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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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¨
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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
|
|
Quarter Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
2018 |
|
July 1,
2017 |
|
June 30,
2018 |
|
July 1,
2017 |
||||||||
Net sales
|
$
|
1,715,443
|
|
|
$
|
1,646,610
|
|
|
$
|
3,186,947
|
|
|
$
|
3,026,965
|
|
Cost of sales
|
1,055,487
|
|
|
1,000,708
|
|
|
1,948,070
|
|
|
1,841,532
|
|
||||
Gross profit
|
659,956
|
|
|
645,902
|
|
|
1,238,877
|
|
|
1,185,433
|
|
||||
Selling, general and administrative expenses
|
439,893
|
|
|
412,197
|
|
|
872,756
|
|
|
825,299
|
|
||||
Operating profit
|
220,063
|
|
|
233,705
|
|
|
366,121
|
|
|
360,134
|
|
||||
Other expenses
|
6,570
|
|
|
6,422
|
|
|
12,331
|
|
|
12,967
|
|
||||
Interest expense, net
|
48,430
|
|
|
44,130
|
|
|
94,193
|
|
|
86,267
|
|
||||
Income from continuing operations before income tax expense
|
165,063
|
|
|
183,153
|
|
|
259,597
|
|
|
260,900
|
|
||||
Income tax expense
|
24,430
|
|
|
10,989
|
|
|
39,555
|
|
|
15,654
|
|
||||
Income from continuing operations
|
140,633
|
|
|
172,164
|
|
|
220,042
|
|
|
245,246
|
|
||||
Income (loss) from discontinued operations, net of tax
|
—
|
|
|
368
|
|
|
—
|
|
|
(2,097
|
)
|
||||
Net income
|
$
|
140,633
|
|
|
$
|
172,532
|
|
|
$
|
220,042
|
|
|
$
|
243,149
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per share — basic:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.39
|
|
|
$
|
0.47
|
|
|
$
|
0.61
|
|
|
$
|
0.66
|
|
Discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
||||
Net income
|
$
|
0.39
|
|
|
$
|
0.47
|
|
|
$
|
0.61
|
|
|
$
|
0.66
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per share — diluted:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.39
|
|
|
$
|
0.47
|
|
|
$
|
0.61
|
|
|
$
|
0.66
|
|
Discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
||||
Net income
|
$
|
0.39
|
|
|
$
|
0.47
|
|
|
$
|
0.61
|
|
|
$
|
0.65
|
|
|
Quarter Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
2018 |
|
July 1,
2017 |
|
June 30,
2018 |
|
July 1,
2017 |
||||||||
Net income
|
$
|
140,633
|
|
|
$
|
172,532
|
|
|
$
|
220,042
|
|
|
$
|
243,149
|
|
Other comprehensive income (loss), net of tax of ($9,982), $2,351, ($11,079) and $6,443, respectively
|
(21,855
|
)
|
|
(11,928
|
)
|
|
(33,348
|
)
|
|
4,298
|
|
||||
Comprehensive income
|
$
|
118,778
|
|
|
$
|
160,604
|
|
|
$
|
186,694
|
|
|
$
|
247,447
|
|
|
June 30,
2018 |
|
December 30,
2017 |
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
397,971
|
|
|
$
|
421,566
|
|
Trade accounts receivable, net
|
973,807
|
|
|
903,318
|
|
||
Inventories
|
2,112,211
|
|
|
1,874,990
|
|
||
Other current assets
|
132,757
|
|
|
186,496
|
|
||
Total current assets
|
3,616,746
|
|
|
3,386,370
|
|
||
Property, net
|
617,302
|
|
|
623,991
|
|
||
Trademarks and other identifiable intangibles, net
|
1,610,567
|
|
|
1,402,857
|
|
||
Goodwill
|
1,259,010
|
|
|
1,167,007
|
|
||
Deferred tax assets
|
218,269
|
|
|
234,932
|
|
||
Other noncurrent assets
|
105,992
|
|
|
79,618
|
|
||
Total assets
|
$
|
7,427,886
|
|
|
$
|
6,894,775
|
|
|
|
|
|
||||
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Accounts payable
|
$
|
935,176
|
|
|
$
|
867,649
|
|
Accrued liabilities
|
506,360
|
|
|
649,634
|
|
||
Notes payable
|
14,540
|
|
|
11,873
|
|
||
Accounts Receivable Securitization Facility
|
153,386
|
|
|
125,209
|
|
||
Current portion of long-term debt
|
181,349
|
|
|
124,380
|
|
||
Total current liabilities
|
1,790,811
|
|
|
1,778,745
|
|
||
Long-term debt
|
4,149,201
|
|
|
3,702,054
|
|
||
Pension and postretirement benefits
|
388,256
|
|
|
405,238
|
|
||
Other noncurrent liabilities
|
332,427
|
|
|
322,536
|
|
||
Total liabilities
|
6,660,695
|
|
|
6,208,573
|
|
||
|
|
|
|
||||
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 — 360,503,574 and 360,125,894, respectively
|
3,605
|
|
|
3,601
|
|
||
Additional paid-in capital
|
275,120
|
|
|
271,462
|
|
||
Retained earnings
|
961,020
|
|
|
850,345
|
|
||
Accumulated other comprehensive loss
|
(472,554
|
)
|
|
(439,206
|
)
|
||
Total stockholders’ equity
|
767,191
|
|
|
686,202
|
|
||
Total liabilities and stockholders’ equity
|
$
|
7,427,886
|
|
|
$
|
6,894,775
|
|
HANESBRANDS INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
|
|||||||
|
Six Months Ended
|
||||||
|
June 30,
2018 |
|
July 1,
2017 |
||||
Operating activities:
|
|
|
|
||||
Net income
|
$
|
220,042
|
|
|
$
|
243,149
|
|
Adjustments to reconcile net income to net cash from operating activities:
|
|
|
|
||||
Depreciation and amortization of long-lived assets
|
65,493
|
|
|
58,095
|
|
||
Write-off on early extinguishment of debt
|
—
|
|
|
1,559
|
|
||
Amortization of debt issuance costs
|
4,627
|
|
|
5,437
|
|
||
Stock compensation expense
|
3,033
|
|
|
4,388
|
|
||
Deferred taxes and other
|
(6,709
|
)
|
|
6,543
|
|
||
Changes in assets and liabilities, net of acquisition of business:
|
|
|
|
||||
Accounts receivable
|
(81,512
|
)
|
|
(79,429
|
)
|
||
Inventories
|
(244,743
|
)
|
|
(130,554
|
)
|
||
Other assets
|
(6,193
|
)
|
|
(48,901
|
)
|
||
Accounts payable
|
68,777
|
|
|
9,019
|
|
||
Accrued pension and postretirement benefits
|
(7,438
|
)
|
|
11,025
|
|
||
Accrued liabilities and other
|
(79,775
|
)
|
|
(46,081
|
)
|
||
Net cash from operating activities
|
(64,398
|
)
|
|
34,250
|
|
||
Investing activities:
|
|
|
|
||||
Purchases of property, plant and equipment
|
(40,640
|
)
|
|
(30,838
|
)
|
||
Proceeds from sales of assets
|
1,840
|
|
|
4,378
|
|
||
Acquisition of business, net of cash acquired
|
(334,916
|
)
|
|
(524
|
)
|
||
Disposition of businesses
|
—
|
|
|
40,285
|
|
||
Net cash from investing activities
|
(373,716
|
)
|
|
13,301
|
|
||
Financing activities:
|
|
|
|
||||
Borrowings on notes payable
|
153,901
|
|
|
141,384
|
|
||
Repayments on notes payable
|
(153,772
|
)
|
|
(128,987
|
)
|
||
Borrowings on Accounts Receivable Securitization Facility
|
114,477
|
|
|
262,216
|
|
||
Repayments on Accounts Receivable Securitization Facility
|
(86,300
|
)
|
|
(103,128
|
)
|
||
Borrowings on Revolving Loan Facilities
|
2,025,860
|
|
|
2,147,299
|
|
||
Repayments on Revolving Loan Facilities
|
(1,498,000
|
)
|
|
(1,747,500
|
)
|
||
Repayments on Term Loan Facilities
|
(21,250
|
)
|
|
(128,215
|
)
|
||
Repayments on International Debt
|
(1,105
|
)
|
|
(43,141
|
)
|
||
Share repurchases
|
—
|
|
|
(299,919
|
)
|
||
Cash dividends paid
|
(108,115
|
)
|
|
(110,529
|
)
|
||
Payment of contingent consideration
|
(3,540
|
)
|
|
(41,250
|
)
|
||
Taxes paid related to net shares settlement of equity awards
|
(4,185
|
)
|
|
(6,228
|
)
|
||
Other
|
(88
|
)
|
|
2,787
|
|
||
Net cash from financing activities
|
417,883
|
|
|
(55,211
|
)
|
||
Effect of changes in foreign exchange rates on cash
|
20,176
|
|
|
(3,170
|
)
|
||
Change in cash, cash equivalents and restricted cash
|
(55
|
)
|
|
(10,830
|
)
|
||
Cash and cash equivalents at beginning of year
|
421,566
|
|
|
460,245
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
421,511
|
|
|
449,415
|
|
||
Less restricted cash at end of period
|
23,540
|
|
|
—
|
|
||
Cash and cash equivalents per balance sheet at end of period
|
$
|
397,971
|
|
|
$
|
449,415
|
|
(1)
|
Basis of Presentation
|
(2)
|
Recent Accounting Pronouncements
|
(3)
|
Revenue Recognition
|
|
Quarter Ended
|
|
Six Months Ended
|
||||
|
June 30,
2018 |
|
June 30,
2018 |
||||
Third-party brick-and-mortar wholesale
|
$
|
1,345,992
|
|
|
$
|
2,510,300
|
|
Consumer-directed
|
369,451
|
|
|
676,647
|
|
||
Total net sales
|
$
|
1,715,443
|
|
|
$
|
3,186,947
|
|
(4)
|
Acquisitions
|
Cash and cash equivalents
|
$
|
2,765
|
|
Accounts receivable, net
|
197
|
|
|
Inventories
|
9,610
|
|
|
Other current assets
|
1,637
|
|
|
Property, net
|
12,013
|
|
|
Trademarks and other identifiable intangibles
|
278,214
|
|
|
Deferred tax assets and other noncurrent assets
|
2,539
|
|
|
Total assets acquired
|
306,975
|
|
|
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
|
278,044
|
|
|
Goodwill
|
111,161
|
|
|
Total purchase price
|
$
|
389,205
|
|
Cash consideration paid
|
$
|
337,123
|
|
Indemnification escrow asset
|
25,140
|
|
|
Debt assumed
|
26,942
|
|
|
Total purchase price
|
$
|
389,205
|
|
|
Quarter Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
2018 |
|
July 1,
2017 |
|
June 30,
2018 |
|
July 1,
2017 |
||||||||
Net sales
|
$
|
1,715,443
|
|
|
$
|
1,673,533
|
|
|
$
|
3,205,007
|
|
|
$
|
3,080,706
|
|
Net income from continuing operations
|
141,395
|
|
|
172,226
|
|
|
223,586
|
|
|
248,300
|
|
||||
Earnings per share from continuing operations:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.39
|
|
|
$
|
0.47
|
|
|
$
|
0.62
|
|
|
$
|
0.67
|
|
Diluted
|
0.39
|
|
|
0.47
|
|
|
0.62
|
|
|
0.67
|
|
(5)
|
Stockholders’ Equity
|
|
Quarter Ended
|
|
Six Months Ended
|
||||||||
|
June 30,
2018 |
|
July 1,
2017 |
|
June 30,
2018 |
|
July 1,
2017 |
||||
Basic weighted average shares outstanding
|
362,011
|
|
|
365,911
|
|
|
361,944
|
|
|
370,075
|
|
Effect of potentially dilutive securities:
|
|
|
|
|
|
|
|
||||
Stock options
|
876
|
|
|
1,565
|
|
|
968
|
|
|
1,605
|
|
Restricted stock units
|
367
|
|
|
515
|
|
|
333
|
|
|
466
|
|
Employee stock purchase plan and other
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
Diluted weighted average shares outstanding
|
363,254
|
|
|
367,992
|
|
|
363,245
|
|
|
372,147
|
|
(6)
|
Inventories
|
|
June 30,
2018 |
|
December 30,
2017 |
||||
Raw materials
|
$
|
137,205
|
|
|
$
|
129,287
|
|
Work in process
|
214,679
|
|
|
226,659
|
|
||
Finished goods
|
1,760,327
|
|
|
1,519,044
|
|
||
|
$
|
2,112,211
|
|
|
$
|
1,874,990
|
|
(7)
|
Debt
|
|
Interest
Rate as of June 30, 2018 |
|
Principal Amount
|
|
Maturity Date
|
||||||
|
June 30,
2018 |
|
December 30,
2017 |
|
|||||||
Senior Secured Credit Facility:
|
|
|
|
|
|
|
|
||||
Revolving Loan Facility
|
3.60%
|
|
$
|
488,000
|
|
|
$
|
—
|
|
|
December 2022
|
Term Loan A
|
3.48%
|
|
731,250
|
|
|
750,000
|
|
|
December 2022
|
||
Term Loan B
|
3.84%
|
|
497,500
|
|
|
500,000
|
|
|
December 2024
|
||
Australian Term A-1
|
3.47%
|
|
128,860
|
|
|
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%
|
|
584,249
|
|
|
599,649
|
|
|
June 2024
|
||
European Revolving Loan Facility
|
1.50%
|
|
116,850
|
|
|
81,539
|
|
|
September 2018
|
||
Accounts Receivable Securitization Facility
|
2.81%
|
|
153,386
|
|
|
125,209
|
|
|
March 2019
|
||
Other International Debt
|
Various
|
|
22,103
|
|
|
1,044
|
|
|
Various
|
||
|
|
|
4,522,198
|
|
|
3,993,267
|
|
|
|
||
Less long-term debt issuance cost
|
|
|
38,262
|
|
|
41,624
|
|
|
|
||
Less current maturities
|
|
|
334,735
|
|
|
249,589
|
|
|
|
||
|
|
|
$
|
4,149,201
|
|
|
$
|
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
|
—
|
|
|
7,219
|
|
|
8,015
|
|
|
(3,659
|
)
|
|
11,575
|
|
|||||
Current-period other comprehensive income (loss) activity
|
(62,777
|
)
|
|
25,274
|
|
|
—
|
|
|
(7,420
|
)
|
|
(44,923
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at June 30, 2018
|
$
|
(106,282
|
)
|
|
$
|
7,032
|
|
|
$
|
(605,985
|
)
|
|
$
|
232,681
|
|
|
$
|
(472,554
|
)
|
Component of AOCI
|
|
Location of Reclassification into Income
|
|
Amount of Reclassification
from AOCI |
|
Amount of Reclassification
from AOCI |
||||||||||||
|
Quarter Ended
|
|
Six Months Ended
|
|||||||||||||||
|
June 30,
2018 |
|
July 1,
2017 |
|
June 30,
2018 |
|
July 1,
2017 |
|||||||||||
Gain (loss) on foreign exchange contracts
|
|
Cost of sales
|
|
$
|
(5,554
|
)
|
|
$
|
2,636
|
|
|
$
|
(7,219
|
)
|
|
$
|
2,934
|
|
|
|
Income tax
|
|
1,113
|
|
|
(1,012
|
)
|
|
1,415
|
|
|
(1,125
|
)
|
||||
|
|
Net of tax
|
|
(4,441
|
)
|
|
1,624
|
|
|
(5,804
|
)
|
|
1,809
|
|
||||
Amortization of deferred actuarial loss and prior service cost
|
|
Other expenses
|
|
(4,948
|
)
|
|
(4,768
|
)
|
|
(8,015
|
)
|
|
(9,578
|
)
|
||||
|
|
Income tax
|
|
1,066
|
|
|
1,831
|
|
|
2,244
|
|
|
3,678
|
|
||||
|
|
Net of tax
|
|
(3,882
|
)
|
|
(2,937
|
)
|
|
(5,771
|
)
|
|
(5,900
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total reclassifications
|
|
|
|
$
|
(8,323
|
)
|
|
$
|
(1,313
|
)
|
|
$
|
(11,575
|
)
|
|
$
|
(4,091
|
)
|
(9)
|
Financial Instruments and Risk Management
|
|
Balance Sheet Location
|
|
Fair Value
|
||||||
|
June 30,
2018 |
|
December 30,
2017 |
||||||
Hedges
|
Other current assets
|
|
$
|
18,325
|
|
|
$
|
1,464
|
|
Non-hedges
|
Other current assets
|
|
4,122
|
|
|
136
|
|
||
Total derivative assets
|
|
|
22,447
|
|
|
1,600
|
|
||
|
|
|
|
|
|
||||
Hedges
|
Accrued liabilities
|
|
(732
|
)
|
|
(14,750
|
)
|
||
Non-hedges
|
Accrued liabilities
|
|
(703
|
)
|
|
(7,818
|
)
|
||
Total derivative liabilities
|
|
|
(1,435
|
)
|
|
(22,568
|
)
|
||
|
|
|
|
|
|
||||
Net derivative asset (liability)
|
|
|
$
|
21,012
|
|
|
$
|
(20,968
|
)
|
|
Amount of Gain (Loss)
Recognized in AOCI (Effective Portion) |
|
Amount of Gain (Loss)
Recognized in AOCI (Effective Portion) |
||||||||||||
|
Quarter Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
2018 |
|
July 1,
2017 |
|
June 30,
2018 |
|
July 1,
2017 |
||||||||
Foreign exchange contracts
|
$
|
26,982
|
|
|
$
|
(8,167
|
)
|
|
$
|
25,274
|
|
|
$
|
(26,281
|
)
|
|
Location of Gain (Loss)
Reclassified from AOCI into Income (Effective Portion) |
|
Amount of Gain (Loss)
Reclassified from AOCI into Income (Effective Portion) |
|
Amount of Gain (Loss)
Reclassified from AOCI into Income (Effective Portion) |
||||||||||||
|
|
Quarter Ended
|
|
Six Months Ended
|
|||||||||||||
|
|
June 30,
2018 |
|
July 1,
2017 |
|
June 30,
2018 |
|
July 1,
2017 |
|||||||||
Foreign exchange contracts
|
Cost of sales
|
|
$
|
(5,554
|
)
|
|
$
|
2,636
|
|
|
$
|
(7,219
|
)
|
|
$
|
2,934
|
|
|
Location of Gain (Loss)
Recognized in Income on Derivatives |
|
Amount of Gain (Loss)
Recognized in Income |
|
Amount of Gain (Loss)
Recognized in Income |
||||||||||||
|
Quarter Ended
|
|
Six Months Ended
|
||||||||||||||
|
June 30,
2018 |
|
July 1,
2017 |
|
June 30,
2018 |
|
July 1,
2017 |
||||||||||
Foreign exchange contracts
|
Cost of sales
|
|
$
|
10,011
|
|
|
$
|
—
|
|
|
$
|
19,111
|
|
|
$
|
—
|
|
Foreign exchange contracts
|
Selling, general and administrative expenses
|
|
472
|
|
|
(411
|
)
|
|
775
|
|
|
(4,675
|
)
|
||||
Total
|
|
|
$
|
10,483
|
|
|
$
|
(411
|
)
|
|
$
|
19,886
|
|
|
$
|
(4,675
|
)
|
(10)
|
Fair Value of Assets and Liabilities
|
|
Assets (Liabilities) at Fair Value as of
June 30, 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
|
$
|
22,447
|
|
|
$
|
—
|
|
|
$
|
22,447
|
|
|
$
|
—
|
|
Foreign exchange derivative contracts - liabilities
|
(1,435
|
)
|
|
—
|
|
|
(1,435
|
)
|
|
—
|
|
||||
|
21,012
|
|
|
—
|
|
|
21,012
|
|
|
—
|
|
||||
Deferred compensation plan liability
|
(49,329
|
)
|
|
—
|
|
|
(49,329
|
)
|
|
—
|
|
||||
Total
|
$
|
(28,317
|
)
|
|
$
|
—
|
|
|
$
|
(28,317
|
)
|
|
$
|
—
|
|
|
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
|
|
Six Months Ended
|
||||
|
July 1,
2017 |
|
July 1,
2017 |
||||
Net sales
|
$
|
—
|
|
|
$
|
6,865
|
|
Cost of sales
|
—
|
|
|
4,507
|
|
||
Gross profit
|
—
|
|
|
2,358
|
|
||
Selling, general and administrative expenses
|
(2
|
)
|
|
3,729
|
|
||
Operating profit (loss)
|
2
|
|
|
(1,371
|
)
|
||
Other expenses
|
—
|
|
|
303
|
|
||
Net (gain) loss on disposal of businesses
|
(524
|
)
|
|
242
|
|
||
Income (loss) from discontinued operations before income tax expense
|
526
|
|
|
(1,916
|
)
|
||
Income tax expense
|
158
|
|
|
181
|
|
||
Net income (loss) from discontinued operations, net of tax
|
$
|
368
|
|
|
$
|
(2,097
|
)
|
(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 span across the Innerwear and Activewear reportable segments.
|
|
Quarter Ended
|
|
Six Months Ended
|
||||||||||||
June 30,
2018 |
|
July 1,
2017 |
|
June 30,
2018 |
|
July 1,
2017 |
|||||||||
Net sales:
|
|
|
|
|
|
|
|
||||||||
Innerwear
|
$
|
694,694
|
|
|
$
|
719,006
|
|
|
$
|
1,185,772
|
|
|
$
|
1,224,196
|
|
Activewear
|
405,785
|
|
|
379,756
|
|
|
751,910
|
|
|
707,099
|
|
||||
International
|
545,862
|
|
|
475,242
|
|
|
1,115,749
|
|
|
952,640
|
|
||||
Other
|
69,102
|
|
|
72,606
|
|
|
133,516
|
|
|
143,030
|
|
||||
Total net sales
|
$
|
1,715,443
|
|
|
$
|
1,646,610
|
|
|
$
|
3,186,947
|
|
|
$
|
3,026,965
|
|
|
Quarter Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
2018 |
|
July 1,
2017 |
|
June 30,
2018 |
|
July 1,
2017 |
||||||||
Segment operating profit:
|
|
|
|
|
|
|
|
||||||||
Innerwear
|
$
|
159,129
|
|
|
$
|
177,628
|
|
|
$
|
260,548
|
|
|
$
|
294,250
|
|
Activewear
|
57,508
|
|
|
58,972
|
|
|
95,795
|
|
|
102,322
|
|
||||
International
|
76,558
|
|
|
60,147
|
|
|
153,619
|
|
|
112,809
|
|
||||
Other
|
7,160
|
|
|
7,716
|
|
|
9,787
|
|
|
10,344
|
|
||||
Total segment operating profit
|
300,355
|
|
|
304,463
|
|
|
519,749
|
|
|
519,725
|
|
||||
Items not included in segment operating profit:
|
|
|
|
|
|
|
|
||||||||
General corporate expenses
|
(46,002
|
)
|
|
(38,565
|
)
|
|
(90,533
|
)
|
|
(81,846
|
)
|
||||
Acquisition, integration and other action-related charges
|
(25,165
|
)
|
|
(26,062
|
)
|
|
(44,782
|
)
|
|
(64,429
|
)
|
||||
Amortization of intangibles
|
(9,125
|
)
|
|
(6,131
|
)
|
|
(18,313
|
)
|
|
(13,316
|
)
|
||||
Total operating profit
|
220,063
|
|
|
233,705
|
|
|
366,121
|
|
|
360,134
|
|
||||
Other expenses
|
(6,570
|
)
|
|
(6,422
|
)
|
|
(12,331
|
)
|
|
(12,967
|
)
|
||||
Interest expense, net
|
(48,430
|
)
|
|
(44,130
|
)
|
|
(94,193
|
)
|
|
(86,267
|
)
|
||||
Income from continuing operations before income tax expense
|
$
|
165,063
|
|
|
$
|
183,153
|
|
|
$
|
259,597
|
|
|
$
|
260,900
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Total net sales in
the second quarter of 2018
were
$1.72 billion
, compared with
$1.65 billion
in the same period of
2017
, representing a
4%
increase.
|
•
|
Operating profit decreased
6%
to
$220 million
in
the second quarter of 2018
, compared with
$234 million
in the same period of
2017
. As a percentage of sales, operating profit was
12.8%
in
the second quarter of 2018
compared to
14.2%
in the same period of
2017
. Included within operating profit for both
the second quarter of 2018
and
2017
were acquisition, integration and other action-related charges of $25 million and $26 million, respectively.
|
•
|
Diluted earnings per share from continuing operations decreased
17%
to
$0.39
in
the second quarter of 2018
, compared with
$0.47
in the same period of
2017
.
|
|
Quarter Ended
|
|
|
|
|
|||||||||
|
June 30,
2018 |
|
July 1,
2017 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
1,715,443
|
|
|
$
|
1,646,610
|
|
|
$
|
68,833
|
|
|
4.2
|
%
|
Cost of sales
|
1,055,487
|
|
|
1,000,708
|
|
|
54,779
|
|
|
5.5
|
|
|||
Gross profit
|
659,956
|
|
|
645,902
|
|
|
14,054
|
|
|
2.2
|
|
|||
Selling, general and administrative expenses
|
439,893
|
|
|
412,197
|
|
|
27,696
|
|
|
6.7
|
|
|||
Operating profit
|
220,063
|
|
|
233,705
|
|
|
(13,642
|
)
|
|
(5.8
|
)
|
|||
Other expenses
|
6,570
|
|
|
6,422
|
|
|
148
|
|
|
2.3
|
|
|||
Interest expense, net
|
48,430
|
|
|
44,130
|
|
|
4,300
|
|
|
9.7
|
|
|||
Income from continuing operations before income tax expense
|
165,063
|
|
|
183,153
|
|
|
(18,090
|
)
|
|
(9.9
|
)
|
|||
Income tax expense
|
24,430
|
|
|
10,989
|
|
|
13,441
|
|
|
122.3
|
|
|||
Income from continuing operations
|
140,633
|
|
|
172,164
|
|
|
(31,531
|
)
|
|
(18.3
|
)
|
|||
Income from discontinued operations, net of tax
|
—
|
|
|
368
|
|
|
(368
|
)
|
|
NM
|
|
|||
Net income
|
$
|
140,633
|
|
|
$
|
172,532
|
|
|
$
|
(31,899
|
)
|
|
(18.5
|
)%
|
•
|
Acquisition of Bras N Things in 2018 and Alternative Apparel in 2017, which added incremental net sales of $52 million in
the second 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 slightly in the quarter driven by performance of our key growth initiatives. Strong growth in our global
Champion
brand and online sales was offset in part by declines in our intimate apparel and
Hanes
activewear businesses; and
|
•
|
Favorable impact from foreign exchange rates in our International businesses of approximately $16 million.
|
|
Net Sales
|
|
Operating Profit
|
||||||||||||
|
Quarter Ended
|
|
Quarter Ended
|
||||||||||||
|
June 30,
2018 |
|
July 1,
2017 |
|
June 30,
2018 |
|
July 1,
2017 |
||||||||
|
(dollars in thousands)
|
||||||||||||||
Innerwear
|
$
|
694,694
|
|
|
$
|
719,006
|
|
|
$
|
159,129
|
|
|
$
|
177,628
|
|
Activewear
|
405,785
|
|
|
379,756
|
|
|
57,508
|
|
|
58,972
|
|
||||
International
|
545,862
|
|
|
475,242
|
|
|
76,558
|
|
|
60,147
|
|
||||
Other
|
69,102
|
|
|
72,606
|
|
|
7,160
|
|
|
7,716
|
|
||||
Corporate
|
—
|
|
|
—
|
|
|
(80,292
|
)
|
|
(70,758
|
)
|
||||
Total
|
$
|
1,715,443
|
|
|
$
|
1,646,610
|
|
|
$
|
220,063
|
|
|
$
|
233,705
|
|
|
Quarter Ended
|
|
|
|
|
|||||||||
|
June 30,
2018 |
|
July 1,
2017 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
694,694
|
|
|
$
|
719,006
|
|
|
$
|
(24,312
|
)
|
|
(3.4
|
)%
|
Segment operating profit
|
159,129
|
|
|
177,628
|
|
|
(18,499
|
)
|
|
(10.4
|
)
|
|||
Segment operating margin
|
22.9
|
%
|
|
24.7
|
%
|
|
|
|
|
|
Quarter Ended
|
|
|
|
|
|||||||||
|
June 30,
2018 |
|
July 1,
2017 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
405,785
|
|
|
$
|
379,756
|
|
|
$
|
26,029
|
|
|
6.9
|
%
|
Segment operating profit
|
57,508
|
|
|
58,972
|
|
|
(1,464
|
)
|
|
(2.5
|
)
|
|||
Segment operating margin
|
14.2
|
%
|
|
15.5
|
%
|
|
|
|
|
|
Quarter Ended
|
|
|
|
|
|||||||||
|
June 30,
2018 |
|
July 1,
2017 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
545,862
|
|
|
$
|
475,242
|
|
|
$
|
70,620
|
|
|
14.9
|
%
|
Segment operating profit
|
76,558
|
|
|
60,147
|
|
|
16,411
|
|
|
27.3
|
|
|||
Segment operating margin
|
14.0
|
%
|
|
12.7
|
%
|
|
|
|
|
•
|
Our acquisition of Bras N Things in the first quarter of 2018, which contributed incremental net sales of nearly $32 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 $16 million.
|
|
Quarter Ended
|
|
|
|
|
|||||||||
|
June 30,
2018 |
|
July 1,
2017 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
69,102
|
|
|
$
|
72,606
|
|
|
$
|
(3,504
|
)
|
|
(4.8
|
)%
|
Segment operating profit
|
7,160
|
|
|
7,716
|
|
|
(556
|
)
|
|
(7.2
|
)
|
|||
Segment operating margin
|
10.4
|
%
|
|
10.6
|
%
|
|
|
|
|
|
Quarter Ended
|
||||||
|
June 30,
2018 |
|
July 1,
2017 |
||||
|
(dollars in thousands)
|
||||||
Acquisition, integration and other action-related costs:
|
|
|
|
||||
Hanes Europe Innerwear
|
$
|
8,455
|
|
|
$
|
10,514
|
|
Hanes Australasia
|
6,647
|
|
|
5,970
|
|
||
Bras N Things
|
2,031
|
|
|
—
|
|
||
Champion Europe
|
1,078
|
|
|
4,399
|
|
||
Smaller acquisitions and other action-related costs
|
6,954
|
|
|
5,179
|
|
||
Total acquisition, integration and other action-related costs
|
$
|
25,165
|
|
|
$
|
26,062
|
|
|
Six Months Ended
|
|
|
|
|
|||||||||
|
June 30,
2018 |
|
July 1,
2017 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
3,186,947
|
|
|
$
|
3,026,965
|
|
|
$
|
159,982
|
|
|
5.3
|
%
|
Cost of sales
|
1,948,070
|
|
|
1,841,532
|
|
|
106,538
|
|
|
5.8
|
|
|||
Gross profit
|
1,238,877
|
|
|
1,185,433
|
|
|
53,444
|
|
|
4.5
|
|
|||
Selling, general and administrative expenses
|
872,756
|
|
|
825,299
|
|
|
47,457
|
|
|
5.8
|
|
|||
Operating profit
|
366,121
|
|
|
360,134
|
|
|
5,987
|
|
|
1.7
|
|
|||
Other expenses
|
12,331
|
|
|
12,967
|
|
|
(636
|
)
|
|
(4.9
|
)
|
|||
Interest expense, net
|
94,193
|
|
|
86,267
|
|
|
7,926
|
|
|
9.2
|
|
|||
Income from continuing operations before income tax expense
|
259,597
|
|
|
260,900
|
|
|
(1,303
|
)
|
|
(0.5
|
)
|
|||
Income tax expense
|
39,555
|
|
|
15,654
|
|
|
23,901
|
|
|
152.7
|
|
|||
Income from continuing operations
|
220,042
|
|
|
245,246
|
|
|
(25,204
|
)
|
|
(10.3
|
)
|
|||
Loss from discontinued operations, net of tax
|
—
|
|
|
(2,097
|
)
|
|
2,097
|
|
|
NM
|
|
|||
Net income
|
$
|
220,042
|
|
|
$
|
243,149
|
|
|
$
|
(23,107
|
)
|
|
(9.5
|
)%
|
•
|
Acquisitions of Bras N Things in 2018 and Alternative Apparel in 2017, which added incremental net sales of $84 million in the
six
months 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 50 basis points in the
six
months of 2018 driven by strong growth in our global
Champion
and online sales, offset in part by declines in our intimate apparel and
Hanes
activewear businesses; and
|
•
|
Favorable impact from foreign exchange rates in our International businesses of approximately $60 million.
|
|
Net Sales
|
|
Operating Profit
|
||||||||||||
|
Six Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
2018 |
|
July 1,
2017 |
|
June 30,
2018 |
|
July 1,
2017 |
||||||||
|
(dollars in thousands)
|
||||||||||||||
Innerwear
|
$
|
1,185,772
|
|
|
$
|
1,224,196
|
|
|
$
|
260,548
|
|
|
$
|
294,250
|
|
Activewear
|
751,910
|
|
|
707,099
|
|
|
95,795
|
|
|
102,322
|
|
||||
International
|
1,115,749
|
|
|
952,640
|
|
|
153,619
|
|
|
112,809
|
|
||||
Other
|
$
|
133,516
|
|
|
143,030
|
|
|
9,787
|
|
|
10,344
|
|
|||
Corporate
|
—
|
|
|
—
|
|
|
(153,628
|
)
|
|
(159,591
|
)
|
||||
Total
|
$
|
3,186,947
|
|
|
$
|
3,026,965
|
|
|
$
|
366,121
|
|
|
$
|
360,134
|
|
|
Six Months Ended
|
|
|
|
|
|||||||||
|
June 30,
2018 |
|
July 1,
2017 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
1,185,772
|
|
|
$
|
1,224,196
|
|
|
$
|
(38,424
|
)
|
|
(3.1
|
)%
|
Segment operating profit
|
260,548
|
|
|
294,250
|
|
|
(33,702
|
)
|
|
(11.5
|
)
|
|||
Segment operating margin
|
22.0
|
%
|
|
24.0
|
%
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
|||||||||
|
June 30,
2018 |
|
July 1,
2017 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
751,910
|
|
|
$
|
707,099
|
|
|
$
|
44,811
|
|
|
6.3
|
%
|
Segment operating profit
|
95,795
|
|
|
102,322
|
|
|
(6,527
|
)
|
|
(6.4
|
)
|
|||
Segment operating margin
|
12.7
|
%
|
|
14.5
|
%
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
|||||||||
|
June 30,
2018 |
|
July 1,
2017 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
1,115,749
|
|
|
$
|
952,640
|
|
|
$
|
163,109
|
|
|
17.1
|
%
|
Segment operating profit
|
153,619
|
|
|
112,809
|
|
|
40,810
|
|
|
36.2
|
|
|||
Segment operating margin
|
13.8
|
%
|
|
11.8
|
%
|
|
|
|
|
•
|
Our acquisition of Bras N Things in the first quarter of 2018, which contributed incremental net sales of $48 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 $60 million.
|
|
Six Months Ended
|
|
|
|
|
|||||||||
|
June 30,
2018 |
|
July 1,
2017 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
133,516
|
|
|
$
|
143,030
|
|
|
$
|
(9,514
|
)
|
|
(6.7
|
)%
|
Segment operating profit
|
9,787
|
|
|
10,344
|
|
|
(557
|
)
|
|
(5.4
|
)
|
|||
Segment operating margin
|
7.3
|
%
|
|
7.2
|
%
|
|
|
|
|
|
Six Months Ended
|
||||||
|
June 30,
2018 |
|
July 1,
2017 |
||||
|
(dollars in thousands)
|
||||||
Acquisition, integration and other action-related costs:
|
|
|
|
||||
Hanes Europe Innerwear
|
$
|
17,031
|
|
|
$
|
30,392
|
|
Hanes Australasia
|
12,739
|
|
|
17,978
|
|
||
Bras N Things
|
3,276
|
|
|
—
|
|
||
Champion Europe
|
2,958
|
|
|
5,567
|
|
||
Smaller acquisitions and other action-related costs
|
8,778
|
|
|
10,492
|
|
||
Total acquisition, integration and other action-related costs
|
$
|
44,782
|
|
|
$
|
64,429
|
|
|
As of June 30, 2018
|
||||||
Borrowing
Capacity
|
|
Borrowing
Availability
|
|||||
|
(dollars in thousands)
|
||||||
Senior Secured Credit Facility:
|
|
|
|
||||
Revolving Loan Facility
|
$
|
1,000,000
|
|
|
$
|
507,915
|
|
Australian Revolving Loan Facility
|
47,710
|
|
|
47,710
|
|
||
European Revolving Loan Facility
|
116,850
|
|
|
—
|
|
||
Accounts Receivable Securitization Facility
1
|
200,000
|
|
|
—
|
|
||
Other international credit facilities
|
179,443
|
|
|
120,726
|
|
||
Total liquidity from credit facilities
|
$
|
1,544,003
|
|
|
$
|
676,351
|
|
•
|
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.
|
|
Six Months Ended
|
||||||
|
June 30,
2018 |
|
July 1,
2017 |
||||
|
(dollars in thousands)
|
||||||
Operating activities
|
$
|
(64,398
|
)
|
|
$
|
34,250
|
|
Investing activities
|
(373,716
|
)
|
|
13,301
|
|
||
Financing activities
|
417,883
|
|
|
(55,211
|
)
|
||
Effect of changes in foreign currency exchange rates on cash
|
20,176
|
|
|
(3,170
|
)
|
||
Change in cash, cash equivalents and restricted cash
|
(55
|
)
|
|
(10,830
|
)
|
||
Cash and cash equivalents at beginning of year
|
421,566
|
|
|
460,245
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
421,511
|
|
|
449,415
|
|
||
Less restricted cash at end of period
|
23,540
|
|
|
—
|
|
||
Cash and cash equivalents per balance sheet at end of period
|
$
|
397,971
|
|
|
$
|
449,415
|
|
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
|
|
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
3.3
|
|
|
|
|
|
3.4
|
|
|
|
|
|
3.5
|
|
|
|
|
|
10.1
|
|
|
|
|
|
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
|
HANESBRANDS INC.
|
||
|
|
|
By:
|
|
/s/ Barry A. Hytinen
|
|
|
Barry A. Hytinen
Chief Financial Officer
(Duly authorized officer and principal financial officer)
|
(a)
|
Eligibility for Severance.
|
(i)
|
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:
|
(A)
|
Executive’s
employment is terminated involuntarily without
Cause
(defined in subparagraph 2(a)(ii)(A)); or
|
(B)
|
Executive
terminates his or her employment at the request of
Company
.
|
(ii)
|
Ineligible Terminations
. Notwithstanding subparagraph (a)(i) next above,
Executive
shall not be eligible for any severance payments or benefits under
|
(A)
|
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
;
|
(B)
|
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;
|
(C)
|
A termination due to death;
|
(D)
|
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”
);
|
(E)
|
A voluntary termination of employment other than at the request of
Company
;
|
(F)
|
A termination following which
Executive
is immediately offered and accepts new employment with
Company
, or becomes a non-executive member of the Board;
|
(G)
|
The transfer of
Executive’s
employment to a subsidiary or affiliate of
Company
with his consent;
|
(H)
|
A termination of employment that qualifies
Executive
to receive
severance payments or benefits under section 3 below following a
Change in Control
; or
|
(I)
|
Any other termination of employment under circumstances not described in subparagraph 2(a)(i).
|
(iii)
|
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.
|
(iv)
|
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.
|
(b)
|
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:
|
(i)
|
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.
|
(ii)
|
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:
|
(A)
|
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
|
(B)
|
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.
|
(iii)
|
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;
|
(iv)
|
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
|
(c)
|
Payment of Severance
. Subject to section 15:
|
(i)
|
Salary Portion.
The
Salary Portion of Severance
shall be paid as follows:
|
(A)
|
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.
|
(B)
|
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).
|
(ii)
|
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.
|
(iii)
|
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.
|
(d)
|
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.
|
(e)
|
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.
|
(f)
|
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.
|
(a)
|
Eligibility for Change in Control Benefits
.
|
(i)
|
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.
|
(ii)
|
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
):
|
(A)
|
A material adverse change in
Executive’s
duties or responsibilities;
|
(B)
|
A reduction in
Executive’s
annual base salary except any reduction of not more than ten (10) percent;
|
(C)
|
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;
|
(D)
|
The failure of any successor to
Company
to assume and agree to perform this
Agreement
; or
|
(E)
|
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
.
|
(iii)
|
Change in Control.
For purposes of this
Agreement
, a
“Change in Control”
will occur:
|
(A)
|
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
:
|
1)
|
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
);
|
2)
|
Any acquisition by
Company
;
|
3)
|
Any acquisition by an employee benefit plan (or related trust) sponsored or maintained by
Company
or any corporation controlled by
Company
; or
|
4)
|
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
|
(B)
|
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:
|
1)
|
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
|
2)
|
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
|
3)
|
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
|
(C)
|
Upon the consummation of a plan of complete liquidation or dissolution of
Company
; or
|
(D)
|
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
).
|
(iv)
|
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.
|
(b)
|
Change in Control Benefits
.
In the event
Executive
becomes entitled to receive benefits under this section 3, the following shall apply:
|
(i)
|
In consideration of
Executive’s
covenants hereunder,
Executive
shall be entitled to receive the following amounts, payable as provided in section 3(j):
|
(A)
|
A lump sum payment equal to the unpaid portion of
Executive’s
annual
Base Salary
and vacation accrued through the
Termination Date
;
|
(B)
|
A lump sum payment equal to
Executive’s
prorated
Annual Incentive Plan
payment (as determined in accordance with subparagraph 2(b)(ii)(A) above);
|
(C)
|
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
|
(D)
|
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%).
|
(ii)
|
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
|
(iii)
|
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;
|
(iv)
|
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
.
|
(c)
|
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
.
|
(d)
|
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
.
|
(e)
|
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
.
|
(f)
|
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
.
|
(g)
|
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.
|
(h)
|
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”)
.
|
(i)
|
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.
|
(j)
|
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.
|
(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.
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(o)
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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
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EXECUTIVE:
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HANESBRANDS INC.
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Signature:
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By:
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Title:
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10.
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Release
.
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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 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
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(b)
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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.
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(c)
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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.
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(d)
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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.
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(e)
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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.
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EXECUTIVE:
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HANESBRANDS INC.
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Signature:
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By:
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Title:
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Name
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Date of Agreement
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Michael E. Faircloth
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August 21, 2013
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Barry A. Hytinen
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October 16, 2017
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Jonathan Ram
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May 21, 2018
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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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