay the outstanding debt balances, prepayment penalties, fees, and expenses related to our old debt.
		During the second quarter of fiscal 2002, we recognized an extraordinary charge of approximately $20.1 million ($12.6 million after-tax) associated with the termination of our then existing revolving credit facility and the early retirement of other long term indebtedness. The charge consisted of $15.0 million related to prepayment penalties, fees and expenses associated with the early termination of our existing notes payable and the write-off of $5.1 million of previously capitalized loan costs associated with the extinguished debt.

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4.		MULTI-YEAR RESTRUCTURING AND REORGANIZATION PLAN
		In July 1998, we adopted a restructuring and reorganization program with the objective of (1) transitioning our company from a manufacturing-driven business to a consumer-focused organization that markets branded apparel products and (2) creating an efficient, low-cost operating structure with the flexibility to take advantage of future opportunities to reduce our costs. The plan originally called for the closing of a number of our world-wide facilities, which included selected manufacturing plants, distribution centers and offices; expanding production outside the United States; consolidating and downsizing the licensed products businesses; disposing of owned shopping-center real estate; reorganizing the corporate structure; as well as other cost saving activities. The plan also called for the establishment of a dual headquarters in Atlanta, Georgia in addition to Alexander City, Alabama. In July 2001, we announced an extension of this program to align the organization by distribution channel to provide stronger customer service, supply chain management, and more cost-effective operations.
		During the second quarter 2001, we announced the closing of two domestic sewing plants, one textile operation, one yarn manufacturing facility, and terminated approximately 770 employees. In July 2001, we also announced changes that affected the Cross Creek® branded business. We elected to discontinue direct marketing of the Cross Creek® brand through golf pro-shops and department stores and instead pursue a third party licensing strategy for this business channel. We have continued to market the Cross Creek® brand through the artwear/careerwear business line, which remains this brand’s principal channel of distribution. Artwear products are unprinted or “blank” products sold under the Russell Athletic®, Jerzees®, Mossy Oak®, Cross Creek® and Three Rivers® brands that are printed upon, embroidered or otherwise decorated by a third party, such as a screen printer. In addition, we consolidated the remaining Cross Creek textile operations into the current dyeing and finishing plant in Mt. Airy, North Carolina. During the second quarter 2001, we recorded asset impairment charges of $11.0 million and employee severance and related costs of $6.4 million. We also incurred approximately $2.2 million in ongoing maintenance cost related to facilities that had been closed in prior periods in connection with prior restructuring activities and $1.6 million of miscellaneous costs primarily related to the consolidation of the Cross Creek® branded business. Additionally, we recorded inventory write-downs of $5.4 million related to the discontinuance of certain Cross Creek® product lines during the second quarter 2001.
		During the third quarter 2001, we recorded asset impairment charges of $3.1 million, employee severance of $5.6 million (for approximately 285 positions) and other costs of $1.8 million related to the consolidation of the Cross Creek® branded business.
		During the third quarter 2001, we also recorded $2.3 million in severance (for approximately 165 positions) to reduce manufacturing capacity in the Domestic Activewear segment and $2.5 million for ongoing maintenance and security costs on facilities closed in prior periods due to restructuring activities, further losses on sales of facilities previously classified as held for sale and other unusual costs.
		During the third quarter 2001, we reached an agreement with Frontier Spinning Mills, Inc. to transfer certain of our spinning assets and yarn employees to Frontier Yarns, LLC (“Frontier Yarns”), a joint venture between us, Frontier Spinning Mills, Inc. and the management of the joint venture. Beginning fiscal 2002, Frontier Yarns supplies most of our yarn needs. These transferred spinning facilities continued to operate as a part of Russell until the transaction was consummated at the end of December 2001. We recorded asset impairment charges of $38.5 million related to the transfer of spinning assets to Frontier Yarns. Of the $38.5 million in asset impairment charges, $15.3 million related to assets that were sold to Frontier Yarns or to other parties and the remaining $23.2 million related to yarn facilities and equipment that is being leased to Frontier Yarns and classified as held for use.

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Special charges reflected in the consolidated condensed statements of operations for comparable 2001 interim periods were as follows: (in thousands)

These charges were classified in the 2001 consolidated condensed statements of operations as follows: (in thousands)

A summary of activity in the restructuring liability accounts follows: (in thousands)

The remaining accrued restructuring liabilities at September 29, 2002 are made up of the following: (in thousands)

		We have substantially completed our multi-year restructuring and reorganization program. As of September 29, 2002, we had approximately $8.1 million in remaining accrued restructuring liabilities. During the thirteen and thirty-nine week periods ending September 29, 2002, we did not incur any additional restructuring charges (“special charges”).
		At September 29, 2002, we held for sale certain closed facilities with an adjusted carrying value of approximately $17.3 million, which have been included in property, plant and equipment as part of the Domestic Activewear segment.

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5.		COMMITMENTS AND CONTINGENCIES
		Commitments
		During fiscal 2001, we entered into a supply agreement with Frontier Yarns to purchase certain minimum quantities of yarn.
		Contingencies
		We are a co-defendant in Locke, et al. v. Russell Corporation, et al. in Jefferson County, Alabama. Fifteen families who own property on Lake Martin in the Raintree Subdivision in Alexander City, Alabama, were the original plaintiffs in the case, which sought unspecified money damages for trespass and nuisance. However, ten families dropped out of the case and there are five remaining plaintiff families. In May 2002, the trial court entered summary judgment in our favor on all but one of the plaintiffs’ claims. The remaining claim, which involves a private right of action for public nuisance, is set for trial on February 3, 2003. A complaint substantially identical to the one filed in the Locke case was filed on November 20, 2001, in the Circuit Court of Jefferson County, Alabama, by two residents of the Raintree Subdivision (Gould v. Russell Corporation, et al.). The trial court has entered summary judgement in our favor on all claims in that case, and the plaintiffs in the case have filed a motion to alter that determination, which remains pending. The allegations in the Locke and Gould cases are similar to those contained in a case styled Sullivan, et al. v. Russell Corporation, et al., which was resolved in our favor by a ruling by the Alabama Supreme Court in 2001. We plan to vigorously defend the Locke and Gould suits.
		By letter dated January 13, 2000, we were notified by the United States Department of Justice (“DOJ”) that the DOJ intended to institute legal proceedings against us and certain other parties alleging violations by those parties of the Clean Water Act in connection with the treatment and discharge of waste at a water treatment facility operated by the City of Alexander City, Alabama. On March 5, 2002, we and two other parties, with no admission of liability, entered into a Consent Decree with the DOJ whereby we and the other parties agreed (i) to pay a civil penalty of $30,000, of which we will pay $10,000 and (ii) to participate in a Supplemental Environmental Project, the cost of which will be approximately $197,000, of which we will pay approximately $112,000. We are not required to undertake any corrective or remedial action under the terms of the Consent Decree. The Consent Decree was approved by the Federal District Court for the Middle District of Alabama on July 25, 2002. The Supplemental Environmental Project will be undertaken in connection with the settlement of a civil enforcement action taken by the DOJ for violations of the Clean Water Act. We specifically denied the allegations of the DOJ and specifically denied any liability based upon those allegations. We do not believe the settlement of this matter will have a material adverse effect upon us.
		We also are a party to various other lawsuits arising out of the conduct of our business. We do not believe that any of these lawsuits, if adversely determined, would have a material adverse effect upon us.
		Trade Accounts Receivable
		In the fourth quarter of 2001, we increased our reserves to reflect estimated losses related to two customers that filed for bankruptcy, primarily Kmart Corporation. As of the date of Kmart’s chapter 11 filing, we had outstanding pre-petition accounts receivable on 2001 orders from Kmart of approximately $12.4 million and increased our bad debt reserve with a fiscal 2001 fourth quarter pre-tax charge of $6.2 million. During the 2002 third quarter, we increased our bad debt reserve by an additional $5.0 million pre-tax charge to provide for possible additional losses on our pre-petition accounts receivable balance from Kmart. A considerable amount of judgment is required to assess the ultimate realization of accounts receivable, and we continue to evaluate the collectibility of these pre-petition receivables from Kmart. Additional adjustments for our Kmart and other bad debts may be appropriate in future periods.

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6.		DILUTED WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
		Our diluted weighted-average common shares outstanding are calculated as follows:

		Net incremental shares issuable on the exercise of employee stock options calculated using the treasury stock method amounted to 163,392 and 322,616 for the thirteen and thirty-nine weeks ended September 30, 2001, respectively. Such incremental shares were not included in the diluted weighted-average common shares outstanding calculation because they were anti-dilutive.
7.		COMPREHENSIVE INCOME (LOSS)
		At September 29, 2002, accumulated other comprehensive loss as shown in the consolidated condensed balance sheet was comprised of foreign currency translation adjustments, minimum pension liabilities, and foreign currency forward contracts. The components of comprehensive income (loss), net of tax, for the periods indicated below were as follows: (in thousands)

8.		SEGMENT INFORMATION
		We operate our business in two reportable segments: Domestic Activewear and International Activewear. Domestic Activewear is further organized into three business lines, which are aligned by distribution channels: Russell Athletic, Mass Retail, and Artwear/Careerwear. Russell Athletic, Mass Retail and Artwear/Careerwear have been aggregated into the Domestic Activewear reportable segment because those business lines are similar in economic characteristics, products, production processes, type of customer, distribution method and regulatory environment. The International Activewear business sells our products in more than 40 countries.
		In 2001, we realigned our domestic organizational structure by distribution channel to provide a stronger focus on customer service, marketing, supply chain management and cost effective operations. Accordingly, the segment data presented herein for 2001 has been restated to present our segment data on the new basis of segment reporting. The business units that were previously shown as “All Other” are now part of our Domestic Activewear segment.

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Our management evaluates performance and allocates resources based on profit or loss from operations before interest, income taxes and special charges (Segment EBIT). Segment EBIT as presented by us may not be comparable to similarly titled measures issued by other companies. The accounting policies of the reportable segments are the same as those described in Note One to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 29, 2001, except that inventories are valued at standard cost at the segment level, whereas a substantial portion of these inventories are valued on a Last-In, First-Out (LIFO) basis in the consolidated financial statements.

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A reconciliation of combined segment EBIT to consolidated income (loss) before income taxes is as follows:

9.		NEW ACCOUNTING PRONOUNCEMENTS
		Asset Impairment
		In August 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” that supersedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of”, and provides a single accounting model for long-lived assets to be disposed of. Although retaining many of the fundamental recognition and measurement provisions of Statement No. 121, the new rules significantly change the criteria that would have to be met to classify an asset as held-for-sale. The new rules also supersede the provisions of APB Opinion 30 with regard to reporting the effects of a disposal of a segment of a business and require expected future operating losses from discontinued operations to be displayed in discontinued operations in the period(s) in which the losses are incurred (rather than as of the measurement date as was required by APB 30). We adopted SFAS No. 144 in the first quarter of 2002. The new rules had no impact on our consolidated financial position or our results of operations.
		Goodwill
		On December 30, 2001, we adopted SFAS No. 142, “Goodwill and Other Intangible Assets”, which eliminates amortization of goodwill and requires an annual impairment test. SFAS No. 142 requires that impairment be tested at the reporting unit level, using a two-step impairment test. The first step determines if goodwill is impaired by comparing the fair value of the reporting unit as a whole to the book value. If a deficiency exists, the second step measures the amount of the impairment loss as the difference between the implied fair value of goodwill and its carrying value. Purchased intangibles with indefinite economic lives will be tested for impairment annually using a lower of cost or fair value approach. Other intangibles will continue to be amortized over their useful lives and reviewed for impairment.

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The following table presents the impact of SFAS No. 142 on net income (loss) and net income (loss) per share had the standard been in effect throughout each period presented (in thousands, except per share amounts).