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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Maryland
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20-3552316
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(State of incorporation)
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(I.R.S. employer
identification no.)
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1000 East Hanes Mill Road
Winston-Salem, North Carolina
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27105
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(Address of principal executive office)
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(Zip code)
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Large accelerated filer
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x
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Emerging growth company
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¨
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Page
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Item 1.
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Item 2.
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Item 3.
|
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Item 4.
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PART II
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Item 1.
|
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Item 1A.
|
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Item 2.
|
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 1.
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Financial Statements
|
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Quarter Ended
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||||||
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March 31,
2018 |
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April 1,
2017 |
||||
Net sales
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$
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1,471,504
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$
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1,380,355
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Cost of sales
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892,583
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840,824
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Gross profit
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578,921
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539,531
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Selling, general and administrative expenses
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432,863
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413,102
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Operating profit
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146,058
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126,429
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Other expenses
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5,761
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6,545
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|
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Interest expense, net
|
45,763
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42,137
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Income from continuing operations before income tax expense
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94,534
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77,747
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Income tax expense
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15,125
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4,665
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Income from continuing operations
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79,409
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73,082
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|
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Loss from discontinued operations, net of tax
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—
|
|
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(2,465
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)
|
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Net income
|
$
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79,409
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$
|
70,617
|
|
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|
||||
Earnings (loss) per share — basic:
|
|
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|
||||
Continuing operations
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$
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0.22
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$
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0.20
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Discontinued operations
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—
|
|
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(0.01
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)
|
||
Net income
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$
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0.22
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$
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0.19
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|
||||
Earnings (loss) per share — diluted:
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|
||||
Continuing operations
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$
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0.22
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$
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0.19
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Discontinued operations
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—
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(0.01
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)
|
||
Net income
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$
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0.22
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$
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0.19
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Quarter Ended
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||||||
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March 31,
2018 |
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April 1,
2017 |
||||
Net income
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$
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79,409
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$
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70,617
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Other comprehensive income (loss), net of tax of ($1,187) and $4,092, respectively
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(11,493
|
)
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16,226
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|
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Comprehensive income
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$
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67,916
|
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$
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86,843
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March 31,
2018 |
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December 30,
2017 |
||||
Assets
|
|
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|
||||
Cash and cash equivalents
|
$
|
373,662
|
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$
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421,566
|
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Trade accounts receivable, net
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874,684
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903,318
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Inventories
|
2,044,680
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1,874,990
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Other current assets
|
106,800
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186,496
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|
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Total current assets
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3,399,826
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3,386,370
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Property, net
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630,669
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623,991
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Trademarks and other identifiable intangibles, net
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1,668,876
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1,402,857
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Goodwill
|
1,282,504
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1,167,007
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Deferred tax assets
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233,279
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234,932
|
|
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Other noncurrent assets
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112,621
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79,618
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|
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Total assets
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$
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7,327,775
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$
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6,894,775
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|
||||
Liabilities and Stockholders’ Equity
|
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|
||||
Accounts payable
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$
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813,981
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$
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867,649
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Accrued liabilities
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523,166
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649,634
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|
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Notes payable
|
17,830
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11,873
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|
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Accounts Receivable Securitization Facility
|
157,081
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125,209
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|
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Current portion of long-term debt
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165,702
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124,380
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|
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Total current liabilities
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1,677,760
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1,778,745
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Long-term debt
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4,185,252
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3,702,054
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|
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Pension and postretirement benefits
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408,787
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405,238
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|
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Other noncurrent liabilities
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350,281
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322,536
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|
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Total liabilities
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6,622,080
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6,208,573
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Stockholders’ equity:
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|
||||
Preferred stock (50,000,000 authorized shares; $.01 par value)
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|
||||
Issued and outstanding — None
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—
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—
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|
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Common stock (2,000,000,000 authorized shares; $.01 par value)
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|
||||
Issued and outstanding — 360,363,608 and 360,125,894, respectively
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3,604
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3,601
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|
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Additional paid-in capital
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277,755
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271,462
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|
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Retained earnings
|
875,035
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|
850,345
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|
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Accumulated other comprehensive loss
|
(450,699
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)
|
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(439,206
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)
|
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Total stockholders’ equity
|
705,695
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|
686,202
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|
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Total liabilities and stockholders’ equity
|
$
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7,327,775
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$
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6,894,775
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HANESBRANDS INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
|
|||||||
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Quarter Ended
|
||||||
|
March 31,
2018 |
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April 1,
2017 |
||||
Operating activities:
|
|
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|
||||
Net income
|
$
|
79,409
|
|
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$
|
70,617
|
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Adjustments to reconcile net income to net cash from operating activities:
|
|
|
|
||||
Depreciation and amortization of long-lived assets
|
31,925
|
|
|
28,765
|
|
||
Amortization of debt issuance costs
|
2,343
|
|
|
2,701
|
|
||
Stock compensation expense
|
4,746
|
|
|
3,528
|
|
||
Deferred taxes and other
|
(2,795
|
)
|
|
6,931
|
|
||
Changes in assets and liabilities, net of acquisition of businesses:
|
|
|
|
||||
Accounts receivable
|
36,932
|
|
|
49,553
|
|
||
Inventories
|
(150,768
|
)
|
|
(140,610
|
)
|
||
Other assets
|
13,840
|
|
|
(6,775
|
)
|
||
Accounts payable
|
(63,655
|
)
|
|
(14,328
|
)
|
||
Accrued pension and postretirement benefits
|
4,441
|
|
|
6,341
|
|
||
Accrued liabilities and other
|
(84,561
|
)
|
|
(29,521
|
)
|
||
Net cash from operating activities
|
(128,143
|
)
|
|
(22,798
|
)
|
||
Investing activities:
|
|
|
|
||||
Purchases of property, plant and equipment
|
(19,804
|
)
|
|
(16,049
|
)
|
||
Proceeds from sales of assets
|
1,506
|
|
|
4,603
|
|
||
Acquisition of business, net of cash acquired
|
(334,915
|
)
|
|
(524
|
)
|
||
Disposition of businesses
|
—
|
|
|
37,434
|
|
||
Net cash from investing activities
|
(353,213
|
)
|
|
25,464
|
|
||
Financing activities:
|
|
|
|
||||
Borrowings on notes payable
|
83,920
|
|
|
27,893
|
|
||
Repayments on notes payable
|
(81,426
|
)
|
|
(42,540
|
)
|
||
Borrowings on Accounts Receivable Securitization Facility
|
79,449
|
|
|
213,539
|
|
||
Repayments on Accounts Receivable Securitization Facility
|
(47,577
|
)
|
|
(65,274
|
)
|
||
Borrowings on Revolving Loan Facilities
|
1,267,860
|
|
|
1,265,000
|
|
||
Repayments on Revolving Loan Facilities
|
(771,000
|
)
|
|
(1,009,500
|
)
|
||
Repayments on Term Loan Facilities
|
(10,625
|
)
|
|
(13,594
|
)
|
||
Repayments on International Debt
|
(997
|
)
|
|
(16,226
|
)
|
||
Share repurchases
|
—
|
|
|
(299,919
|
)
|
||
Cash dividends paid
|
(54,053
|
)
|
|
(55,875
|
)
|
||
Payment of contingent consideration
|
(3,540
|
)
|
|
—
|
|
||
Taxes paid related to net shares settlement of equity awards
|
(2,757
|
)
|
|
(1,669
|
)
|
||
Other
|
(170
|
)
|
|
2,676
|
|
||
Net cash from financing activities
|
459,084
|
|
|
4,511
|
|
||
Effect of changes in foreign exchange rates on cash
|
1,186
|
|
|
(3,799
|
)
|
||
Change in cash, cash equivalents and restricted cash
|
(21,086
|
)
|
|
3,378
|
|
||
Cash and cash equivalents at beginning of year
|
421,566
|
|
|
460,245
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
400,480
|
|
|
463,623
|
|
||
Less restricted cash at end of period
|
26,818
|
|
|
—
|
|
||
Cash and cash equivalents per balance sheet at end of period
|
$
|
373,662
|
|
|
$
|
463,623
|
|
(1)
|
Basis of Presentation
|
(2)
|
Recent Accounting Pronouncements
|
(3)
|
Revenue Recognition
|
|
Quarter Ended
|
||
|
March 31,
2018 |
||
Third-party brick-and-mortar wholesale
|
$
|
1,164,308
|
|
Consumer-directed
|
307,196
|
|
|
Total net sales
|
$
|
1,471,504
|
|
(4)
|
Acquisitions
|
Cash and cash equivalents
|
$
|
2,765
|
|
Accounts receivable, net
|
197
|
|
|
Inventories
|
10,110
|
|
|
Other current assets
|
1,637
|
|
|
Property, net
|
12,417
|
|
|
Trademarks and other identifiable intangibles
|
278,214
|
|
|
Deferred tax assets and other noncurrent assets
|
2,539
|
|
|
Total assets acquired
|
307,879
|
|
|
Accounts payable
|
4,929
|
|
|
Accrued liabilities and other
|
16,339
|
|
|
Deferred tax liabilities and other noncurrent liabilities
|
7,663
|
|
|
Total liabilities assumed
|
28,931
|
|
|
Net assets acquired
|
278,948
|
|
|
Goodwill
|
112,624
|
|
|
Total purchase price
|
$
|
391,572
|
|
Cash consideration paid
|
$
|
337,123
|
|
Indemnification escrow asset
|
27,507
|
|
|
Debt assumed
|
26,942
|
|
|
Total purchase price
|
$
|
391,572
|
|
|
Quarter Ended
|
||||||
|
March 31,
2018 |
|
April 1,
2017 |
||||
Net sales
|
$
|
1,501,315
|
|
|
$
|
1,427,069
|
|
Net income from continuing operations
|
82,641
|
|
|
78,764
|
|
||
Earnings per share from continuing operations:
|
|
|
|
||||
Basic
|
$
|
0.23
|
|
|
$
|
0.21
|
|
Diluted
|
0.23
|
|
|
0.21
|
|
(5)
|
Stockholders’ Equity
|
|
Quarter Ended
|
||||
|
March 31,
2018 |
|
April 1,
2017 |
||
Basic weighted average shares outstanding
|
361,882
|
|
|
373,218
|
|
Effect of potentially dilutive securities:
|
|
|
|
||
Stock options
|
1,067
|
|
|
1,640
|
|
Restricted stock units
|
335
|
|
|
385
|
|
Employee stock purchase plan and other
|
7
|
|
|
8
|
|
Diluted weighted average shares outstanding
|
363,291
|
|
|
375,251
|
|
(6)
|
Inventories
|
|
March 31,
2018 |
|
December 30,
2017 |
||||
Raw materials
|
$
|
135,327
|
|
|
$
|
129,287
|
|
Work in process
|
213,029
|
|
|
226,659
|
|
||
Finished goods
|
1,696,324
|
|
|
1,519,044
|
|
||
|
$
|
2,044,680
|
|
|
$
|
1,874,990
|
|
(7)
|
Debt
|
|
Interest
Rate as of March 31, 2018 |
|
Principal Amount
|
|
Maturity Date
|
||||||
|
March 31,
2018 |
|
December 30,
2017 |
|
|||||||
Senior Secured Credit Facility:
|
|
|
|
|
|
|
|
||||
Revolving Loan Facility
|
3.24%
|
|
$
|
457,000
|
|
|
$
|
—
|
|
|
December 2022
|
Term Loan A
|
3.23%
|
|
740,625
|
|
|
750,000
|
|
|
December 2022
|
||
Term Loan B
|
3.63%
|
|
498,750
|
|
|
500,000
|
|
|
December 2024
|
||
Australian Term A-1
|
3.22%
|
|
133,323
|
|
|
135,826
|
|
|
July 2019
|
||
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%
|
|
615,460
|
|
|
599,649
|
|
|
June 2024
|
||
European Revolving Loan Facility
|
1.50%
|
|
123,092
|
|
|
81,539
|
|
|
September 2018
|
||
Accounts Receivable Securitization Facility
|
2.54%
|
|
157,081
|
|
|
125,209
|
|
|
March 2019
|
||
Other International Debt
|
Various
|
|
23,074
|
|
|
1,044
|
|
|
Various
|
||
|
|
|
4,548,405
|
|
|
3,993,267
|
|
|
|
||
Less long-term debt issuance cost
|
|
|
40,370
|
|
|
41,624
|
|
|
|
||
Less current maturities
|
|
|
322,783
|
|
|
249,589
|
|
|
|
||
|
|
|
$
|
4,185,252
|
|
|
$
|
3,702,054
|
|
|
|
(8)
|
Accumulated Other Comprehensive Loss
|
|
Cumulative Translation Adjustment
|
|
Hedges
|
|
Defined Benefit Plans
|
|
Income Taxes
|
|
Accumulated Other Comprehensive Loss
|
||||||||||
|
|
|
|
||||||||||||||||
Balance at December 30, 2017
|
$
|
(43,505
|
)
|
|
$
|
(25,461
|
)
|
|
$
|
(614,000
|
)
|
|
$
|
243,760
|
|
|
$
|
(439,206
|
)
|
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
1,665
|
|
|
3,067
|
|
|
(1,480
|
)
|
|
3,252
|
|
|||||
Current-period other comprehensive income (loss) activity
|
(13,330
|
)
|
|
(1,708
|
)
|
|
—
|
|
|
293
|
|
|
(14,745
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at March 31, 2018
|
$
|
(56,835
|
)
|
|
$
|
(25,504
|
)
|
|
$
|
(610,933
|
)
|
|
$
|
242,573
|
|
|
$
|
(450,699
|
)
|
Component of AOCI
|
|
Location of Reclassification into Income
|
|
Amount of Reclassification
from AOCI |
||||||
|
Quarter Ended
|
|||||||||
|
March 31,
2018 |
|
April 1,
2017 |
|||||||
Gain (loss) on foreign exchange contracts
|
|
Cost of sales
|
|
$
|
(1,665
|
)
|
|
$
|
298
|
|
|
|
Income tax
|
|
302
|
|
|
(113
|
)
|
||
|
|
Net of tax
|
|
(1,363
|
)
|
|
185
|
|
||
Amortization of deferred actuarial loss and prior service cost
|
|
Selling, general and administrative expenses
|
|
(3,067
|
)
|
|
(4,810
|
)
|
||
|
|
Income tax
|
|
1,178
|
|
|
1,847
|
|
||
|
|
Net of tax
|
|
(1,889
|
)
|
|
(2,963
|
)
|
||
|
|
|
|
|
|
|
||||
Total reclassifications
|
|
|
|
$
|
(3,252
|
)
|
|
$
|
(2,778
|
)
|
(9)
|
Financial Instruments and Risk Management
|
|
Balance Sheet Location
|
|
Fair Value
|
||||||
|
March 31,
2018 |
|
December 30,
2017 |
||||||
Hedges
|
Other current assets
|
|
$
|
1,990
|
|
|
$
|
1,464
|
|
Non-hedges
|
Other current assets
|
|
181
|
|
|
136
|
|
||
Total derivative assets
|
|
|
2,171
|
|
|
1,600
|
|
||
|
|
|
|
|
|
||||
Hedges
|
Accrued liabilities
|
|
(11,421
|
)
|
|
(14,750
|
)
|
||
Non-hedges
|
Accrued liabilities
|
|
(6,611
|
)
|
|
(7,818
|
)
|
||
Total derivative liabilities
|
|
|
(18,032
|
)
|
|
(22,568
|
)
|
||
|
|
|
|
|
|
||||
Net derivative liability
|
|
|
$
|
(15,861
|
)
|
|
$
|
(20,968
|
)
|
|
Amount of Loss
Recognized in AOCI (Effective Portion) |
||||||
|
Quarter Ended
|
||||||
|
March 31,
2018 |
|
April 1,
2017 |
||||
Foreign exchange contracts
|
$
|
(1,708
|
)
|
|
$
|
(18,114
|
)
|
|
Location of Gain (Loss)
Reclassified from AOCI into Income (Effective Portion) |
|
Amount of Gain (Loss)
Reclassified from AOCI into Income (Effective Portion) |
||||||
|
|
Quarter Ended
|
|||||||
|
|
March 31,
2018 |
|
April 1,
2017 |
|||||
Foreign exchange contracts
|
Cost of sales
|
|
$
|
(1,665
|
)
|
|
$
|
298
|
|
|
Location of Gain (Loss)
Recognized in Income on Derivatives |
|
Amount of Gain (Loss)
Recognized in Income |
||||||
|
Quarter Ended
|
||||||||
|
March 31,
2018 |
|
April 1,
2017 |
||||||
Foreign exchange contracts
|
Cost of sales
|
|
$
|
9,100
|
|
|
$
|
—
|
|
Foreign exchange contracts
|
Selling, general and administrative expenses
|
|
303
|
|
|
(4,264
|
)
|
||
Total
|
|
|
$
|
9,403
|
|
|
$
|
(4,264
|
)
|
(10)
|
Fair Value of Assets and Liabilities
|
|
Assets (Liabilities) at Fair Value as of
March 31, 2018 |
||||||||||||||
|
Total
|
|
Quoted Prices In
Active Markets for Identical Assets (Level 1) |
|
Significant
Other Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
Foreign exchange derivative contracts - assets
|
$
|
2,171
|
|
|
$
|
—
|
|
|
$
|
2,171
|
|
|
$
|
—
|
|
Foreign exchange derivative contracts - liabilities
|
(18,032
|
)
|
|
—
|
|
|
(18,032
|
)
|
|
—
|
|
||||
|
(15,861
|
)
|
|
—
|
|
|
(15,861
|
)
|
|
—
|
|
||||
Deferred compensation plan liability
|
(45,082
|
)
|
|
—
|
|
|
(45,082
|
)
|
|
—
|
|
||||
Total
|
$
|
(60,943
|
)
|
|
$
|
—
|
|
|
$
|
(60,943
|
)
|
|
$
|
—
|
|
|
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) |
||||||||
Foreign exchange derivative contracts - assets
|
$
|
1,600
|
|
|
$
|
—
|
|
|
$
|
1,600
|
|
|
$
|
—
|
|
Foreign exchange derivative contracts - liabilities
|
(22,568
|
)
|
|
—
|
|
|
(22,568
|
)
|
|
—
|
|
||||
|
(20,968
|
)
|
|
—
|
|
|
(20,968
|
)
|
|
—
|
|
||||
Deferred compensation plan liability
|
(52,758
|
)
|
|
—
|
|
|
(52,758
|
)
|
|
—
|
|
||||
Total
|
$
|
(73,726
|
)
|
|
$
|
—
|
|
|
$
|
(73,726
|
)
|
|
$
|
—
|
|
(11)
|
Income Taxes
|
(12)
|
Discontinued Operations
|
|
Quarter Ended
|
||
|
April 1,
2017 |
||
Net sales
|
$
|
6,865
|
|
Cost of sales
|
4,507
|
|
|
Gross profit
|
2,358
|
|
|
Selling, general and administrative expenses
|
3,731
|
|
|
Operating loss
|
(1,373
|
)
|
|
Other expenses
|
303
|
|
|
Net loss on disposal of businesses
|
766
|
|
|
Loss from discontinued operations before income tax expense
|
(2,442
|
)
|
|
Income tax expense
|
23
|
|
|
Net loss from discontinued operations, net of tax
|
$
|
(2,465
|
)
|
(13)
|
Business Segment Information
|
•
|
Innerwear sells basic branded products that are replenishment in nature under the product categories of men’s underwear, panties, children’s underwear, socks and intimate apparel, which includes bras and shapewear.
|
•
|
Activewear sells basic branded products that are primarily seasonal in nature under the product categories of branded printwear and retail activewear, as well as licensed logo apparel in collegiate bookstores, mass retail and other channels.
|
•
|
International primarily relates to the Europe, Australia, Asia, Latin America and Canada geographic locations that sell products that primarily span across the Innerwear and Activewear product categories.
|
|
Quarter Ended
|
||||||
|
March 31,
2018 |
|
April 1,
2017 |
||||
Segment operating profit:
|
|
|
|
||||
Innerwear
|
$
|
101,419
|
|
|
$
|
116,622
|
|
Activewear
|
38,287
|
|
|
43,350
|
|
||
International
|
77,061
|
|
|
52,662
|
|
||
Other
|
2,627
|
|
|
2,628
|
|
||
Total segment operating profit
|
219,394
|
|
|
215,262
|
|
||
Items not included in segment operating profit:
|
|
|
|
||||
General corporate expenses
|
(44,531
|
)
|
|
(43,281
|
)
|
||
Acquisition, integration and other action-related charges
|
(19,617
|
)
|
|
(38,367
|
)
|
||
Amortization of intangibles
|
(9,188
|
)
|
|
(7,185
|
)
|
||
Total operating profit
|
146,058
|
|
|
126,429
|
|
||
Other expenses
|
(5,761
|
)
|
|
(6,545
|
)
|
||
Interest expense, net
|
(45,763
|
)
|
|
(42,137
|
)
|
||
Income from continuing operations before income tax expense
|
$
|
94,534
|
|
|
$
|
77,747
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Total net sales in
the first quarter of 2018
were
$1.47 billion
, compared with
$1.38 billion
in the same period of
2017
, representing a
7%
increase.
|
•
|
Operating profit increased
16%
to
$146 million
in
the first quarter of 2018
, compared with
$126 million
in the same period of
2017
. As a percentage of sales, operating profit was
9.9%
in
the first quarter of 2018
compared to
9.2%
in the same period of
2017
. Included within operating profit for both
the first quarter of 2018
and
2017
were acquisition, integration and other action-related charges of $20 million and $38 million, respectively.
|
•
|
Diluted earnings per share from continuing operations increased
16%
to
$0.22
in
the first quarter of 2018
, compared with
$0.19
in the same period of
2017
.
|
•
|
We acquired BNT Holdco Pty Limited (“Bras N Things”) on February 12, 2018 for a total purchase price of A$498 million. Bras N Things is a leading intimate apparel retailer and e-commerce business in Australia, New Zealand and South Africa. Bras N Things sells proprietary bras, panties and lingerie sets through a retail network of approximately 170 stores and an e-commerce platform. We believe this acquisition will create opportunities for expansion of the Bras N Things consumer-directed model.
|
|
Quarter Ended
|
|
|
|
|
|||||||||
|
March 31,
2018 |
|
April 1,
2017 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
1,471,504
|
|
|
$
|
1,380,355
|
|
|
$
|
91,149
|
|
|
6.6
|
%
|
Cost of sales
|
892,583
|
|
|
840,824
|
|
|
51,759
|
|
|
6.2
|
|
|||
Gross profit
|
578,921
|
|
|
539,531
|
|
|
39,390
|
|
|
7.3
|
|
|||
Selling, general and administrative expenses
|
432,863
|
|
|
413,102
|
|
|
19,761
|
|
|
4.8
|
|
|||
Operating profit
|
146,058
|
|
|
126,429
|
|
|
19,629
|
|
|
15.5
|
|
|||
Other expenses
|
5,761
|
|
|
6,545
|
|
|
(784
|
)
|
|
(12.0
|
)
|
|||
Interest expense, net
|
45,763
|
|
|
42,137
|
|
|
3,626
|
|
|
8.6
|
|
|||
Income from continuing operations before income tax expense
|
94,534
|
|
|
77,747
|
|
|
16,787
|
|
|
21.6
|
|
|||
Income tax expense
|
15,125
|
|
|
4,665
|
|
|
10,460
|
|
|
224.2
|
|
|||
Income from continuing operations
|
79,409
|
|
|
73,082
|
|
|
6,327
|
|
|
8.7
|
|
|||
Loss from discontinued operations, net of tax
|
—
|
|
|
(2,465
|
)
|
|
2,465
|
|
|
NM
|
|
|||
Net income
|
$
|
79,409
|
|
|
$
|
70,617
|
|
|
$
|
8,792
|
|
|
12.5
|
%
|
•
|
Acquisition of Bras N Things in 2018 and Alternative Apparel in 2017, which added incremental net sales of approximately $32 million in
the first quarter of 2018
;
|
•
|
Organic sales on a constant currency basis, defined as sales excluding the impact of foreign currency and businesses acquired within 12 months, increased approximately 1% in the quarter driven by international,
Champion
and online sales growth, offset in part by declines in our Hanes activewear business, hosiery and slower traffic at our outlet stores; and
|
•
|
Favorable impact of foreign exchange rates in our International businesses of approximately $45 million.
|
|
Net Sales
|
|
Operating Profit
|
||||||||||||
|
Quarter Ended
|
|
Quarter Ended
|
||||||||||||
|
March 31,
2018 |
|
April 1,
2017 |
|
March 31,
2018 |
|
April 1,
2017 |
||||||||
|
(dollars in thousands)
|
||||||||||||||
Innerwear
|
$
|
491,078
|
|
|
$
|
505,190
|
|
|
$
|
101,419
|
|
|
$
|
116,622
|
|
Activewear
|
346,125
|
|
|
327,343
|
|
|
38,287
|
|
|
43,350
|
|
||||
International
|
569,887
|
|
|
477,398
|
|
|
77,061
|
|
|
52,662
|
|
||||
Other
|
64,414
|
|
|
70,424
|
|
|
2,627
|
|
|
2,628
|
|
||||
Corporate
|
—
|
|
|
—
|
|
|
(73,336
|
)
|
|
(88,833
|
)
|
||||
Total
|
$
|
1,471,504
|
|
|
$
|
1,380,355
|
|
|
$
|
146,058
|
|
|
$
|
126,429
|
|
|
Quarter Ended
|
|
|
|
|
|||||||||
|
March 31,
2018 |
|
April 1,
2017 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
491,078
|
|
|
$
|
505,190
|
|
|
$
|
(14,112
|
)
|
|
(2.8
|
)%
|
Segment operating profit
|
101,419
|
|
|
116,622
|
|
|
(15,203
|
)
|
|
(13.0
|
)
|
|||
Segment operating margin
|
20.7
|
%
|
|
23.1
|
%
|
|
|
|
|
|
Quarter Ended
|
|
|
|
|
|||||||||
|
March 31,
2018 |
|
April 1,
2017 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
346,125
|
|
|
$
|
327,343
|
|
|
$
|
18,782
|
|
|
5.7
|
%
|
Segment operating profit
|
38,287
|
|
|
43,350
|
|
|
(5,063
|
)
|
|
(11.7
|
)
|
|||
Segment operating margin
|
11.1
|
%
|
|
13.2
|
%
|
|
|
|
|
|
Quarter Ended
|
|
|
|
|
|||||||||
|
March 31,
2018 |
|
April 1,
2017 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
569,887
|
|
|
$
|
477,398
|
|
|
$
|
92,489
|
|
|
19.4
|
%
|
Segment operating profit
|
77,061
|
|
|
52,662
|
|
|
24,399
|
|
|
46.3
|
|
|||
Segment operating margin
|
13.5
|
%
|
|
11.0
|
%
|
|
|
|
|
•
|
Our acquisition of Bras N Things in the first quarter of 2018, which contributed incremental net sales of approximately $16 million;
|
•
|
Increased net sales driven by our global
Champion
sales growth, primarily in the Europe and Asia markets; and
|
•
|
Favorable impact of foreign currency exchange rates of approximately $45 million.
|
|
Quarter Ended
|
|
|
|
|
|||||||||
|
March 31,
2018 |
|
April 1,
2017 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
64,414
|
|
|
$
|
70,424
|
|
|
$
|
(6,010
|
)
|
|
(8.5
|
)%
|
Segment operating profit
|
2,627
|
|
|
2,628
|
|
|
(1
|
)
|
|
—
|
|
|||
Segment operating margin
|
4.1
|
%
|
|
3.7
|
%
|
|
|
|
|
|
Quarter Ended
|
||||||
|
March 31,
2018 |
|
April 1,
2017 |
||||
|
(dollars in thousands)
|
||||||
Acquisition, integration and other action-related costs:
|
|
|
|
||||
Hanes Europe Innerwear
|
$
|
8,576
|
|
|
$
|
19,878
|
|
Hanes Australasia
|
6,092
|
|
|
12,008
|
|
||
Champion Europe
|
1,880
|
|
|
1,168
|
|
||
Bras N Things
|
1,245
|
|
|
—
|
|
||
Smaller acquisitions and other action-related costs
|
1,824
|
|
|
5,313
|
|
||
Total acquisition, integration and other action-related costs
|
$
|
19,617
|
|
|
$
|
38,367
|
|
|
As of March 31, 2018
|
||||||
Borrowing
Capacity
|
|
Borrowing
Availability
|
|||||
|
(dollars in thousands)
|
||||||
Senior Secured Credit Facility:
|
|
|
|
||||
Revolving Loan Facility
|
$
|
1,000,000
|
|
|
$
|
538,915
|
|
Australian Revolving Loan Facility
|
49,805
|
|
|
49,805
|
|
||
European Revolving Loan Facility
|
123,092
|
|
|
—
|
|
||
Accounts Receivable Securitization Facility
|
200,000
|
|
|
42,919
|
|
||
Other international credit facilities
|
145,581
|
|
|
111,713
|
|
||
Total liquidity from credit facilities
|
$
|
1,518,478
|
|
|
$
|
743,352
|
|
•
|
we have principal and interest obligations under our debt;
|
•
|
we acquired Bras N Things in February 2018 and Alternative Apparel in October 2017 and we may pursue additional strategic business acquisitions in the future;
|
•
|
we expect to continue to invest in efforts to accelerate worldwide omnichannel and global growth initiatives, as well as marketing and brand building;
|
•
|
contributions to our pension plans;
|
•
|
our Board of Directors has authorized a regular quarterly dividend; and
|
•
|
our Board of Directors has authorized share repurchases.
|
|
Quarter Ended
|
||||||
|
March 31,
2018 |
|
April 1,
2017 |
||||
|
(dollars in thousands)
|
||||||
Operating activities
|
$
|
(128,143
|
)
|
|
$
|
(22,798
|
)
|
Investing activities
|
(353,213
|
)
|
|
25,464
|
|
||
Financing activities
|
459,084
|
|
|
4,511
|
|
||
Effect of changes in foreign currency exchange rates on cash
|
1,186
|
|
|
(3,799
|
)
|
||
Change in cash, cash equivalents and restricted cash
|
(21,086
|
)
|
|
3,378
|
|
||
Cash and cash equivalents at beginning of year
|
421,566
|
|
|
460,245
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
400,480
|
|
|
463,623
|
|
||
Less restricted cash at end of period
|
26,818
|
|
|
—
|
|
||
Cash and cash equivalents per balance sheet at end of period
|
$
|
373,662
|
|
|
$
|
463,623
|
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
Exhibit
Number
|
|
Description
|
|
|
|
2.1
|
|
|
|
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2.2
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3.1
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3.2
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3.3
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3.4
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3.5
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4.1
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10.1
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31.1
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31.2
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32.1
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32.2
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101.INS XBRL
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Instance Document
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101.SCH XBRL
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Taxonomy Extension Schema Document
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101.CAL XBRL
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Taxonomy Extension Calculation Linkbase Document
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101.LAB XBRL
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Taxonomy Extension Label Linkbase Document
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101.PRE XBRL
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Taxonomy Extension Presentation Linkbase Document
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101.DEF XBRL
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Taxonomy Extension Definition Linkbase Document
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HANESBRANDS INC.
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By:
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/s/ Barry A. Hytinen
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Barry A. Hytinen
Chief Financial Officer
(Duly authorized officer and principal financial officer)
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(a)
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Executive agrees that for a period of two years following the Retirement Date Executive will not, without the prior written consent of the Company, either alone or in association with others, (1) solicit for employment, or assist or encourage the solicitation for employment of, any employee at or above the rank of “manager” of the Company or any of its subsidiaries or affiliates, including any employee at or above the rank of “manager” with whom Executive had material contact during the last two years of Executive’s employment with the Company; (2) induce or attempt to induce any customer (i) with whom Executive or any employee under Executive’s direct supervision had material contact during the last two years of Executive’s employment with the Company or (ii) about whom Executive obtained trade secrets or confidential information in the course of Executive’s employment with the Company to cease or reduce doing business with the Company or any of its subsidiaries or affiliates, or interfere with the relationship between the Company or any of its subsidiaries or affiliates, on the one hand, and any such customer, on the other hand; or (3) directly or indirectly counsel, advise, perform services for, or be employed by, or otherwise engage or participate in any Competing Business (regardless of whether Executive receives compensation of any kind).
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(b)
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For purposes of this Agreement, a “Competing Business” is defined as any business (1) with total revenues in excess of $50 million within the basic innerwear (underwear, socks, panties, bras, shapewear and hosiery) or activewear apparel markets during its most recently completed fiscal year preceding the conduct prohibited by Section (a)(3) above, (2) that is operating commercially within the Territory, and (3) that has commercial operations in one or more product categories within the basic innerwear or activewear apparel markets that overlap product categories comprising in excess of 10% of the Company’s total revenues during the Company’s most recently completed fiscal year. The “Territory” shall mean (i) anywhere in the world in which the Company or any of its subsidiaries or affiliates engaged in commercial operations during the last two years of Executive’s employment with the Company, including (without limitation) the United States of America, Canada, Mexico, France, Australia,
New Zealand, Japan, Italy, Germany, Spain, the United Kingdom, Brazil, China, and/or the Caribbean Basin and (ii) any geographic area with respect to which Executive had direct or indirect responsibility during the last two years of Executive’s employment. Upon request from Executive, the Company will cooperate with Executive to provide calculations regarding the Company’s revenues within the basic innerwear or activewear apparel markets for a given fiscal year to assist Executive in assessing compliance with the covenants included in this paragraph 6. Executive may rely on a written communication from the Company’s Chief Executive Officer or Chief Legal Officer regarding a determination by the Company that the provisions of this paragraph 6 would not prohibit specified activities proposed to be undertaken by Executive.
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(a)
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Executive on behalf of Executive, Executive’s heirs, executors, administrators and assigns, does hereby knowingly and voluntarily release, acquit and forever discharge the 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 the 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, the Company is providing Executive with total consideration, financial or otherwise, which exceeds what Executive would have been given without this 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 Carolina Equal Employment Practices Act, as amended. Nothing herein shall release any party from any obligation under this Agreement. Executive acknowledges and agrees that this release and the covenant not to sue set forth in paragraph (c) below are essential and material terms of this Agreement and that, without such release and covenant not to sue, no agreement would have been reached by the parties. Executive understands and acknowledges the significance and consequences of this release and this Agreement. Notwithstanding the foregoing, nothing contained in this paragraph 8(a) shall (i) waive, release or otherwise discharge any claim or cause of action that cannot legally be waived, including, but not limited to, any claim for workers’ compensation benefits, unemployment benefits; (ii) affect any rights of defense or indemnification, or to be held harmless, or any coverage under directors and officers liability insurance or any other insurance or rights or claims of contribution or advancement of expenses that Executive has; or (iii) affect any rights as a shareholder of the Company that Executive has.
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EXECUTIVE
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HANESBRANDS INC.
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/s/ Richard A. Noll
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By:
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/s/ Gerald W. Evans, Jr.
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Richard A. Noll
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Title: Chief Executive Officer
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/s/ Gerald W. Evans, Jr.
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Gerald W. Evans, Jr.
Chief Executive Officer
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/s/ Barry A. Hytinen
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Barry A. Hytinen
Chief Financial Officer
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/s/ Gerald W. Evans, Jr.
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Gerald W. Evans, Jr.
Chief Executive Officer
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/s/ Barry A. Hytinen
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Barry A. Hytinen
Chief Financial Officer
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