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x
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ANNUAL 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
|
Maryland
|
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20-3552316
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(State of incorporation)
|
|
(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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PART I
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|
|
Item 1
|
||
Item 1A
|
||
Item 1B
|
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Item 1C
|
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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 5
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||
Item 6
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Item 7
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Item 7A
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Item 8
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Item 9
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Item 9A
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Item 9B
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PART III
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Item 10
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Item 11
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Item 12
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Item 13
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Item 14
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PART IV
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Item 15
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Item 16
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||
Item 1.
|
Business
|
Segment
|
Primary Products
|
Primary Brands
|
Innerwear
|
Men’s underwear, women’s panties, children’s underwear and socks
|
Hanes
,
Champion
,
Maidenform
,
Bali
,
JMS/Just My Size
,
Polo Ralph Lauren
*
|
Intimate apparel, such as bras and shapewear
|
Maidenform, Bali
,
Playtex
,
Hanes
,
JMS/Just My Size
,
DKNY,
*
Donna Karan*
|
|
|
|
|
Activewear
|
T-shirts, fleece, sport shirts, performance T-shirts and shorts, sports bras, thermals and teamwear
|
Champion
,
Hanes
,
JMS/Just My Size
,
Hanes Beefy-T
,
Gear for Sports
,
Alternative
|
|
|
|
International
|
Activewear, men’s underwear, women’s panties, children’s underwear, intimate apparel, socks, hosiery and home goods
|
Champion
,
Bonds, DIM
,
Hanes
,
Sheridan
,
Playtex, Nur Die/Nur Der, Lovable, Wonderbra
,
Berlei
,
Maidenform
,
Abanderado
,
Shock Absorber, Zorba
,
Explorer
, Kendall,
*
Sol y Oro
,
Polo Ralph Lauren,
*
Bellinda,
Donna Karan,* DKNY*
|
|
|
*
|
Brand used under a license agreement.
|
Item 1A.
|
Risk Factors
|
•
|
changes in duties, taxes, tariffs and other charges on imports;
|
•
|
limitations on the quantity of goods which may be imported into the United States from a particular country;
|
•
|
requirements as to where products and/or inputs are manufactured or sourced;
|
•
|
creation of export licensing requirements, imposition of restrictions on export quantities or specification of minimum export pricing and/or export prices or duties;
|
•
|
limitations on foreign owned businesses; or
|
•
|
government actions to cancel contracts, re-denominate the official currency, renounce or default on obligations, renegotiate terms unilaterally or expropriate assets.
|
Item 1B.
|
Unresolved Staff Comments
|
Item 1C.
|
Executive Officers of the Registrant
|
Name
|
Age
|
Positions
|
Gerald W. Evans, Jr.
|
58
|
Chief Executive Officer
|
Barry A. Hytinen
|
43
|
Chief Financial Officer
|
Joia M. Johnson
|
57
|
Chief Administrative Officer, General Counsel and Corporate Secretary
|
W. Howard Upchurch
|
53
|
Group President, Innerwear Americas
|
John T. Marsh
|
52
|
Group President, Global Activewear
|
Michael E. Faircloth
|
52
|
Group President, Global Supply Chain, Information Technology and E-Commerce
|
M. Scott Lewis
|
47
|
Chief Accounting Officer and Controller
|
Item 2.
|
Properties
|
|
Owned Square
Feet
|
|
Leased Square
Feet
|
|
Total
|
|||
Properties by Segment
(1)
|
|
|
|
|
|
|||
Innerwear
|
2,347,885
|
|
|
5,864,949
|
|
|
8,212,834
|
|
Activewear
|
2,458,519
|
|
|
3,033,133
|
|
|
5,491,652
|
|
International
|
2,831,800
|
|
|
3,539,278
|
|
|
6,371,078
|
|
Other
|
303,445
|
|
|
1,099,990
|
|
|
1,403,435
|
|
Totals
|
7,941,649
|
|
|
13,537,350
|
|
|
21,478,999
|
|
|
|
(1)
|
Excludes vacant land, facilities under construction, facilities no longer in operation intended for disposal, facilities associated with discontinued operations, sourcing offices not associated with a particular segment, and office buildings housing corporate functions.
|
Item 3.
|
Legal Proceedings
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
High
|
|
Low
|
||||
2017
|
|
|
|
||||
Quarter Ended April 1, 2017
|
$
|
23.98
|
|
|
$
|
18.91
|
|
Quarter Ended July 1, 2017
|
$
|
23.32
|
|
|
$
|
20.04
|
|
Quarter Ended September 30, 2017
|
$
|
25.73
|
|
|
$
|
22.38
|
|
Quarter Ended December 30, 2017
|
$
|
25.00
|
|
|
$
|
18.90
|
|
|
|
|
|
||||
2016
|
|
|
|
||||
Quarter Ended April 2, 2016
|
$
|
31.36
|
|
|
$
|
23.25
|
|
Quarter Ended July 2, 2016
|
$
|
30.42
|
|
|
$
|
24.96
|
|
Quarter Ended October 1, 2016
|
$
|
28.24
|
|
|
$
|
24.14
|
|
Quarter Ended December 31, 2016
|
$
|
27.07
|
|
|
$
|
21.40
|
|
|
|
Total Number of Shares Purchased
|
|
Average
Price Paid
Per Share
(2)
|
|
Total Number of Shares Purchased as Part of Publicly Announced Program
(1)
|
|
Maximum Number of Shares that May Yet Be Purchased under the Program
(1)
|
|||||
October 1, 2017 to November 4, 2017
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
25,303,666
|
|
November 5, 2017 to December 2, 2017
|
|
3,954,610
|
|
|
20.06
|
|
|
3,954,610
|
|
|
21,349,056
|
|
|
December 3, 2017 to December 30, 2017
|
|
989,449
|
|
|
20.89
|
|
|
989,449
|
|
|
20,359,607
|
|
|
Total
|
|
4,944,059
|
|
|
|
|
4,944,059
|
|
|
|
|
|
(1)
|
On April 27, 2016, our Board of Directors approved a share repurchase program for up to 40 million shares to be repurchased in open market transactions, subject to market conditions, legal requirements and other factors.
|
(2)
|
Average price paid per share for shares purchased as part of our publicly-announced plan.
|
|
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights
|
|
Weighted Average Exercise Price of Outstanding Options, Warrants and Rights
|
|
Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (1)
|
||||
|
(amounts in thousands, except per share data)
|
||||||||
Plan Category
|
|
|
|
|
|
||||
Equity compensation plans approved by security holders
|
5,232
|
|
|
$
|
16.76
|
|
|
13,262
|
|
Equity compensation plans not approved by security holders
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
5,232
|
|
|
$
|
16.76
|
|
|
13,262
|
|
|
|
(1)
|
The amount appearing under “Number of securities remaining available for future issuance under equity compensation plans” includes 9,533 shares available under the Hanesbrands Inc. Omnibus Incentive Plan (As Amended and Restated) and 3,729 shares available under the Hanesbrands Inc. Employee Stock Purchase Plan of 2006.
|
Item 6.
|
Selected Financial Data
|
|
Years Ended
|
||||||||||||||||||
|
December 30,
2017 |
|
December 31,
2016 |
|
January 2,
2016 |
|
January 3,
2015 |
|
December 28,
2013 |
||||||||||
|
(amounts in thousands, except per share data)
|
||||||||||||||||||
Statement of Income Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
6,471,410
|
|
|
$
|
6,028,199
|
|
|
$
|
5,731,549
|
|
|
$
|
5,324,746
|
|
|
$
|
4,627,802
|
|
Operating profit
|
723,068
|
|
|
775,649
|
|
|
595,118
|
|
|
563,954
|
|
|
515,186
|
|
|||||
Income from continuing operations
|
63,991
|
|
|
536,927
|
|
|
428,855
|
|
|
404,519
|
|
|
330,494
|
|
|||||
Income (loss) from discontinued operations, net of tax
|
(2,097
|
)
|
|
2,455
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income
|
$
|
61,894
|
|
|
$
|
539,382
|
|
|
$
|
428,855
|
|
|
$
|
404,519
|
|
|
$
|
330,494
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings (loss) per share — basic:
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
$
|
0.17
|
|
|
$
|
1.41
|
|
|
$
|
1.07
|
|
|
$
|
1.01
|
|
|
$
|
0.83
|
|
Discontinued operations
|
(0.01
|
)
|
|
0.01
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income
|
$
|
0.17
|
|
|
$
|
1.41
|
|
|
$
|
1.07
|
|
|
$
|
1.01
|
|
|
$
|
0.83
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings (loss) per share — diluted:
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
$
|
0.17
|
|
|
$
|
1.40
|
|
|
$
|
1.06
|
|
|
$
|
0.99
|
|
|
$
|
0.81
|
|
Discontinued operations
|
(0.01
|
)
|
|
0.01
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income
|
$
|
0.17
|
|
|
$
|
1.40
|
|
|
$
|
1.06
|
|
|
$
|
0.99
|
|
|
$
|
0.81
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Dividends per share
|
$
|
0.60
|
|
|
$
|
0.44
|
|
|
$
|
0.40
|
|
|
$
|
0.30
|
|
|
$
|
0.15
|
|
|
December 30,
2017 |
|
December 31,
2016 |
|
January 2,
2016 |
|
January 3,
2015 |
|
December 28,
2013 |
||||||||||
|
(in thousands)
|
||||||||||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
421,566
|
|
|
$
|
460,245
|
|
|
$
|
319,169
|
|
|
$
|
239,855
|
|
|
$
|
115,863
|
|
Working capital
|
1,607,625
|
|
|
1,695,498
|
|
|
1,413,958
|
|
|
1,067,753
|
|
|
1,047,625
|
|
|||||
Total assets
|
6,894,775
|
|
|
6,930,480
|
|
|
5,597,590
|
|
|
5,187,891
|
|
|
4,072,176
|
|
|||||
Noncurrent liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt
|
3,702,054
|
|
|
3,507,685
|
|
|
2,232,712
|
|
|
1,593,695
|
|
|
1,449,155
|
|
|||||
Other noncurrent liabilities
|
590,548
|
|
|
573,213
|
|
|
585,078
|
|
|
725,010
|
|
|
393,617
|
|
|||||
Total stockholders’ equity
|
686,202
|
|
|
1,223,914
|
|
|
1,275,891
|
|
|
1,386,772
|
|
|
1,230,623
|
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Overview.
This section provides a general description of our Company and operating segments, business and industry trends, our key business strategies and background information on other matters discussed in this MD&A.
|
•
|
2017
Highlights.
This section discusses some of the highlights of our performance and activities during
2017
.
|
•
|
Consolidated Results of Operations and Operating Results by Business Segment.
These sections provide our analysis and outlook for the significant line items on our statements of income, as well as other information that we deem meaningful to an understanding of our results of operations on both a consolidated basis and a business segment basis.
|
•
|
Liquidity and Capital Resources.
This section provides an analysis of trends and uncertainties affecting liquidity, cash requirements for our business, sources and uses of our cash and our financing arrangements.
|
•
|
Critical Accounting Policies and Estimates.
This section discusses the accounting policies that we consider important to the evaluation and reporting of our financial condition and results of operations, and whose application requires significant judgments or a complex estimation process.
|
•
|
Recently Issued Accounting Pronouncements.
This section provides a summary of the most recent authoritative accounting pronouncements that we will be required to adopt in a future period.
|
•
|
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 to both retailers and wholesalers, as well as licensed sports apparel and licensed logo apparel in collegiate bookstores, mass retailers and other channels.
|
•
|
International primarily relates to the Europe, Australia, Asia, Latin America and Canada geographic locations that sell products that span across the Innerwear and Activewear reportable segments.
|
•
|
Net sales in
2017
were
$6.5 billion
, compared with
$6.0 billion
in
2016
, representing a 7% increase.
|
•
|
Operating profit was
$723 million
in
2017
compared with
$776 million
in
2016
, representing a 7% decrease. As a percent of sales, operating profit was 11.2% in
2017
compared to 12.9% in
2016
. Included within operating profit were acquisition and integration related charges of $193 million and $139 million in 2017 and 2016, respectively.
|
•
|
Diluted earnings per share was
$0.17
in
2017
, compared with
$1.40
in
2016
, representing a 88% decrease.
|
•
|
Operating cash flows were
$656 million
in
2017
compared to
$606 million
in
2016
.
|
•
|
Income tax expense for
2017
includes a one-time provisional charge related to U.S. tax reform of $457 million, primarily for the transition tax on deemed repatriated earnings of foreign subsidiaries and revaluation of our deferred tax assets and liabilities, to the lower corporate income tax rate of 21%.
|
•
|
During 2017, we purchased, as part of our cash deployment strategy, approximately 20 million shares of our common stock under the share repurchase program for approximately $400 million at a weighted average cost per share of $20.35.
|
•
|
We refinanced our senior secured credit facility (the “Senior Secured Credit Facility”) to extend the maturity date of the revolving loan facility (the ”Revolving Loan Facility”) and Term Loan A to April 2022 and extend the maturity date of the Term Loan B to April 2024. In addition, we reduced the rate of the Revolving Loan Facility; increased the size and reduced the rate of each term loan; and obtained other favorable credit terms to the entire facility.
|
•
|
We acquired Alternative Apparel on October 13, 2017. Alternative Apparel sells the
Alternative
brand better basics T-shirts, fleece and other tops and bottoms.
Alternative
is a lifestyle brand known for its comfort, style and social responsibility.
|
•
|
As part of our cash deployment strategy, we paid four quarterly dividends, in March, June, September and December, of $0.15 per share.
|
|
Years Ended
|
|
|
|
|
|||||||||
|
December 30,
2017 |
|
December 31,
2016 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
6,471,410
|
|
|
$
|
6,028,199
|
|
|
$
|
443,211
|
|
|
7.4
|
%
|
Cost of sales
|
3,980,859
|
|
|
3,752,151
|
|
|
228,708
|
|
|
6.1
|
|
|||
Gross profit
|
2,490,551
|
|
|
2,276,048
|
|
|
214,503
|
|
|
9.4
|
|
|||
Selling, general and administrative expenses
|
1,739,631
|
|
|
1,500,399
|
|
|
239,232
|
|
|
15.9
|
|
|||
Change in fair value of contingent consideration
|
27,852
|
|
|
—
|
|
|
27,852
|
|
|
NM
|
|
|||
Operating profit
|
723,068
|
|
|
775,649
|
|
|
(52,581
|
)
|
|
(6.8
|
)
|
|||
Other expenses
|
11,363
|
|
|
51,758
|
|
|
(40,395
|
)
|
|
(78.0
|
)
|
|||
Interest expense, net
|
174,435
|
|
|
152,692
|
|
|
21,743
|
|
|
14.2
|
|
|||
Income from continuing operations before income tax expense
|
537,270
|
|
|
571,199
|
|
|
(33,929
|
)
|
|
(5.9
|
)
|
|||
Income tax expense
|
473,279
|
|
|
34,272
|
|
|
439,007
|
|
|
NM
|
|
|||
Income from continuing operations
|
63,991
|
|
|
536,927
|
|
|
(472,936
|
)
|
|
(88.1
|
)
|
|||
Income (loss) from discontinued operations, net of tax
|
(2,097
|
)
|
|
2,455
|
|
|
(4,552
|
)
|
|
NM
|
|
|||
Net income
|
$
|
61,894
|
|
|
$
|
539,382
|
|
|
$
|
(477,488
|
)
|
|
(88.5
|
)%
|
•
|
Acquisitions of Hanes Australasia, Champion Europe and GTM in 2016 and Alternative Apparel in 2017, which added incremental net sales of approximately $470 million in 2017;
|
•
|
Increased net sales driven by our global
Champion
and global online growth initiatives;
|
•
|
Increased net sales in our licensed intimate apparel business, along with our sock and men’s underwear product categories;
|
•
|
Sales growth in licensed sports apparel in the college bookstore business; and
|
•
|
Favorable impact of foreign currency exchange rates of approximately $25 million.
|
•
|
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;
|
•
|
Lower net sales in our licensed sports apparel business and
Hanes
activewear apparel within the mass merchant 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
|
||||||||||||
|
Years Ended
|
|
Years Ended
|
||||||||||||
|
December 30,
2017 |
|
December 31,
2016 |
|
December 30,
2017 |
|
December 31,
2016 |
||||||||
|
(dollars in thousands)
|
||||||||||||||
Innerwear
|
$
|
2,462,876
|
|
|
$
|
2,543,717
|
|
|
$
|
528,038
|
|
|
$
|
563,905
|
|
Activewear
|
1,654,278
|
|
|
1,601,108
|
|
|
227,589
|
|
|
224,658
|
|
||||
International
|
2,054,664
|
|
|
1,531,913
|
|
|
261,411
|
|
|
179,917
|
|
||||
Other
|
299,592
|
|
|
351,461
|
|
|
23,364
|
|
|
32,801
|
|
||||
Corporate
|
—
|
|
|
—
|
|
|
(317,334
|
)
|
|
(225,632
|
)
|
||||
Total
|
$
|
6,471,410
|
|
|
$
|
6,028,199
|
|
|
$
|
723,068
|
|
|
$
|
775,649
|
|
|
Years Ended
|
|
|
|||||||||||
|
December 30,
2017 |
|
December 31,
2016 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
2,462,876
|
|
|
$
|
2,543,717
|
|
|
$
|
(80,841
|
)
|
|
(3.2
|
)%
|
Segment operating profit
|
528,038
|
|
|
563,905
|
|
|
(35,867
|
)
|
|
(6.4
|
)
|
|
Years Ended
|
|
|
|||||||||||
|
December 30,
2017 |
|
December 31,
2016 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
1,654,278
|
|
|
$
|
1,601,108
|
|
|
$
|
53,170
|
|
|
3.3
|
%
|
Segment operating profit
|
227,589
|
|
|
224,658
|
|
|
2,931
|
|
|
1.3
|
|
|
Years Ended
|
|
|
|||||||||||
|
December 30,
2017 |
|
December 31,
2016 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
2,054,664
|
|
|
$
|
1,531,913
|
|
|
$
|
522,751
|
|
|
34.1
|
%
|
Segment operating profit
|
261,411
|
|
|
179,917
|
|
|
81,494
|
|
|
45.3
|
|
•
|
Incremental net sales from the acquisitions of Hanes Australasia in July of 2016 and Champion Europe in June of 2016;
|
•
|
Continued growth in Asia within our Activewear product category, primarily driven by
Champion
and
Hanes
sales growth; and
|
•
|
Favorable impact of foreign currency exchange rates of approximately $25 million.
|
•
|
Declining hosiery sales and slower traffic at retail in certain European markets.
|
|
Years Ended
|
|
|
|||||||||||
|
December 30,
2017 |
|
December 31,
2016 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
299,592
|
|
|
$
|
351,461
|
|
|
$
|
(51,869
|
)
|
|
(14.8
|
)%
|
Segment operating profit
|
23,364
|
|
|
32,801
|
|
|
(9,437
|
)
|
|
(28.8
|
)
|
|
Years Ended
|
||||||
|
December 30,
2017 |
|
December 31,
2016 |
||||
|
(dollars in thousands)
|
||||||
Acquisition, integration and other action-related costs included in operating profit:
|
|
|
|
||||
Hanes Europe Innerwear
|
$
|
65,995
|
|
|
$
|
79,003
|
|
Hanes Australasia
|
40,681
|
|
|
30,783
|
|
||
Champion Europe
|
10,645
|
|
|
10,972
|
|
||
Knights Apparel
|
11,994
|
|
|
29,056
|
|
||
Other acquisitions
|
1,995
|
|
|
4,344
|
|
||
Business disruption and other actions
|
33,590
|
|
|
—
|
|
||
Contingent consideration related to Champion Europe
|
27,852
|
|
|
—
|
|
||
Acquisition related currency transactions
|
—
|
|
|
(15,639
|
)
|
||
Total acquisition, integration and other action-related costs included in operating profit
|
$
|
192,752
|
|
|
$
|
138,519
|
|
|
Years Ended
|
|
|
|
|
|||||||||
|
December 31,
2016 |
|
January 2,
2016 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
6,028,199
|
|
|
$
|
5,731,549
|
|
|
$
|
296,650
|
|
|
5.2
|
%
|
Cost of sales
|
3,752,151
|
|
|
3,595,217
|
|
|
156,934
|
|
|
4.4
|
|
|||
Gross profit
|
2,276,048
|
|
|
2,136,332
|
|
|
139,716
|
|
|
6.5
|
|
|||
Selling, general and administrative expenses
|
1,500,399
|
|
|
1,541,214
|
|
|
(40,815
|
)
|
|
(2.6
|
)
|
|||
Operating profit
|
775,649
|
|
|
595,118
|
|
|
180,531
|
|
|
30.3
|
|
|||
Other expenses
|
51,758
|
|
|
3,210
|
|
|
48,548
|
|
|
NM
|
|
|||
Interest expense, net
|
152,692
|
|
|
118,035
|
|
|
34,657
|
|
|
29.4
|
|
|||
Income from continuing operations before income tax expense
|
571,199
|
|
|
473,873
|
|
|
97,326
|
|
|
20.5
|
|
|||
Income tax expense
|
34,272
|
|
|
45,018
|
|
|
(10,746
|
)
|
|
(23.9
|
)
|
|||
Income from continuing operations
|
536,927
|
|
|
428,855
|
|
|
108,072
|
|
|
25.2
|
|
|||
Income from discontinued operations, net of tax
|
2,455
|
|
|
—
|
|
|
2,455
|
|
|
NM
|
|
|||
Net income
|
$
|
539,382
|
|
|
$
|
428,855
|
|
|
$
|
110,527
|
|
|
25.8
|
%
|
•
|
Incremental net sales of approximately $435 million from businesses acquired in 2016, primarily Hanes Australasia and Champion Europe;
|
•
|
Acquisition of Knights Apparel in April 2015, which added an incremental $21 million of net sales in 2016; and
|
•
|
Continued growth in the Activewear segment within our college bookstore business and
Champion
sales within the mass merchant channel.
|
•
|
Lower sales in the Innerwear segment due to a slower than expected retail environment;
|
•
|
Lower net sales in our Activewear segment in the sporting goods and mid-tier department store channels, primarily due to certain sporting goods retailer bankruptcies; and
|
•
|
Lower net sales in Other due to slower traffic at our outlet stores, the planned exit of our legacy catalog business and removal of non-core product offerings to a more focused branded store strategy, and continued decline in our Hosiery sales.
|
|
Net Sales
|
|
Operating Profit
|
||||||||||||
|
Years Ended
|
|
Years Ended
|
||||||||||||
|
December 31,
2016 |
|
January 2,
2016 |
|
December 31,
2016 |
|
January 2,
2016 |
||||||||
|
(dollars in thousands)
|
||||||||||||||
Innerwear
|
$
|
2,543,717
|
|
|
$
|
2,609,402
|
|
|
$
|
563,905
|
|
|
$
|
596,634
|
|
Activewear
|
1,601,108
|
|
|
1,605,423
|
|
|
224,658
|
|
|
245,563
|
|
||||
International
|
1,531,913
|
|
|
1,132,637
|
|
|
179,917
|
|
|
105,515
|
|
||||
Other
|
351,461
|
|
|
384,087
|
|
|
32,801
|
|
|
43,582
|
|
||||
Corporate
|
—
|
|
|
—
|
|
|
(225,632
|
)
|
|
(396,176
|
)
|
||||
Total
|
$
|
6,028,199
|
|
|
$
|
5,731,549
|
|
|
$
|
775,649
|
|
|
$
|
595,118
|
|
|
Years Ended
|
|
|
|
|
|||||||||
|
December 31,
2016 |
|
January 2,
2016 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
2,543,717
|
|
|
$
|
2,609,402
|
|
|
$
|
(65,685
|
)
|
|
(2.5
|
)%
|
Segment operating profit
|
563,905
|
|
|
596,634
|
|
|
(32,729
|
)
|
|
(5.5
|
)
|
|
Years Ended
|
|
|
|
|
|||||||||
|
December 31,
2016 |
|
January 2,
2016 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
1,601,108
|
|
|
$
|
1,605,423
|
|
|
$
|
(4,315
|
)
|
|
(0.3
|
)%
|
Segment operating profit
|
224,658
|
|
|
245,563
|
|
|
(20,905
|
)
|
|
(8.5
|
)
|
•
|
Lower sales in the sporting goods and mid-tier department store channels primarily due to certain retailer bankruptcies;
|
•
|
Lower sales in our Hanes Activewear business due to an expected loss of certain seasonal programs; and
|
•
|
Lower
Champion
sales within the mid-tier channel in 2016, due to larger pipes to support space gains in 2015, which were not repeated in 2016.
|
•
|
The acquisition of Knights Apparel in April 2015, which added an incremental $21 million of net sales in 2016;
|
•
|
The acquisition of GTM in September 2016, which added an incremental $13 million of net sales;
|
•
|
Champion
growth within the mass retail channel; and
|
•
|
Continued growth in our college bookstore business.
|
|
Years Ended
|
|
|
|
|
|||||||||
|
December 31,
2016 |
|
January 2,
2016 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
1,531,913
|
|
|
$
|
1,132,637
|
|
|
$
|
399,276
|
|
|
35.3
|
%
|
Segment operating profit
|
179,917
|
|
|
105,515
|
|
|
74,402
|
|
|
70.5
|
|
•
|
Acquisitions of Hanes Australasia, Champion Europe and Champion Japan licensee; and
|
•
|
Continued space gains in Asia within our Activewear product category.
|
•
|
Unfavorable impact of foreign currency exchange rates of approximately $12 million; and
|
•
|
The planned exit of small, low performing brands in Hanes Europe Innerwear.
|
|
Years Ended
|
|
|
|
|
|||||||||
|
December 31,
2016 |
|
January 2,
2016 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
351,461
|
|
|
$
|
384,087
|
|
|
$
|
(32,626
|
)
|
|
(8.5
|
)%
|
Segment operating profit
|
32,801
|
|
|
43,582
|
|
|
(10,781
|
)
|
|
(24.7
|
)
|
|
Years Ended
|
||||||
|
December 31,
2016 |
|
January 2,
2016 |
||||
|
(dollars in thousands)
|
||||||
Acquisition, integration and other action-related costs included in operating profit:
|
|
|
|
||||
Hanes Europe Innerwear
|
$
|
79,003
|
|
|
$
|
138,116
|
|
Hanes Australasia
|
30,783
|
|
|
—
|
|
||
Knights Apparel
|
29,056
|
|
|
14,789
|
|
||
Champion Europe
|
10,972
|
|
|
—
|
|
||
Other acquisitions
|
4,344
|
|
|
—
|
|
||
Maidenform
|
—
|
|
|
31,114
|
|
||
Acquisition related currency transactions
|
(15,639
|
)
|
|
—
|
|
||
Total acquisition and integration costs
|
138,519
|
|
|
184,019
|
|
||
Foundational costs
|
—
|
|
|
47,786
|
|
||
Other costs
|
—
|
|
|
34,255
|
|
||
Total acquisition, integration and other action-related costs included in operating profit:
|
$
|
138,519
|
|
|
$
|
266,060
|
|
•
|
we have principal and interest obligations under our debt;
|
•
|
we acquired Champion Europe in June 2016, Hanes Australasia in July 2016, Alternative Apparel in October 2017 and we may pursue strategic acquisitions in the future;
|
•
|
we expect to continue to invest in efforts to improve operating efficiencies and lower costs;
|
•
|
we expect to make required cash contributions of $15 million to our pension plans in 2018;
|
•
|
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 impact our effective income tax rate;
|
•
|
we are obligated to make installment payments over an eight-year period related to our transition tax liability resulting from the implementation of the Tax Act, beginning in 2018;
|
•
|
our Board of Directors has authorized a regular quarterly dividend; and
|
•
|
our Board of Directors has authorized the repurchase of up to 40 million shares under our share repurchase program. In 2017, we repurchased 19.6 million shares at a cost of $400 million.
|
|
|
|
Payments Due by Period
|
||||||||||||||||
|
At December 30, 2017
|
|
Fiscal
2018 |
|
Fiscal
2019-2020
|
|
Fiscal
2021-2022
|
|
Fiscal
2023 and
Thereafter
|
||||||||||
|
(dollars in thousands)
|
||||||||||||||||||
Operating activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest on debt obligations
(1)
|
$
|
837,896
|
|
|
$
|
149,162
|
|
|
$
|
287,270
|
|
|
$
|
279,648
|
|
|
$
|
121,816
|
|
Inventory purchase obligations
|
421,356
|
|
|
418,038
|
|
|
3,318
|
|
|
—
|
|
|
—
|
|
|||||
Operating lease obligations
|
622,296
|
|
|
137,959
|
|
|
212,176
|
|
|
146,998
|
|
|
125,163
|
|
|||||
Marketing and advertising obligations
|
20,745
|
|
|
10,817
|
|
|
8,290
|
|
|
1,638
|
|
|
—
|
|
|||||
Defined benefit plan minimum contributions
(2)
|
15,000
|
|
|
15,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Tax obligations
(3)
|
177,345
|
|
|
17,038
|
|
|
35,799
|
|
|
33,370
|
|
|
91,138
|
|
|||||
Other long-term obligations
(4)
|
356,558
|
|
|
115,675
|
|
|
146,358
|
|
|
32,663
|
|
|
61,862
|
|
|||||
Investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
13,552
|
|
|
13,552
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt
|
3,993,267
|
|
|
249,589
|
|
|
221,529
|
|
|
647,500
|
|
|
2,874,649
|
|
|||||
Notes payable
|
11,873
|
|
|
11,873
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
6,469,888
|
|
|
$
|
1,138,703
|
|
|
$
|
914,740
|
|
|
$
|
1,141,817
|
|
|
$
|
3,274,628
|
|
|
|
(1)
|
Interest obligations on floating rate debt instruments are calculated for future periods using interest rates in effect at
December 30, 2017
.
|
(2)
|
Represents only the required minimum pension contributions in 2018. In addition to the required cash contributions, we may elect to make voluntary contributions to maintain certain funded levels. For a discussion of our pension plan obligations, see Note, “Defined Benefit Pension Plans,” to our consolidated financial statements.
|
(3)
|
Represents uncertain tax positions and the transition tax liability resulting from the Tax Cuts and Jobs Act of 2017.
|
(4)
|
Represents the projected payment for long-term liabilities recorded on the Consolidated Balance Sheet for certain employee benefit claims, royalty-bearing license agreement payments, contingent consideration payment and deferred compensation.
|
|
Years Ended
|
||||||
|
December 30,
2017 |
|
December 31,
2016 |
||||
|
(dollars in thousands)
|
||||||
Operating activities
|
$
|
655,718
|
|
|
$
|
605,607
|
|
Investing activities
|
(104,513
|
)
|
|
(966,641
|
)
|
||
Financing activities
|
(585,768
|
)
|
|
511,054
|
|
||
Effect of changes in foreign currency exchange rates on cash
|
(4,116
|
)
|
|
(8,944
|
)
|
||
Change in cash and cash equivalents
|
(38,679
|
)
|
|
141,076
|
|
||
Cash and cash equivalents at beginning of year
|
460,245
|
|
|
319,169
|
|
||
Cash and cash equivalents at end of year
|
$
|
421,566
|
|
|
$
|
460,245
|
|
|
As of December 30, 2017
|
||||||
Borrowing
Capacity
|
|
Borrowing
Availability
|
|||||
|
(dollars in thousands)
|
||||||
Senior Secured Credit Facility:
|
|
|
|
||||
Revolving Loan Facility
|
$
|
1,000,000
|
|
|
$
|
995,482
|
|
Australian Revolving Loan Facility
|
50,497
|
|
|
50,497
|
|
||
European Revolving Loan Facility
|
118,878
|
|
|
37,339
|
|
||
Accounts Receivable Securitization Facility
|
275,000
|
|
|
149,791
|
|
||
Other international credit facilities
|
145,581
|
|
|
78,282
|
|
||
Total liquidity from credit facilities
|
$
|
1,589,956
|
|
|
$
|
1,311,391
|
|
•
|
In determining the discount rate, we utilized the Aon Hewitt AA Above Median Curve (rounded to the nearest 10 basis points) in order to determine a unique interest rate for each plan and match the expected cash flows for each plan. Beginning in 2016, we began utilizing a full series specific spot rates along the Aon Hewitt AA Above Median yield curve in our determination of discount rates, for our U.S. defined benefit plans, in order to determine our interest rate and match to the relevant cash flows for the plans. This change improves the correlation between projected benefit cash flows and the corresponding yield curve spot rates and to provide a more precise measurement of interest costs.
|
•
|
Salary increase assumptions were based on historical experience and anticipated future management actions. The salary increase assumption only applies to the Canadian plans, certain Hanes Europe Innerwear plans and portions of the Hanesbrands nonqualified retirement plans, as benefits under these plans are not frozen. The benefits under the Hanesbrands Inc. Pension Plan were frozen as of December 31, 2005.
|
•
|
In determining the long-term rate of return on plan assets we applied a proportionally weighted blend between assuming the historical long-term compound growth rate of the plan portfolio would predict the future returns of similar investments, and the utilization of forward-looking assumptions.
|
•
|
Retirement rates were based primarily on actual experience while standard actuarial tables were used to estimate mortality. In
2017
, the tables used as a basis for the mortality assumption were from the RP-2014 table with Scale MP-2017.
|
|
Increase (Decrease) in
|
||||||
|
Pension
Expense
|
|
Benefit
Obligation
|
||||
|
(in millions)
|
||||||
1% decrease in discount rate
|
$
|
(1
|
)
|
|
$
|
169
|
|
1% increase in discount rate
|
1
|
|
|
(137
|
)
|
||
1% decrease in expected investment return
|
8
|
|
|
N/A
|
|
||
1% increase in expected investment return
|
(8
|
)
|
|
N/A
|
|
Item 7A.
|
Quantitative and Qualitative Disclosures about Market Risk
|
Item 8.
|
Financial Statements and Supplementary Data
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
Item 9B.
|
Other Information
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
Item 14.
|
Principal Accounting Fees and Services
|
Item 15.
|
Exhibits and Financial Statement Schedules
|
Exhibit
Number
|
|
Description
|
2.1
|
|
|
|
|
|
2.2
|
|
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
3.3
|
|
|
|
|
|
3.4
|
|
|
|
|
|
3.5
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2
|
|
|
|
|
|
4.3
|
|
|
|
|
|
4.4
|
|
|
|
|
Exhibit
Number
|
|
Description
|
4.5
|
|
|
|
|
|
4.6
|
|
|
|
|
|
4.7
|
|
|
|
|
|
4.8
|
|
|
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
10.3
|
|
|
|
|
|
10.4
|
|
|
|
|
|
10.5
|
|
|
|
|
|
10.6
|
|
|
|
|
|
10.7
|
|
|
|
|
|
10.8
|
|
|
|
|
|
Exhibit
Number
|
|
Description
|
10.9
|
|
|
|
|
|
10.10
|
|
|
|
|
|
10.11
|
|
|
|
|
|
10.12
|
|
|
|
|
|
10.13
|
|
|
|
|
|
10.14
|
|
|
|
|
|
10.15
|
|
|
|
|
|
10.16
|
|
|
|
|
|
10.17
|
|
|
|
|
|
10.18
|
|
|
|
|
|
10.19
|
|
|
|
|
|
10.20
|
|
|
|
|
|
10.21
|
|
|
|
|
|
Exhibit
Number
|
|
Description
|
10.22
|
|
|
|
|
|
12.1
|
|
|
|
|
|
21.1
|
|
|
|
|
|
23.1
|
|
|
|
|
|
24.1
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1
|
|
|
|
|
|
32.2
|
|
|
|
|
|
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
|
|
|
*
|
Management contract or compensatory plans or arrangements.
|
Item 16.
|
Form 10-K Summary
|
HANESBRANDS INC.
|
|
/s/ Gerald W. Evans, Jr.
|
Gerald W. Evans, Jr.
|
Chief Executive Officer
|
Signature
|
|
Capacity
|
|
Date
|
|
|
|
|
|
/s/ Gerald W. Evans, Jr.
|
|
Chief Executive Officer
(principal executive officer)
|
|
February 8, 2018
|
Gerald W. Evans, Jr.
|
|
|
|
|
|
|
|
|
|
/s/ Barry A. Hytinen
|
|
Chief Financial Officer
(principal financial officer)
|
|
February 8, 2018
|
Barry A. Hytinen
|
|
|
|
|
|
|
|
|
|
/s/ M. Scott Lewis
|
|
Chief Accounting Officer and Controller
(principal accounting officer)
|
|
February 8, 2018
|
M. Scott Lewis
|
|
|
|
|
|
|
|
|
|
/s/ Bobby J. Griffin
|
|
Director
|
|
February 8, 2018
|
Bobby J. Griffin
|
|
|
|
|
|
|
|
|
|
/s/ James C. Johnson
|
|
Director
|
|
February 8, 2018
|
James C. Johnson
|
|
|
|
|
|
|
|
|
|
/s/ Jessica T. Mathews
|
|
Director
|
|
February 8, 2018
|
Jessica T. Mathews
|
|
|
|
|
|
|
|
|
|
/s/ Franck J. Moison
|
|
Director
|
|
February 8, 2018
|
Franck J. Moison
|
|
|
|
|
|
|
|
|
|
/s/ Robert F. Moran
|
|
Director
|
|
February 8, 2018
|
Robert F. Moran
|
|
|
|
|
|
|
|
|
|
/s/ Ronald L. Nelson
|
|
Director
|
|
February 8, 2018
|
Ronald L. Nelson
|
|
|
|
|
|
|
|
|
|
/s/ Richard A. Noll
|
|
Director
|
|
February 8, 2018
|
Richard A. Noll
|
|
|
|
|
|
|
|
|
|
/s/ David V. Singer
|
|
Director
|
|
February 8, 2018
|
David V. Singer
|
|
|
|
|
|
|
|
|
|
/s/ Ann E. Ziegler
|
|
Director
|
|
February 8, 2018
|
Ann E. Ziegler
|
|
|
|
|
|
|
Consolidated Financial Statements:
|
Page
|
|
Years Ended
|
||||||||||
|
December 30,
2017 |
|
December 31,
2016 |
|
January 2,
2016 |
||||||
Net sales
|
$
|
6,471,410
|
|
|
$
|
6,028,199
|
|
|
$
|
5,731,549
|
|
Cost of sales
|
3,980,859
|
|
|
3,752,151
|
|
|
3,595,217
|
|
|||
Gross profit
|
2,490,551
|
|
|
2,276,048
|
|
|
2,136,332
|
|
|||
Selling, general and administrative expenses
|
1,739,631
|
|
|
1,500,399
|
|
|
1,541,214
|
|
|||
Change in fair value of contingent consideration
|
27,852
|
|
|
—
|
|
|
—
|
|
|||
Operating profit
|
723,068
|
|
|
775,649
|
|
|
595,118
|
|
|||
Other expenses
|
11,363
|
|
|
51,758
|
|
|
3,210
|
|
|||
Interest expense, net
|
174,435
|
|
|
152,692
|
|
|
118,035
|
|
|||
Income from continuing operations before income tax expense
|
537,270
|
|
|
571,199
|
|
|
473,873
|
|
|||
Income tax expense
|
473,279
|
|
|
34,272
|
|
|
45,018
|
|
|||
Income from continuing operations
|
63,991
|
|
|
536,927
|
|
|
428,855
|
|
|||
Income (loss) from discontinued operations, net of tax
|
(2,097
|
)
|
|
2,455
|
|
|
—
|
|
|||
Net income
|
$
|
61,894
|
|
|
$
|
539,382
|
|
|
$
|
428,855
|
|
|
|
|
|
|
|
||||||
Earnings (loss) per share — basic:
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
0.17
|
|
|
$
|
1.41
|
|
|
$
|
1.07
|
|
Discontinued operations
|
(0.01
|
)
|
|
0.01
|
|
|
—
|
|
|||
Net income
|
$
|
0.17
|
|
|
$
|
1.41
|
|
|
$
|
1.07
|
|
|
|
|
|
|
|
||||||
Earnings (loss) per share — diluted:
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
0.17
|
|
|
$
|
1.40
|
|
|
$
|
1.06
|
|
Discontinued operations
|
(0.01
|
)
|
|
0.01
|
|
|
—
|
|
|||
Net income
|
$
|
0.17
|
|
|
$
|
1.40
|
|
|
$
|
1.06
|
|
|
Years Ended
|
||||||||||
|
December 30,
2017 |
|
December 31,
2016 |
|
January 2,
2016 |
||||||
Net income
|
$
|
61,894
|
|
|
$
|
539,382
|
|
|
$
|
428,855
|
|
Other comprehensive loss:
|
|
|
|
|
|
||||||
Foreign currency translation
|
34,554
|
|
|
(20,384
|
)
|
|
(23,576
|
)
|
|||
Cash flow hedges, net of tax effect of $7,951, ($1,272) and ($866), respectively
|
(31,281
|
)
|
|
5,757
|
|
|
1,043
|
|
|||
Defined benefit plans, net of tax effect of $930, $16,393 and ($883), respectively
|
(6,488
|
)
|
|
(26,431
|
)
|
|
189
|
|
|||
Other comprehensive loss
|
(3,215
|
)
|
|
(41,058
|
)
|
|
(22,344
|
)
|
|||
Comprehensive income
|
$
|
58,679
|
|
|
$
|
498,324
|
|
|
$
|
406,511
|
|
|
December 30,
2017 |
|
December 31,
2016 |
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
421,566
|
|
|
$
|
460,245
|
|
Trade accounts receivable, net
|
903,318
|
|
|
836,924
|
|
||
Inventories
|
1,874,990
|
|
|
1,840,565
|
|
||
Other current assets
|
186,496
|
|
|
137,535
|
|
||
Current assets of discontinued operations
|
—
|
|
|
45,897
|
|
||
Total current assets
|
3,386,370
|
|
|
3,321,166
|
|
||
Property, net
|
623,991
|
|
|
692,464
|
|
||
Trademarks and other identifiable intangibles, net
|
1,402,857
|
|
|
1,285,458
|
|
||
Goodwill
|
1,167,007
|
|
|
1,098,540
|
|
||
Deferred tax assets
|
234,932
|
|
|
464,872
|
|
||
Other noncurrent assets
|
79,618
|
|
|
67,980
|
|
||
Total assets
|
$
|
6,894,775
|
|
|
$
|
6,930,480
|
|
|
|
|
|
||||
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Accounts payable
|
$
|
867,649
|
|
|
$
|
761,647
|
|
Accrued liabilities and other:
|
|
|
|
||||
Payroll and employee benefits
|
153,394
|
|
|
154,697
|
|
||
Advertising and promotion
|
150,375
|
|
|
134,648
|
|
||
Other
|
345,865
|
|
|
330,450
|
|
||
Notes payable
|
11,873
|
|
|
56,396
|
|
||
Accounts Receivable Securitization Facility
|
125,209
|
|
|
44,521
|
|
||
Current portion of long-term debt
|
124,380
|
|
|
133,843
|
|
||
Current liabilities of discontinued operations
|
—
|
|
|
9,466
|
|
||
Total current liabilities
|
1,778,745
|
|
|
1,625,668
|
|
||
Long-term debt
|
3,702,054
|
|
|
3,507,685
|
|
||
Pension and postretirement benefits
|
405,238
|
|
|
371,612
|
|
||
Accrued income taxes - noncurrent
|
137,226
|
|
|
—
|
|
||
Other noncurrent liabilities
|
185,310
|
|
|
201,601
|
|
||
Total liabilities
|
6,208,573
|
|
|
5,706,566
|
|
||
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock (50,000,000 authorized shares; $.01 par value)
|
|
|
|
||||
Issued and outstanding — None
|
—
|
|
|
—
|
|
||
Common stock (2,000,000,000 authorized shares; $.01 par value)
|
|
|
|
||||
Issued and outstanding — 360,125,894 and 378,687,052, respectively
|
3,601
|
|
|
3,787
|
|
||
Additional paid-in capital
|
271,462
|
|
|
260,002
|
|
||
Retained earnings
|
850,345
|
|
|
1,396,116
|
|
||
Accumulated other comprehensive loss
|
(439,206
|
)
|
|
(435,991
|
)
|
||
Total stockholders’ equity
|
686,202
|
|
|
1,223,914
|
|
||
Total liabilities and stockholders’ equity
|
$
|
6,894,775
|
|
|
$
|
6,930,480
|
|
|
Common Stock
|
|
Additional
Paid-In Capital |
|
Retained
Earnings |
|
Accumulated
Other Comprehensive Loss |
|
Total
|
|||||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||||||
Balances at January 3, 2015
|
400,789
|
|
|
$
|
4,008
|
|
|
$
|
290,926
|
|
|
$
|
1,464,427
|
|
|
$
|
(372,589
|
)
|
|
$
|
1,386,772
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
428,855
|
|
|
—
|
|
|
428,855
|
|
|||||
Dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
(161,316
|
)
|
|
—
|
|
|
(161,316
|
)
|
|||||
Translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23,576
|
)
|
|
(23,576
|
)
|
|||||
Net unrealized gain on qualifying cash flow hedges
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,043
|
|
|
1,043
|
|
|||||
Net unrecognized gain from pension and postretirement plans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
189
|
|
|
189
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
29,154
|
|
|
—
|
|
|
—
|
|
|
29,154
|
|
|||||
Net exercise of stock options, vesting of restricted stock units and other
|
3,012
|
|
|
30
|
|
|
(33,765
|
)
|
|
—
|
|
|
—
|
|
|
(33,735
|
)
|
|||||
Share repurchases
|
(12,148
|
)
|
|
(121
|
)
|
|
(8,746
|
)
|
|
(342,628
|
)
|
|
—
|
|
|
(351,495
|
)
|
|||||
Balances at January 2, 2016
|
391,653
|
|
|
$
|
3,917
|
|
|
$
|
277,569
|
|
|
$
|
1,389,338
|
|
|
$
|
(394,933
|
)
|
|
$
|
1,275,891
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
539,382
|
|
|
—
|
|
|
539,382
|
|
|||||
Dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
(169,294
|
)
|
|
—
|
|
|
(169,294
|
)
|
|||||
Translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,384
|
)
|
|
(20,384
|
)
|
|||||
Net unrealized gain on qualifying cash flow hedges
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,757
|
|
|
5,757
|
|
|||||
Net unrecognized loss from pension and postretirement plans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,431
|
)
|
|
(26,431
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
30,617
|
|
|
6,051
|
|
|
—
|
|
|
36,668
|
|
|||||
Net exercise of stock options, vesting of restricted stock units and other
|
1,277
|
|
|
12
|
|
|
(37,786
|
)
|
|
—
|
|
|
—
|
|
|
(37,774
|
)
|
|||||
Share repurchases
|
(14,243
|
)
|
|
(142
|
)
|
|
(10,398
|
)
|
|
(369,361
|
)
|
|
—
|
|
|
(379,901
|
)
|
|||||
Balances at December 31, 2016
|
378,687
|
|
|
$
|
3,787
|
|
|
$
|
260,002
|
|
|
$
|
1,396,116
|
|
|
$
|
(435,991
|
)
|
|
$
|
1,223,914
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
61,894
|
|
|
—
|
|
|
61,894
|
|
|||||
Dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
(222,290
|
)
|
|
—
|
|
|
(222,290
|
)
|
|||||
Translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34,554
|
|
|
34,554
|
|
|||||
Net unrealized loss on qualifying cash flow hedges
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(31,281
|
)
|
|
(31,281
|
)
|
|||||
Net unrecognized loss from pension and postretirement plans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,488
|
)
|
|
(6,488
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
23,224
|
|
|
—
|
|
|
—
|
|
|
23,224
|
|
|||||
Net exercise of stock options, vesting of restricted stock units and other
|
1,079
|
|
|
10
|
|
|
2,154
|
|
|
528
|
|
|
—
|
|
|
2,692
|
|
|||||
Share repurchases
|
(19,640
|
)
|
|
(196
|
)
|
|
(13,918
|
)
|
|
(385,903
|
)
|
|
—
|
|
|
(400,017
|
)
|
|||||
Balances at December 30, 2017
|
360,126
|
|
|
$
|
3,601
|
|
|
$
|
271,462
|
|
|
$
|
850,345
|
|
|
$
|
(439,206
|
)
|
|
$
|
686,202
|
|
|
Years Ended
|
||||||||||
|
December 30,
2017 |
|
December 31,
2016 |
|
January 2,
2016 |
||||||
Operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
61,894
|
|
|
$
|
539,382
|
|
|
$
|
428,855
|
|
Adjustments to reconcile net income to net cash from operating activities:
|
|
|
|
|
|
||||||
Depreciation
|
87,595
|
|
|
81,057
|
|
|
80,166
|
|
|||
Amortization of intangibles
|
34,892
|
|
|
22,118
|
|
|
23,737
|
|
|||
Charges incurred for amendments of credit facilities
|
—
|
|
|
34,624
|
|
|
—
|
|
|||
Write-off on early extinguishment of debt
|
4,028
|
|
|
12,667
|
|
|
—
|
|
|||
Amortization of debt issuance costs
|
10,394
|
|
|
9,034
|
|
|
7,077
|
|
|||
Stock compensation expense
|
23,582
|
|
|
31,780
|
|
|
29,618
|
|
|||
Deferred taxes
|
239,068
|
|
|
(8,836
|
)
|
|
10,850
|
|
|||
Change in fair value of contingent consideration liability
|
27,852
|
|
|
—
|
|
|
—
|
|
|||
Other
|
1,468
|
|
|
(12,587
|
)
|
|
(8,696
|
)
|
|||
Changes in assets and liabilities, net of acquisition and disposition of businesses:
|
|
|
|
|
|
||||||
Accounts receivable
|
(31,656
|
)
|
|
(83,279
|
)
|
|
(21,974
|
)
|
|||
Inventories
|
22,648
|
|
|
135,807
|
|
|
(289,654
|
)
|
|||
Other assets
|
(28,346
|
)
|
|
(24,563
|
)
|
|
35,044
|
|
|||
Accounts payable
|
71,806
|
|
|
(60,994
|
)
|
|
74,613
|
|
|||
Accrued pension and postretirement benefits
|
19,042
|
|
|
(31,504
|
)
|
|
(102,202
|
)
|
|||
Accrued income taxes
|
179,117
|
|
|
7,396
|
|
|
(4,395
|
)
|
|||
Accrued liabilities and other
|
(67,666
|
)
|
|
(46,495
|
)
|
|
(36,032
|
)
|
|||
Net cash from operating activities
|
655,718
|
|
|
605,607
|
|
|
227,007
|
|
|||
|
|
|
|
|
|
||||||
Investing activities:
|
|
|
|
|
|
||||||
Purchases of property, plant and equipment
|
(87,008
|
)
|
|
(83,399
|
)
|
|
(99,375
|
)
|
|||
Proceeds from sales of assets
|
4,459
|
|
|
80,833
|
|
|
15,404
|
|
|||
Acquisition of businesses, net of cash acquired
|
(62,249
|
)
|
|
(964,075
|
)
|
|
(192,829
|
)
|
|||
Disposition of businesses
|
40,285
|
|
|
—
|
|
|
—
|
|
|||
Net cash from investing activities
|
(104,513
|
)
|
|
(966,641
|
)
|
|
(276,800
|
)
|
|||
|
|
|
|
|
|
||||||
Financing activities:
|
|
|
|
|
|
||||||
Borrowings on notes payable
|
278,489
|
|
|
904,476
|
|
|
1,167,681
|
|
|||
Repayments on notes payable
|
(327,615
|
)
|
|
(992,760
|
)
|
|
(1,184,458
|
)
|
|||
Borrowings on Accounts Receivable Securitization Facility
|
373,640
|
|
|
238,065
|
|
|
231,891
|
|
|||
Repayments on Accounts Receivable Securitization Facility
|
(292,952
|
)
|
|
(388,707
|
)
|
|
(247,691
|
)
|
|||
Borrowings on Revolving Loan Facilities
|
4,161,799
|
|
|
3,798,942
|
|
|
5,272,000
|
|
|||
Repayments on Revolving Loan Facilities
|
(4,153,000
|
)
|
|
(3,795,500
|
)
|
|
(5,385,000
|
)
|
|||
Borrowings on Senior Notes
|
—
|
|
|
2,359,347
|
|
|
—
|
|
|||
Repayments on Senior Notes
|
—
|
|
|
(1,000,000
|
)
|
|
—
|
|
|||
Borrowings on Term Loan Facilities
|
1,250,000
|
|
|
301,272
|
|
|
1,150,000
|
|
|||
Repayments on Term Loan Facilities
|
(1,145,215
|
)
|
|
(268,264
|
)
|
|
(311,955
|
)
|
|||
Borrowings on International Debt
|
—
|
|
|
9,145
|
|
|
10,676
|
|
|||
Repayments on International Debt
|
(45,072
|
)
|
|
(12,734
|
)
|
|
(15,971
|
)
|
|||
Share repurchases
|
(400,017
|
)
|
|
(379,901
|
)
|
|
(351,495
|
)
|
|||
Cash dividends paid
|
(219,903
|
)
|
|
(167,375
|
)
|
|
(161,316
|
)
|
|||
Payments to amend and refinance credit facilities
|
(9,122
|
)
|
|
(80,069
|
)
|
|
(12,793
|
)
|
|||
Payment of contingent consideration
|
(41,250
|
)
|
|
—
|
|
|
—
|
|
|||
Taxes paid related to net shares settlement of equity awards
|
(15,463
|
)
|
|
(17,414
|
)
|
|
(76,569
|
)
|
|||
Excess tax benefit from stock-based compensation
|
—
|
|
|
—
|
|
|
45,286
|
|
|||
Other
|
(87
|
)
|
|
2,531
|
|
|
2,696
|
|
|||
Net cash from financing activities
|
(585,768
|
)
|
|
511,054
|
|
|
132,982
|
|
|||
Effect of changes in foreign exchange rates on cash
|
(4,116
|
)
|
|
(8,944
|
)
|
|
(3,875
|
)
|
|||
Change in cash and cash equivalents
|
(38,679
|
)
|
|
141,076
|
|
|
79,314
|
|
|||
Cash and cash equivalents at beginning of year
|
460,245
|
|
|
319,169
|
|
|
239,855
|
|
|||
Cash and cash equivalents at end of year
|
$
|
421,566
|
|
|
$
|
460,245
|
|
|
$
|
319,169
|
|
(1)
|
Basis of Presentation
|
(2)
|
Summary of Significant Accounting Policies
|
•
|
As a period charge in the future period the tax arises; or
|
•
|
As part of deferred taxes related to the investment or subsidiary.
|
(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
|
23,687
|
|
|
Total assets acquired
|
827,238
|
|
|
Accounts payable
|
89,309
|
|
|
Accrued liabilities and other
|
24,912
|
|
|
Current liabilities of discontinued operations
|
14,564
|
|
|
Long-term debt
|
41,976
|
|
|
Deferred tax liabilities and other noncurrent liabilities
|
16,320
|
|
|
Total liabilities assumed
|
187,081
|
|
|
Net assets acquired
|
640,157
|
|
|
Goodwill
|
160,714
|
|
|
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
|
|
|
Years Ended
|
||||||
|
December 31,
2016 |
|
January 2,
2016 |
||||
Net sales
|
$
|
6,434,928
|
|
|
$
|
6,480,153
|
|
Net income from continuing operations
|
617,261
|
|
|
437,849
|
|
||
Earnings per share from continuing operations:
|
|
|
|
||||
Basic
|
$
|
1.62
|
|
|
$
|
1.09
|
|
Diluted
|
1.61
|
|
|
1.08
|
|
|
Year Ended
|
||
|
January 2,
2016 |
||
Net sales
|
$
|
5,753,706
|
|
Net income from continuing operations
|
433,636
|
|
|
Earnings per share from continuing operations:
|
|
||
Basic
|
$
|
1.08
|
|
Diluted
|
1.07
|
|
(4)
|
Discontinued Operations
|
|
Years Ended
|
||||||
|
December 30,
2017 |
|
December 31,
2016 |
||||
Net sales
|
$
|
6,865
|
|
|
$
|
34,698
|
|
Cost of sales
|
4,507
|
|
|
22,554
|
|
||
Gross profit
|
2,358
|
|
|
12,144
|
|
||
Selling, general and administrative expenses
|
3,729
|
|
|
8,632
|
|
||
Operating profit (loss)
|
(1,371
|
)
|
|
3,512
|
|
||
Other expenses
|
303
|
|
|
1,106
|
|
||
Net loss on disposal of business
|
242
|
|
|
—
|
|
||
Income (loss) from discontinued operations before income tax expense
|
(1,916
|
)
|
|
2,406
|
|
||
Income tax expense (benefit)
|
181
|
|
|
(49
|
)
|
||
Net income (loss) from discontinued operations, net of tax
|
$
|
(2,097
|
)
|
|
$
|
2,455
|
|
Trade accounts receivable, net
|
$
|
10,139
|
|
Inventories
|
10,691
|
|
|
Property, net
|
3,630
|
|
|
Trademarks and other identifiable intangibles, net
|
14,929
|
|
|
Goodwill
|
10,479
|
|
|
Accounts payable and accrued liabilities
|
(8,257
|
)
|
|
Net other assets and liabilities
|
(5,180
|
)
|
|
Net assets of discontinued operations
|
$
|
36,431
|
|
(5)
|
Earnings Per Share
|
|
Years Ended
|
|||||||
|
December 30,
2017 |
|
December 31,
2016 |
|
January 2,
2016 |
|||
Basic weighted average shares outstanding
|
367,680
|
|
|
381,782
|
|
|
399,891
|
|
Effect of potentially dilutive securities:
|
|
|
|
|
|
|||
Stock options
|
1,435
|
|
|
1,983
|
|
|
2,719
|
|
Restricted stock units
|
307
|
|
|
756
|
|
|
1,009
|
|
Employee stock purchase plan and other
|
4
|
|
|
45
|
|
|
40
|
|
Diluted weighted average shares outstanding
|
369,426
|
|
|
384,566
|
|
|
403,659
|
|
(6)
|
Stock-Based Compensation
|
|
Shares
|
|
Weighted-
Average Exercise Price |
|
Aggregate
Intrinsic Value |
|
Weighted-
Average Remaining Contractual Term (Years) |
|||||
Options outstanding at January 3, 2015
|
7,292
|
|
|
$
|
5.92
|
|
|
$
|
158,469
|
|
|
3.40
|
Exercised
|
(4,540
|
)
|
|
6.10
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||||
Options outstanding at January 2, 2016
|
2,752
|
|
|
$
|
5.62
|
|
|
$
|
65,531
|
|
|
2.88
|
Exercised
|
(477
|
)
|
|
5.90
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||||
Options outstanding at December 31, 2016
|
2,275
|
|
|
$
|
5.56
|
|
|
$
|
36,438
|
|
|
2.20
|
Exercised
|
(736
|
)
|
|
6.22
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||||
Options outstanding and exercisable at December 30, 2017
|
1,539
|
|
|
$
|
5.24
|
|
|
$
|
24,108
|
|
|
1.76
|
|
Shares
|
|
Weighted-
Average Grant Date Fair Value |
|
Aggregate
Intrinsic Value |
|
Weighted-
Average Remaining Contractual Term (Years) |
|||||
Nonvested share units outstanding at January 3, 2015
|
3,418
|
|
|
$
|
16.12
|
|
|
$
|
94,521
|
|
|
1.71
|
Granted — non-performanced based
|
516
|
|
|
31.06
|
|
|
|
|
|
|||
Granted — performanced based
|
828
|
|
|
23.50
|
|
|
|
|
|
|||
Vested
|
(1,816
|
)
|
|
11.45
|
|
|
|
|
|
|||
Forfeited
|
(113
|
)
|
|
16.87
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||||
Nonvested share units outstanding at January 2, 2016
|
2,833
|
|
|
$
|
23.99
|
|
|
$
|
83,381
|
|
|
1.78
|
Granted — non-performanced based
|
748
|
|
|
23.44
|
|
|
|
|
|
|||
Granted — performanced based
|
511
|
|
|
23.64
|
|
|
|
|
|
|||
Vested
|
(1,525
|
)
|
|
19.47
|
|
|
|
|
|
|||
Forfeited
|
(47
|
)
|
|
23.38
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||||
Nonvested share units outstanding at December 31, 2016
|
2,520
|
|
|
$
|
26.46
|
|
|
$
|
54,356
|
|
|
2.11
|
Granted — non-performanced based
|
628
|
|
|
21.22
|
|
|
|
|
|
|||
Granted — performanced based
|
590
|
|
|
23.04
|
|
|
|
|
|
|||
Vested
|
(991
|
)
|
|
26.74
|
|
|
|
|
|
|||
Forfeited
|
(81
|
)
|
|
26.81
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||||
Nonvested share units outstanding at December 30, 2017
|
2,666
|
|
|
$
|
24.36
|
|
|
$
|
55,741
|
|
|
2.00
|
(7)
|
Trade Accounts Receivable
|
|
Allowance
for Doubtful Accounts |
|
Allowance
for Chargebacks and Other Deductions (1) |
|
Total
|
||||||
Balance at January 3, 2015
|
$
|
8,117
|
|
|
$
|
8,739
|
|
|
$
|
16,856
|
|
Charged to expenses
|
4,656
|
|
|
8,675
|
|
|
13,331
|
|
|||
Deductions and write-offs
|
(7,844
|
)
|
|
(7,840
|
)
|
|
(15,684
|
)
|
|||
Currency translation
|
(1,180
|
)
|
|
(223
|
)
|
|
(1,403
|
)
|
|||
|
|
|
|
|
|
||||||
Balance at January 2, 2016
|
$
|
3,749
|
|
|
$
|
9,351
|
|
|
$
|
13,100
|
|
Charged to expenses
|
3,650
|
|
|
19,820
|
|
|
23,470
|
|
|||
Deductions and write-offs
|
(381
|
)
|
|
(16,259
|
)
|
|
(16,640
|
)
|
|||
Currency translation
|
(360
|
)
|
|
(844
|
)
|
|
(1,204
|
)
|
|||
|
|
|
|
|
|
||||||
Balance at December 31, 2016
|
$
|
6,658
|
|
|
$
|
12,068
|
|
|
$
|
18,726
|
|
Charged to expenses
|
6,642
|
|
|
16,169
|
|
|
22,811
|
|
|||
Deductions and write-offs
|
(632
|
)
|
|
(18,264
|
)
|
|
(18,896
|
)
|
|||
Currency translation
|
904
|
|
|
2,551
|
|
|
3,455
|
|
|||
|
|
|
|
|
|
||||||
Balance at December 30, 2017
|
$
|
13,572
|
|
|
$
|
12,524
|
|
|
$
|
26,096
|
|
|
|
(1)
|
The balances presented herein reflect the prior year reclassification from the “Accounts Receivable” line as disclosed in Note, “Basis of Presentation.”
|
(8)
|
Inventories
|
|
December 30,
2017 |
|
December 31,
2016 |
||||
Raw materials
|
$
|
129,287
|
|
|
$
|
131,228
|
|
Work in process
|
226,659
|
|
|
185,066
|
|
||
Finished goods
|
1,519,044
|
|
|
1,524,271
|
|
||
|
$
|
1,874,990
|
|
|
$
|
1,840,565
|
|
(9)
|
Property, Net
|
|
December 30,
2017 |
|
December 31,
2016 |
||||
Land
|
$
|
45,882
|
|
|
$
|
43,731
|
|
Buildings and improvements
|
486,893
|
|
|
566,819
|
|
||
Machinery and equipment
|
1,063,661
|
|
|
977,312
|
|
||
Construction in progress
|
33,922
|
|
|
49,887
|
|
||
Capital leases
|
7,133
|
|
|
4,761
|
|
||
|
1,637,491
|
|
|
1,642,510
|
|
||
Less accumulated depreciation
|
1,013,500
|
|
|
950,046
|
|
||
Property, net
|
$
|
623,991
|
|
|
$
|
692,464
|
|
(10)
|
Notes Payable
|
|
Interest
Rate as of December 30, 2017 |
|
Principal Amount
|
||||||
December 30,
2017 |
|
December 31,
2016 |
|||||||
Europe
|
Various
|
|
$
|
10,072
|
|
|
$
|
54,772
|
|
Philippines
|
5.99%
|
|
1,801
|
|
|
1,265
|
|
||
Australia
|
—
|
|
—
|
|
|
359
|
|
||
|
|
|
$
|
11,873
|
|
|
$
|
56,396
|
|
(11)
|
Debt
|
|
Interest
Rate as of December 30, 2017 |
|
Principal Amount
|
|
|
||||||
|
December 30,
2017 |
|
December 31,
2016 |
|
Maturity Date
|
||||||
Senior Secured Credit Facility:
|
|
|
|
|
|
|
|
||||
Revolving Loan Facility
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
|
December 2022
|
Term Loan A
|
2.99%
|
|
750,000
|
|
|
655,469
|
|
|
December 2022
|
||
Term Loan B
|
3.23%
|
|
500,000
|
|
|
318,625
|
|
|
December 2024
|
||
Australian Term A-1
|
3.23%
|
|
135,826
|
|
|
143,544
|
|
|
July 2019
|
||
Australian Term A-2
|
—
|
|
—
|
|
|
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%
|
|
599,649
|
|
|
520,617
|
|
|
June 2024
|
||
European Revolving Loan Facility
|
1.50%
|
|
81,539
|
|
|
62,474
|
|
|
September 2018
|
||
Accounts Receivable Securitization Facility
|
2.31%
|
|
125,209
|
|
|
44,521
|
|
|
March 2018
|
||
Other International Debt
|
Various
|
|
1,044
|
|
|
43,789
|
|
|
Various
|
||
|
|
|
3,993,267
|
|
|
3,732,583
|
|
|
|
||
Less long-term debt issuance cost
|
|
|
41,624
|
|
|
46,534
|
|
|
|
||
Less current maturities
|
|
|
249,589
|
|
|
178,364
|
|
|
|
||
|
|
|
$
|
3,702,054
|
|
|
$
|
3,507,685
|
|
|
|
•
|
the equity interests of substantially all of the Company’s direct and indirect U.S. subsidiaries (other than U.S. subsidiaries directly or indirectly owned by foreign subsidiaries) and 65% of the voting securities of certain first tier foreign subsidiaries; and
|
•
|
substantially all present and future property and assets, real and personal, tangible and intangible, of the Company and each guarantor, except for certain enumerated interests, and all proceeds and products of such property and assets.
|
(12)
|
Commitments and Contingencies
|
(13)
|
Intangible Assets and Goodwill
|
|
Gross
|
|
Accumulated
Amortization |
|
Net Book
Value |
||||||
Year ended December 30, 2017:
|
|
|
|
|
|
||||||
Intangible assets subject to amortization:
|
|
|
|
|
|
||||||
Trademarks and brand names
|
$
|
35,498
|
|
|
$
|
24,694
|
|
|
$
|
10,804
|
|
Licensing agreements
|
103,366
|
|
|
42,218
|
|
|
61,148
|
|
|||
Customer and distributor relationships
|
172,820
|
|
|
42,010
|
|
|
130,810
|
|
|||
Computer software
|
116,273
|
|
|
83,390
|
|
|
32,883
|
|
|||
Other intangibles
|
2,131
|
|
|
397
|
|
|
1,734
|
|
|||
|
$
|
430,088
|
|
|
$
|
192,709
|
|
|
237,379
|
|
|
Intangible assets not subject to amortization:
|
|
|
|
|
|
||||||
Trademarks
|
|
|
|
|
1,089,742
|
|
|||||
Perpetual licensing agreements and other
|
|
|
|
|
75,736
|
|
|||||
Net book value of intangible assets
|
|
|
|
|
$
|
1,402,857
|
|
|
Gross
|
|
Accumulated
Amortization |
|
Net Book
Value |
||||||
Year ended December 31, 2016:
|
|
|
|
|
|
||||||
Intangible assets subject to amortization:
|
|
|
|
|
|
||||||
Trademarks and brand names
|
$
|
28,617
|
|
|
$
|
28,607
|
|
|
$
|
10
|
|
Licensing agreements
|
102,069
|
|
|
33,397
|
|
|
68,672
|
|
|||
Customer and distributor relationships
|
156,340
|
|
|
26,153
|
|
|
130,187
|
|
|||
Computer software
|
88,213
|
|
|
68,318
|
|
|
19,895
|
|
|||
Other intangibles
|
(1,498
|
)
|
|
(994
|
)
|
|
(504
|
)
|
|||
|
$
|
373,741
|
|
|
$
|
155,481
|
|
|
218,260
|
|
|
Intangible assets not subject to amortization:
|
|
|
|
|
|
||||||
Trademarks
|
|
|
|
|
999,170
|
|
|||||
Perpetual licensing agreements
|
|
|
|
|
68,028
|
|
|||||
Net book value of intangible assets
|
|
|
|
|
$
|
1,285,458
|
|
|
Innerwear
|
|
Activewear
|
|
International
|
|
Other
|
|
Total
|
||||||||||
Net book value at January 2, 2016
|
$
|
431,561
|
|
|
$
|
289,153
|
|
|
$
|
110,377
|
|
|
$
|
3,224
|
|
|
$
|
834,315
|
|
Acquisition of businesses
|
—
|
|
|
2,290
|
|
|
285,236
|
|
|
—
|
|
|
287,526
|
|
|||||
Currency translation
|
—
|
|
|
—
|
|
|
(23,301
|
)
|
|
—
|
|
|
(23,301
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Net book value at December 31, 2016
|
$
|
431,561
|
|
|
$
|
291,443
|
|
|
$
|
372,312
|
|
|
$
|
3,224
|
|
|
$
|
1,098,540
|
|
Acquisition of businesses
|
—
|
|
|
25,248
|
|
|
3,351
|
|
|
—
|
|
|
28,599
|
|
|||||
Segment change
|
(24,708
|
)
|
|
259
|
|
|
—
|
|
|
24,449
|
|
|
—
|
|
|||||
Currency translation
|
—
|
|
|
—
|
|
|
39,868
|
|
|
—
|
|
|
39,868
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Net book value at December 30, 2017
|
$
|
406,853
|
|
|
$
|
316,950
|
|
|
$
|
415,531
|
|
|
$
|
27,673
|
|
|
$
|
1,167,007
|
|
(14)
|
Accumulated Other Comprehensive Loss
|
|
Cumulative Translation Adjustment
|
|
Hedges
|
|
Defined Benefit Plans
|
|
Income Taxes
|
|
Accumulated Other Comprehensive Loss
|
||||||||||
|
|
|
|
|
|||||||||||||||
Balance at January 2, 2016
|
$
|
(57,675
|
)
|
|
$
|
6,743
|
|
|
$
|
(563,759
|
)
|
|
$
|
219,758
|
|
|
$
|
(394,933
|
)
|
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
(3,966
|
)
|
|
17,116
|
|
|
(5,030
|
)
|
|
8,120
|
|
|||||
Current-period other comprehensive income (loss) activity
|
(20,384
|
)
|
|
10,995
|
|
|
(59,940
|
)
|
|
20,151
|
|
|
(49,178
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at December 31, 2016
|
$
|
(78,059
|
)
|
|
$
|
13,772
|
|
|
$
|
(606,583
|
)
|
|
$
|
234,879
|
|
|
$
|
(435,991
|
)
|
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
(1,825
|
)
|
|
19,062
|
|
|
(7,095
|
)
|
|
10,142
|
|
|||||
Current-period other comprehensive income (loss) activity
|
34,554
|
|
|
(37,408
|
)
|
|
(26,479
|
)
|
|
15,976
|
|
|
(13,357
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at December 30, 2017
|
$
|
(43,505
|
)
|
|
$
|
(25,461
|
)
|
|
$
|
(614,000
|
)
|
|
$
|
243,760
|
|
|
$
|
(439,206
|
)
|
Component of AOCI
|
|
Location of Reclassification into Income
|
|
Amount of Reclassification from AOCI
|
||||||||||
|
December 30,
2017 |
|
December 31,
2016 |
|
January 2,
2016 |
|||||||||
Loss on foreign exchange contracts
|
|
Cost of sales
|
|
$
|
(1,825
|
)
|
|
$
|
(3,966
|
)
|
|
$
|
(11,968
|
)
|
|
|
Income tax
|
|
225
|
|
|
1,543
|
|
|
4,655
|
|
|||
|
|
Net of tax
|
|
$
|
(1,600
|
)
|
|
$
|
(2,423
|
)
|
|
$
|
(7,313
|
)
|
|
|
|
|
|
|
|
|
|
||||||
Amortization of deferred actuarial loss and prior service cost
|
|
Selling, general and administrative expenses
|
|
$
|
19,062
|
|
|
$
|
17,116
|
|
|
$
|
14,573
|
|
|
|
Income tax
|
|
(7,320
|
)
|
|
(6,573
|
)
|
|
(5,669
|
)
|
|||
|
|
Net of tax
|
|
$
|
11,742
|
|
|
$
|
10,543
|
|
|
$
|
8,904
|
|
|
|
|
|
|
|
|
|
|
||||||
Total reclassifications
|
|
|
|
$
|
10,142
|
|
|
$
|
8,120
|
|
|
$
|
1,591
|
|
(15)
|
Financial Instruments and Risk Management
|
|
|
|
Fair Value
|
||||||
|
Balance Sheet Location
|
|
December 30,
2017 |
|
December 31,
2016 |
||||
Hedges
|
Other current assets
|
|
$
|
1,464
|
|
|
$
|
16,729
|
|
Non-hedges
|
Other current assets
|
|
136
|
|
|
4,363
|
|
||
Total derivative assets
|
|
|
$
|
1,600
|
|
|
$
|
21,092
|
|
|
|
|
|
|
|
||||
Hedges
|
Accrued liabilities
|
|
$
|
(14,750
|
)
|
|
$
|
(207
|
)
|
Non-hedges
|
Accrued liabilities
|
|
(7,818
|
)
|
|
(172
|
)
|
||
Total derivative liabilities
|
|
|
$
|
(22,568
|
)
|
|
$
|
(379
|
)
|
|
|
|
|
|
|
||||
Net derivative asset (liability)
|
|
|
$
|
(20,968
|
)
|
|
$
|
20,713
|
|
|
Amount of Gain (Loss) Recognized in
Accumulated Other Comprehensive Loss (Effective Portion) Year Ended |
||||||||||
|
December 30,
2017 |
|
December 31,
2016 |
|
January 2,
2016 |
||||||
Foreign exchange contracts
|
$
|
(37,408
|
)
|
|
$
|
10,995
|
|
|
$
|
13,423
|
|
|
Location of Gain Reclassified from
Accumulated Other Comprehensive Income (Loss) into Income (Effective Portion) |
|
Amount of Gain Reclassified from
Accumulated Other Comprehensive Loss into Income (Effective Portion) Year Ended |
||||||||||
|
December 30,
2017 |
|
December 31,
2016 |
|
January 2,
2016 |
||||||||
Foreign exchange contracts
|
Cost of sales
|
|
$
|
1,825
|
|
|
$
|
3,966
|
|
|
$
|
11,968
|
|
|
Location of Gain (Loss)
Recognized in Income on Derivatives |
|
Amount of Gain (Loss) Recognized in
Income Year Ended |
||||||||||
|
December 30,
2017 |
|
December 31,
2016 |
|
January 2,
2016 |
||||||||
Foreign exchange contracts
|
Selling, general and
administrative expenses |
|
$
|
114
|
|
|
$
|
12,222
|
|
|
$
|
(9,271
|
)
|
(16)
|
Fair Value of Assets and Liabilities
|
•
|
Market approach — prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.
|
•
|
Cost approach — amount that would be required to replace the service capacity of an asset or replacement cost.
|
•
|
Income approach — techniques to convert future amounts to a single present amount based on market expectations, including present value techniques, option-pricing and other models.
|
|
|
|
Assets (Liabilities) at Fair Value as of
December 30, 2017 |
||||||||||||
|
Total
|
|
Quoted Prices In
Active Markets for Identical Assets (Level 1) |
|
Significant
Other Observable Inputs (Level 2) |
|
Significant Unobservable Inputs (Level 3) |
||||||||
Defined benefit pension plan investment assets:
|
|
|
|
|
|
|
|
||||||||
U.S. equity securities
|
$
|
172,558
|
|
|
$
|
172,558
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign equity securities
|
40,920
|
|
|
40,920
|
|
|
—
|
|
|
—
|
|
||||
Debt securities
|
52,331
|
|
|
52,331
|
|
|
—
|
|
|
—
|
|
||||
Cash and other
|
2,595
|
|
|
2,595
|
|
|
—
|
|
|
—
|
|
||||
Insurance contracts
|
2,194
|
|
|
—
|
|
|
2,194
|
|
|
—
|
|
||||
Total plan assets in the fair value hierarchy
|
270,598
|
|
|
268,404
|
|
|
2,194
|
|
|
—
|
|
||||
Plan assets measured at net asset value:
(1)
|
|
|
|
|
|
|
|
||||||||
Hedge fund of funds
|
328,511
|
|
|
|
|
|
|
|
|||||||
Foreign equity securities
|
109,525
|
|
|
|
|
|
|
|
|||||||
Debt securities
|
102,531
|
|
|
|
|
|
|
|
|||||||
Real estate
|
42,996
|
|
|
|
|
|
|
|
|||||||
Commodities
|
18,525
|
|
|
|
|
|
|
|
|||||||
Total plan assets measured at net asset value
|
602,088
|
|
|
|
|
|
|
|
|||||||
Total plan assets
|
872,686
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
||||||||
Derivative contracts:
|
|
|
|
|
|
|
|
||||||||
Foreign exchange derivative contracts
|
1,600
|
|
|
—
|
|
|
1,600
|
|
|
—
|
|
||||
Foreign exchange derivative contracts
|
(22,568
|
)
|
|
—
|
|
|
(22,568
|
)
|
|
—
|
|
||||
|
(20,968
|
)
|
|
—
|
|
|
(20,968
|
)
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plan liability
|
(52,758
|
)
|
|
—
|
|
|
(52,758
|
)
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total
|
$
|
798,960
|
|
|
$
|
268,404
|
|
|
$
|
(71,532
|
)
|
|
$
|
—
|
|
|
|
(1)
|
Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in the tables above are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets.
|
|
|
|
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) |
||||||||
Defined benefit pension plan investment assets:
|
|
|
|
|
|
|
|
||||||||
U.S. equity securities
|
$
|
147,702
|
|
|
$
|
147,702
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign equity securities
|
33,511
|
|
|
33,511
|
|
|
—
|
|
|
—
|
|
||||
Debt securities
|
49,128
|
|
|
49,128
|
|
|
—
|
|
|
—
|
|
||||
Cash and other
|
2,234
|
|
|
2,234
|
|
|
—
|
|
|
—
|
|
||||
Insurance contracts
|
3,334
|
|
|
—
|
|
|
3,334
|
|
|
—
|
|
||||
Total plan assets in the fair value hierarchy
|
235,909
|
|
|
232,575
|
|
|
3,334
|
|
|
—
|
|
||||
Plan assets measured at net asset value:
(1)
|
|
|
|
|
|
|
|
||||||||
Hedge fund of funds
|
326,298
|
|
|
|
|
|
|
|
|||||||
U.S. equity securities
(2)
|
19,848
|
|
|
|
|
|
|
|
|||||||
Foreign equity securities
(2)
|
88,933
|
|
|
|
|
|
|
|
|||||||
Debt securities
(2)
|
95,634
|
|
|
|
|
|
|
|
|||||||
Real estate
|
42,869
|
|
|
|
|
|
|
|
|||||||
Commodities
(2)
|
17,678
|
|
|
|
|
|
|
|
|||||||
Total plan assets measured at net asset value
|
591,260
|
|
|
|
|
|
|
|
|||||||
Total plan assets
|
827,169
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
||||||||
Derivative contracts:
|
|
|
|
|
|
|
|
||||||||
Foreign exchange derivative contracts
|
21,092
|
|
|
—
|
|
|
21,092
|
|
|
—
|
|
||||
Foreign exchange derivative contracts
|
(379
|
)
|
|
—
|
|
|
(379
|
)
|
|
—
|
|
||||
|
20,713
|
|
|
—
|
|
|
20,713
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Champion Europe contingent consideration
(3)
|
(42,378
|
)
|
|
—
|
|
|
—
|
|
|
(42,378
|
)
|
||||
Deferred compensation plan liability
|
(51,868
|
)
|
|
—
|
|
|
(51,868
|
)
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total
|
$
|
753,636
|
|
|
$
|
232,575
|
|
|
$
|
(27,821
|
)
|
|
$
|
(42,378
|
)
|
|
|
(1)
|
Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in the tables above are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets.
|
(2)
|
The Company’s presentation of fair value hierarchy table has been revised to remove certain defined benefit pension plan assets from the fair value hierarchy to reflect the use of the net asset value as a practical expedient to value these assets in order to conform with ASU 2015-07, “Fair Value Measurement (Topic 820).” This change is not material to the consolidated financial statements and does not have an impact on the Company’s financial condition, results of operations or cash flows.
|
(3)
|
The fair value of the Champion Europe contingent consideration had not changed since the date of acquisition, other than from the foreign exchange translation impact between periods.
|
(17)
|
Defined Benefit Pension Plans
|
|
Years Ended
|
||||||||||
|
December 30,
2017 |
|
December 31,
2016 |
|
January 2,
2016 |
||||||
Service cost
|
$
|
2,216
|
|
|
$
|
1,856
|
|
|
$
|
2,478
|
|
Interest cost
|
40,830
|
|
|
42,061
|
|
|
49,202
|
|
|||
Expected return on assets
|
(41,780
|
)
|
|
(47,621
|
)
|
|
(55,127
|
)
|
|||
Curtailments
|
154
|
|
|
(489
|
)
|
|
—
|
|
|||
Settlement cost
|
23
|
|
|
115
|
|
|
25
|
|
|||
Amortization of:
|
|
|
|
|
|
||||||
Prior service cost
|
9
|
|
|
9
|
|
|
22
|
|
|||
Net actuarial loss
|
19,053
|
|
|
17,052
|
|
|
14,551
|
|
|||
Net periodic benefit cost
|
$
|
20,505
|
|
|
$
|
12,983
|
|
|
$
|
11,151
|
|
|
|
|
|
|
|
||||||
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income
|
|
|
|
|
|
||||||
Net loss
|
$
|
15,186
|
|
|
$
|
41,921
|
|
|
$
|
3,813
|
|
Prior service credit (cost)
|
(380
|
)
|
|
(9
|
)
|
|
22
|
|
|||
Total loss recognized in other comprehensive income
|
14,806
|
|
|
41,912
|
|
|
3,835
|
|
|||
Total recognized in net periodic benefit cost and other comprehensive income
|
$
|
35,311
|
|
|
$
|
54,895
|
|
|
$
|
14,986
|
|
|
December 30,
2017 |
|
December 31,
2016 |
||||
Benefit obligation:
|
|
|
|
||||
Beginning of year
|
$
|
1,197,189
|
|
|
$
|
1,172,267
|
|
Service cost
|
2,216
|
|
|
1,856
|
|
||
Interest cost
|
40,830
|
|
|
42,061
|
|
||
Plan amendment
|
(370
|
)
|
|
—
|
|
||
Benefits paid
|
(57,464
|
)
|
|
(56,576
|
)
|
||
Curtailments
|
187
|
|
|
(1,053
|
)
|
||
Settlements
|
(688
|
)
|
|
(2,360
|
)
|
||
Impact of exchange rate change
|
9,453
|
|
|
(1,976
|
)
|
||
Business combination
|
—
|
|
|
4,547
|
|
||
Actuarial loss
|
86,414
|
|
|
36,671
|
|
||
Other
|
(45
|
)
|
|
1,752
|
|
||
End of year
|
1,277,722
|
|
|
1,197,189
|
|
||
|
|
|
|
||||
Fair value of plan assets:
|
|
|
|
||||
Beginning of year
|
827,169
|
|
|
809,217
|
|
||
Actual return on plan assets
|
94,957
|
|
|
24,758
|
|
||
Employer contributions
|
6,376
|
|
|
47,203
|
|
||
Benefits paid
|
(57,464
|
)
|
|
(56,576
|
)
|
||
Settlements
|
(688
|
)
|
|
(2,360
|
)
|
||
Business combination
|
—
|
|
|
4,776
|
|
||
Impact of exchange rate change
|
2,381
|
|
|
178
|
|
||
Other
|
(45
|
)
|
|
(27
|
)
|
||
End of year
|
872,686
|
|
|
827,169
|
|
||
Funded status
|
$
|
(405,036
|
)
|
|
$
|
(370,020
|
)
|
|
December 30,
2017 |
|
December 31,
2016 |
||||
Benefit obligation
|
$
|
1,277,722
|
|
|
$
|
1,197,189
|
|
Plans with benefit obligation in excess of plan assets:
|
|
|
|
||||
Benefit obligation
|
1,245,844
|
|
|
1,167,871
|
|
||
Fair value of plan assets
|
842,168
|
|
|
799,191
|
|
|
December 30,
2017 |
|
December 31,
2016 |
||||
Current liabilities
|
$
|
(3,663
|
)
|
|
$
|
(3,605
|
)
|
Noncurrent liabilities
|
(401,749
|
)
|
|
(366,822
|
)
|
||
Accumulated other comprehensive loss
|
(618,416
|
)
|
|
(603,610
|
)
|
|
December 30,
2017 |
|
December 31,
2016 |
||||
Prior service cost
|
$
|
(163
|
)
|
|
$
|
216
|
|
Actuarial loss
|
618,579
|
|
|
603,394
|
|
||
|
$
|
618,416
|
|
|
$
|
603,610
|
|
|
December 30,
2017 |
|
December 31,
2016 |
|
January 2,
2016 |
|||
Net periodic benefit cost:
|
|
|
|
|
|
|||
Discount rate
|
4.15
|
%
|
|
4.43
|
%
|
|
4.43
|
%
|
Long-term rate of return on plan assets
|
5.21
|
|
|
5.80
|
|
|
5.61
|
|
Rate of compensation increase
(1)
|
3.84
|
|
|
3.51
|
|
|
3.51
|
|
|
|
|
|
|
|
|||
Plan obligations:
|
|
|
|
|
|
|||
Discount rate
|
3.60
|
%
|
|
4.15
|
%
|
|
4.04
|
%
|
Rate of compensation increase
(1)
|
4.40
|
|
|
3.84
|
|
|
3.51
|
|
|
|
(1)
|
The compensation increase assumption applies to the international plans and portions of the nonqualified retirement plans, as benefits under these plans were not frozen at
December 30, 2017
,
December 31, 2016
and
January 2, 2016
.
|
|
December 30,
2017 |
|
December 31,
2016 |
||
Asset category:
|
|
|
|
||
Hedge fund of funds
|
38
|
%
|
|
39
|
%
|
U.S. equity securities
|
20
|
|
|
20
|
|
Debt securities
|
18
|
|
|
17
|
|
Foreign equity securities
|
17
|
|
|
15
|
|
Real estate
|
5
|
|
|
5
|
|
Commodities
|
2
|
|
|
2
|
|
Insurance contracts
|
—
|
|
|
1
|
|
Cash and other
|
—
|
|
|
1
|
|
(18)
|
Income Taxes
|
|
Years Ended
|
|||||||
|
December 30,
2017 |
|
December 31,
2016 |
|
January 2,
2016 |
|||
Income before income tax expense:
|
|
|
|
|
|
|||
Domestic
|
(6.6
|
)%
|
|
(10.2
|
)%
|
|
5.6
|
%
|
Foreign
|
106.6
|
|
|
110.2
|
|
|
94.4
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|||
Tax expense at U.S. statutory rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State income tax
|
0.2
|
|
|
(0.7
|
)
|
|
1.1
|
|
Tax on remittance of foreign earnings
|
0.5
|
|
|
9.9
|
|
|
9.1
|
|
Tax on remittance of foreign earnings due to U.S. tax reform
|
67.0
|
|
|
N/A
|
|
|
N/A
|
|
Revaluation of net deferred tax assets due to U.S. tax reform
|
14.3
|
|
|
N/A
|
|
|
N/A
|
|
Foreign taxes less than U.S. statutory rate
|
(27.4
|
)
|
|
(38.5
|
)
|
|
(30.8
|
)
|
Employee benefits
|
(0.2
|
)
|
|
(0.7
|
)
|
|
0.4
|
|
Change in valuation allowance
|
0.1
|
|
|
1.2
|
|
|
2.6
|
|
Increase in unrecognized tax benefits
|
1.8
|
|
|
0.6
|
|
|
0.1
|
|
Release of unrecognized tax benefit reserves
|
(0.9
|
)
|
|
(0.4
|
)
|
|
(9.8
|
)
|
State tax rate change
|
0.1
|
|
|
0.6
|
|
|
2.3
|
|
Federal and state provision to return
|
(2.6
|
)
|
|
(0.7
|
)
|
|
(0.4
|
)
|
Other, net
|
0.2
|
|
|
(0.3
|
)
|
|
(0.1
|
)
|
Taxes at effective worldwide tax rates
|
88.1
|
%
|
|
6.0
|
%
|
|
9.5
|
%
|
|
Current
|
|
Deferred
|
|
Total
|
||||||
Year ended December 30, 2017
|
|
|
|
|
|
||||||
Domestic
|
$
|
154,751
|
|
|
$
|
260,393
|
|
|
$
|
415,144
|
|
Foreign
|
10,603
|
|
|
(15,098
|
)
|
|
(4,495
|
)
|
|||
State
|
68,857
|
|
|
(6,227
|
)
|
|
62,630
|
|
|||
|
$
|
234,211
|
|
|
$
|
239,068
|
|
|
$
|
473,279
|
|
|
|
|
|
|
|
||||||
Year ended December 31, 2016
|
|
|
|
|
|
||||||
Domestic
|
$
|
2,768
|
|
|
$
|
34,590
|
|
|
$
|
37,358
|
|
Foreign
|
38,257
|
|
|
(34,232
|
)
|
|
4,025
|
|
|||
State
|
2,083
|
|
|
(9,194
|
)
|
|
(7,111
|
)
|
|||
|
$
|
43,108
|
|
|
$
|
(8,836
|
)
|
|
$
|
34,272
|
|
|
|
|
|
|
|
||||||
Year ended January 2, 2016
|
|
|
|
|
|
||||||
Domestic
|
$
|
(2,294
|
)
|
|
$
|
9,437
|
|
|
$
|
7,143
|
|
Foreign
|
32,067
|
|
|
(10,235
|
)
|
|
21,832
|
|
|||
State
|
4,395
|
|
|
11,648
|
|
|
16,043
|
|
|||
|
$
|
34,168
|
|
|
$
|
10,850
|
|
|
$
|
45,018
|
|
|
Years Ended
|
||||||||||
|
December 30,
2017 |
|
December 31,
2016 |
|
January 2,
2016 |
||||||
Cash payments for income taxes
|
$
|
57,882
|
|
|
$
|
39,655
|
|
|
$
|
23,045
|
|
|
December 30,
2017 |
|
December 31,
2016 |
||||
Deferred tax assets:
|
|
|
|
||||
Nondeductible reserves
|
$
|
1,859
|
|
|
$
|
1,962
|
|
Inventories
|
57,857
|
|
|
123,507
|
|
||
Property and equipment
|
—
|
|
|
3,322
|
|
||
Bad debt allowance
|
7,363
|
|
|
6,965
|
|
||
Accrued expenses
|
14,399
|
|
|
20,351
|
|
||
Employee benefits
|
143,970
|
|
|
181,148
|
|
||
Tax credits
|
10,140
|
|
|
45,783
|
|
||
Net operating loss and other tax carryforwards
|
142,064
|
|
|
210,284
|
|
||
Derivatives
|
3,305
|
|
|
—
|
|
||
Other
|
17,305
|
|
|
20,355
|
|
||
Gross deferred tax assets
|
398,262
|
|
|
613,677
|
|
||
Less valuation allowances
|
(72,602
|
)
|
|
(67,451
|
)
|
||
Deferred tax assets
|
325,660
|
|
|
546,226
|
|
||
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
||||
Property and equipment
|
4,455
|
|
|
—
|
|
||
Derivatives
|
—
|
|
|
5,103
|
|
||
Intangibles
|
120,033
|
|
|
121,674
|
|
||
Prepaids
|
3,932
|
|
|
5,728
|
|
||
Deferred tax liabilities
|
128,420
|
|
|
132,505
|
|
||
Net deferred tax assets
|
$
|
197,240
|
|
|
$
|
413,721
|
|
January 3, 2015
|
$
|
43,757
|
|
Charge to expenses
|
12,224
|
|
|
Charged to other accounts
(1)
|
5,377
|
|
|
January 2, 2016
|
$
|
61,358
|
|
Charge to expenses
|
6,859
|
|
|
Charged to other accounts
(1)
|
(766
|
)
|
|
December 31, 2016
|
$
|
67,451
|
|
Charge to expenses
|
729
|
|
|
Charged to other accounts
(1)
|
4,422
|
|
|
December 30, 2017
|
$
|
72,602
|
|
|
|
(1)
|
Charges to other accounts include the effects of foreign currency translation and purchase accounting adjustments.
|
Balance at January 2, 2016 (gross balance of $20,085)
|
$
|
19,780
|
|
Additions based on tax positions related to the current year
|
4,648
|
|
|
Additions for tax positions of prior years
|
106
|
|
|
Reductions for tax positions of prior years
|
(4,838
|
)
|
|
|
|
||
Balance at December 31, 2016 (gross balance of $20,688)
|
$
|
19,696
|
|
Additions based on tax positions related to the current year
|
7,902
|
|
|
Additions for tax positions of prior years
|
36
|
|
|
Reductions for tax positions of prior years
|
(3,602
|
)
|
|
|
|
||
Balance at December 30, 2017 (gross balance of $26,175)
|
$
|
24,032
|
|
(19)
|
Stockholders’ Equity
|
(20)
|
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 span across the Innerwear and Activewear reportable segments.
|
|
Years Ended
|
||||||||||
|
December 30,
2017 |
|
December 31,
2016 |
|
January 2,
2016 |
||||||
Net sales:
|
|
|
|
|
|
||||||
Innerwear
|
$
|
2,462,876
|
|
|
$
|
2,543,717
|
|
|
$
|
2,609,402
|
|
Activewear
|
1,654,278
|
|
|
1,601,108
|
|
|
1,605,423
|
|
|||
International
|
2,054,664
|
|
|
1,531,913
|
|
|
1,132,637
|
|
|||
Other
|
299,592
|
|
|
351,461
|
|
|
384,087
|
|
|||
Total net sales
|
$
|
6,471,410
|
|
|
$
|
6,028,199
|
|
|
$
|
5,731,549
|
|
|
Years Ended
|
||||||||||
|
December 30,
2017 |
|
December 31,
2016 |
|
January 2,
2016 |
||||||
Segment operating profit:
|
|
|
|
|
|
||||||
Innerwear
|
$
|
528,038
|
|
|
$
|
563,905
|
|
|
$
|
596,634
|
|
Activewear
|
227,589
|
|
|
224,658
|
|
|
245,563
|
|
|||
International
|
261,411
|
|
|
179,917
|
|
|
105,515
|
|
|||
Other
|
23,364
|
|
|
32,801
|
|
|
43,582
|
|
|||
Total segment operating profit
|
1,040,402
|
|
|
1,001,281
|
|
|
991,294
|
|
|||
Items not included in segment operating profit:
|
|
|
|
|
|
||||||
General corporate expenses
|
(89,690
|
)
|
|
(64,995
|
)
|
|
(106,379
|
)
|
|||
Acquisition, integration and other action-related charges
|
(192,752
|
)
|
|
(138,519
|
)
|
|
(266,060
|
)
|
|||
Amortization of intangibles
|
(34,892
|
)
|
|
(22,118
|
)
|
|
(23,737
|
)
|
|||
Total operating profit
|
723,068
|
|
|
775,649
|
|
|
595,118
|
|
|||
Other expenses
|
(11,363
|
)
|
|
(51,758
|
)
|
|
(3,210
|
)
|
|||
Interest expense, net
|
(174,435
|
)
|
|
(152,692
|
)
|
|
(118,035
|
)
|
|||
Income from continuing operations before income tax expense
|
$
|
537,270
|
|
|
$
|
571,199
|
|
|
$
|
473,873
|
|
|
December 30,
2017 |
|
December 31,
2016 |
||||
Assets:
|
|
|
|
||||
Innerwear
|
$
|
1,578,023
|
|
|
$
|
1,604,088
|
|
Activewear
|
872,132
|
|
|
874,006
|
|
||
International
|
1,275,838
|
|
|
1,113,972
|
|
||
Other
|
151,980
|
|
|
160,475
|
|
||
|
3,877,973
|
|
|
3,752,541
|
|
||
Current assets of discontinued operations
|
—
|
|
|
45,897
|
|
||
Corporate
(1)
|
3,016,802
|
|
|
3,132,042
|
|
||
Total assets
|
$
|
6,894,775
|
|
|
$
|
6,930,480
|
|
|
Years Ended
|
||||||||||
|
December 30,
2017 |
|
December 31,
2016 |
|
January 2,
2016 |
||||||
Depreciation and amortization expense:
|
|
|
|
|
|
||||||
Innerwear
|
$
|
32,000
|
|
|
$
|
36,591
|
|
|
$
|
38,136
|
|
Activewear
|
19,485
|
|
|
19,196
|
|
|
21,626
|
|
|||
International
|
30,219
|
|
|
18,694
|
|
|
13,201
|
|
|||
Other
|
5,891
|
|
|
6,576
|
|
|
7,203
|
|
|||
|
87,595
|
|
|
81,057
|
|
|
80,166
|
|
|||
Corporate
|
34,892
|
|
|
22,118
|
|
|
23,737
|
|
|||
Total depreciation and amortization expense
|
$
|
122,487
|
|
|
$
|
103,175
|
|
|
$
|
103,903
|
|
|
Years Ended
|
||||||||||
|
December 30,
2017 |
|
December 31,
2016 |
|
January 2,
2016 |
||||||
Additions to property, plant and equipment:
|
|
|
|
|
|
||||||
Innerwear
|
$
|
21,427
|
|
|
$
|
28,078
|
|
|
$
|
43,170
|
|
Activewear
|
11,263
|
|
|
11,518
|
|
|
22,331
|
|
|||
International
|
31,127
|
|
|
23,520
|
|
|
18,022
|
|
|||
Other
|
3,455
|
|
|
4,353
|
|
|
9,815
|
|
|||
|
67,272
|
|
|
67,469
|
|
|
93,338
|
|
|||
Corporate
|
19,736
|
|
|
15,930
|
|
|
6,037
|
|
|||
Total additions to long-lived assets
|
$
|
87,008
|
|
|
$
|
83,399
|
|
|
$
|
99,375
|
|
|
|
(1)
|
Principally cash and equivalents, certain fixed assets, net deferred tax assets, goodwill, trademarks and other identifiable intangibles, and certain other noncurrent assets.
|
(21)
|
Geographic Area Information
|
|
Years Ended or at
|
||||||||||||||||||||||
|
December 30,
2017 |
|
December 31,
2016 |
|
January 2,
2016 |
||||||||||||||||||
|
Sales
|
|
Property, Net
|
|
Sales
|
|
Property, Net
|
|
Sales
|
|
Property, Net
|
||||||||||||
United States
|
$
|
4,417,885
|
|
|
$
|
130,029
|
|
|
$
|
4,489,593
|
|
|
$
|
134,119
|
|
|
$
|
4,594,665
|
|
|
$
|
130,235
|
|
Australia
|
592,285
|
|
|
50,671
|
|
|
278,298
|
|
|
41,970
|
|
|
23,073
|
|
|
579
|
|
||||||
France
|
283,959
|
|
|
20,937
|
|
|
290,698
|
|
|
18,776
|
|
|
301,010
|
|
|
20,777
|
|
||||||
Italy
|
275,047
|
|
|
16,941
|
|
|
174,095
|
|
|
15,405
|
|
|
93,667
|
|
|
16,785
|
|
||||||
Japan
|
203,521
|
|
|
1,547
|
|
|
182,307
|
|
|
942
|
|
|
119,693
|
|
|
867
|
|
||||||
Germany
|
120,236
|
|
|
14,102
|
|
|
110,748
|
|
|
13,649
|
|
|
104,311
|
|
|
15,573
|
|
||||||
Europe (Other)
|
112,408
|
|
|
44,608
|
|
|
96,381
|
|
|
39,189
|
|
|
103,911
|
|
|
17,242
|
|
||||||
Canada
|
79,420
|
|
|
1,289
|
|
|
90,585
|
|
|
1,093
|
|
|
105,869
|
|
|
1,196
|
|
||||||
Spain
|
67,475
|
|
|
8,453
|
|
|
65,207
|
|
|
6,818
|
|
|
58,824
|
|
|
7,464
|
|
||||||
Mexico
|
64,175
|
|
|
1,591
|
|
|
60,362
|
|
|
1,453
|
|
|
66,197
|
|
|
1,809
|
|
||||||
United Kingdom
|
55,290
|
|
|
784
|
|
|
32,409
|
|
|
825
|
|
|
29,484
|
|
|
942
|
|
||||||
Brazil
|
34,617
|
|
|
4,444
|
|
|
28,829
|
|
|
5,051
|
|
|
31,934
|
|
|
4,322
|
|
||||||
China
|
8,324
|
|
|
2,350
|
|
|
5,338
|
|
|
97,194
|
|
|
5,016
|
|
|
106,575
|
|
||||||
Central America and the Caribbean Basin
|
1,844
|
|
|
276,547
|
|
|
2,846
|
|
|
269,996
|
|
|
4,180
|
|
|
276,402
|
|
||||||
Other
|
154,924
|
|
|
49,698
|
|
|
120,503
|
|
|
45,984
|
|
|
89,715
|
|
|
49,694
|
|
||||||
|
$
|
6,471,410
|
|
|
$
|
623,991
|
|
|
$
|
6,028,199
|
|
|
$
|
692,464
|
|
|
$
|
5,731,549
|
|
|
$
|
650,462
|
|
(22)
|
Quarterly Financial Data (Unaudited)
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Total
|
||||||||||
2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
1,380,355
|
|
|
$
|
1,646,610
|
|
|
$
|
1,799,270
|
|
|
$
|
1,645,175
|
|
|
$
|
6,471,410
|
|
Gross profit
|
539,531
|
|
|
645,902
|
|
|
678,457
|
|
|
626,661
|
|
|
2,490,551
|
|
|||||
Income (loss) from continuing operations
|
73,082
|
|
|
172,164
|
|
|
203,356
|
|
|
(384,611
|
)
|
|
63,991
|
|
|||||
Income (loss) from discontinued operations
|
(2,465
|
)
|
|
368
|
|
|
—
|
|
|
—
|
|
|
(2,097
|
)
|
|||||
Net income (loss)
|
70,617
|
|
|
172,532
|
|
|
203,356
|
|
|
(384,611
|
)
|
|
61,894
|
|
|||||
Earnings (loss) per share - basic:
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
0.20
|
|
|
0.47
|
|
|
0.56
|
|
|
(1.06
|
)
|
|
0.17
|
|
|||||
Discontinuing operations
|
(0.01
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
|||||
Earnings (loss) per share - diluted:
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
0.19
|
|
|
0.47
|
|
|
0.55
|
|
|
(1.06
|
)
|
|
0.17
|
|
|||||
Discontinuing operations
|
(0.01
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
2016
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
1,219,140
|
|
|
$
|
1,472,731
|
|
|
$
|
1,761,019
|
|
|
$
|
1,575,309
|
|
|
$
|
6,028,199
|
|
Gross profit
|
457,256
|
|
|
557,291
|
|
|
649,366
|
|
|
612,135
|
|
|
2,276,048
|
|
|||||
Income from continuing operations
|
80,269
|
|
|
128,143
|
|
|
172,790
|
|
|
155,725
|
|
|
536,927
|
|
|||||
Income from discontinued operations
|
—
|
|
|
—
|
|
|
1,068
|
|
|
1,387
|
|
|
2,455
|
|
|||||
Net income
|
80,269
|
|
|
128,143
|
|
|
173,858
|
|
|
157,112
|
|
|
539,382
|
|
|||||
Earnings per share - basic:
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
0.21
|
|
|
0.34
|
|
|
0.46
|
|
|
0.41
|
|
|
1.41
|
|
|||||
Discontinuing operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
|||||
Earnings per share - diluted:
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
0.21
|
|
|
0.34
|
|
|
0.45
|
|
|
0.41
|
|
|
1.40
|
|
|||||
Discontinuing operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
ALTERNATIVE APPAREL, INC.
|
|
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By:
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/s/ Russell D'Souza
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Name: Russell D'Souza
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Title: Treasurer
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HANESBRANDS INC.
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By:
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/s/ Russell D'Souza
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Name: Russell D'Souza
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Title: Treasurer
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U.S. BANK NATIONAL ASSOCIATION, as Trustee
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By:
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/s/ Donald T. Hurrelbrink
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Name: Donald T. Hurrelbrink
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Title: Vice President
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(a)
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Eligibility for Severance.
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(i)
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Eligible Terminations
. Subject to subparagraph (a)(ii) below,
Executive
shall be eligible for severance payments and benefits under this section 2 if his employment terminates under one of the following circumstances:
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(A)
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Executive’s
employment is terminated involuntarily without
Cause
(defined in subparagraph 2(a)(ii)(A)); or
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(B)
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Executive
terminates his or her employment at the request of
Company
.
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(ii)
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Ineligible Terminations
. Notwithstanding subparagraph (a)(i) next above,
Executive
shall not be eligible for any severance payments or benefits under
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(A)
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A termination for
Cause
. For purposes of this
Agreement,
“
Cause”
means
Executive
has been convicted of (or pled guilty or no contest to) a felony or any crime involving fraud, embezzlement, theft, misrepresentation of financial impropriety; has willfully engaged in misconduct resulting in material harm to
Company
; has willfully failed to substantially perform duties after written notice; or is in willful violation of
Company
policies resulting in material harm to
Company
;
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(B)
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A termination as the result of
Disability.
For purposes of this
Agreement “Disability”
shall mean a determination under
Company’s
disability plan covering
Executive
that
Executive
is disabled;
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(C)
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A termination due to death;
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(D)
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A termination due to
Retirement.
For purposes of this
Agreement “Retirement”
shall mean
Executive’s
voluntary termination of employment on or after
Executive’s
attainment of the normal retirement age as defined in the Hanesbrands Inc. Pension and Retirement Plan (the “
Retirement Plan”
);
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(E)
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A voluntary termination of employment other than at the request of
Company
;
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(F)
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A termination following which
Executive
is immediately offered and accepts new employment with
Company
, or becomes a non-executive member of the Board;
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(G)
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The transfer of
Executive’s
employment to a subsidiary or affiliate of
Company
with his consent;
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(H)
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A termination of employment that qualifies
Executive
to receive
severance payments or benefits under section 3 below following a
Change in Control
; or
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(I)
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Any other termination of employment under circumstances not described in subparagraph 2(a)(i).
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(iii)
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Characterization of Termination
. The characterization of
Executive’s
termination shall be made by the
Committee
(as defined in section 5 below) which determination shall be final and binding.
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(iv)
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Termination Date
. For purposes of this section 2,
Executive’s
“
Termination Date
” shall mean the date specified in the separation and release agreement described under section 2(e) below.
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(b)
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Severance Benefits Payable
. If
Executive
is terminated under circumstances described in subparagraph 2(a)(i), and not described in subparagraph 2(a)(ii), then in lieu of any benefits payable under any other severance plan of the
Company
of any type and in consideration of the separation and release agreement and the covenants contained herein, the following shall apply:
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(i)
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Executive
shall be entitled to receive his
Base Salary
(the “
Salary Portion of Severance
”) during the “
Severance Period,
” payable as provided in section 2(c). The “
Severance Period”
shall mean the number of months determined by multiplying the number of
Executive’s
full years of employment with
Company
or any subsidiary or affiliate of
Company
(including periods of employment with Sara Lee Corporation) by two; provided, however, that in no event shall the
Severance Period
be less than twelve months or more than twenty-four months. “
Base Salary”
shall mean the annual salary in effect for
Executive
immediately prior to his
Termination Date.
At the discretion of the
Committee
,
Executive
may receive an additional salary portion in an amount equal to as much as 100% of
Executive’s
target bonus under the
Annual Incentive Plan.
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(ii)
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Executive
shall receive a pro-rata amount (determined based upon the number of days from the first day of the
Company’s
current fiscal year to
Executive’s
Termination Date
divided by the total number of days in the applicable performance period and based on actual performance and achievement of any performance goals) of:
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(A)
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The annual incentive, if any, payable under the
Annual Incentive Plan
in effect with respect to the fiscal year or
Short Year
in which the
Termination Date
occurs based on actual fiscal year performance (the “
Annual Incentive Portion of Severance
”). “
Annual Incentive Plan”
means the Hanesbrands Inc. annual incentive plan in which
Executive
participates as of the
Termination Date
; and
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(B)
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The long-term incentive payable under the
Omnibus Plan
in effect on
Executive’s
Termination Date
for any performance period or cycle that is at least fifty (50) percent completed prior to
Executive’s Termination Date
and which relates to the period of his service prior to his
Termination Date
. The “
Omnibus Plan”
means the Hanesbrands Inc. Omnibus Incentive Plan of 2006, as amended from time to time, and any successor plan or plans. The long-term incentive described in this section (“
Long-Term Cash Incentive Plan
”) includes cash long-term incentives, but does not include stock options, RSUs, or other equity awards.
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(iii)
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Beginning on his
Termination Date
,
Executive
shall be eligible to elect continued coverage under the group medical and dental plan available to similarly situated senior executives. If
Executive
elects continuation coverage for medical coverage, dental coverage or both, he shall pay the entire COBRA
premium charged for such continuation coverage during the S
everance Period
; provided, however, that
during the
Severance Period Company
shall reimburse
Executive
for that portion of the COBRA
premium paid that exceeds the amount payable by an active executive of
Company
for similar coverage, as adjusted from time to time. Such reimbursement shall be made to
Executive
on the 20
th
day of each calendar month during the
Severance Period,
or within ten (10) business days thereafter. The amount eligible for reimbursement under this subparagraph in any calendar year shall not affect any amounts eligible for reimbursement to be provided in any other calendar year. In addition,
Executive’s
right to reimbursement hereunder shall not be subject to liquidation or exchange for any other benefit. E
xecutive’s
right to COBRA continuation coverage under any such group health plan shall be reduced by the number of months of medical and dental coverage otherwise provided pursuant to this subparagraph. The premium charged for any continuation coverage after the end of the
Severance Period
shall be entirely at
Executive’s
expense and shall be the actuarially determined cost of the continuation coverage as determined by an actuary selected by the
Company
(in accordance with the requirements under COBRA, to the extent applicable).
Executive
shall not be entitled to reimbursement of any portion of the premium charged for such coverage after the end of the
Severance Period. Executive’s
COBRA continuation coverage shall terminate in accordance with the COBRA continuation of coverage provisions under
Company’s
group medical and dental plans. If
Executive
is eligible for early retirement under the terms of the
Retirement Plan
(or would become eligible if the
Severance Period
is considered as employment), then, after exhausting any COBRA continuation coverage under the group medical plan,
Executive
may elect to participate in any retiree medical plan available to similarly situated senior executives in accordance with the terms and conditions of such plan in effect on and after
Executive’s Termination Date
; provided, that such retiree medical coverage shall not be available to
Executive
unless he or she elects such coverage within thirty (30) days following his
Termination Date
.
The premium charged for such retiree medical coverage may be different (greater) than the premium charged an active employee for similar coverage;
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(iv)
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Except as otherwise provided herein or in the applicable plan
,
participation in all other
Company
plans available to similarly situated senior executives including but not limited to, qualified pension plans, stock purchase plans, matching grant programs, 401(k) plans and ESOPs, personal accident insurance, travel accident insurance, short and long term disability insurance, and accidental death and dismemberment insurance, shall cease on
Executive’s
Termination Date
. During the
Severance
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(c)
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Payment of Severance
. Subject to section 15:
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(i)
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Salary Portion.
The
Salary Portion of Severance
shall be paid as follows:
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(A)
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That portion of the
Salary Portion of Severance
that exceeds the “S
eparation Pay Limit,”
if any
,
shall be paid to
Executive
in a lump sum payment as soon as practicable following the
Termination Date
, but in no event later than the fifteenth day of the third month after the date of the termination of
Executive’s
employment. The
“Separation Pay Limit
” shall mean two (2) times the lesser of (1) the sum of
Executive’s
annualized compensation based upon the annual rate of pay for services provided to
Company
for the calendar year immediately preceding the calendar year in which the
Termination Date
occurs (adjusted for any increase during that calendar year that was expected to continue indefinitely if
Executive
had not terminated employment); and (2) the maximum dollar amount of compensation that may be taken into account under a tax-qualified retirement plan under
Code
Section 401(a)(17) for the year in which the
Termination Date
occurs. The payment to be made to
Executive
pursuant to this subparagraph (A) is intended to be exempt from
Code
Section 409A
(as defined in section 15)
under the exemption found in Regulation Section 1.409A-(b)(4) for short-term deferrals.
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(B)
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The remaining portion of the
Salary Portion of Severance
shall be paid during the
Severance Period
in accordance with
Company’s
payroll schedule, unless the
Committee
shall elect to pay the remaining
Salary Portion of Severance
in a lump sum payment or a combination of regular payments and a lump sum payment. Any lump sum payment shall be paid to
Executive
as soon as practicable following the
Termination Date
, but in no event later than the fifteenth day of the third month after the date of the termination of
Executive’s
employment. Notwithstanding the foregoing, in no event shall such remaining portion of the
Salary Portion of Severance
be paid to
Executive
later than December 31 of the second calendar year following the calendar year in which
Executive’s Termination Date
occurs. The payment(s) to be made to
Executive
pursuant to this subparagraph (B) are intended to be exempt from
Code
Section 409A
(as defined in section 15)
under the exemption found in Regulation Section 1.409A-1(b)(9)(iii) for separation pay plans (i.e., the so-called “two times” pay exemption).
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(ii)
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Incentive Portion.
The
Annual Incentive Portion of Severance
, if any, shall be paid in cash on the same date the active participants under the
Annual Incentive Plan
are paid. The
Long-Term Cash Incentive Plan
payout, if any, shall be paid in the same form and on the same date the active participants under the
Omnibus Plan
are paid.
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(iii)
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Withholding.
All payments hereunder shall be reduced by such amount as
Company
(or any subsidiary or affiliate of
Company
) may be required under all applicable federal, state, local or other laws or regulations to withhold or pay over with respect to such payment.
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(d)
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Termination of Benefits
. Notwithstanding any provisions in this
Agreement
to the contrary, all rights to receive or continue to receive severance payments and benefits under this section 2 shall cease on the earliest of: (i) the date
Executive
breaches any of the covenants in the separation and release agreement described in section 2(e); or (ii) the date
Executive
becomes reemployed by
Company
or any of its subsidiaries or affiliates.
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(e)
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Separation and Release Agreement
. No benefits under this section 2 shall be payable to
Executive
unless
Executive
and
Company
have executed a separation and release agreement within forty-five (45) days following the
Termination Date
and the
payment of severance benefits under this section 2 shall be subject to the terms and conditions of the separation and release agreement.
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(f)
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Death of Executive
.
In the event that
Executive
shall die prior to the payment in full of any benefits described above as payable to
Executive
for
Involuntary Termination
, payments of such benefits shall cease on the date of
Executive’s
death.
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(a)
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Eligibility for Change in Control Benefits
.
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(i)
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Eligible Terminations
. If (A) within three (3) months preceding a
Change in Control
, the
Executive’s
employment is terminated by the
Company
at the request of a third party in contemplation of a
Change in Control
, (B) within twenty-four (24) months following a
Change in Control, Executive
’s employment is terminated by
Company
other than on account of
Executive’s
death, disability or retirement and other than for
Cause,
or (C) within twenty-four (24) months following a
Change in Control
Executive
voluntarily terminates his employment for
Good Reason, Executive
shall be entitled to the
Change in Control
benefits as described in section 3(b) below.
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(ii)
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Good Reason
. For purposes of this section 3,
“Good Reason”
means the occurrence of any one or more of the following (without
Executive’s
written consent after a
Change in Control
):
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(A)
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A material adverse change in
Executive’s
duties or responsibilities;
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(B)
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A reduction in
Executive’s
annual base salary except any reduction of not more than ten (10) percent;
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(C)
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A material reduction in
Executive’s
level of participation in any of
Company’s
short- and/or long-term incentive compensation plans, or employee benefit or retirement plans, policies, practices or arrangements in which
Executive
participates except for any reduction applicable to all senior executives;
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(D)
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The failure of any successor to
Company
to assume and agree to perform this
Agreement
; or
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(E)
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Company’s
requiring
Executive
to be based at an office location which is at least fifty (50) miles from his or her office location at the time of the
Change in Control
.
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(iii)
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Change in Control.
For purposes of this
Agreement
, a
“Change in Control”
will occur:
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(A)
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Upon the acquisition by any individual, entity or group, including any
Person
(as defined in the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”)), of beneficial ownership (as defined in Rule 13d‑3 promulgated under the Exchange Act), directly or indirectly, of twenty (20) percent or more of the combined voting power of the then outstanding capital stock of
Company
that by its terms may be voted on all matters submitted to stockholders of
Company
generally (“
Voting Stock
”); provided, however, that the following acquisitions shall not constitute a
Change in Control
:
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1)
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Any acquisition directly from
Company
(excluding any acquisition resulting from the exercise of a conversion or exchange privilege in respect of outstanding convertible or exchangeable securities unless such outstanding convertible or exchangeable securities were acquired directly from
Company
);
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2)
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Any acquisition by
Company
;
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3)
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Any acquisition by an employee benefit plan (or related trust) sponsored or maintained by
Company
or any corporation controlled by
Company
; or
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4)
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Any acquisition by any corporation pursuant to a reorganization, merger or consolidation involving
Company
, if, immediately after such reorganization, merger or consolidation, each of the conditions described in clauses (1), (2) and (3) of subparagraph 3(a)(iii)(B) below shall be satisfied; and provided further that, for purposes of clause (2) immediately above, if (i) any
Person
(other than
Company
or any employee benefit plan (or related trust) sponsored or maintained by
Company
or any corporation controlled by
Company
) shall become the beneficial owner of twenty (20) percent or more of the
Voting Stock
by reason of an acquisition of
Voting Stock
by
Company
, and (ii) such
Person
shall, after such acquisition by
Company
, become the beneficial owner of any additional shares of the
Voting Stock
and such beneficial ownership is publicly announced, then such additional beneficial ownership shall constitute a
Change in Control
; or
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(B)
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Upon the consummation of a reorganization, merger or consolidation of
Company
, or a sale, lease, exchange or other transfer of all or substantially all of the assets of
Company
; excluding, however, any such reorganization, merger, consolidation, sale, lease, exchange or other transfer with respect to which, immediately after consummation of such transaction:
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1)
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All or substantially all of the beneficial owners of the
Voting Stock
of
Company
outstanding immediately prior to such transaction continue to beneficially own, directly or indirectly (either by remaining outstanding or by being converted into voting securities of the entity resulting from such transaction), more than fifty (50) percent of the combined voting power of the voting securities of the entity resulting from such transaction (including, without limitation,
Company
or an entity which as a result of such transaction owns
Company
or all or substantially all of
Company
's property or assets, directly or indirectly) (the “
Resulting Entity
”) outstanding immediately after such transaction, in substantially the same proportions relative to each other as their ownership immediately prior to such transaction; and
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2)
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No
Person
(other than any
Person
that beneficially owned, immediately prior to such reorganization, merger, consolidation, sale or other disposition, directly or indirectly,
Voting Stock
representing twenty (20) percent or more of the combined voting power of
Company's
then outstanding
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3)
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At least a majority of the members of the board of directors of the entity resulting from such transaction were members of the board of directors of
Company
(the “
Board
”) at the time of the execution of the initial agreement or action of the
Board
authorizing such reorganization, merger, consolidation, sale or other disposition; or
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(C)
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Upon the consummation of a plan of complete liquidation or dissolution of
Company
; or
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(D)
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When the
Initial Directors
cease for any reason to constitute at least a majority of the
Board
. For this purpose, an “
Initial Director
” shall mean those individuals serving as the directors of
Company
as of the date of this
Agreement
; provided, however, that any individual who becomes a director of
Company
at or after the first annual meeting of stockholders of
Company
whose election, or nomination for election by the
Company’s
stockholders, was approved by the vote of at least a majority of the
Initial Directors
then comprising the
Board
(or by the nominating committee of the
Board
, if such committee is comprised of
Initial Directors
and has such authority) shall be deemed to have been an
Initial Director
; and provided further, that no individual shall be deemed to be an
Initial Director
if such individual initially was elected as a director of
Company
as a result of: (1) an actual or threatened solicitation by a
Person
(other than the
Board
) made for the purpose of opposing a solicitation by the
Board
with respect to the election or removal of directors; or (2) any other actual or threatened solicitation of proxies or consents by or on behalf of any
Person
(other than the
Board
).
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(iv)
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Termination Date.
For purposes of this section 3, “
Termination Date
” shall mean the date specified in the
Notice of Termination
as the date on which the conditions giving rise to
Executive’s
termination were first met.
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(b)
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Change in Control Benefits
.
In the event
Executive
becomes entitled to receive benefits under this section 3, the following shall apply:
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(i)
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In consideration of
Executive’s
covenants hereunder,
Executive
shall be entitled to receive the following amounts, payable as provided in section 3(j):
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(A)
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A lump sum payment equal to the unpaid portion of
Executive’s
annual
Base Salary
and vacation accrued through the
Termination Date
;
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(B)
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A lump sum payment equal to
Executive’s
prorated
Annual Incentive Plan
payment (as determined in accordance with subparagraph 2(b)(ii)(A) above);
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(C)
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A lump sum payment equal to
Executive’s
prorated
Long-Term Cash Incentive Plan
payment (as determined in accordance with subparagraph 2(b)(ii)(B) above); and
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(D)
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A lump sum payment equal to
two
times the sum of (1)
Executive’s
annual
Base Salary
; and (2) the greater of (i)
Executive’s
target annual incentive (as defined in the
Annual Incentive Plan
) for the year in which the
Change in Control
occurs and (ii)
Executive’s
average annual incentive calculated over the three (3) fiscal years immediately preceding the year in which the
Change in Control
occurs; and (3) an amount equal to the
Company
matching contribution to the defined contribution plan in which
Executive
is participating at the
Termination Date
(currently 4%).
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(ii)
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For a period of 24 months following
Executive’s Termination Date
(the “
CIC
Severance Period
”),
Executive
shall have the right to elect continuation of the life insurance, personal accident insurance, travel accident insurance and accidental death and dismemberment insurance coverages which insurance coverages shall be provided at the same levels and the same costs in effect immediately prior to the
Change in Control.
Beginning on his
Termination Date
,
Executive
shall be eligible to elect continued coverage under the group medical and dental plan available to similarly situated senior executives. If
Executive
elects continuation coverage for medical coverage, dental coverage or both, he shall pay the entire COBRA
premium charged for such continuation coverage during the
CIC
S
everance Period
; provided, however, that
during the
CIC Severance Period, Company
shall reimburse
Executive
for that portion of the COBRA
premium paid that exceeds the amount payable by an active executive of
Company
for similar coverage, as adjusted from time to time. Such reimbursement shall be made to
Executive
on the 20
th
day of each calendar month during the
CIC Severance Period,
or within ten (10) business days thereafter. The amount eligible for reimbursement under this subparagraph in any calendar year shall not affect any amounts eligible for reimbursement to be provided in any other calendar year. In addition,
Executive’s
right to reimbursement hereunder shall not be subject to liquidation or exchange for any other benefit.
Executive’s
right to COBRA continuation coverage under any such group health plan shall be reduced by the number of months of coverage otherwise provided pursuant to this subparagraph. The premium charged for any continuation coverage after the end of the
CIC Severance Period
shall be entirely at
Executive’s
expense and shall be the actuarially determined cost of the continuation coverage as determined by an actuary selected by the
Company
(in accordance with the requirements under COBRA, to the extent applicable).
Executive
shall not
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(iii)
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If the aggregate benefits accrued by
Executive
as of the
Termination Date
under the savings and retirement plans sponsored by
Company
are not fully vested pursuant to the terms of the applicable plan(s), the difference between the benefits
Executive
is entitled to receive under such plans and the benefits he would have received had he been fully vested will be provided to
Executive
under the Hanesbrands Inc. Supplemental Employee Retirement Plan (the
“Supplemental Plan”
). In addition, for purposes of determining
Executive’s
benefits under the
Supplemental Plan
and
Executive’s
right to post-retirement medical benefits under
Company’s
retiree medical plan, additional years of age and service credits equivalent to the length of the
CIC Severance Period
shall be included. However,
Executive
will not be eligible to begin receiving any retirement benefits under any such plans until the date he or she would otherwise be eligible to begin receiving benefits under such plans;
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(iv)
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Except as otherwise provided herein or in the applicable plan, participation in all other plans of
Company
or any subsidiary or affiliate of
Company
available to similarly situated
Executives
of
Company
, shall cease on
Executive’s
Termination Date
.
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(c)
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Termination for Disability
. If
Executive’s
employment is terminated due to
Disability
following a
Change in Control
,
Executive
shall receive his
Base Salary
through the
Termination Date
, at which time his benefits shall be determined in accordance with
Company’s
disability, retirement, insurance and other applicable plans and programs then in effect, and
Executive
shall not be entitled to any other benefits provided by this
Agreement
.
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(d)
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Termination for Retirement or Death
. If
Executive’s
employment is terminated by reason of his retirement or death following a
Change in Control
,
Executive’s
benefits shall be determined in accordance with
Company’s
retirement, survivor’s benefits, insurance, and other applicable programs then in effect, and
Executive
shall not be entitled to any other benefits provided by this
Agreement
.
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(e)
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Termination for Cause, or Other Than for Good Reason or Retirement
. If
Executive’s
employment is terminated either by
Company
for
Cause
, or voluntarily by
Executive
(other than for
Retirement
or
Good Reason
) following a
Change in Control
,
Company
shall pay
Executive
his full
Base Salary
and accrued vacation through the
Termination Date
, at the rate then in effect, plus all other amounts to which such
Executive
is entitled under any compensation plans of
Company
, at the time such payments are due, and
Company
shall have no further obligations to such
Executive
under this
Agreement
.
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(f)
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Separation and Release Agreement
. No benefits under this section 3 shall be payable to
Executive
unless
Executive
and
Company
have executed a “
Separation and Release Agreement”
(in substantially the form attached hereto as Exhibit A) within forty-five (45) days following the
Termination Date
and the payment of change in control benefits under this section 3 shall be subject to the terms and conditions of the
Separation and Release Agreement
.
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(g)
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Deferred Compensation
. All amounts previously deferred by or accrued to the benefit of
Executive
under any nonqualified deferred compensation plan sponsored by
Company
(including, without limitation, any vested amounts deferred under incentive plans), together with any accrued earnings thereon, shall be paid in accordance with the terms of such plan following
Executive’s
termination.
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(h)
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Notice of Termination
. Any termination of employment under this section 3 by
Company
or by
Executive
for
Good Reason
shall be communicated by a written notice which shall indicate the specific
Change in Control
termination provision relied upon, and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of
Executive’s
employment under the provision so indicated (a “
Notice of Termination”)
.
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(i)
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Termination of Benefits
.
All rights to receive or continue to receive severance payments and benefits pursuant to this section 3 by reason of a
Change in Control
shall cease on the date
Executive
becomes reemployed by
Company
or any of its subsidiaries or affiliates.
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(j)
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Form and Timing of Benefits
. Subject to the provisions of this section 3 and to section 15, the
Change in Control
benefits described herein shall be paid to
Executive
in cash in a single lump sum payment as soon as practicable following the
Termination Date
, but in no event later than the fifteenth day of the third month after the date of the
Executive’s
termination of employment. The
Change in Control
benefits payable to
Executive
pursuant to this subparagraph (j) are intended to be exempt from
Code
Section 409A
(as defined in section 15)
under the exemption found in Regulation Section 1.409A-(b)(4) for short-term deferrals.
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(k)
|
Excise Tax Adjustment.
Subject to the limitation below, in the event that
Executive
becomes entitled to any payment or benefit under this section 3 (such benefits together with any other payments or benefits payable under any other agreement with, or plan or policy of,
Company
are referred to in the aggregate as the “
Total Payments
”), if all or any part of the
Total Payments
will, as determined by
Company
, be subject to the tax (the “
Excise Tax
”) imposed by
Code
Section 4999 (or any similar
|
(i)
|
Any other payments or benefits received or to be received by
Executive
in connection with a
Change in Control
or
Executive’s
termination of employment (whether pursuant to the terms of this
Agreement
or any other plan, policy, arrangement or agreement with
Company
, or with any
Person
whose actions result in a
Change in Control
or any
Person
affiliated with
Company
or such
Person
s) shall be treated as “parachute payments” within the meaning of
Code
Section 280G(b)(2), and all “excess parachute payments” within the meaning of
Code
Section 280G(b)(1) shall be treated as subject to the
Excise Tax
, unless in the opinion of
Company’s
tax counsel as supported by
Company’s
independent auditors and acceptable to
Executive
, such other payments or benefits (in whole or in part) do not constitute parachute payments, or unless such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered within the meaning of
Code
Section 280G(b)(4) in excess of the base amount within the meaning of
Code
Section 280G(b)(3), or are otherwise not subject to the
Excise Tax
;
|
(ii)
|
The value of any noncash benefits or any deferred payment or benefit shall be determined by
Company’s
independent auditors in accordance with the principles of
Code
Sections 280G(d)(3) and (4);
|
(iii)
|
Executive
shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation, and state and local income taxes at the highest marginal rate of taxation in the state and locality of
Executive’s
residence on the
Termination Date
, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes; and
|
(iv)
|
In the event the Internal Revenue Service adjusts any item included in
Company’s
computations under this section 3(k) so that
Executive
did not receive the full net benefit intended under the provisions of this section 3(k),
Company
shall reimburse
Executive
for the full amount necessary to make
Executive
whole as determined by the
Committee.
Any such payment shall be treated for
Section 409A
purposes as a payment separate from the payment made pursuant to this subparagraph (k) immediately following
Executive’s
|
(l)
|
Company’s Payment Obligation.
Subject to the provisions of section 4,
Company’s
obligation to make the payments and the arrangements provided in this section 3 shall be absolute and unconditional, and shall not be affected by any circumstances, including, without limitation, any offset, counterclaim, recoupment, defense, or other right which
Company
may have against
Executive
or anyone else. All amounts payable by
Company
under this section 3 shall be paid without notice or demand and each and every payment made by
Company
shall be final, and
Company
shall not seek to recover all or any part of such payment from
Executive
or from whomsoever may be entitled thereto, for any reason except as provided in section 3(k) above or in section 4.
|
(m)
|
Other Employment
.
Executive
shall not be obligated to seek other employment in mitigation of the amounts payable or arrangements made under this section 3, and the obtaining of any such other employment shall in no event result in any reduction of
Company’s
obligations to make the payments and arrangements required to be made under this section 3, except to the extent otherwise specifically provided in this
Agreement
.
|
(n)
|
Payment of Legal Fees and Expenses.
To the extent permitted by law,
Company
shall reimburse
Executive
for all reasonable legal fees, costs of litigation or arbitration, prejudgment or pre-award interest, and other expenses incurred in good faith by
Executive
as a result of
Company’s
refusal to provide benefits under this section 3, or as a result of
Company
contesting the validity, enforceability or interpretation of the provisions of this section 3, or as the result of any conflict (including conflicts related to the calculation of parachute payments or the characterization of
Executive’s
termination) between
Executive
and
Company
; provided that the conflict or dispute is resolved in
Executive’s
favor and
Executive
acts in good faith in pursuing his rights under this section 3. Such reimbursement shall be made within thirty (30) days following final resolution, in favor of
Executive
, of the conflict or dispute giving rise to such fees and expenses. In no event shall
Executive
be entitled to receive the reimbursements provided for in this subparagraph if he acts in bad faith or pursues a claim without merit, or if he fails to prevail in any action instituted by him or
Company.
|
(o)
|
Arbitration for Change in Control Benefits
. Any dispute or controversy arising under or in connection with the benefits provided under this section 3 shall promptly and expeditiously be submitted to arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association in effect at the time of such arbitration proceeding utilizing a panel of three (3) arbitrators sitting in a location selected by
Executive
within fifty (50) miles from the location of his employment with
Company
. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. The costs and expenses of both parties, including, without limitation, attorneys’ fees shall be borne by
|
EXECUTIVE:
|
|
|
HANESBRANDS INC.
|
|
|
|
|
|
|
Signature:
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
Title:
|
|
10.
|
Release
.
|
(a)
|
Executive on behalf of Executive, Executive’s heirs, executors, administrators and assigns, does hereby knowingly and voluntarily release, acquit and forever discharge Company and any of its subsidiaries, affiliates, successors, assigns and past, present and future directors, officers, employees, trustees and shareholders (the “Released Parties”) from and against any and all complaints, claims, cross-claims, third-party claims, counterclaims, contribution claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses of any nature whatsoever, known or unknown, suspected or unsuspected, foreseen or unforeseen, matured or unmatured, which, at any time up to and including the date on which Executive signs this Agreement, exists, have existed, or may arise from any matter whatsoever occurring, including, but not limited to, any claims arising out of or in any way related to Executive’s employment with Company or its subsidiaries or affiliates and the conclusion thereof, which Executive, or any of Executive’s heirs, executors, administrators, assigns, affiliates, and agents ever had, now has or at any time hereafter may have, own or hold against any of the Released Parties based on any matter existing on or before the date on which Executive signs this Agreement. Executive acknowledges that in exchange for this release, Company is providing Executive with total consideration, financial or otherwise, which exceeds what Executive would have been given without the release. By executing this Agreement, Executive is waiving, without limitation, all claims (except for the filing of a charge with an administrative agency) against the Released Parties arising under federal, state and local labor and antidiscrimination laws, any employment related claims under the employee Retirement Income Security Act of 1974, as amended, and any other restriction on the right to terminate employment, including, without limitation, Title VII of the Civil Rights Act of 1964, as amended, the Americans with Disabilities Act of 1990, as amended, and the North
|
(b)
|
EXECUTIVE SPECIFICALLY WAIVES AND RELEASES THE RELEASED PARTIES FROM ALL CLAIMS EXECUTIVE MAY HAVE AS OF THE DATE EXECUTIVE SIGNS THIS AGREEMENT REGARDING CLAIMS OR RIGHTS ARISING UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, AS AMENDED, 29 U.S.C. § 621 (“ADEA”). EXECUTIVE FURTHER AGREES: (i) THAT EXECUTIVE’S WAIVER OF RIGHTS UNDER THIS RELEASE IS KNOWING AND VOLUNTARY AND IN COMPLIANCE WITH THE OLDER WORKERS BENEFIT PROTECTION ACT OF 1990; (ii) THAT EXECUTIVE UNDERSTANDS THE TERMS OF THIS RELEASE; (iii) THAT EXECUTIVE’S WAIVER OF RIGHTS IN THIS RELEASE IS IN EXCHANGE FOR CONSIDERATION THAT WOULD NOT OTHERWISE BE OWING TO EXECUTIVE PURSUANT TO ANY PREEXISTING OBLIGATION OF ANY KIND HAD EXECUTIVE NOT SIGNED THIS RELEASE; (iv) THAT EXECUTIVE HEREBY IS AND HAS BEEN ADVISED IN WRITING BY COMPANY TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS RELEASE; (v) THAT COMPANY HAS GIVEN EXECUTIVE A PERIOD OF AT LEAST FORTY-FIVE (45) DAYS WITHIN WHICH TO CONSIDER THIS RELEASE; (vi) THAT EXECUTIVE REALIZES THAT FOLLOWING EXECUTIVE’S EXECUTION OF THIS RELEASE, EXECUTIVE HAS SEVEN (7) DAYS IN WHICH TO REVOKE THIS RELEASE BY WRITTEN NOTICE TO THE UNDERSIGNED, AND (vii) THAT THIS ENTIRE AGREEMENT SHALL BE VOID AND OF NO FORCE AND EFFECT IF EXECUTIVE CHOOSES TO SO REVOKE, AND IF EXECUTIVE CHOOSES NOT TO SO REVOKE, THAT THIS AGREEMENT AND RELEASE THEN BECOME EFFECTIVE AND ENFORCEABLE UPON THE EIGHTH DAY AFTER EXECUTIVE SIGNS THIS AGREEMENT.
|
(c)
|
To the maximum extent permitted by law, Executive covenants not to sue or to institute or cause to be instituted any action in any federal, state, or local agency or court against any of the Released Parties, including, but not limited to, any of the claims released this Agreement. Notwithstanding the foregoing, nothing herein shall prevent Executive or any of the Released Parties from filing a charge with an administrative agency, from instituting any action required to enforce the terms of this Agreement, or from challenging the validity of this Agreement. In addition, nothing herein shall be construed to prevent Executive from enforcing any rights Executive may have to recover vested benefits under the Employee Retirement Income Security Act of 1974, as amended.
|
(d)
|
Executive represents and warrants that: (i) Executive has not filed or initiated any legal, equitable, administrative, or other proceeding(s) against any of the Released Parties; (ii) no such proceeding(s) have been initiated against any of the Released Parties on Executive’s behalf; (iii) Executive is the sole owner of the actual or alleged claims, demands, rights, causes of action, and other matters that are released in this paragraph 10; (iv) the same have not been transferred or assigned or caused to be transferred or assigned to any other person, firm, corporation or other legal entity; and (v) Executive has the full right and power to grant, execute, and deliver the releases, undertakings, and agreements contained in this Agreement.
|
(e)
|
The consideration offered herein is accepted by Executive as being in full accord, satisfaction, compromise and settlement of any and all claims or potential claims, and Executive expressly agrees that Executive is not entitled to and shall not receive any further payments, benefits, or other compensation or recovery of any kind from Company or any of the other Released Parties. Executive further agrees that in the event of any further proceedings whatsoever based upon any matter released herein, Company and each of the other Released Parties shall have no further monetary or other obligation of any kind to Executive, including without limitation any obligation for any costs, expenses and attorneys’ fees incurred by or on behalf of Executive.
|
EXECUTIVE:
|
|
|
HANESBRANDS INC.
|
|
|
|
|
|
|
Signature:
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
Title:
|
|
Name
|
|
Date of Agreement
|
Richard D. Moss
|
|
November 3, 2011
|
Michael E. Faircloth
|
|
August 21, 2013
|
John T. Marsh
|
|
August 22, 2013
|
Barry A. Hytinen
|
|
October 16, 2017
|
|
Years Ended
|
||||||||||||||||||
|
December 30,
2017 |
|
December 31,
2016 |
|
January 2,
2016 |
|
January 3,
2015 |
|
December 28,
2013 |
||||||||||
Earnings, as defined:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations before income tax expense, noncontrolling interest and income/loss from equity investees
|
$
|
537,061
|
|
|
$
|
570,872
|
|
|
$
|
474,568
|
|
|
$
|
464,836
|
|
|
$
|
395,866
|
|
Fixed charges
|
250,942
|
|
|
201,973
|
|
|
156,303
|
|
|
129,034
|
|
|
129,034
|
|
|||||
Amortization of capitalized interest
|
2,352
|
|
|
2,430
|
|
|
2,758
|
|
|
2,719
|
|
|
2,754
|
|
|||||
Interest capitalized
|
(1,226
|
)
|
|
(1,695
|
)
|
|
(2,566
|
)
|
|
(1,355
|
)
|
|
(930
|
)
|
|||||
Noncontrolling interest in pre-tax income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total earnings, as defined
|
$
|
789,129
|
|
|
$
|
773,580
|
|
|
$
|
631,063
|
|
|
$
|
595,234
|
|
|
$
|
526,724
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed charges, as defined:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
$
|
179,110
|
|
|
$
|
148,791
|
|
|
$
|
114,686
|
|
|
$
|
93,080
|
|
|
$
|
97,054
|
|
Amortized premiums, discounts and capitalized expenses related to indebtedness
|
10,298
|
|
|
9,139
|
|
|
7,077
|
|
|
6,011
|
|
|
6,921
|
|
|||||
Interest factor in rental expenses
|
61,534
|
|
|
44,043
|
|
|
34,540
|
|
|
29,886
|
|
|
25,059
|
|
|||||
Total fixed charges, as defined
|
$
|
250,942
|
|
|
$
|
201,973
|
|
|
$
|
156,303
|
|
|
$
|
128,977
|
|
|
$
|
129,034
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of earnings to fixed charges
|
3.14
|
|
|
3.83
|
|
|
4.04
|
|
|
4.62
|
|
|
4.08
|
|
Note:
|
The Ratio of Earnings to Fixed Charges should be read in conjunction with our consolidated financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations incorporated by reference in this Form 10-K. The interest expense included in the fixed charges calculation above excludes interest expense relating to the Company's uncertain tax positions. The interest factor in rental expenses is calculated as one-third of rent expense.
|
Name of Subsidiary
|
Jurisdiction of Formation
|
Alternative Apparel, Inc.
|
Delaware
|
BA International, L.L.C.
|
Delaware
|
Berlei (US) LLC
|
Delaware
|
Caribesock, Inc.
|
Delaware
|
Caribetex, Inc.
|
Delaware
|
CASA International, LLC
|
Delaware
|
CC Products LLC
|
Delaware
|
Ceibena Del, Inc.
|
Delaware
|
Event 1 LLC
|
Kansas
|
GearCo LLC
|
Delaware
|
GFSI Holdings LLC
|
Delaware
|
GFSI LLC
|
Delaware
|
GTM Retail, Inc.
|
Kansas
|
Hanes El Pedregal Holdings LLC
|
Delaware
|
Hanes Jiboa Holdings LLC
|
Delaware
|
Hanes Menswear, LLC
|
Delaware
|
Hanes Minority Holdings LLC
|
Delaware
|
Hanes Puerto Rico, Inc.
|
Delaware
|
Hanesbrands Direct, LLC
|
Colorado
|
Hanesbrands Distribution, Inc.
|
Delaware
|
Hanesbrands Export Canada LLC
|
Delaware
|
HBI Branded Apparel Enterprises, LLC
|
Delaware
|
HBI Branded Apparel Limited, Inc.
|
Delaware
|
HbI International, LLC
|
Delaware
|
HBI Playtex Bath LLC
|
Delaware
|
HBI Receivables LLC
|
Delaware
|
HBI Sourcing, LLC
|
Delaware
|
Inner Self LLC
|
Delaware
|
It’s Greek To Me, Inc.
|
Kansas
|
Jasper-Costa Rica, L.L.C.
|
Delaware
|
Knights Apparel LLC
|
Delaware
|
Knights Holdco LLC
|
Delaware
|
Maidenform (Bangladesh) LLC
|
Delaware
|
Maidenform (Indonesia) LLC
|
Delaware
|
Maidenform Brands LLC
|
Delaware
|
Maidenform International LLC
|
Delaware
|
Maidenform LLC
|
Delaware
|
MF Retail LLC
|
Delaware
|
MFB International Holdings S.a r.l., U.S. Branch
|
United States
|
Playtex Dorado, LLC
|
Delaware
|
Playtex Industries, Inc.
|
Delaware
|
Playtex Marketing Corporation (50%) owned)
|
Delaware
|
Seamless Textiles, LLC
|
Delaware
|
UPCR, Inc.
|
Delaware
|
UPEL, Inc.
|
Delaware
|
Name of Subsidiary
|
Jurisdiction of Formation
|
Hanes Australasia Limited
|
Australia
|
Hanes Australia Pty Ltd
|
Australia
|
Hanes Austria GmbH
|
Austria
|
Hanes Benelux BVBA/SPRL
|
Belgium
|
Hanes Benelux BVBA/SPRL - Netherlands Branch
|
Netherlands
|
Hanes Bodywear Germany GmbH
|
Germany
|
Hanes Brands Incorporated de Costa Rica, S.A.
|
Costa Rica
|
Hanes Caribe, Inc.
|
Cayman Islands
|
Hanes Central Services Europe S.A.S.
|
France
|
Hanes Choloma, S. de R. L.
|
Honduras
|
Hanes Colombia, S.A.
|
Colombia
|
Hanes Commercial Europe S.a r.l.
|
Luxembourg
|
Hanes Commercial Europe S.a r.l. Sucursal en Espana
|
Spain
|
Hanes Czech Republic, s.r.o.
|
Czech Republic
|
Hanes de Centroamerica S.A.
|
Guatemala
|
Hanes de El Salvador, S.A. de C.V.
|
El Salvador
|
Hanes Direct Marketing France S.A.S.
|
France
|
Hanes Dominican, Inc.
|
Cayman Islands
|
Hanes E-Commerce Europe S.A.S.
|
France
|
Hanes Finance Europe S.A.S.
|
France
|
Hanes France S.A.S.
|
France
|
Hanes Germany GmbH
|
Germany
|
Hanes Global Holdings Luxembourg S.a r.l.
|
Luxembourg
|
Hanes Global Supply Chain Europe S.a r.l.
|
Luxembourg
|
Hanes Global Supply Chain Germany GmbH
|
Germany
|
Hanes Global Supply Chain Philippines, Inc.
|
Philippines
|
Hanes Global Supply Chain Romania SRL
|
Romania
|
Hanes Global Supply Chain Slovakia AS
|
Slovakia
|
Hanes Holdings Asia Limited
|
Hong Kong
|
Hanes Holdings Australasia Pty Ltd
|
Australia
|
Hanes Holdings Hong Kong Limited
|
Hong Kong
|
Hanes Holdings Lux S.à.r.l.
|
Luxembourg
|
Hanes Holdings UK Limited
|
United Kingdom
|
Hanes Hungary KFT
|
Hungary
|
Hanes Ink Honduras, S.A. de C.V.
|
Honduras
|
Hanes Innerwear Australia Pty Ltd
|
Australia
|
Hanes IP Bonds Australia Pty Ltd
|
Australia
|
Hanes IP Europe S.a r.l.
|
Luxembourg
|
Hanes IP Sports Australia Pty Ltd
|
Australia
|
Hanes Italy Srl
|
Italy
|
Hanes Menswear Puerto Rico, Inc.
|
Puerto Rico
|
Hanes Netherlands Holdings B.V.
|
Netherlands
|
Hanes New Zealand Limited
|
New Zealand
|
Hanes Operations Europe S.A.S.
|
France
|
Hanes Outsourcing Philippines Inc.
|
Philippines
|
Hanes Panama Inc.
|
Panama
|
Hanes Poland Sp z.o.o.
|
Poland
|
Hanes Portugal, Lda.
|
Portugal
|
Hanes Rus OOO
|
Russian Federation
|
Name of Subsidiary
|
Jurisdiction of Formation
|
HBI Manufacturing (Thailand) Co., Ltd.
|
Thailand
|
HBI RH Mexico, S. De R.L. de C.V.
|
Mexico
|
HBI Risk Management Ltd.
|
Bermuda
|
HBI Servicios Administrativos de Costa Rica, S.A.
|
Costa Rica
|
HBI Socks de Honduras, S. de R.L. de C.V.
|
Honduras
|
HBI Sourcing Asia Limited
|
Hong Kong
|
HBI Sourcing Asia Limited - Philippine RHQ (Branch)
|
Philippines
|
HBI Uno Holdings, Inc.
|
Cayman Islands
|
Industrias El Porvenier, S. de R.L.
|
Honduras
|
Inversiones Bonaventure S.A. de C.V.
|
El Salvador
|
It’s Greek To Me, Inc. Shenzhen Representative Office
|
China
|
J.E. Morgan de Honduras, S.A.
|
Honduras
|
Jasper Honduras, S.A.
|
Honduras
|
Jasper-Salvador, S.A. de C.V.
|
El Salvador
|
Jogbra Honduras, S.A.
|
Honduras
|
Maidenform (Asia) Limited
|
British Virgin Islands
|
Maidenform (Bangladesh) LLC - Bangladesh Liaison Office
|
Bangladesh
|
Maidenform (U.K.) Limited
|
United Kingdom
|
Maidenform Brands Germany GmbH
|
Germany
|
Maidenform Brands International Limited
|
Ireland
|
Maidenform Brands Spain, S.R.L.
|
Spain
|
Manufacturera Ceibena S. de R.L.
|
Honduras
|
Manufacturera Comalapa S.A. de C.V.
|
El Salvador
|
Manufacturera de Cartago, S.R.L.
|
Costa Rica
|
Manufacturera San Pedro Sula, S. de R.L.
|
Honduras
|
Mediterraneo S.p.A.
|
Italy
|
MF Brands S.A. de C.V.
|
Mexico
|
MF Supreme Brands de Mexico, S.A. de C.V.
|
Mexico
|
MFB International Holdings S.a r.l.
|
Luxembourg
|
Playtex Puerto Rico, Inc.
|
Puerto Rico
|
PT Hanes Supply Chain Indonesia
|
Indonesia
|
PT. HBI Sourcing Indonesia
|
Indonesia
|
PTX (D.R.), Inc.
|
Cayman Islands
|
PW France S.A.S.
|
France
|
Rinplay S. de R.L. de C.V.
|
Mexico
|
Sagepar SARL
|
France
|
Seamless Puerto Rico, Inc.
|
Puerto Rico
|
Servicios de Soporte Intimate Apparel, S. de R.L.
|
Costa Rica
|
Shared Apparel Services Pty Ltd
|
Australia
|
Sheridan Australia Pty Limited
|
Australia
|
Sheridan N.Z. Limited
|
New Zealand
|
Sheridan U.K. Limited
|
United Kingdom
|
Socks Dominicana S.A.
|
Dominican Republic
|
Sthgirw Workwear Pty Ltd
|
Australia
|
Texlee El Salvador, Ltda. de C.V.
|
El Salvador
|
The Harwood Honduras Companies, S. de R.L.
|
Honduras
|
Tricotbest B.V. in liquidation
|
Netherlands
|
Universo Finanziaria S.p.A.
|
Italy
|
Universo Sport Immobiliare S.r.l.
|
Italy
|
Name of Subsidiary
|
Jurisdiction of Formation
|
VSE Verwaltungsgesellschaft mbH
|
Germany
|
Yakka (Wodonga) Pty. Ltd.
|
Australia
|
/s/ Gerald W. Evans, Jr.
|
Gerald W. Evans, Jr.
Chief Executive Officer
|
/s/ Barry A. Hytinen
|
Barry A. Hytinen
Chief Financial Officer
|
/s/ Gerald W. Evans, Jr.
|
Gerald W. Evans, Jr.
Chief Executive Officer
|
/s/ Barry A. Hytinen
|
Barry A. Hytinen
Chief Financial Officer
|