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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended JANUARY 4, 2003
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number 0-1790
RUSSELL CORPORATION
(Exact name of registrant as specified in its charter)
Alabama 63-0180720
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3330 Cumberland Blvd, Suite 800
Atlanta, Georgia 30339
Registrant's telephone number, including area code: (678) 742-8000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- -------------------
Common Stock, $.01 par value New York Stock Exchange
Pacific Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
None
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 (or such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No | |
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |X|
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes |X| No | |
The aggregate market value of Common Stock, par value $.01, held by
non-affiliates of the registrant, as of June 30, 2002, was approximately
$474,415,400.
As of March 24, 2003, there were 32,213,602 shares of Common Stock, $.01
par value outstanding (excluding treasury shares).
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Shareholders Report for the year ended January 4,
2003 (the "Annual Report") are incorporated by reference into Parts I, II and
III.
Portions of the Proxy Statement for the Annual Meeting of Shareholders to
be held on April 23, 2003 (the "Proxy Statement") are incorporated by reference
into Part III.
PART I
ITEM 1. BUSINESS
General
Russell Corporation ("Russell," "we," "our" or the "Company") is a leading
branded athletic, activewear and outdoor company marketing athletic uniforms,
apparel and accessories for a wide variety of sports, outdoors and fitness
activities under widely-recognized brand names including RUSSELL ATHLETIC,
JERZEES, MOSSY OAK, CROSS CREEK, MOVING COMFORT, and DISCUS. Russell was
incorporated in 1902 and has its headquarters in Atlanta, Georgia. The Russell
name has been associated with high quality apparel since 1902 and with team
uniforms since 1932.
We design, market and manufacture or source a variety of apparel products,
including fleece, t-shirts, casual shirts, jackets, athletic shorts, socks,
camouflage attire and accessories for men, women, boys, and girls. We are a
leading supplier of team uniforms and related apparel to college, high school
and other organized sports teams. On February 6, 2003, we completed the
acquisition of the assets of Bike Athletic Company, including, but not limited
to, the brand names BIKE, LADY BIKE, COMPRESSION PERFORMANCE SHORT, BMS, SXT,
and SPORTFIT. Bike sells protective equipment including athletic supporters,
knee and elbow pads, braces, and football protective equipment, in addition to
team uniforms, performance apparel and other products.
We offer a diversified portfolio of brands across multiple distribution
channels and market our products across the United States and Canada and
approximately 40 other countries. We market and distribute our products through
mass merchandisers, sporting goods dealers, department and sports specialty
stores, college stores, on-line retailers, mail order houses, artwear
distributors, screenprinters, and embroiderers. We sell our products primarily
through a combination of salaried, Company-employed sales persons and commission
agents. We operate in two segments: Domestic Activewear, which includes the
United States and Canada, and International Activewear. Domestic Activewear
sales represented approximately 92% of our total 2002 net sales. We have
organized our Domestic Activewear segment into three business lines, which are
aligned by distribution channels: Russell Athletic, Mass Retail and
Artwear/Careerwear. For fiscal 2002, these business lines represented
approximately 26%, 30% and 36%, respectively of our total net sales.
International Activewear sales represented approximately 8% of our total 2002
net sales.
In 1998, we initiated a multi-year restructuring and reorganization
program with the objectives of: (i) transitioning the Company from a
manufacturing-driven business to a consumer-focused organization that markets
branded apparel products; and (ii) creating an efficient, low-cost operating
structure with the flexibility to take advantage of future opportunities to
further reduce costs, such as strategic outsourcing arrangements, transferring
our sewing and assembly operations to offshore facilities, and utilizing
increasingly efficient domestic facilities. We substantially completed our
restructuring and reorganization program in 2001. For further discussion of
activities under the program, see "Management's Discussion and Analysis" on
pages 24 through 36 and Note 9 of "Notes to Consolidated Financial Statements"
on pages 52 through 55 of the Annual Report, which are incorporated herein by
reference.
We produce finished apparel and fabrics utilizing owned facilities, as
well as contractors and other suppliers for spinning, knitting and weaving,
dyeing and finishing, and cutting and sewing operations. While we have retained
certain manufacturing operations, our restructuring and reorganization programs
have transitioned us from a primarily manufacturing-based operation to a
supply-chain focused organization with a greater emphasis on outsourcing in
addition to operating increasingly efficient owned facilities. We outsource our
yarn requirements, purchasing the majority from the yarn spinning joint venture
we entered into in 2001 pursuant to a long-term supply agreement, and the
remainder from other manufacturers (for further discussion of the yarn joint
venture, see "Management's Discussion and Analysis" on pages 24 through 36 and
Notes 8 and 9 of "Notes to Consolidated Financial Statements" on pages 51
through 55 of the Annual Report).
Knitting, weaving, dyeing, finishing, and cutting processes are primarily
performed in Company-owned facilities in the United States. Approximately 99% of
the Company's apparel sewing and assembly operations are conducted offshore for
products sold by the Domestic Activewear segment (excluding socks). Our
dependence on third-parties for manufacturing and raw materials production could
subject us to difficulties in obtaining timely delivery of products that meet
our quality standards. Although we monitor the performance of our contractors,
we cannot assure that they will deliver our products in a timely manner or that
they will meet our quality standards. In this event, failure to satisfy our
customers' requirements could result in our customers canceling orders,
demanding reduced prices, refusing to accept orders or reducing future orders,
any of which could have a material adverse effect on our business, results of
operations and financial condition.
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We do not have long-term supply contracts for any of our raw materials
other than yarn, but we believe there are readily available alternative sources
of supply. However, if we are unable to secure or maintain our relationships
with suppliers, or experience delays in obtaining alternative sources of supply,
we may not be able to fulfill our customers' requirements, which could have a
material adverse effect on our business, results of operations and financial
condition.
The raw materials used to manufacture our products are subject to price
volatility caused by weather, supply conditions, government regulations,
economic climate, and other unpredictable factors. To reduce the risk caused by
market fluctuations, we have historically entered into futures contracts to
hedge commodity prices, principally cotton, on portions of anticipated
purchases. However, we no longer directly hold any significant hedging positions
and have no present intention to engage in further commodity hedging, due to the
sale of our yarn spinning assets to our yarn joint venture. The cost of cotton,
however, is a pass through cost in our supply agreement with the yarn joint
venture, and we direct the timing and pricing of cotton purchases by the joint
venture.
Our results of operations are affected by numerous factors, including
seasonal variations. Typically, demand for our products is higher during the
third and fourth quarters of each fiscal year. Changes in the weather also
affect the demand for our products, particularly for our fleece products.
Generally, we produce and store finished goods inventory, particularly fleece,
to meet the expected demand for delivery in the upcoming season. If, after
producing and storing inventory in anticipation of seasonal deliveries, demand
is significantly less than expected, we may hold inventory for extended periods
of time, sell excess inventory at reduced prices or write-down portions of the
inventory. Such a scenario would adversely affect our results of operations.
Reduced demand could also result in slower production, lower plant and equipment
utilization and lower fixed operating cost absorption, all of which would have a
negative impact on our business. In addition, due to the time that may lapse
between production and shipment of goods, prices may or may not immediately
reflect changes in our cost of raw materials and other costs.
Some of our customers are material to our business and results of
operations. For fiscal 2002, 2001 and 2000 respectively, Wal-Mart and its
subsidiaries, our largest customer, represented approximately 21.4%, 18.7% and
17.9% of our consolidated net sales. Our percentage of net sales to Wal-Mart and
its subsidiaries may increase as we pursue opportunities for new business with
Wal-Mart. Our top ten customers accounted for approximately 51.1% of our 2002
net sales. We believe that consolidation in the retail industry and the strength
of our customers have given certain customers the ability to make greater
demands over suppliers such as us, and we expect this trend to continue.
However, we also believe that this consolidation may afford us greater cost
savings potential as a result of more advantageous economies of scale. If
consolidation continues, our net sales and results of operations may be
increasingly sensitive to a deterioration in the financial condition of, or
other adverse developments with, one or more of our customers. Although we
believe that our relationships with our major customers are good, we generally
do not have long-term contracts with any of them, which is typical of our
industry. As a result, although our customers provide indications of their
product needs and purchases on a season by season basis, they generally purchase
our products on an order-by-order basis and the relationship, as well as
particular orders, can be terminated at any time. The loss or significant
decrease in business from any of our major customers could have a material
adverse effect on our business, results of operations and financial condition.
Financial Information About Segments
Russell has two reportable segments: Domestic Activewear and International
Activewear. These segments operate in multiple locations and offer similar
products, including fleece, t-shirts, casual shirts, jackets, athletic shorts,
socks, camouflage attire and accessories for men, women, boys, and girls. The
reportable segments are each managed separately because they manufacture or
source, market and distribute products into different geographical areas. The
segment information found in Note 10 of "Notes to Consolidated Financial
Statements" on pages 55 and 56 of the Annual Report is incorporated herein by
reference.
Domestic Activewear - Our Domestic Activewear segment is organized into
three business lines: (1) Russell Athletic, (2) Mass Retail, and (3)
Artwear/Careerwear. The Russell Athletic line is comprised of RUSSELL
ATHLETIC, BIKE, MOVING COMFORT, and DISCUS products sold primarily
to department and sports specialty stores, sporting goods dealers, college
stores, and organized sports teams. The Mass Retail line is made up primarily of
JERZEES and JERZEES OUTDOORS products and MOSSY OAK camouflage products
sold to mass retailers, including supercenters, dollar stores, warehouse clubs,
and discount stores. The Artwear/Careerwear line, consisting of RUSSELL
ATHLETIC, JERZEES, MOSSY OAK, CROSS CREEK, and THREE RIVERS
unprinted or "blank" products, is sold to artwear distributors, wholesalers and
embellishers who then decorate the products or sell them to a third party, such
as a screen printer. This line also includes fabrics that we sell to other
apparel manufacturers, primarily for the manufacture of school and industrial
uniforms.
The products of the Domestic Activewear segment are produced or procured
through Company-owned manufacturing facilities, as well as contractors or other
vendors. Generally, Company-owned and operated manufacturing facilities for
Domestic Activewear
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consist of fabrication, dyeing, finishing, cutting, and sewing. Yarn used in
production by the Domestic Activewear segment is purchased primarily from our
yarn joint venture under a long-term supply agreement. We have experienced no
material difficulties in purchasing adequate supplies and do not presently
anticipate difficulties in the future.
International Activewear - The International Activewear segment includes
sales of our core RUSSELL ATHLETIC and JERZEES products to department and
sports specialty stores, mass retailers, artwear distributors and/or
screenprinters in approximately 40 countries outside the United States and
Canada. For fiscal 2002, this segment represented 8%, or $88 million, of total
net sales. The majority of our international business is sales of JERZEES
products to the artwear channel in Europe. In Europe, we also market RUSSELL
ATHLETIC products primarily through nine licensing arrangements. RUSSELL
ATHLETIC products are also sold in Japan, where DISCUS products are sold
as well. Our International Activewear sales force and the independent agents
dedicated to the international business are primarily based in the United
Kingdom, continental Europe, Mexico, Japan, and Australia and are generally
assigned by business line and by geographic territory.
Financial Information About Geographic Areas
"Enterprise-wide Disclosures" from Note 10 of "Notes to Consolidated
Financial Statements" on pages 55 and 56 of the Annual Report is incorporated
herein by reference.
Our foreign operations subject us to risks customarily associated with
foreign operations. We sell our products in more than 40 countries and have
facilities in 14 foreign countries, including Australia, Honduras, Mexico, and
the United Kingdom, with the majority of our foreign sales being in Europe and
Mexico. Net sales are collected in the local currency, exposing the Company to
risks of change in social, political and economic conditions inherent in
operating in foreign countries, including, but not limited to, the following:
(i) currency fluctuations; (ii) import and export license requirements; (iii)
trade restrictions; (iv) changes in tariffs and taxes; (v) restrictions on
repatriating foreign profits back to the United States; (vi) foreign laws and
regulations; (vii) difficulties in staffing and managing international
operations; (viii) political unrest; and (ix) disruptions or delays in
shipments.
We have foreign currency exposures relating to buying, selling and
financing in currencies other than our functional currencies. We also have
foreign currency exposure related to foreign denominated revenues and costs
translated into U.S. dollars. These exposures are primarily concentrated in the
euro, British pound sterling and Mexican peso. Fluctuations in foreign currency
exchange rates may affect the results of our operations and the value of our
foreign assets, which in turn may adversely affect reported earnings and the
comparability of period-to-period results of operations. Fluctuations in
currency exchange rates may also affect the relative prices at which we and our
foreign competitors sell products in the same markets. In addition, changes in
the value of the relevant currencies may affect the cost of certain items
required in our operations. Fluctuations in foreign currency exchange rates
could have a material adverse effect on our business, results of operations and
financial condition.
Trademarks and Licenses
We market our products under a number of trademarks and tradenames. We
have registered trademarks in the United States for RUSSELL ATHLETIC, JERZEES,
BIKE, CROSS CREEK, MOVING COMFORT and DISCUS and variations of these brands as
well as other trademarks. We have similar trademark registrations
internationally. We also have a worldwide license to use certain registered
MOSSY OAK trademarks. The protection of our trademarks is important to our
business. We believe that our registered and common law trademarks have
significant value and these trademarks are instrumental to our ability to create
and sustain demand for our products. We do not have any patents material to our
business.
We hold licenses to manufacture and sell Major League Baseball products,
college apparel and MOSSY OAK branded camouflage apparel. Our licenses with
Major League Baseball expire on December 31, 2003, and permit us to use certain
of the licensor's logos, trademarks, wordmarks and copyrights on specified
products. These licenses require us to pay licensing fees, including fixed
minimum fees plus a percentage of net sales on those products, and require us to
provide a specified amount of team uniforms free of charge. We have historically
negotiated renewals of these licenses on commercially reasonable terms; however,
we cannot guarantee that we will be able to renew our licenses with Major League
Baseball or that Major League Baseball will not grant additional licenses to
other parties. We are currently negotiating to extend our Major League Baseball
licenses for the period subsequent to December 31, 2003.
We have two licenses with licensing agents that cover approximately 180
colleges and universities. One of these licenses expires on March 31, 2003, and
we are currently negotiating the renewal of that license. The license with the
other licensing agent automatically renews for rolling one-year terms, but is
subject to termination without cause at any time on 90 days notice. We also
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have approximately 30 licenses directly with colleges and universities that are
generally for one to two year terms and require us to pay a licensing fee of a
percentage of net sales.
Our MOSSY OAK license from Haas Outdoors is perpetual and permits us to
use certain of the licensor's trademarks, service marks, trade names, logos, and
copyrights on apparel and accessories. This license is non-exclusive for certain
products including accessories, gloves, headwear, footwear, bags, and products
incorporating performance features such as special fabrics. The MOSSY OAK
license also requires that we pay a licensing fee calculated as a percentage of
net sales from our MOSSY OAK products, with certain minimum annual royalty
payments through 2005. If we fail to comply with the terms of the MOSSY OAK
license, including the obligation to make royalty payments, Haas Outdoors may
terminate the license.
Competition
The apparel industry is extremely competitive. While no single competitor
dominates any channel in which we operate, some of our competitors are larger,
more diversified and have greater financial and other resources than we do. We,
and others in our industry, face competition on many fronts, including, without
limitation: (i) quality of product; (ii) brand recognition; (iii) price; (iv)
product differentiation; (v) advertising; and (vi) customer service. We also
compete with manufacturers of activewear outside the United States, many of
which may have substantially lower costs. Our ability to remain competitive in
the areas of quality, price, marketing, product development, manufacturing,
distribution, and order processing will, in large part, determine our future
success.
Employees
As of January 4, 2003, the Company employed 13,915 persons. The Company
has never had a strike or work stoppage and considers its relationship with its
employees to be good.
Regulation
The Company is subject to federal, state and local laws and regulations
affecting its business, including, but not limited to, those promulgated under
the Occupational Safety and Health Act, the Consumer Product Safety Act, the
Flammable Fabrics Act, the Textile Fiber Product Identification Act, and the
rules and regulations of the Consumer Products Safety Commission and various
environmental laws and regulations. The Company believes that it is in
compliance with all applicable governmental regulations under these statutes.
The Company also believes it is in compliance with all current environmental
requirements and expects no material environmental expenditures in the
foreseeable future.
Available Information
Our Internet address is www.russellcorp.com and our annual reports on Form
10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all
amendments to those reports are available, free of charge, through our Internet
website as soon as reasonably practicable after filing with the Securities and
Exchange Commission.
FORWARD-LOOKING INFORMATION
With the exception of historical information, the matters and statements
discussed, made or incorporated by reference in this Annual Report on Form 10-K
contain certain "forward-looking statements" (as defined in Section 21E of the
Securities Exchange Act of 1934) that describe our beliefs concerning future
conditions, prospects, growth opportunities, new products lines and the outlook
for the Company based on currently available information. Wherever possible, we
have identified these forward-looking statements by words such as "anticipate",
"believe", "intend", "estimate", "expect", "continue", "could", "may", "plan",
"project", "predict", "will" and similar expressions. In addition, the Company
and its representatives may from time to time make other oral or written
statements that are also forward-looking statements. All such forward-looking
statements are based on assumptions that we believe are reasonable when made.
Such forward-looking statements are subject to risks and uncertainties
that could cause our actual results, performance and achievements to differ
materially from those expressed in, or implied by, such forward-looking
statements, including, but not limited to, risks related to: (a) changes in
weather and the seasonal nature of our business; (b) significant competitive
activity, including, but not limited to, product quality, brand recognition,
price, product differentiation, advertising and customer service; (c) changes in
customer demand for our products; (d) the impact of economic changes in the
markets where we operate, such as changes in interest rates, currency exchange
rates, inflation rates, recession, and other external and political factors over
which we have no control; (e) the
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overall level of consumer spending on apparel; (f) the existence of excess
capacity in our industry; (g) effects of lawsuits and government regulations;
(h) reliance on a few customers for a portion of our sales; (i) dependence on
third-parties for production of yarn and manufacture of our products; (j) our
international operations; (k) protection of our intellectual property; (l)
changes in prices and availability of raw materials used in our manufacturing
processes; and (m) other factors listed from time to time in our announcements
and filings with the Securities Exchange Commission. The risks listed above are
not exhaustive and other sections of this Annual Report on Form 10-K may include
additional factors that could adversely affect our business and financial
performance. We assume no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events or otherwise.
ITEM 2. PROPERTIES
Russell's principal executive office is located in Atlanta, Georgia, with
other executive offices located in Alexander City, Alabama. We own manufacturing
plants and distribution facilities in Alabama, Georgia, North Carolina, Mexico
and Honduras. We have secured most of our outstanding debt by a pledge of
substantially all of our domestic assets, which included first mortgages on our
real property in the United States, other than property held for sale, and
encumbrances on manufacturing machinery held in the United States. We have no
other material encumbrances on real property or manufacturing machinery.
We believe that all of our properties are well maintained and suitable for
operation and are currently fully utilized for such purposes, excluding plants
and equipment that are held for sale as a result of our restructuring and
reorganization program. (See Note 9 of "Notes to Consolidated Financial
Statements" on pages 52 through 55 of the Annual Report, which is incorporated
herein by reference.)
The Company utilizes an aggregate of approximately 8,016,000 square feet
of manufacturing, warehousing and office facilities, and has approximately
1,503,000 square feet that is either idle or held for sale. The following table
summarizes the approximate areas of such facilities:
Domestic International Total
Primary Use Activewear Activewear Square Feet
----------- ---------- ------------- -----------
Knitting and Weaving 813,000 -- 813,000
Dyeing and Finishing 889,000 -- 889,000
Cutting and Sewing 1,596,000 -- 1,596,000
Warehousing and Shipping 3,605,000 279,000 3,884,000
Administrative 234,000 39,000 273,000
Idle or held for sale 1,503,000 -- 1,503,000
Other 561,000 -- 561,000
All presently utilized facilities in the U.S. are owned, except the
regional sales offices, certain distribution facilities and the Company's
headquarters in Atlanta, Georgia (see Note 8 of "Notes to Consolidated Financial
Statements" on pages 51 and 52 of the Annual Report, which is incorporated
herein by reference).
ITEM 3. LEGAL PROCEEDINGS
Russell is 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 October 20, 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 judgment 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
in 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, Russell was 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.
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On March 5, 2002, Russell 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 have paid our portion
of $10,000 and (ii) to participate in a Supplemental Environmental Project, the
cost of which will be approximately $197,000, of which we have paid our portion
of 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, and
we do not believe the settlement of this matter will have a material adverse
effect upon us.
We are a party to various other lawsuits arising out of the conduct of our
business. We do not believe that any of these matters, if adversely determined,
would have a material adverse effect upon us.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Russell's securities are traded on the exchanges listed on the cover page
of this Form 10-K Report. As of March 25, 2003 we had approximately 9,000
holders of record of our common stock. "Dividend and Market Information" on the
inside back cover of the Annual Report is incorporated herein by reference. We
are subject to certain restrictions on our ability to pay dividends under the
terms of our $325 million Senior Secured Credit Facilities and our $250 million
aggregate principal amount of 9.25% Senior Unsecured Notes due 2010.
Securities Authorized for Issuance Under Equity Compensation Plans
NUMBER OF SECURITIES
NUMBER OF SECURITIES REMAINING AVAILABLE FOR
TO BE ISSUED UPON WEIGHTED-AVERAGE FUTURE ISSUANCE UNDER
EXERCISE OF EXERCISE PRICE OF EQUITY COMPENSATION PLANS
OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, (EXCLUDING SECURITIES
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN (a))
(a) (b) (c)
EQUITY COMPENSATION PLANS APPROVED BY
SECURITY HOLDERS 3,554,256 $21.41 2,688,338
EQUITY COMPENSATION PLANS NOT APPROVED
BY SECURITY HOLDERS 993,427 15.72 251,108
TOTAL 4,547,683 20.17 2,939,446
The Russell Corporation 2000 Stock Option Plan (the "2000 Option Plan")
was adopted by the Board of Directors as an incentive compensation plan that
gives us broad discretion to grant awards, and develop the terms of such awards,
to any employee or consultant of the Company. Approval of the 2000 Option Plan
by security holders was not required under applicable regulations. The 2000
Option Plan permits the issuance of awards in a variety of forms, including: (a)
incentive stock options; (b) non-qualified stock options; (c) reload stock
options; (d) restricted shares; (e) bonus shares; (f) deferred shares; (g)
freestanding stock appreciation rights; (h) tandem stock appreciation rights;
(i) performance units; and (j) performance shares.
ITEM 6. SELECTED FINANCIAL DATA
"Ten-Year Selected Financial Highlights" on pages 22 and 23 of the Annual
Report is incorporated herein by reference with respect to fiscal years 2002,
2001, 2000, 1999 and 1998.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
"Management's Discussion and Analysis" on pages 24 through 36 of the
Annual Report is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
"Management's Discussion and Analysis" on pages 24 through 36 of the
Annual Report is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of the registrant and its
subsidiaries included in the Annual Report are incorporated herein by reference:
...Consolidated Balance Sheets - January 4, 2003 and December 29, 2001
...Consolidated Statements of Operations - Years ended January 4, 2003,
December 29, 2001, and December 30, 2000
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...Consolidated Statements of Cash Flows - Years ended January 4, 2003,
December 29, 2001, and December 30, 2000
...Consolidated Statements of Stockholders' Equity - Years ended January
4, 2003, December 29, 2001, and December 30, 2000
...Notes to Consolidated Financial Statements - Years ended January 4,
2003, December 29, 2001, and December 30, 2000
...Report of Independent Auditors
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Identification of Directors and Executive Officers
"Election of Directors" on pages 1 through 3 of the Proxy Statement is
incorporated herein by reference.
Additional executive officers who are not directors are as follows:
Officer
Name Age Since Position
---------------- ---- -------- -------------------------
Jonathan R. Letzler 46 1998 President and Chief
Operating Officer
Robert D. Martin 55 2000 Senior Vice President and
Chief Financial Officer
Floyd G. Hoffman 60 1999 Senior Vice President,
Corporate Development,
General Counsel and
Secretary
JT Taunton, Jr. 60 1983 Senior Vice President/
President and Chief
Executive Officer,
Fabrics and Services
Nancy N. Young 54 1998 Vice President,
Communications and
Community Relations
Larry E. Workman 59 1987 Corporate Controller
Carol M. Mabe 54 2000 Vice President, Strategic
Development
Kevin L. Clayton 43 2003 Vice President, Diversity
M. Cheryl Barre 46 2001 Vice President/
President, Mass Retail
Matthew C. Mirchin 43 2002 Vice President/President,
Russell Athletic
Marietta Edmunds Zakas 44 2002 Vice President, Treasurer
J. Scott Mosteller 42 2001 Vice President, Operations
Gilbert J. Roberts 42 2001 Vice President/
President, Russell Artwear
Steve R. Forehand 47 1987 Assistant General Counsel
and Assistant Secretary
Christopher M. Champion 32 2001 Associate Counsel, Director
of Government Relations
and Assistant Secretary
III-1
Mr. Letzler was employed by Russell in 1998, as Senior Vice President and
Chief Executive Officer of JERZEES. He was named President and Chief Operating
Officer in 2001. Prior to joining Russell, he was with Sara Lee Corporation from
1980 to 1998, most recently as President of Hanes Hosiery and prior to that he
was President of the Hanes Printables Division.
Mr. Martin, employed by Russell in 2000, was most recently Senior Vice
President and CFO for Sunbeam Corporation's international operations. Prior to
joining Sunbeam, he had been with Sara Lee Corporation's branded apparel
operations for 22 years, the last 8 years of which he served as Vice President
and CFO of the European apparel group.
Mr. Hoffman was employed by Russell as Senior Vice President, General
Counsel and Secretary in 1999 and assumed additional responsibility as Senior
Vice President, Corporate Development in 2000. Prior to joining Russell, he was
Vice President-General Counsel and Secretary for OSI Industries, Inc., from 1996
to 1999. Prior to that, he was Vice President-Deputy General Counsel and
Assistant Secretary for Sara Lee Corporation.
Mr. Taunton, employed by Russell since 1973, was named President and Chief
Executive Officer of Fabrics and Services and Senior Vice President of Russell
in 1998. Prior to that, he most recently served as Executive Vice President,
Sales and Marketing. He had also previously served as President of the Fabrics
Division from 1988 to 1993.
Ms. Young was employed by Russell in 1998 in her current role. Prior to
joining Russell, she was with Sara Lee Corporation from 1984 to 1998, most
recently as Director, Corporate Affairs and Community Relations.
Mr. Workman was named Corporate Controller in 1987. He has been employed
by Russell since 1969 as an accountant and served as Manager, Cost Accounting,
from 1970 to 1987.
Ms. Mabe, employed by Russell in 1999, was named President and Chief
Executive Officer of Russell Athletic and Senior Vice President of Russell in
2001 and assumed her current duties as Russell's Vice President, Strategic
Development, in 2002. Prior to joining Russell, she was Vice President of
Strategic Marketing for VF Jeanswear, Inc., a subsidiary of VF Corporation. She
has also held executive positions with Victoria's Secret Stores and Sara Lee
Corporation.
Mr. Clayton was employed by Russell as Vice President, Diversity in
January 2003. Prior to joining Russell, he was the President and Chief Executive
Officer of K.L. Clayton & Associates where he worked with several companies
providing both diversity and business consulting services from 1991 to 2002.
Ms. Barre, employed by Russell since 1999, was named President, Mass
Retail and Vice President of Russell in 2001 after serving as President of
JERZEES Retail since 1999. Prior to joining Russell, she had been with PepsiCo,
Inc., for 15 years, most recently as Vice President for Fountain Beverage of
Pepsi-Cola Company.
Mr. Mirchin was employed by Russell in 2001 as President of Russell
Athletic Team Sports. He was named President of Russell Athletic in 2002. Prior
to joining Russell, he held various positions with Champion Products, a division
of Sara Lee Corporation, from 1994 to 2001, most recently as Senior Vice
President of Sales.
Ms. Zakas was employed by Russell as Vice President, Treasurer in June
2002. Prior to joining Russell, she was an independent consultant to Russell and
other companies. From 1993 to 2000, Ms. Zakas held various positions with
Equifax, Inc., a consumer and commercial credit information company, serving
most recently as Corporate Vice President, Corporate Secretary and Director of
Investor Relations.
Mr. Mosteller was employed by Russell as President of DeSoto Mills, Inc.,
in 2000. He was named Vice President, Operations in 2001. Prior to joining
Russell, he was with Simpson Performance Products as Chief Operating Officer for
2 years after serving with Sara Lee Corporation's branded apparel operations for
10 years, most recently as Vice President of Sourcing for the European knit
products business.
Mr. Roberts was employed by Russell as Vice President and President of
Russell Artwear in 2001 after having previously been employed by Russell as
President of JERZEES Retail Operations in 1999 and Vice President, Planning and
Development in 1998. Prior to rejoining Russell in 2001, he was Chief Operating
Officer of Butterfield & Robinson for 2 years, and prior to joining Russell in
1998, Mr. Roberts had served with Sara Lee Corporation for 10 years.
III-2
Mr. Forehand, employed by Russell in 1985 as Director of Taxes, served as
Assistant Secretary from 1987 to 1988 and Secretary from 1989 to 1998, when he
was named Assistant General Counsel and Assistant Secretary.
Mr. Champion joined Russell in 1995 as a staff attorney. He was named
Director of Government Relations in 1999 and assumed his current duties as
Associate Counsel, Director of Government Relations and Assistant Secretary in
2001.
All executive officers and all other officers of the Company were elected
or re-elected to their positions at the Board of Directors meeting on February
12, 2003.
"Section 16(a) Beneficial Ownership Reporting Compliance" on page 8 of the
Proxy Statement is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
"Executive Compensation" on pages 13 through 18 of the Proxy Statement is
incorporated herein by reference. "Management Development and Compensation
Committee Report on Executive Compensation" and "Comparative Five-Year
Cumulative Total Returns Through 1/4/03" on pages 9 through 12 of the Proxy
Statement are incorporated herein by reference, but pursuant to Instruction (9)
to Item 402(a)(3) of Regulation S-K shall not be deemed to be filed with the
Commission or subject to the liabilities of Section 18 of the Securities
Exchange Act of 1934.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
(a) "Principal Shareholders" on pages 5 and 6 of the Proxy Statement is
incorporated herein by reference.
(b) Information concerning security ownership of management set forth on
page 4 of the Proxy Statement under the caption "Security Ownership of Executive
Officers and Directors" is incorporated herein by reference.
(c) There are no arrangements known to the registrant the operation of
which may at a subsequent date result in a change in control of the registrant.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
"Transactions with Management and Others" on page 8 of the Proxy Statement
is incorporated herein by reference.
ITEM 14. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer and Chief Financial Officer have evaluated the
effectiveness of our disclosure controls and procedures (as such term is defined
in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) as of a date within 90 days prior to the filing
date of this annual report (the "Evaluation Date"). Based on such evaluation,
such officers have concluded that, as of the Evaluation Date, our disclosure
controls and procedures are effective in alerting them on a timely basis to
material information relating to us (including our consolidated subsidiaries)
required to be included in our reports filed or submitted under the Exchange
Act.
Changes in Internal Controls
Since the Evaluation Date, there have not been any significant changes in
our internal controls or in other factors that could significantly affect such
controls.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) List of Documents filed as part of this Report:
(1) Financial Statements
All financial statements of the registrant as set forth under
Item 8 of this Report on Form 10-K
III-3
(2) Financial Statement Schedule
Schedule Page
Number Description Number
II Valuation and Qualifying III-8 and III-9
Accounts
All other financial statements and schedules not listed have been omitted
since the required information is included in the consolidated financial
statements or the notes thereto, or is not applicable or required.
(3) Exhibits (numbered in accordance with Item 601 of Regulation S-K)
Exhibit Incorporation by Reference
Numbers Description or Filed Herewith
------- -------------------------------------- ---------------------------------------
(3a) Restated Articles of Incorporation Filed Herewith
(3b) Certificate of Adoption of Resolutions Exhibit 4.2 to Current Report on Form
by Board of Directors of Russell 8-K filed September 17, 1999
Corporation dated October 25, 1989
(3c) Bylaws Filed Herewith
(4a) Rights Agreement dated as of September Exhibit 4.1 to Current Report on Form
15, 1999 between the Company and 8-K filed on September 17, 1999
SunTrust Bank, Atlanta, Georgia
(4b) Loan and Security Agreement dated as of Exhibit 4.1 to Quarterly Report on Form
April 18, 2002 relating to the Company's 10-Q filed May 15, 2002
$300,000,000 Revolving Credit Facility
and $25,000,000 Term Loan Facility(1)
(4c) Amendment No. 1 to Loan and Security Filed Herewith
Agreement dated as of March 11, 2003
relating to the Company's $300,000,000
Revolving Credit Facility and
$25,000,000 Term Loan Facility
(4d) Indenture dated as of April 18, 2002 Exhibit 4.2 to Quarterly Report on Form
relating to the Company's 9.25% Senior 10-Q filed May 15, 2002
Notes due 2010
(10a) Fuel supply contract with Russell Lands, Exhibit 13(c) to Registration Statement
Incorporated dated May 21, 1975 No. 2-56574
(10b) Russell Corporation 1997 Non-Employee Exhibit (10f) to Annual Report on Form
Directors' Stock Grant, Stock Option and 10-K for year ended January 2, 1999
Deferred Compensation Plan
(10c) Executive Incentive Plan Appendix B to Proxy Statement dated
March 16, 2000
- ----------
(1) Portions of the Loan and Security Agreement have been omitted pursuant to
a request for confidential treatment approved by the Securities and
Exchange Commission ("SEC"). The omitted material has been filed
separately with the SEC.
III-4
Exhibit Incorporation by Reference
Numbers Description or Filed Herewith
------- -------------------------------------- ---------------------------------------
(10d) Russell Corporation Amended and Restated Filed Herewith
Flexible Deferral Plan
(10e) Russell Corporation 2000 Stock Option Exhibit 4(k) to Registration Statement
Plan No. 333-30238
(10f) Russell Corporation Employee Stock Exhibit 4(k) to Registration Statement
Purchase Plan No. 333-30236
(10g) Amendment No. 1 to the Russell Exhibit (10i) to Annual Report on Form
Corporation Employee Stock Purchase Plan 10-K for year ended December 29, 2001
(10h) Russell Corporation 2000 Non-Employee Exhibit 4(m) to Registration Statement
Directors' Compensation Plan No. 333-55340
(10i) First Amendment to the Russell Filed Herewith
Corporation 2000 Non-Employee Directors'
Compensation Plan dated December 11, 2002
(10j) Amended and Restated Employment Exhibit (10m) to Annual Report on Form
Agreement dated April 1, 2001, by and 10-K for year ended December 30, 2000
between the Company and John F. Ward
(10k) Amended and Restated Executive Deferred Exhibit (10n) to Annual Report on Form
Compensation and Buyout Plan dated April 10-K for year ended December 30, 2000
1, 2001, by and between the Company and
John F. Ward
(10l) Amended and Restated Employment Filed Herewith
Agreement dated as of November 20, 2002
by and between the Company and Jonathan
R. Letzler
(10m) Russell Corporation Amended and Restated Filed Herewith
Supplemental Executive Retirement Plan
dated January 1, 2002
(10n) Supply Agreement dated as of December Exhibit (10p) to Annual Report on Form
28, 2001 by and between the Company and 10-K for year ended December 29, 2001
Frontier Yarns, LLC(2)
(10o) Russell Corporation Amended and Restated Filed Herewith
Supplemental Retirement Benefit Plan
dated January 1, 2002
(10p) Employment Agreement dated August 16, Exhibit (10s) to Annual Report on Form
2000 by and between the Company and 10-K for year ended December 29, 2001
Robert D. Martin
(10q) Employment Agreement dated as of January Filed Herewith
17, 1999 by and between the Company and
Floyd G. Hoffman
- ----------
(2) Portions of the Supply Agreement have been omitted pursuant to a request
for confidential treatment approved by the Securities and Exchange
Commission (the "SEC"). The omitted material has been filed separately
with the SEC.
III-5
Exhibit Incorporation by Reference
Numbers Description or Filed Herewith
------- -------------------------------------- ---------------------------------------
(10r) Form of Change of Control Agreement with Filed Herewith
Robert D. Martin and Floyd G. Hoffman
(10s) Form of Change of Control Agreement with Filed Herewith
JT Taunton, Jr., and Certain Other
Management of the Company
(11) Computations of Income/(Loss) per Common Filed Herewith
Share
(13) 2002 Annual Report to Shareholders Filed Herewith
(21) List of Subsidiaries Filed Herewith
(23) Consent of Ernst & Young LLP, Filed Herewith
Independent Auditors
(24) Powers of Attorney Filed Herewith
(99a) Certification: Pursuant to Section 906 Filed Herewith
of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section
1350, Chapter 63 of Title 18, United
States Code)
(99b) Proxy Statement for April 23, 2003 Filed Herewith
Annual Shareholders' Meeting
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the fourth
quarter of the year ended January 4, 2003.
III-6
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunder duly authorized.
RUSSELL CORPORATION
(Registrant)
Date: March 26, 2003 By /s/ John F. Ward
-------------- ---------------------------
John F. Ward
Chairman and CEO
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report is signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
/s/ John F. Ward March 26, 2003
------------------------ Chairman and CEO --------------
John F. Ward Date
/s/ Robert D. Martin Senior Vice President and March 26, 2003
------------------------ Chief Financial Officer --------------
Robert D. Martin Date
/s/ Herschel M. Bloom Director March 26, 2003
------------------------ --------------
Herschel M. Bloom* Date
/s/ Ronald G. Bruno Director March 26, 2003
------------------------ --------------
Ronald G. Bruno* Date
/s/ Timothy A. Lewis March 26, 2003
------------------------ Director --------------
Timothy A. Lewis Date
/s/ C. V. Nalley III Director March 26, 2003
------------------------ --------------
C. V. Nalley III* Date
/s/ Margaret M. Porter Director March 26, 2003
------------------------ --------------
Margaret M. Porter* Date
/s/ Mary Jane Robertson Director March 26, 2003
------------------------ --------------
Mary Jane Robertson* Date
/s/ Benjamin Russell Director March 26, 2003
------------------------ --------------
Benjamin Russell* Date
/s/ John R. Thomas Director March 26, 2003
------------------------ --------------
John R. Thomas* Date
/s/ John A. White Director March 26, 2003
------------------------ --------------
John A. White* Date
/s/ Larry E. Workman Controller March 24, 2003
------------------------ (Principal Accounting Officer) --------------
Larry E. Workman Date
* By Christopher M. Champion as Attorney-in-Fact pursuant to Powers of
Attorney executed by the directors listed above, which Powers of Attorney
have been filed with the Securities and Exchange Commission.
By: /s/ Christopher M. Champion
--------------------------------
Christopher M. Champion
As Attorney-in-Fact
III-7
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
RUSSELL CORPORATION AND SUBSIDIARIES
BALANCE AT ADDITIONS BALANCE
BEGINNING CHARGED TO COSTS AT END
DESCRIPTION OF PERIOD AND EXPENSES ACQUISITIONS DEDUCTIONS OF PERIOD
- ----------- --------- ---------------- ------------ ---------- ---------
YEAR ENDED JANUARY 4, 2003
Allowance for doubtful accounts $11,968,071 $ 7,486,500 $ 1,404,187(1) $18,050,384
Reserve for discounts and returns 3,815,761 12,985,537 11,897,248(2) 4,904,050
----------- ----------- ----------- ----------- -----------
TOTALS $15,783,832 $20,472,037 $ -- $13,301,435 $22,954,434
=========== =========== =========== =========== ===========
YEAR ENDED DECEMBER 29, 2001
Allowance for doubtful accounts $ 7,816,440 $ 5,776,937 $ 1,625,306(1) $11,968,071
Reserve for discounts and returns 1,979,833 16,278,217 14,442,289(2) 3,815,761
----------- ----------- ----------- ----------- -----------
TOTALS $ 9,796,273 $22,055,154 $ -- $16,067,595 $15,783,832
=========== =========== =========== =========== ===========
YEAR ENDED DECEMBER 30, 2000
Allowance for doubtful accounts $ 4,520,566 $ 4,857,941 $ -- $ 1,562,067(1) $ 7,816,440
Reserve for discounts and returns 3,391,201 7,731,241 9,142,609(2) 1,979,833
----------- ----------- ----------- ----------- -----------
TOTALS $ 7,911,767 $12,589,182 $ -- $10,704,676 $ 9,796,273
=========== =========== =========== =========== ===========
(1) Uncollectible accounts written off, net of recoveries
(2) Discounts and returns allowed customers during the year
III-8
SCHEDULE II - - VALUATION AND QUALIFYING ACCOUNTS
RUSSELL CORPORATION AND SUBSIDIARIES
RESERVE AT ADDITIONS BALANCE
BEGINNING CHARGED TO COSTS AT END
DESCRIPTION OF PERIOD AND EXPENSES ACQUISITIONS DEDUCTIONS OF PERIOD
- ----------- --------- ---------------- ------------ ---------- ---------
YEAR ENDED JANUARY 4, 2003
Asset impairment and accelerated
depreciation $43,547,000 $ 5,288,000 $ -- $ 7,276,000(10) $41,559,000
Employee terminations 11,673,000 -- -- 11,033,000(9) 640,000
Inventory losses including shipping
and warehousing costs 9,175,000 403,000 -- 9,541,000(5) 37,000
Termination of certain licenses
and contracts 1,417,000 -- -- 1,022,000(8) 395,000
Exit cost related to facilities 3,049,000 834,000 -- 2,585,000(3) 1,298,000
Other 725,000 -- -- 725,000(4) --
----------- ------------ ----------- ------------ -----------
TOTALS $69,586,000 $ 6,525,000(11) $ -- $ 32,182,000 $43,929,000
=========== ============ =========== ============ ===========
YEAR ENDED DECEMBER 29, 2001
Asset impairment and accelerated
depreciation $29,340,000 $ 82,255,000 $ -- $ 68,048,000(4)(5) $43,547,000
Employee terminations 3,320,000 23,808,000 -- 15,455,000(3) 11,673,000
Inventory losses including shipping
and warehousing costs 2,930,000 13,084,000 -- 6,839,000(5) 9,175,000
Termination of certain licenses
and contracts 2,406,000 6,387,000 -- 7,376,000(3) 1,417,000
Exit cost related to facilities -- 11,577,000 -- 8,528,000(3) 3,049,000
Other 1,451,000 6,981,000 -- 7,707,000(6) 725,000
----------- ------------ ----------- ------------ -----------
TOTALS $39,447,000 $144,092,000 $ -- $113,953,000 $69,586,000
=========== ============ =========== ============ ===========
YEAR ENDED DECEMBER 30, 2000
Asset impairment and accelerated
depreciation $14,632,000 $ 34,000,000 $ -- $ 19,292,000(4)(5) $29,340,000
Employee terminations 4,770,000 11,834,000 -- 13,284,000(3) 3,320,000
Inventory losses including shipping
and warehousing costs 3,251,000 3,648,000 -- 3,969,000(7) 2,930,000
Termination of certain licenses
and contracts 1,223,000 3,313,000 -- 2,130,000(3) 2,406,000
Exit cost related to facilities 534,000 4,596,000 -- 5,130,000(3) --
Other -- 7,620,000 -- 6,169,000(3) 1,451,000
----------- ------------ ----------- ------------ -----------
TOTALS $24,410,000 $ 65,011,000 $ -- $ 49,974,000 $39,447,000
=========== ============ =========== ============ ===========
(3) Represents cash paid
(4) Represents asset write-offs
(5) Represents assets sold after write-downs.
(6) Represents cash paid of $6,622 and asset write-offs of $1,085.
(7) Represents cash paid of $895 and assets sold after write-downs of $3,074
(8) Represents cash paid of $619 and an adjustment of $403,000 to reflect our
best estimate of the ultimate settlement of this liability.
(9) Represents cash paid of $10,662 and an adjustment of $371,000 to reflect
our best estimate of the ultimate settlement of this liability
(10) Represents asset sold after write-downs and includes $5,751,000 of gains
realized on the sale of assets held for sale at the beginning of 2002.
(11) This additional expense was completely offset by the adjustments noted at
(8) and (9) along with the realized gains on asset sales discussed in
(10).
III-9
CERTIFICATIONS
I, John F. Ward, Chairman and Chief Executive Officer of Russell Corporation,
certify that:
1. I have reviewed this annual report on Form 10-K of Russell Corporation;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operation and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and
c) Presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: March 26, 2003
/s/ John F. Ward
- -------------------------------------
John F. Ward
Chairman and Chief Executive Officer
III-10
I, Robert D. Martin, Senior Vice President and Chief Financial Officer of
Russell Corporation, certify that:
1. I have reviewed this annual report on Form 10-K of Russell Corporation;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operation and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and
c) Presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: March 26, 2003
/s/ Robert D. Martin
- -------------------------------------------------
Robert D. Martin
Senior Vice President and Chief Financial Officer
III-11