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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Maryland
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20-3552316
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(State of incorporation)
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(I.R.S. employer
identification no.)
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1000 East Hanes Mill Road
Winston-Salem, North Carolina
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27105
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(Address of principal executive office)
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(Zip code)
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Large accelerated filer
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x
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Emerging growth company
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¨
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 1.
|
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Item 1A.
|
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 1.
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Financial Statements
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Quarter Ended
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||||||
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April 1,
2017 |
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April 2,
2016 |
||||
Net sales
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$
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1,380,355
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$
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1,219,140
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Cost of sales
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840,824
|
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761,884
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Gross profit
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539,531
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|
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457,256
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|
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Selling, general and administrative expenses
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418,263
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334,851
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|
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Operating profit
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121,268
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122,405
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Other expenses
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1,384
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|
649
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|
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Interest expense, net
|
42,137
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31,566
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Income from continuing operations before income tax expense
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77,747
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90,190
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|
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Income tax expense
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4,665
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|
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9,921
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|
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Income from continuing operations
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73,082
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80,269
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|
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Loss from discontinued operations, net of tax
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(2,465
|
)
|
|
—
|
|
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Net income
|
$
|
70,617
|
|
|
$
|
80,269
|
|
|
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|
||||
Earnings per share — basic:
|
|
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|
||||
Continuing operations
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$
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0.20
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$
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0.21
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Discontinued operations
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(0.01
|
)
|
|
—
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|
||
Net income
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$
|
0.19
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|
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$
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0.21
|
|
|
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|
||||
Earnings per share — diluted:
|
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|
||||
Continuing operations
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$
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0.19
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|
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$
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0.21
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Discontinued operations
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(0.01
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)
|
|
—
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|
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Net income
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$
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0.19
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|
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$
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0.21
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Quarter Ended
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||||||
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April 1,
2017 |
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April 2,
2016 |
||||
Net income
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$
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70,617
|
|
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$
|
80,269
|
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Other comprehensive income, net of tax of $4,092, and $1,439, respectively
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16,226
|
|
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10,216
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|
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Comprehensive income
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$
|
86,843
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|
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$
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90,485
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April 1,
2017 |
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December 31,
2016 |
||||
Assets
|
|
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|
||||
Cash and cash equivalents
|
$
|
463,623
|
|
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$
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460,245
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Trade accounts receivable, net
|
800,467
|
|
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836,924
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|
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Inventories
|
1,998,501
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1,840,565
|
|
||
Other current assets
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196,216
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137,535
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|
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Current assets of discontinued operations
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—
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45,897
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|
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Total current assets
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3,458,807
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3,321,166
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Property, net
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620,393
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692,464
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|
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Trademarks and other identifiable intangibles, net
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1,318,904
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1,285,458
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|
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Goodwill
|
1,118,509
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1,098,540
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Deferred tax assets
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467,993
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464,872
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|
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Other noncurrent assets
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71,322
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67,980
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|
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Total assets
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$
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7,055,928
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$
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6,930,480
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||||
Liabilities and Stockholders’ Equity
|
|
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||||
Accounts payable
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$
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756,176
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$
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761,647
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Accrued liabilities
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629,494
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619,795
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|
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Notes payable
|
43,418
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56,396
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Accounts Receivable Securitization Facility
|
192,786
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44,521
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|
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Current portion of long-term debt
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140,620
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133,843
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|
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Current liabilities of discontinued operations
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—
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9,466
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|
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Total current liabilities
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1,762,494
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1,625,668
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Long-term debt
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3,763,119
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3,507,685
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|
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Pension and postretirement benefits
|
375,036
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371,612
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|
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Other noncurrent liabilities
|
197,219
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201,601
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|
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Total liabilities
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6,097,868
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5,706,566
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Stockholders’ equity:
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|
||||
Preferred stock (50,000,000 authorized shares; $.01 par value)
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|
||||
Issued and outstanding — None
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—
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—
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|
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Common stock (2,000,000,000 authorized shares; $.01 par value)
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|
||||
Issued and outstanding — 364,146,239 and 378,687,052, respectively
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3,641
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3,787
|
|
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Additional paid-in capital
|
253,643
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260,002
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|
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Retained earnings
|
1,120,541
|
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1,396,116
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Accumulated other comprehensive loss
|
(419,765
|
)
|
|
(435,991
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)
|
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Total stockholders’ equity
|
958,060
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1,223,914
|
|
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Total liabilities and stockholders’ equity
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$
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7,055,928
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$
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6,930,480
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HANESBRANDS INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
|
|||||||
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Quarter Ended
|
||||||
|
April 1,
2017 |
|
April 2,
2016 |
||||
Operating activities:
|
|
|
|
||||
Net income
|
$
|
70,617
|
|
|
$
|
80,269
|
|
Adjustments to reconcile net income to net cash from operating activities:
|
|
|
|
||||
Depreciation and amortization of long-lived assets
|
28,765
|
|
|
22,820
|
|
||
Net loss on disposition of businesses
|
1,639
|
|
|
—
|
|
||
Amortization of debt issuance costs
|
2,701
|
|
|
1,790
|
|
||
Stock compensation expense
|
3,528
|
|
|
7,508
|
|
||
Deferred taxes and other
|
5,292
|
|
|
(8,372
|
)
|
||
Changes in assets and liabilities, net of acquisition of businesses:
|
|
|
|
||||
Accounts receivable
|
49,553
|
|
|
(34,927
|
)
|
||
Inventories
|
(140,610
|
)
|
|
(140,393
|
)
|
||
Other assets
|
(6,775
|
)
|
|
3,030
|
|
||
Accounts payable
|
(14,328
|
)
|
|
(141,341
|
)
|
||
Accrued pension and postretirement benefits
|
6,341
|
|
|
(37,793
|
)
|
||
Accrued liabilities and other
|
(29,521
|
)
|
|
(37,397
|
)
|
||
Net cash from operating activities
|
(22,798
|
)
|
|
(284,806
|
)
|
||
Investing activities:
|
|
|
|
||||
Purchases of property, plant and equipment
|
(16,049
|
)
|
|
(27,859
|
)
|
||
Proceeds from sales of assets
|
4,603
|
|
|
15,286
|
|
||
Acquisition of businesses, net of cash acquired
|
(524
|
)
|
|
(7,062
|
)
|
||
Disposition of businesses
|
37,434
|
|
|
—
|
|
||
Net cash from investing activities
|
25,464
|
|
|
(19,635
|
)
|
||
Financing activities:
|
|
|
|
||||
Borrowings on notes payable
|
27,893
|
|
|
368,778
|
|
||
Repayments on notes payable
|
(42,540
|
)
|
|
(367,016
|
)
|
||
Borrowings on Accounts Receivable Securitization Facility
|
213,539
|
|
|
53,261
|
|
||
Repayments on Accounts Receivable Securitization Facility
|
(65,274
|
)
|
|
(48,424
|
)
|
||
Borrowings on Revolving Loan Facilities
|
1,265,000
|
|
|
1,471,500
|
|
||
Repayments on Revolving Loan Facilities
|
(1,009,500
|
)
|
|
(732,500
|
)
|
||
Repayments on Term Loan Facilities
|
(13,594
|
)
|
|
(10,126
|
)
|
||
Borrowings on International Debt
|
—
|
|
|
2,895
|
|
||
Repayments on International Debt
|
(16,226
|
)
|
|
(1,728
|
)
|
||
Share repurchases
|
(299,919
|
)
|
|
(379,901
|
)
|
||
Cash dividends paid
|
(55,875
|
)
|
|
(42,683
|
)
|
||
Taxes paid related to net shares settlement of equity awards
|
(1,669
|
)
|
|
(837
|
)
|
||
Other
|
2,676
|
|
|
1,465
|
|
||
Net cash from financing activities
|
4,511
|
|
|
314,684
|
|
||
Effect of changes in foreign exchange rates on cash
|
(3,799
|
)
|
|
3,010
|
|
||
Change in cash and cash equivalents
|
3,378
|
|
|
13,253
|
|
||
Cash and cash equivalents at beginning of year
|
460,245
|
|
|
319,169
|
|
||
Cash and cash equivalents at end of period
|
$
|
463,623
|
|
|
$
|
332,422
|
|
(1)
|
Basis of Presentation
|
(2)
|
Recent Accounting Pronouncements
|
(3)
|
Acquisitions
|
Cash and cash equivalents
|
$
|
54,294
|
|
Accounts receivable, net
|
36,019
|
|
|
Inventories
|
104,806
|
|
|
Other current assets
|
16,588
|
|
|
Current assets of discontinued operations
|
50,839
|
|
|
Property, net
|
34,835
|
|
|
Trademarks and other identifiable intangibles
|
506,170
|
|
|
Deferred tax assets and other noncurrent assets
|
18,320
|
|
|
Total assets acquired
|
821,871
|
|
|
Accounts payable
|
89,309
|
|
|
Accrued liabilities and other
|
22,838
|
|
|
Current liabilities of discontinued operations
|
14,564
|
|
|
Long-term debt
|
41,976
|
|
|
Deferred tax liabilities and other noncurrent liabilities
|
15,817
|
|
|
Total liabilities assumed
|
184,504
|
|
|
Net assets acquired
|
637,367
|
|
|
Goodwill
|
163,504
|
|
|
Purchase price
|
$
|
800,871
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
14,581
|
|
Trade accounts receivable, net
|
27,926
|
|
|
Inventories
|
53,816
|
|
|
Other current assets
|
5,976
|
|
|
Property, net
|
24,605
|
|
|
Trademarks and other identifiable intangibles
|
135,277
|
|
|
Deferred tax assets and other noncurrent assets
|
3,777
|
|
|
Total assets acquired
|
265,958
|
|
|
Accounts payable
|
66,594
|
|
|
Accrued liabilities and other (including contingent consideration)
|
60,887
|
|
|
Notes payable
|
27,748
|
|
|
Deferred tax liabilities and other noncurrent liabilities
|
20,282
|
|
|
Total liabilities assumed and contingent consideration
|
175,511
|
|
|
Net assets acquired
|
90,447
|
|
|
Goodwill
|
109,830
|
|
|
Initial consideration paid
|
200,277
|
|
|
Estimated contingent consideration
|
45,277
|
|
|
Total purchase price
|
$
|
245,554
|
|
|
|
(4)
|
Discontinued Operations
|
|
Quarter Ended
|
||
|
April 1,
2017 |
||
Net sales
|
$
|
6,865
|
|
Cost of sales
|
4,507
|
|
|
Gross profit
|
2,358
|
|
|
Selling, general and administrative expenses
|
3,731
|
|
|
Operating loss
|
(1,373
|
)
|
|
Other expenses
|
303
|
|
|
Net loss on disposal of businesses
|
766
|
|
|
Loss from discontinued operations before income tax expense
|
(2,442
|
)
|
|
Income tax expense
|
23
|
|
|
Net loss from discontinued operations, net of tax
|
$
|
(2,465
|
)
|
(5)
|
Stockholders’ Equity
|
|
Quarter Ended
|
||||
|
April 1,
2017 |
|
April 2,
2016 |
||
Basic weighted average shares outstanding
|
373,218
|
|
|
386,598
|
|
Effect of potentially dilutive securities:
|
|
|
|
||
Stock options
|
1,640
|
|
|
1,400
|
|
Restricted stock units
|
385
|
|
|
1,040
|
|
Employee stock purchase plan and other
|
8
|
|
|
5
|
|
Diluted weighted average shares outstanding
|
375,251
|
|
|
389,043
|
|
(6)
|
Inventories
|
|
April 1,
2017 |
|
December 31,
2016 |
||||
Raw materials
|
$
|
138,868
|
|
|
$
|
131,228
|
|
Work in process
|
205,381
|
|
|
185,066
|
|
||
Finished goods
|
1,654,252
|
|
|
1,524,271
|
|
||
|
$
|
1,998,501
|
|
|
$
|
1,840,565
|
|
(7)
|
Debt
|
|
Interest
Rate as of April 1, 2017 |
|
Principal Amount
|
|
Maturity Date
|
||||||
|
April 1,
2017 |
|
December 31,
2016 |
|
|||||||
Senior Secured Credit Facility:
|
|
|
|
|
|
|
|
||||
Revolving Loan Facility
|
2.74%
|
|
$
|
255,500
|
|
|
$
|
—
|
|
|
April 2020
|
Term Loan A
|
2.70%
|
|
641,875
|
|
|
655,469
|
|
|
April 2020
|
||
Term Loan B
|
3.48%
|
|
318,625
|
|
|
318,625
|
|
|
April 2022
|
||
Australian Term A-1
|
3.18%
|
|
152,587
|
|
|
143,544
|
|
|
July 2019
|
||
Australian Term A-2
|
3.48%
|
|
152,587
|
|
|
143,544
|
|
|
July 2021
|
||
4.875% Senior Notes
|
4.88%
|
|
900,000
|
|
|
900,000
|
|
|
May 2026
|
||
4.625% Senior Notes
|
4.63%
|
|
900,000
|
|
|
900,000
|
|
|
May 2024
|
||
3.5% Senior Notes
|
3.50%
|
|
532,681
|
|
|
520,617
|
|
|
June 2024
|
||
European Revolving Loan Facility
|
1.50%
|
|
64,593
|
|
|
62,474
|
|
|
September 2017
|
||
Accounts Receivable Securitization Facility
|
1.78%
|
|
192,786
|
|
|
44,521
|
|
|
March 2018
|
||
Other International Debt
|
Various
|
|
30,386
|
|
|
43,789
|
|
|
Various
|
||
|
|
|
4,141,620
|
|
|
3,732,583
|
|
|
|
||
Less long-term debt issuance cost
|
|
|
45,095
|
|
|
46,534
|
|
|
|
||
Less current maturities
|
|
|
333,406
|
|
|
178,364
|
|
|
|
||
|
|
|
$
|
3,763,119
|
|
|
$
|
3,507,685
|
|
|
|
(8)
|
Accumulated Other Comprehensive Loss
|
|
Cumulative Translation Adjustment
|
|
Hedges
|
|
Defined Benefit Plans
|
|
Income Taxes
|
|
Accumulated Other Comprehensive Loss
|
||||||||||
|
|
|
|
||||||||||||||||
Balance at December 31, 2016
|
$
|
(78,059
|
)
|
|
$
|
13,772
|
|
|
$
|
(606,583
|
)
|
|
$
|
234,879
|
|
|
$
|
(435,991
|
)
|
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
(298
|
)
|
|
4,810
|
|
|
(1,734
|
)
|
|
2,778
|
|
|||||
Current-period other comprehensive income (loss) activity
|
25,736
|
|
|
(18,114
|
)
|
|
—
|
|
|
5,826
|
|
|
13,448
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at April 1, 2017
|
$
|
(52,323
|
)
|
|
$
|
(4,640
|
)
|
|
$
|
(601,773
|
)
|
|
$
|
238,971
|
|
|
$
|
(419,765
|
)
|
Component of AOCI
|
|
Location of Reclassification into Income
|
|
Amount of Reclassification
from AOCI |
||||||
|
Quarter Ended
|
|||||||||
|
April 1,
2017 |
|
April 2,
2016 |
|||||||
Gain on foreign exchange contracts
|
|
Cost of sales
|
|
$
|
298
|
|
|
$
|
2,324
|
|
|
|
Income tax
|
|
(113
|
)
|
|
(904
|
)
|
||
|
|
Net of tax
|
|
185
|
|
|
1,420
|
|
||
Amortization of deferred actuarial loss and prior service cost
|
|
Selling, general and administrative
expenses |
|
(4,810
|
)
|
|
(4,205
|
)
|
||
|
|
Income tax
|
|
1,847
|
|
|
1,636
|
|
||
|
|
Net of tax
|
|
(2,963
|
)
|
|
(2,569
|
)
|
||
|
|
|
|
|
|
|
||||
Total reclassifications
|
|
|
|
$
|
(2,778
|
)
|
|
$
|
(1,149
|
)
|
(9)
|
Financial Instruments and Risk Management
|
|
Balance Sheet Location
|
|
Fair Value
|
||||||
|
April 1,
2017 |
|
December 31,
2016 |
||||||
Hedges
|
Other current assets
|
|
$
|
3,828
|
|
|
$
|
16,729
|
|
Non-hedges
|
Other current assets
|
|
2,475
|
|
|
4,363
|
|
||
Total derivative assets
|
|
|
6,303
|
|
|
21,092
|
|
||
|
|
|
|
|
|
||||
Hedges
|
Accrued liabilities
|
|
(4,965
|
)
|
|
(207
|
)
|
||
Non-hedges
|
Accrued liabilities
|
|
(2,179
|
)
|
|
(172
|
)
|
||
Total derivative liabilities
|
|
|
(7,144
|
)
|
|
(379
|
)
|
||
|
|
|
|
|
|
||||
Net derivative (liability) asset
|
|
|
$
|
(841
|
)
|
|
$
|
20,713
|
|
|
Amount of Loss
Recognized in AOCI (Effective Portion) |
||||||
|
Quarter Ended
|
||||||
|
April 1,
2017 |
|
April 2,
2016 |
||||
Foreign exchange contracts
|
$
|
(18,114
|
)
|
|
$
|
(5,578
|
)
|
|
Location of
Gain Reclassified from AOCI into Income (Effective Portion) |
|
Amount of Gain
Reclassified from AOCI into Income (Effective Portion) |
||||||
|
|
Quarter Ended
|
|||||||
|
|
April 1,
2017 |
|
April 2,
2016 |
|||||
Foreign exchange contracts
|
Cost of sales
|
|
$
|
298
|
|
|
$
|
2,324
|
|
|
Location of Loss
Recognized in Income on Derivative |
|
Amount of Loss
Recognized in Income |
||||||
|
Quarter Ended
|
||||||||
|
April 1,
2017 |
|
April 2,
2016 |
||||||
Foreign exchange contracts
|
Selling, general and administrative expenses
|
|
$
|
(4,264
|
)
|
|
$
|
(2,408
|
)
|
(10)
|
Fair Value of Assets and Liabilities
|
|
Assets (Liabilities) at Fair Value as of
April 1, 2017 |
||||||||||||||
|
Total
|
|
Quoted Prices In
Active Markets for Identical Assets (Level 1) |
|
Significant
Other Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
Foreign exchange derivative contracts
|
$
|
6,303
|
|
|
$
|
—
|
|
|
$
|
6,303
|
|
|
$
|
—
|
|
Foreign exchange derivative contracts
|
(7,144
|
)
|
|
—
|
|
|
(7,144
|
)
|
|
—
|
|
||||
|
(841
|
)
|
|
—
|
|
|
(841
|
)
|
|
—
|
|
||||
Champion Europe contingent consideration
|
(43,815
|
)
|
|
—
|
|
|
—
|
|
|
(43,815
|
)
|
||||
Deferred compensation plan liability
|
(52,089
|
)
|
|
—
|
|
|
(52,089
|
)
|
|
—
|
|
||||
Total
|
$
|
(96,745
|
)
|
|
$
|
—
|
|
|
$
|
(52,930
|
)
|
|
$
|
(43,815
|
)
|
|
Assets (Liabilities) at Fair Value as of
December 31, 2016 |
||||||||||||||
|
Total
|
|
Quoted Prices In
Active Markets for Identical Assets (Level 1) |
|
Significant
Other Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
Foreign exchange derivative contracts
|
$
|
21,092
|
|
|
$
|
—
|
|
|
$
|
21,092
|
|
|
$
|
—
|
|
Foreign exchange derivative contracts
|
(379
|
)
|
|
—
|
|
|
(379
|
)
|
|
—
|
|
||||
|
20,713
|
|
|
—
|
|
|
20,713
|
|
|
—
|
|
||||
Champion Europe contingent consideration
|
(42,378
|
)
|
|
—
|
|
|
—
|
|
|
(42,378
|
)
|
||||
Deferred compensation plan liability
|
(51,868
|
)
|
|
—
|
|
|
(51,868
|
)
|
|
—
|
|
||||
Total
|
$
|
(73,533
|
)
|
|
$
|
—
|
|
|
$
|
(31,155
|
)
|
|
$
|
(42,378
|
)
|
(11)
|
Income Taxes
|
(12)
|
Business Segment Information
|
•
|
Innerwear sells basic branded products that are replenishment in nature under the product categories of men’s underwear, panties, children’s underwear, socks and intimate apparel, which includes bras and shapewear.
|
•
|
Activewear sells basic branded products that are primarily seasonal in nature under the product categories of branded printwear and retail activewear, as well as licensed logo apparel in collegiate bookstores, mass retail and other channels.
|
•
|
International primarily relates to the Europe, Australia, Asia, Latin America and Canada geographic locations that sell products that primarily span across the Innerwear and Activewear product categories.
|
|
Quarter Ended
|
||||||
|
April 1,
2017 |
|
April 2,
2016 |
||||
Segment operating profit:
|
|
|
|
||||
Innerwear
|
$
|
102,701
|
|
|
$
|
109,735
|
|
Activewear
|
33,408
|
|
|
32,105
|
|
||
International
|
50,495
|
|
|
24,719
|
|
||
Other
|
445
|
|
|
5,679
|
|
||
Total segment operating profit
|
187,049
|
|
|
172,238
|
|
||
Items not included in segment operating profit:
|
|
|
|
||||
General corporate expenses
|
(20,229
|
)
|
|
(21,435
|
)
|
||
Acquisition-related and integration charges
|
(38,367
|
)
|
|
(24,669
|
)
|
||
Amortization of intangibles
|
(7,185
|
)
|
|
(3,729
|
)
|
||
Total operating profit
|
121,268
|
|
|
122,405
|
|
||
Other expenses
|
(1,384
|
)
|
|
(649
|
)
|
||
Interest expense, net
|
(42,137
|
)
|
|
(31,566
|
)
|
||
Income from continuing operations before income tax expense
|
$
|
77,747
|
|
|
$
|
90,190
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Total net sales in
the first quarter of 2017
were
$1.4 billion
, compared with
$1.2 billion
in the same period of
2016
, representing a
13%
increase.
|
•
|
Operating profit decreased
1%
to
$121 million
in
the first quarter of 2017
, compared with
$122 million
in the same period of
2016
. As a percentage of sales, operating profit was
8.8%
in
the first quarter of 2017
compared to
10.0%
in the same period of
2016
. Included within operating profit for both
the first quarter of 2017
and 2016 were acquisition-related and integration charges of $38 million and $25 million, respectively.
|
•
|
Diluted earnings per share from continuing operations decreased
10%
to
$0.19
in
the first quarter of 2017
, compared with
$0.21
in the same period of
2016
.
|
•
|
We repurchased approximately 14.7 million shares of our common stock for approximately $300 million at a weighted average cost per share of $20.39.
|
•
|
As part of our acquisition of Pacific Brands (“Hanes Australasia”) in July 2016, we acquired the Dunlop Flooring and the Tontine Pillow businesses. These businesses were not a strategic fit and, therefore, the decision was made to divest of the aforementioned businesses. Both sale transactions were completed during the quarter, resulting in a combined pre-tax loss of $1 million, which was reported as part of discontinued operations.
|
|
Quarter Ended
|
|
|
|
|
|||||||||
|
April 1,
2017 |
|
April 2,
2016 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
1,380,355
|
|
|
$
|
1,219,140
|
|
|
$
|
161,215
|
|
|
13.2
|
%
|
Cost of sales
|
840,824
|
|
|
761,884
|
|
|
78,940
|
|
|
10.4
|
|
|||
Gross profit
|
539,531
|
|
|
457,256
|
|
|
82,275
|
|
|
18.0
|
|
|||
Selling, general and administrative expenses
|
418,263
|
|
|
334,851
|
|
|
83,412
|
|
|
24.9
|
|
|||
Operating profit
|
121,268
|
|
|
122,405
|
|
|
(1,137
|
)
|
|
(0.9
|
)
|
|||
Other expenses
|
1,384
|
|
|
649
|
|
|
735
|
|
|
113.3
|
|
|||
Interest expense, net
|
42,137
|
|
|
31,566
|
|
|
10,571
|
|
|
33.5
|
|
|||
Income from continuing operations before income tax expense
|
77,747
|
|
|
90,190
|
|
|
(12,443
|
)
|
|
(13.8
|
)
|
|||
Income tax expense
|
4,665
|
|
|
9,921
|
|
|
(5,256
|
)
|
|
(53.0
|
)
|
|||
Income from continuing operations
|
73,082
|
|
|
80,269
|
|
|
(7,187
|
)
|
|
(9.0
|
)
|
|||
Income from discontinued operations, net of tax
|
(2,465
|
)
|
|
—
|
|
|
(2,465
|
)
|
|
NM
|
|
|||
Net income
|
$
|
70,617
|
|
|
$
|
80,269
|
|
|
$
|
(9,652
|
)
|
|
(12.0
|
)%
|
•
|
Acquisitions of Hanes Australasia, Champion Europe and GTM in 2016, which added incremental net sales of approximately $213 million in 2017;
|
•
|
Higher net sales in our Activewear segment primarily driven by
Champion
sales within the mass merchant channel;
|
•
|
Growth in our men’s underwear business; and
|
•
|
Continued growth in Asia within our Activewear product category.
|
•
|
Lower net sales in our remaining Innerwear product categories as a result of challenging consumer traffic at retail, cautious inventory management by retailers and store closures within the mid-tier and department store channel; and
|
•
|
Lower net sales in Other driven by continued declines in Hosiery, slower traffic at our outlet stores and the planned exit from our legacy catalog business in the third quarter of 2016.
|
|
Net Sales
|
|
Operating Profit
|
||||||||||||
|
Quarter Ended
|
|
Quarter Ended
|
||||||||||||
|
April 1,
2017 |
|
April 2,
2016 |
|
April 1,
2017 |
|
April 2,
2016 |
||||||||
|
(dollars in thousands)
|
||||||||||||||
Innerwear
|
$
|
505,190
|
|
|
$
|
537,021
|
|
|
$
|
102,701
|
|
|
$
|
109,735
|
|
Activewear
|
327,343
|
|
|
316,543
|
|
|
33,408
|
|
|
32,105
|
|
||||
International
|
477,398
|
|
|
279,087
|
|
|
50,495
|
|
|
24,719
|
|
||||
Other
|
70,424
|
|
|
86,489
|
|
|
445
|
|
|
5,679
|
|
||||
Corporate
|
—
|
|
|
—
|
|
|
(65,781
|
)
|
|
(49,833
|
)
|
||||
Total
|
$
|
1,380,355
|
|
|
$
|
1,219,140
|
|
|
$
|
121,268
|
|
|
$
|
122,405
|
|
|
Quarter Ended
|
|
|
|
|
|||||||||
|
April 1,
2017 |
|
April 2,
2016 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
505,190
|
|
|
$
|
537,021
|
|
|
$
|
(31,831
|
)
|
|
(5.9
|
)%
|
Segment operating profit
|
102,701
|
|
|
109,735
|
|
|
(7,034
|
)
|
|
(6.4
|
)
|
|
Quarter Ended
|
|
|
|
|
|||||||||
|
April 1,
2017 |
|
April 2,
2016 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
327,343
|
|
|
$
|
316,543
|
|
|
$
|
10,800
|
|
|
3.4
|
%
|
Segment operating profit
|
33,408
|
|
|
32,105
|
|
|
1,303
|
|
|
4.1
|
|
|
Quarter Ended
|
|
|
|
|
|||||||||
|
April 1,
2017 |
|
April 2,
2016 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
477,398
|
|
|
$
|
279,087
|
|
|
$
|
198,311
|
|
|
71.1
|
%
|
Segment operating profit
|
50,495
|
|
|
24,719
|
|
|
25,776
|
|
|
104.3
|
|
•
|
Incremental net sales from the acquisitions of Hanes Australasia and Champion Europe in 2016; and
|
•
|
Continued growth in Asia within our Activewear product category.
|
•
|
Lower net sales in Hanes Europe Innerwear, due to the slowing of certain European economies and the unfavorable impact of foreign currency exchange rates.
|
|
Quarter Ended
|
|
|
|
|
|||||||||
|
April 1,
2017 |
|
April 2,
2016 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
70,424
|
|
|
$
|
86,489
|
|
|
$
|
(16,065
|
)
|
|
(18.6
|
)%
|
Segment operating profit
|
445
|
|
|
5,679
|
|
|
(5,234
|
)
|
|
(92.2
|
)
|
|
Quarter Ended
|
||||||
|
April 1,
2017 |
|
April 2,
2016 |
||||
|
(dollars in thousands)
|
||||||
Acquisition-related and integration costs:
|
|
|
|
||||
Hanes Europe Innerwear
|
$
|
19,878
|
|
|
$
|
19,034
|
|
Hanes Australasia
|
12,008
|
|
|
—
|
|
||
Knights Apparel
|
5,239
|
|
|
3,910
|
|
||
Champion Europe
|
1,168
|
|
|
—
|
|
||
Other acquisitions
|
74
|
|
|
1,725
|
|
||
Total acquisition-related and integration costs
|
$
|
38,367
|
|
|
$
|
24,669
|
|
•
|
we have principal and interest obligations under our debt;
|
•
|
we acquired Champion Europe in June 2016 and Hanes Australasia in July 2016 and we may pursue additional strategic business acquisitions in the future;
|
•
|
we expect to continue to invest in efforts to improve operating efficiencies and lower costs;
|
•
|
contributions to our pension plans;
|
•
|
we may increase or decrease the portion of the current-year income of our foreign subsidiaries that we remit to the United States, which could significantly impact our effective income tax rate;
|
•
|
our Board of Directors has authorized a regular quarterly dividend; and
|
•
|
our Board of Directors has authorized share repurchases.
|
|
Three Months Ended
|
||||||
|
April 1,
2017 |
|
April 2,
2016 |
||||
|
(dollars in thousands)
|
||||||
Operating activities
|
$
|
(22,798
|
)
|
|
$
|
(284,806
|
)
|
Investing activities
|
25,464
|
|
|
(19,635
|
)
|
||
Financing activities
|
4,511
|
|
|
314,684
|
|
||
Effect of changes in foreign currency exchange rates on cash
|
(3,799
|
)
|
|
3,010
|
|
||
Change in cash and cash equivalents
|
3,378
|
|
|
13,253
|
|
||
Cash and cash equivalents at beginning of year
|
460,245
|
|
|
319,169
|
|
||
Cash and cash equivalents at end of period
|
$
|
463,623
|
|
|
$
|
332,422
|
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
|
|
Total Number of Shares Purchased (1)
|
|
Average
Price Paid
Per Share (2)
|
|
Total Number of Shares Purchased as Part of Publicly Announced Program
|
|
Maximum Number of Shares that May Yet Be Purchased under the Program
|
|||||
January 1, 2017 to February 4, 2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40,000,000
|
|
|
February 5, 2017 to March 4, 2017
|
|
14,696,334
|
|
|
$
|
20.39
|
|
|
14,696,334
|
|
|
25,303,666
|
|
March 5, 2017 to April 1, 2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,303,666
|
|
|
Total
|
|
14,696,334
|
|
|
|
|
14,696,334
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
HANESBRANDS INC.
|
||
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By:
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/s/ Richard D. Moss
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Richard D. Moss
Chief Financial Officer
(Duly authorized officer and principal financial officer)
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Exhibit
Number
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Description
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|
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2.1
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3.1
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3.2
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3.3
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3.4
|
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3.5
|
|
|
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4.1
|
|
Supplemental Indenture No. 4 (to Indenture dated June 3, 2016) dated as of March 28, 2017, among Hanesbrands Finance Luxembourg, S.C.A., Hanes Caribe, Inc. and U.S. Bank Trustees Limited.
|
|
|
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31.1
|
|
Certification of Gerald W. Evans, Jr., Chief Executive Officer.
|
|
|
|
31.2
|
|
Certification of Richard D. Moss, Chief Financial Officer.
|
|
|
|
32.1
|
|
Section 1350 Certification of Gerald W. Evans, Jr., Chief Executive Officer.
|
|
|
|
32.2
|
|
Section 1350 Certification of Richard D. Moss, Chief Financial Officer.
|
|
||
101.INS XBRL
|
|
Instance Document
|
|
|
|
101.SCH XBRL
|
|
Taxonomy Extension Schema Document
|
|
|
|
101.CAL XBRL
|
|
Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.LAB XBRL
|
|
Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE XBRL
|
|
Taxonomy Extension Presentation Linkbase Document
|
|
|
|
101.DEF XBRL
|
|
Taxonomy Extension Definition Linkbase Document
|
|
|
/s/ Gerald W. Evans, Jr.
|
Gerald W. Evans, Jr.
Chief Executive Officer
|
/s/ Richard D. Moss
|
Richard D. Moss
Chief Financial Officer
|
/s/ Gerald W. Evans, Jr.
|
Gerald W. Evans, Jr.
Chief Executive Officer
|
/s/ Richard D. Moss
|
Richard D. Moss
Chief Financial Officer
|