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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
|
|
Nine Months Ended
|
||||||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
September 29,
2018 |
|
September 30,
2017 |
||||||||
Net sales
|
$
|
1,848,707
|
|
|
$
|
1,799,270
|
|
|
$
|
5,035,654
|
|
|
$
|
4,826,235
|
|
Cost of sales
|
1,136,040
|
|
|
1,120,813
|
|
|
3,084,110
|
|
|
2,962,345
|
|
||||
Gross profit
|
712,667
|
|
|
678,457
|
|
|
1,951,544
|
|
|
1,863,890
|
|
||||
Selling, general and administrative expenses
|
455,778
|
|
|
419,991
|
|
|
1,328,534
|
|
|
1,245,290
|
|
||||
Operating profit
|
256,889
|
|
|
258,466
|
|
|
623,010
|
|
|
618,600
|
|
||||
Other expenses
|
7,285
|
|
|
7,043
|
|
|
19,616
|
|
|
20,010
|
|
||||
Interest expense, net
|
52,795
|
|
|
43,917
|
|
|
146,988
|
|
|
130,184
|
|
||||
Income from continuing operations before income tax expense
|
196,809
|
|
|
207,506
|
|
|
456,406
|
|
|
468,406
|
|
||||
Income tax expense
|
25,388
|
|
|
4,150
|
|
|
64,943
|
|
|
19,804
|
|
||||
Income from continuing operations
|
171,421
|
|
|
203,356
|
|
|
391,463
|
|
|
448,602
|
|
||||
Loss from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,097
|
)
|
||||
Net income
|
$
|
171,421
|
|
|
$
|
203,356
|
|
|
$
|
391,463
|
|
|
$
|
446,505
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per share — basic:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.47
|
|
|
$
|
0.56
|
|
|
$
|
1.08
|
|
|
$
|
1.22
|
|
Discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
||||
Net income
|
$
|
0.47
|
|
|
$
|
0.56
|
|
|
$
|
1.08
|
|
|
$
|
1.21
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per share — diluted:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.47
|
|
|
$
|
0.55
|
|
|
$
|
1.07
|
|
|
$
|
1.21
|
|
Discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
||||
Net income
|
$
|
0.47
|
|
|
$
|
0.55
|
|
|
$
|
1.07
|
|
|
$
|
1.20
|
|
|
Quarter Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
September 29,
2018 |
|
September 30,
2017 |
||||||||
Net income
|
$
|
171,421
|
|
|
$
|
203,356
|
|
|
$
|
391,463
|
|
|
$
|
446,505
|
|
Other comprehensive income (loss), net of tax of ($1,236), $1,427, ($12,315) and $7,870, respectively
|
(13,944
|
)
|
|
5,051
|
|
|
(47,292
|
)
|
|
9,349
|
|
||||
Comprehensive income
|
$
|
157,477
|
|
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$
|
208,407
|
|
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$
|
344,171
|
|
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$
|
455,854
|
|
|
September 29,
2018 |
|
December 30,
2017 |
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
398,499
|
|
|
$
|
421,566
|
|
Trade accounts receivable, net
|
1,044,516
|
|
|
903,318
|
|
||
Inventories
|
2,139,281
|
|
|
1,874,990
|
|
||
Other current assets
|
154,909
|
|
|
186,496
|
|
||
Total current assets
|
3,737,205
|
|
|
3,386,370
|
|
||
Property, net
|
607,649
|
|
|
623,991
|
|
||
Trademarks and other identifiable intangibles, net
|
1,586,148
|
|
|
1,402,857
|
|
||
Goodwill
|
1,252,524
|
|
|
1,167,007
|
|
||
Deferred tax assets
|
191,649
|
|
|
234,932
|
|
||
Other noncurrent assets
|
80,331
|
|
|
79,618
|
|
||
Total assets
|
$
|
7,455,506
|
|
|
$
|
6,894,775
|
|
|
|
|
|
||||
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Accounts payable
|
$
|
975,138
|
|
|
$
|
867,649
|
|
Accrued liabilities
|
531,740
|
|
|
649,634
|
|
||
Notes payable
|
14,051
|
|
|
11,873
|
|
||
Accounts Receivable Securitization Facility
|
221,979
|
|
|
125,209
|
|
||
Current portion of long-term debt
|
284,220
|
|
|
124,380
|
|
||
Total current liabilities
|
2,027,128
|
|
|
1,778,745
|
|
||
Long-term debt
|
3,863,580
|
|
|
3,702,054
|
|
||
Pension and postretirement benefits
|
386,647
|
|
|
405,238
|
|
||
Other noncurrent liabilities
|
307,563
|
|
|
322,536
|
|
||
Total liabilities
|
6,584,918
|
|
|
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 — 360,660,993 and 360,125,894, respectively
|
3,607
|
|
|
3,601
|
|
||
Additional paid-in capital
|
275,671
|
|
|
271,462
|
|
||
Retained earnings
|
1,077,808
|
|
|
850,345
|
|
||
Accumulated other comprehensive loss
|
(486,498
|
)
|
|
(439,206
|
)
|
||
Total stockholders’ equity
|
870,588
|
|
|
686,202
|
|
||
Total liabilities and stockholders’ equity
|
$
|
7,455,506
|
|
|
$
|
6,894,775
|
|
HANESBRANDS INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
|
|||||||
|
Nine Months Ended
|
||||||
|
September 29,
2018 |
|
September 30,
2017 |
||||
Operating activities:
|
|
|
|
||||
Net income
|
$
|
391,463
|
|
|
$
|
446,505
|
|
Adjustments to reconcile net income to net cash from operating activities:
|
|
|
|
||||
Depreciation and amortization of long-lived assets
|
99,314
|
|
|
89,762
|
|
||
Amortization of debt issuance costs
|
6,951
|
|
|
7,943
|
|
||
Stock compensation expense
|
4,621
|
|
|
6,351
|
|
||
Deferred taxes and other
|
(4,170
|
)
|
|
(10,591
|
)
|
||
Changes in assets and liabilities, net of acquisition of business:
|
|
|
|
||||
Accounts receivable
|
(156,509
|
)
|
|
(147,933
|
)
|
||
Inventories
|
(278,962
|
)
|
|
(74,945
|
)
|
||
Other assets
|
42,122
|
|
|
(42,664
|
)
|
||
Accounts payable
|
116,189
|
|
|
71,264
|
|
||
Accrued pension and postretirement benefits
|
(4,840
|
)
|
|
15,021
|
|
||
Accrued liabilities and other
|
(74,890
|
)
|
|
(29,623
|
)
|
||
Net cash from operating activities
|
141,289
|
|
|
331,090
|
|
||
Investing activities:
|
|
|
|
||||
Purchases of property, plant and equipment
|
(63,472
|
)
|
|
(60,418
|
)
|
||
Proceeds from sales of assets
|
1,779
|
|
|
4,398
|
|
||
Acquisition of business, net of cash acquired
|
(334,916
|
)
|
|
(524
|
)
|
||
Disposition of businesses
|
—
|
|
|
40,285
|
|
||
Net cash from investing activities
|
(396,609
|
)
|
|
(16,259
|
)
|
||
Financing activities:
|
|
|
|
||||
Borrowings on notes payable
|
217,709
|
|
|
212,804
|
|
||
Repayments on notes payable
|
(217,987
|
)
|
|
(249,708
|
)
|
||
Borrowings on Accounts Receivable Securitization Facility
|
191,896
|
|
|
342,315
|
|
||
Repayments on Accounts Receivable Securitization Facility
|
(95,126
|
)
|
|
(135,841
|
)
|
||
Borrowings on Revolving Loan Facilities
|
2,841,860
|
|
|
2,957,799
|
|
||
Repayments on Revolving Loan Facilities
|
(2,488,500
|
)
|
|
(2,738,000
|
)
|
||
Repayments on Term Loan Facilities
|
(22,500
|
)
|
|
(201,281
|
)
|
||
Repayments on International Debt
|
(1,105
|
)
|
|
(44,073
|
)
|
||
Share repurchases
|
—
|
|
|
(299,919
|
)
|
||
Cash dividends paid
|
(162,200
|
)
|
|
(165,211
|
)
|
||
Payments to amend and refinance credit facilities
|
(633
|
)
|
|
(559
|
)
|
||
Payment of contingent consideration
|
(3,540
|
)
|
|
(41,250
|
)
|
||
Taxes paid related to net shares settlement of equity awards
|
(5,778
|
)
|
|
(8,075
|
)
|
||
Other
|
486
|
|
|
3,401
|
|
||
Net cash from financing activities
|
254,582
|
|
|
(367,598
|
)
|
||
Effect of changes in foreign exchange rates on cash
|
879
|
|
|
(7,433
|
)
|
||
Change in cash, cash equivalents and restricted cash
|
141
|
|
|
(60,200
|
)
|
||
Cash and cash equivalents at beginning of year
|
421,566
|
|
|
460,245
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
421,707
|
|
|
400,045
|
|
||
Less restricted cash at end of period
|
23,208
|
|
|
—
|
|
||
Cash and cash equivalents per balance sheet at end of period
|
$
|
398,499
|
|
|
$
|
400,045
|
|
(1)
|
Basis of Presentation
|
(2)
|
Recent Accounting Pronouncements
|
(3)
|
Revenue Recognition
|
|
Quarter Ended
|
|
Nine Months Ended
|
||||
|
September 29,
2018 |
|
September 29,
2018 |
||||
Third-party brick-and-mortar wholesale
|
$
|
1,458,126
|
|
|
$
|
3,968,426
|
|
Consumer-directed
|
390,581
|
|
|
1,067,228
|
|
||
Total net sales
|
$
|
1,848,707
|
|
|
$
|
5,035,654
|
|
(4)
|
Acquisitions
|
Cash and cash equivalents
|
$
|
2,765
|
|
Accounts receivable, net
|
197
|
|
|
Inventories
|
9,610
|
|
|
Other current assets
|
1,637
|
|
|
Property, net
|
11,764
|
|
|
Trademarks and other identifiable intangibles
|
278,214
|
|
|
Deferred tax assets and other noncurrent assets
|
2,539
|
|
|
Total assets acquired
|
306,726
|
|
|
Accounts payable
|
4,929
|
|
|
Accrued liabilities and other
|
16,339
|
|
|
Deferred tax liabilities and other noncurrent liabilities
|
7,864
|
|
|
Total liabilities assumed
|
29,132
|
|
|
Net assets acquired
|
277,594
|
|
|
Goodwill
|
111,611
|
|
|
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
|
|
Nine Months Ended
|
||||||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
September 29,
2018 |
|
September 30,
2017 |
||||||||
Net sales
|
$
|
1,848,707
|
|
|
$
|
1,831,502
|
|
|
$
|
5,054,161
|
|
|
$
|
4,919,291
|
|
Net income from continuing operations
|
171,421
|
|
|
209,768
|
|
|
394,494
|
|
|
460,947
|
|
||||
Earnings per share from continuing operations:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.47
|
|
|
$
|
0.57
|
|
|
$
|
1.09
|
|
|
$
|
1.25
|
|
Diluted
|
0.47
|
|
|
0.57
|
|
|
1.08
|
|
|
1.24
|
|
(5)
|
Stockholders’ Equity
|
|
Quarter Ended
|
|
Nine Months Ended
|
||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
September 29,
2018 |
|
September 30,
2017 |
||||
Basic weighted average shares outstanding
|
363,510
|
|
|
366,083
|
|
|
363,338
|
|
|
368,885
|
|
Effect of potentially dilutive securities:
|
|
|
|
|
|
|
|
||||
Stock options
|
723
|
|
|
1,541
|
|
|
882
|
|
|
1,591
|
|
Restricted stock units
|
401
|
|
|
535
|
|
|
303
|
|
|
470
|
|
Employee stock purchase plan and other
|
4
|
|
|
1
|
|
|
4
|
|
|
1
|
|
Diluted weighted average shares outstanding
|
364,638
|
|
|
368,160
|
|
|
364,527
|
|
|
370,947
|
|
(6)
|
Inventories
|
|
September 29,
2018 |
|
December 30,
2017 |
||||
Raw materials
|
$
|
134,684
|
|
|
$
|
129,287
|
|
Work in process
|
195,559
|
|
|
226,659
|
|
||
Finished goods
|
1,809,038
|
|
|
1,519,044
|
|
||
|
$
|
2,139,281
|
|
|
$
|
1,874,990
|
|
(7)
|
Debt
|
|
Interest
Rate as of September 29, 2018 |
|
Principal Amount
|
|
Maturity Date
|
||||||
|
September 29,
2018 |
|
December 30,
2017 |
|
|||||||
Senior Secured Credit Facility:
|
|
|
|
|
|
|
|
||||
Revolving Loan Facility
|
3.69%
|
|
$
|
313,500
|
|
|
$
|
—
|
|
|
December 2022
|
Term Loan A
|
3.70%
|
|
731,250
|
|
|
750,000
|
|
|
December 2022
|
||
Term Loan B
|
3.99%
|
|
496,250
|
|
|
500,000
|
|
|
December 2024
|
||
Australian Term A-1
|
3.39%
|
|
125,686
|
|
|
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%
|
|
580,248
|
|
|
599,649
|
|
|
June 2024
|
||
European Revolving Loan Facility
|
1.50%
|
|
116,050
|
|
|
81,539
|
|
|
September 2019
|
||
Accounts Receivable Securitization Facility
|
2.97%
|
|
221,979
|
|
|
125,209
|
|
|
March 2019
|
||
Other International Debt
|
Various
|
|
21,559
|
|
|
1,044
|
|
|
Various
|
||
|
|
|
4,406,522
|
|
|
3,993,267
|
|
|
|
||
Less debt issuance costs
|
|
|
36,743
|
|
|
41,624
|
|
|
|
||
Less current maturities
|
|
|
506,199
|
|
|
249,589
|
|
|
|
||
|
|
|
$
|
3,863,580
|
|
|
$
|
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
|
—
|
|
|
9,686
|
|
|
12,934
|
|
|
(5,492
|
)
|
|
17,128
|
|
|||||
Current-period other comprehensive income (loss) activity
|
(82,664
|
)
|
|
25,067
|
|
|
—
|
|
|
(6,823
|
)
|
|
(64,420
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at September 29, 2018
|
$
|
(126,169
|
)
|
|
$
|
9,292
|
|
|
$
|
(601,066
|
)
|
|
$
|
231,445
|
|
|
$
|
(486,498
|
)
|
Component of AOCI
|
|
Location of Reclassification into Income
|
|
Amount of Reclassification
from AOCI |
|
Amount of Reclassification
from AOCI |
||||||||||||
|
Quarter Ended
|
|
Nine Months Ended
|
|||||||||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
September 29,
2018 |
|
September 30,
2017 |
|||||||||||
Gain (loss) on foreign exchange contracts
|
|
Cost of sales
|
|
$
|
(2,467
|
)
|
|
$
|
414
|
|
|
$
|
(9,686
|
)
|
|
$
|
3,348
|
|
|
|
Income tax
|
|
455
|
|
|
191
|
|
|
1,870
|
|
|
(934
|
)
|
||||
|
|
Net of tax
|
|
(2,012
|
)
|
|
605
|
|
|
(7,816
|
)
|
|
2,414
|
|
||||
Amortization of deferred actuarial loss and prior service cost
|
|
Other expenses
|
|
(4,919
|
)
|
|
(4,862
|
)
|
|
(12,934
|
)
|
|
(14,440
|
)
|
||||
|
|
Income tax
|
|
1,378
|
|
|
1,867
|
|
|
3,622
|
|
|
5,545
|
|
||||
|
|
Net of tax
|
|
(3,541
|
)
|
|
(2,995
|
)
|
|
(9,312
|
)
|
|
(8,895
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total reclassifications
|
|
|
|
$
|
(5,553
|
)
|
|
$
|
(2,390
|
)
|
|
$
|
(17,128
|
)
|
|
$
|
(6,481
|
)
|
(9)
|
Financial Instruments and Risk Management
|
|
Balance Sheet Location
|
|
Fair Value
|
||||||
|
September 29,
2018 |
|
December 30,
2017 |
||||||
Hedges
|
Other current assets
|
|
$
|
14,316
|
|
|
$
|
1,464
|
|
Non-hedges
|
Other current assets
|
|
4,774
|
|
|
136
|
|
||
Total derivative assets
|
|
|
19,090
|
|
|
1,600
|
|
||
|
|
|
|
|
|
||||
Hedges
|
Accrued liabilities
|
|
(766
|
)
|
|
(14,750
|
)
|
||
Non-hedges
|
Accrued liabilities
|
|
(976
|
)
|
|
(7,818
|
)
|
||
Total derivative liabilities
|
|
|
(1,742
|
)
|
|
(22,568
|
)
|
||
|
|
|
|
|
|
||||
Net derivative asset (liability)
|
|
|
$
|
17,348
|
|
|
$
|
(20,968
|
)
|
|
Amount of Loss
Recognized in AOCI (Effective Portion) |
|
Amount of Gain (Loss)
Recognized in AOCI (Effective Portion) |
||||||||||||
|
Quarter Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
September 29,
2018 |
|
September 30,
2017 |
||||||||
Foreign exchange contracts
|
$
|
(207
|
)
|
|
$
|
(17,379
|
)
|
|
$
|
25,067
|
|
|
$
|
(43,660
|
)
|
|
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
|
|
Nine Months Ended
|
|||||||||||||
|
|
September 29,
2018 |
|
September 30,
2017 |
|
September 29,
2018 |
|
September 30,
2017 |
|||||||||
Foreign exchange contracts
|
Cost of sales
|
|
$
|
(2,467
|
)
|
|
$
|
414
|
|
|
$
|
(9,686
|
)
|
|
$
|
3,348
|
|
|
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
|
|
Nine Months Ended
|
||||||||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
September 29,
2018 |
|
September 30,
2017 |
||||||||||
Foreign exchange contracts
|
Cost of sales
|
|
$
|
(2,241
|
)
|
|
$
|
—
|
|
|
$
|
16,870
|
|
|
$
|
—
|
|
Foreign exchange contracts
|
Selling, general and administrative expenses
|
|
(445
|
)
|
|
3,277
|
|
|
330
|
|
|
(1,398
|
)
|
||||
Total
|
|
|
$
|
(2,686
|
)
|
|
$
|
3,277
|
|
|
$
|
17,200
|
|
|
$
|
(1,398
|
)
|
(10)
|
Fair Value of Assets and Liabilities
|
|
Assets (Liabilities) at Fair Value as of
September 29, 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
|
$
|
19,090
|
|
|
$
|
—
|
|
|
$
|
19,090
|
|
|
$
|
—
|
|
Foreign exchange derivative contracts - liabilities
|
(1,742
|
)
|
|
—
|
|
|
(1,742
|
)
|
|
—
|
|
||||
|
17,348
|
|
|
—
|
|
|
17,348
|
|
|
—
|
|
||||
Deferred compensation plan liability
|
(46,340
|
)
|
|
—
|
|
|
(46,340
|
)
|
|
—
|
|
||||
Total
|
$
|
(28,992
|
)
|
|
$
|
—
|
|
|
$
|
(28,992
|
)
|
|
$
|
—
|
|
|
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
|
|
Nine Months Ended
|
||||
|
September 30,
2017 |
|
September 30,
2017 |
||||
Net sales
|
$
|
—
|
|
|
$
|
6,865
|
|
Cost of sales
|
—
|
|
|
4,507
|
|
||
Gross profit
|
—
|
|
|
2,358
|
|
||
Selling, general and administrative expenses
|
—
|
|
|
3,729
|
|
||
Operating loss
|
—
|
|
|
(1,371
|
)
|
||
Other expenses
|
—
|
|
|
303
|
|
||
Net loss on disposal of businesses
|
—
|
|
|
242
|
|
||
Loss from discontinued operations before income tax expense
|
—
|
|
|
(1,916
|
)
|
||
Income tax expense
|
—
|
|
|
181
|
|
||
Net loss from discontinued operations, net of tax
|
$
|
—
|
|
|
$
|
(2,097
|
)
|
(13)
|
Subsequent Event
|
(14)
|
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
|
|
Nine Months Ended
|
||||||||||||
September 29,
2018 |
|
September 30,
2017 |
|
September 29,
2018 |
|
September 30,
2017 |
|||||||||
Net sales:
|
|
|
|
|
|
|
|
||||||||
Innerwear
|
$
|
599,726
|
|
|
$
|
644,059
|
|
|
$
|
1,785,498
|
|
|
$
|
1,868,255
|
|
Activewear
|
554,953
|
|
|
519,496
|
|
|
1,306,863
|
|
|
1,226,595
|
|
||||
International
|
619,435
|
|
|
556,730
|
|
|
1,735,184
|
|
|
1,509,370
|
|
||||
Other
|
74,593
|
|
|
78,985
|
|
|
208,109
|
|
|
222,015
|
|
||||
Total net sales
|
$
|
1,848,707
|
|
|
$
|
1,799,270
|
|
|
$
|
5,035,654
|
|
|
$
|
4,826,235
|
|
|
Quarter Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
September 29,
2018 |
|
September 30,
2017 |
||||||||
Segment operating profit:
|
|
|
|
|
|
|
|
||||||||
Innerwear
|
$
|
132,244
|
|
|
$
|
152,983
|
|
|
$
|
392,792
|
|
|
$
|
447,233
|
|
Activewear
|
93,605
|
|
|
87,497
|
|
|
189,400
|
|
|
189,819
|
|
||||
International
|
99,624
|
|
|
78,394
|
|
|
253,243
|
|
|
191,203
|
|
||||
Other
|
8,400
|
|
|
12,109
|
|
|
18,187
|
|
|
22,453
|
|
||||
Total segment operating profit
|
333,873
|
|
|
330,983
|
|
|
853,622
|
|
|
850,708
|
|
||||
Items not included in segment operating profit:
|
|
|
|
|
|
|
|
||||||||
General corporate expenses
|
(46,161
|
)
|
|
(45,364
|
)
|
|
(136,694
|
)
|
|
(127,210
|
)
|
||||
Acquisition, integration and other action-related charges
|
(20,732
|
)
|
|
(16,874
|
)
|
|
(65,514
|
)
|
|
(81,303
|
)
|
||||
Amortization of intangibles
|
(10,091
|
)
|
|
(10,279
|
)
|
|
(28,404
|
)
|
|
(23,595
|
)
|
||||
Total operating profit
|
256,889
|
|
|
258,466
|
|
|
623,010
|
|
|
618,600
|
|
||||
Other expenses
|
(7,285
|
)
|
|
(7,043
|
)
|
|
(19,616
|
)
|
|
(20,010
|
)
|
||||
Interest expense, net
|
(52,795
|
)
|
|
(43,917
|
)
|
|
(146,988
|
)
|
|
(130,184
|
)
|
||||
Income from continuing operations before income tax expense
|
$
|
196,809
|
|
|
$
|
207,506
|
|
|
$
|
456,406
|
|
|
$
|
468,406
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Total net sales in
the third quarter of 2018
were
$1.85 billion
, compared with
$1.80 billion
in the same period of
2017
, representing a
3%
increase.
|
•
|
Operating profit decreased
1%
to
$257 million
in
the third quarter of 2018
, compared with
$258 million
in the same period of
2017
. As a percentage of sales, operating profit was
13.9%
in
the third quarter of 2018
compared to
14.4%
in the same period of
2017
.
|
•
|
Diluted earnings per share from continuing operations decreased
15%
to
$0.47
in
the third quarter of 2018
, compared with
$0.55
in the same period of
2017
.
|
|
Quarter Ended
|
|
|
|
|
|||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
1,848,707
|
|
|
$
|
1,799,270
|
|
|
$
|
49,437
|
|
|
2.7
|
%
|
Cost of sales
|
1,136,040
|
|
|
1,120,813
|
|
|
15,227
|
|
|
1.4
|
|
|||
Gross profit
|
712,667
|
|
|
678,457
|
|
|
34,210
|
|
|
5.0
|
|
|||
Selling, general and administrative expenses
|
455,778
|
|
|
419,991
|
|
|
35,787
|
|
|
8.5
|
|
|||
Operating profit
|
256,889
|
|
|
258,466
|
|
|
(1,577
|
)
|
|
(0.6
|
)
|
|||
Other expenses
|
7,285
|
|
|
7,043
|
|
|
242
|
|
|
3.4
|
|
|||
Interest expense, net
|
52,795
|
|
|
43,917
|
|
|
8,878
|
|
|
20.2
|
|
|||
Income from continuing operations before income tax expense
|
196,809
|
|
|
207,506
|
|
|
(10,697
|
)
|
|
(5.2
|
)
|
|||
Income tax expense
|
25,388
|
|
|
4,150
|
|
|
21,238
|
|
|
511.8
|
|
|||
Income from continuing operations
|
171,421
|
|
|
203,356
|
|
|
(31,935
|
)
|
|
(15.7
|
)
|
|||
Income from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
NM
|
|
|||
Net income
|
$
|
171,421
|
|
|
$
|
203,356
|
|
|
$
|
(31,935
|
)
|
|
(15.7
|
)%
|
•
|
Acquisition of Bras N Things in 2018 and Alternative Apparel in 2017, which added incremental net sales of $48 million in
the third 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, which increased more than 1% in the quarter, driven by strong growth in our global
Champion
brand, men’s underwear business and online sales, partially offset by declines in our remaining innerwear and activewear product categories; and
|
•
|
Unfavorable impact from foreign exchange rates in our International businesses of approximately $22 million.
|
|
Net Sales
|
|
Operating Profit
|
||||||||||||
|
Quarter Ended
|
|
Quarter Ended
|
||||||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
September 29,
2018 |
|
September 30,
2017 |
||||||||
|
(dollars in thousands)
|
||||||||||||||
Innerwear
|
$
|
599,726
|
|
|
$
|
644,059
|
|
|
$
|
132,244
|
|
|
$
|
152,983
|
|
Activewear
|
554,953
|
|
|
519,496
|
|
|
93,605
|
|
|
87,497
|
|
||||
International
|
619,435
|
|
|
556,730
|
|
|
99,624
|
|
|
78,394
|
|
||||
Other
|
74,593
|
|
|
78,985
|
|
|
8,400
|
|
|
12,109
|
|
||||
Corporate
|
—
|
|
|
—
|
|
|
(76,984
|
)
|
|
(72,517
|
)
|
||||
Total
|
$
|
1,848,707
|
|
|
$
|
1,799,270
|
|
|
$
|
256,889
|
|
|
$
|
258,466
|
|
|
Quarter Ended
|
|
|
|
|
|||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
599,726
|
|
|
$
|
644,059
|
|
|
$
|
(44,333
|
)
|
|
(6.9
|
)%
|
Segment operating profit
|
132,244
|
|
|
152,983
|
|
|
(20,739
|
)
|
|
(13.6
|
)
|
|||
Segment operating margin
|
22.1
|
%
|
|
23.8
|
%
|
|
|
|
|
|
Quarter Ended
|
|
|
|
|
|||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
554,953
|
|
|
$
|
519,496
|
|
|
$
|
35,457
|
|
|
6.8
|
%
|
Segment operating profit
|
93,605
|
|
|
87,497
|
|
|
6,108
|
|
|
7.0
|
|
|||
Segment operating margin
|
16.9
|
%
|
|
16.8
|
%
|
|
|
|
|
|
Quarter Ended
|
|
|
|
|
|||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
619,435
|
|
|
$
|
556,730
|
|
|
$
|
62,705
|
|
|
11.3
|
%
|
Segment operating profit
|
99,624
|
|
|
78,394
|
|
|
21,230
|
|
|
27.1
|
|
|||
Segment operating margin
|
16.1
|
%
|
|
14.1
|
%
|
|
|
|
|
•
|
Our acquisition of Bras N Things in the first quarter of 2018, which contributed incremental net sales of $32 million; and
|
•
|
Organic sales on a constant currency basis, defined as sales excluding the impact of foreign currency and businesses acquired within 12 months, increased 10% in the international segment driven by our global
Champion
sales growth, primarily in the Europe and Asia markets.
|
•
|
Unfavorable impact of foreign currency exchange rates of approximately $22 million.
|
|
Quarter Ended
|
|
|
|
|
|||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
74,593
|
|
|
$
|
78,985
|
|
|
$
|
(4,392
|
)
|
|
(5.6
|
)%
|
Segment operating profit
|
8,400
|
|
|
12,109
|
|
|
(3,709
|
)
|
|
(30.6
|
)
|
|||
Segment operating margin
|
11.3
|
%
|
|
15.3
|
%
|
|
|
|
|
|
Quarter Ended
|
||||||
|
September 29,
2018 |
|
September 30,
2017 |
||||
|
(dollars in thousands)
|
||||||
Acquisition, integration and other action-related costs:
|
|
|
|
||||
Hanes Europe Innerwear
|
$
|
7,076
|
|
|
$
|
8,136
|
|
Hanes Australasia
|
1,444
|
|
|
9,383
|
|
||
Bras N Things
|
2,065
|
|
|
—
|
|
||
Champion Europe
|
350
|
|
|
2,528
|
|
||
Smaller acquisitions and other action-related costs
|
9,797
|
|
|
(3,173
|
)
|
||
Total acquisition, integration and other action-related costs
|
$
|
20,732
|
|
|
$
|
16,874
|
|
|
Nine Months Ended
|
|
|
|
|
|||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
5,035,654
|
|
|
$
|
4,826,235
|
|
|
$
|
209,419
|
|
|
4.3
|
%
|
Cost of sales
|
3,084,110
|
|
|
2,962,345
|
|
|
121,765
|
|
|
4.1
|
|
|||
Gross profit
|
1,951,544
|
|
|
1,863,890
|
|
|
87,654
|
|
|
4.7
|
|
|||
Selling, general and administrative expenses
|
1,328,534
|
|
|
1,245,290
|
|
|
83,244
|
|
|
6.7
|
|
|||
Operating profit
|
623,010
|
|
|
618,600
|
|
|
4,410
|
|
|
0.7
|
|
|||
Other expenses
|
19,616
|
|
|
20,010
|
|
|
(394
|
)
|
|
(2.0
|
)
|
|||
Interest expense, net
|
146,988
|
|
|
130,184
|
|
|
16,804
|
|
|
12.9
|
|
|||
Income from continuing operations before income tax expense
|
456,406
|
|
|
468,406
|
|
|
(12,000
|
)
|
|
(2.6
|
)
|
|||
Income tax expense
|
64,943
|
|
|
19,804
|
|
|
45,139
|
|
|
227.9
|
|
|||
Income from continuing operations
|
391,463
|
|
|
448,602
|
|
|
(57,139
|
)
|
|
(12.7
|
)
|
|||
Loss from discontinued operations, net of tax
|
—
|
|
|
(2,097
|
)
|
|
2,097
|
|
|
NM
|
|
|||
Net income
|
$
|
391,463
|
|
|
$
|
446,505
|
|
|
$
|
(55,042
|
)
|
|
(12.3
|
)%
|
•
|
Acquisitions of Bras N Things in 2018 and Alternative Apparel in 2017, which added incremental net sales of nearly $132 million in the
nine
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 nearly 1% in the
nine
months of 2018 driven by strong growth in our global
Champion
and online sales, offset in part by declines in our basic, intimate apparel and
Hanes
activewear businesses; and
|
•
|
Favorable impact from foreign exchange rates in our International businesses of approximately $38 million.
|
|
Net Sales
|
|
Operating Profit
|
||||||||||||
|
Nine Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
September 29,
2018 |
|
September 30,
2017 |
||||||||
|
(dollars in thousands)
|
||||||||||||||
Innerwear
|
$
|
1,785,498
|
|
|
$
|
1,868,255
|
|
|
$
|
392,792
|
|
|
$
|
447,233
|
|
Activewear
|
1,306,863
|
|
|
1,226,595
|
|
|
189,400
|
|
|
189,819
|
|
||||
International
|
1,735,184
|
|
|
1,509,370
|
|
|
253,243
|
|
|
191,203
|
|
||||
Other
|
$
|
208,109
|
|
|
222,015
|
|
|
18,187
|
|
|
22,453
|
|
|||
Corporate
|
—
|
|
|
—
|
|
|
(230,612
|
)
|
|
(232,108
|
)
|
||||
Total
|
$
|
5,035,654
|
|
|
$
|
4,826,235
|
|
|
$
|
623,010
|
|
|
$
|
618,600
|
|
|
Nine Months Ended
|
|
|
|
|
|||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
1,785,498
|
|
|
$
|
1,868,255
|
|
|
$
|
(82,757
|
)
|
|
(4.4
|
)%
|
Segment operating profit
|
392,792
|
|
|
447,233
|
|
|
(54,441
|
)
|
|
(12.2
|
)
|
|||
Segment operating margin
|
22.0
|
%
|
|
23.9
|
%
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
|||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
1,306,863
|
|
|
$
|
1,226,595
|
|
|
$
|
80,268
|
|
|
6.5
|
%
|
Segment operating profit
|
189,400
|
|
|
189,819
|
|
|
(419
|
)
|
|
(0.2
|
)
|
|||
Segment operating margin
|
14.5
|
%
|
|
15.5
|
%
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
|||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
1,735,184
|
|
|
$
|
1,509,370
|
|
|
$
|
225,814
|
|
|
15.0
|
%
|
Segment operating profit
|
253,243
|
|
|
191,203
|
|
|
62,040
|
|
|
32.4
|
|
|||
Segment operating margin
|
14.6
|
%
|
|
12.7
|
%
|
|
|
|
|
•
|
Our acquisition of Bras N Things in the first quarter of 2018, which contributed incremental net sales of $80 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 $38 million.
|
|
Nine Months Ended
|
|
|
|
|
|||||||||
|
September 29,
2018 |
|
September 30,
2017 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
208,109
|
|
|
$
|
222,015
|
|
|
$
|
(13,906
|
)
|
|
(6.3
|
)%
|
Segment operating profit
|
18,187
|
|
|
22,453
|
|
|
(4,266
|
)
|
|
(19.0
|
)
|
|||
Segment operating margin
|
8.7
|
%
|
|
10.1
|
%
|
|
|
|
|
|
Nine Months Ended
|
||||||
|
September 29,
2018 |
|
September 30,
2017 |
||||
|
(dollars in thousands)
|
||||||
Acquisition, integration and other action-related costs:
|
|
|
|
||||
Hanes Europe Innerwear
|
$
|
24,107
|
|
|
$
|
38,528
|
|
Hanes Australasia
|
14,183
|
|
|
27,361
|
|
||
Bras N Things
|
5,341
|
|
|
—
|
|
||
Champion Europe
|
3,308
|
|
|
8,096
|
|
||
Smaller acquisitions and other action-related costs
|
18,575
|
|
|
7,318
|
|
||
Total acquisition, integration and other action-related costs
|
$
|
65,514
|
|
|
$
|
81,303
|
|
|
As of September 29, 2018
|
||||||
Borrowing
Capacity
|
|
Borrowing
Availability
|
|||||
|
(dollars in thousands)
|
||||||
Senior Secured Credit Facility:
|
|
|
|
||||
Revolving Loan Facility
|
$
|
1,000,000
|
|
|
$
|
682,165
|
|
Australian Revolving Loan Facility
|
47,177
|
|
|
25,507
|
|
||
European Revolving Loan Facility
|
116,050
|
|
|
—
|
|
||
Accounts Receivable Securitization Facility
1
|
225,000
|
|
|
—
|
|
||
Other international credit facilities
|
180,567
|
|
|
116,688
|
|
||
Total liquidity from credit facilities
|
$
|
1,568,794
|
|
|
$
|
824,360
|
|
•
|
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.
|
|
Nine Months Ended
|
||||||
|
September 29,
2018 |
|
September 30,
2017 |
||||
|
(dollars in thousands)
|
||||||
Operating activities
|
$
|
141,289
|
|
|
$
|
331,090
|
|
Investing activities
|
(396,609
|
)
|
|
(16,259
|
)
|
||
Financing activities
|
254,582
|
|
|
(367,598
|
)
|
||
Effect of changes in foreign currency exchange rates on cash
|
879
|
|
|
(7,433
|
)
|
||
Change in cash, cash equivalents and restricted cash
|
141
|
|
|
(60,200
|
)
|
||
Cash and cash equivalents at beginning of year
|
421,566
|
|
|
460,245
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
421,707
|
|
|
400,045
|
|
||
Less restricted cash at end of period
|
23,208
|
|
|
—
|
|
||
Cash and cash equivalents per balance sheet at end of period
|
$
|
398,499
|
|
|
$
|
400,045
|
|
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
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2
|
|
|
|
|
|
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)
|
/s/ Gerald W. Evans, Jr.
|
Gerald W. Evans, Jr.
Chief Executive Officer
|
/s/ Barry A. Hytinen
|
Barry A. Hytinen
Chief Financial Officer
|
/s/ Gerald W. Evans, Jr.
|
Gerald W. Evans, Jr.
Chief Executive Officer
|
/s/ Barry A. Hytinen
|
Barry A. Hytinen
Chief Financial Officer
|