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☒
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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
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Winston-Salem,
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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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☒
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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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Title of each class
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Trading Symbol
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Name of each exchange on which registered
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Common Stock, Par Value $0.01
|
HBI
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New York Stock Exchange
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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.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 5.
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Item 6.
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Item 1.
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Financial Statements
|
|
Quarters Ended
|
|
Six Months Ended
|
||||||||||||
|
June 27,
2020 |
|
June 29,
2019 |
|
June 27,
2020 |
|
June 29,
2019 |
||||||||
Net sales
|
$
|
1,738,779
|
|
|
$
|
1,760,927
|
|
|
$
|
3,055,241
|
|
|
$
|
3,348,951
|
|
Cost of sales
|
1,105,767
|
|
|
1,085,404
|
|
|
1,948,497
|
|
|
2,053,397
|
|
||||
Gross profit
|
633,012
|
|
|
675,523
|
|
|
1,106,744
|
|
|
1,295,554
|
|
||||
Selling, general and administrative expenses
|
391,476
|
|
|
445,923
|
|
|
831,078
|
|
|
916,310
|
|
||||
Operating profit
|
241,536
|
|
|
229,600
|
|
|
275,666
|
|
|
379,244
|
|
||||
Other expenses
|
5,050
|
|
|
8,249
|
|
|
11,540
|
|
|
15,700
|
|
||||
Interest expense, net
|
41,659
|
|
|
46,522
|
|
|
78,508
|
|
|
94,581
|
|
||||
Income before income tax expense
|
194,827
|
|
|
174,829
|
|
|
185,618
|
|
|
268,963
|
|
||||
Income tax expense
|
33,646
|
|
|
25,274
|
|
|
32,311
|
|
|
38,320
|
|
||||
Net income
|
$
|
161,181
|
|
|
$
|
149,555
|
|
|
$
|
153,307
|
|
|
$
|
230,643
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.46
|
|
|
$
|
0.41
|
|
|
$
|
0.43
|
|
|
$
|
0.63
|
|
Diluted
|
$
|
0.46
|
|
|
$
|
0.41
|
|
|
$
|
0.43
|
|
|
$
|
0.63
|
|
|
Quarters Ended
|
|
Six Months Ended
|
||||||||||||
|
June 27,
2020 |
|
June 29,
2019 |
|
June 27,
2020 |
|
June 29,
2019 |
||||||||
Net income
|
$
|
161,181
|
|
|
$
|
149,555
|
|
|
$
|
153,307
|
|
|
$
|
230,643
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Translation adjustments
|
95,033
|
|
|
(3,202
|
)
|
|
(22,121
|
)
|
|
4,184
|
|
||||
Unrealized gain (loss) on qualifying cash flow hedges, net of tax of $4,031, $1,915, $(3,249) and $3,573, respectively
|
(6,177
|
)
|
|
(5,158
|
)
|
|
1,606
|
|
|
(9,077
|
)
|
||||
Unrecognized income from pension and postretirement plans, net of tax of $(1,794), $(1,411), $(3,066) and $(2,616), respectively
|
3,560
|
|
|
3,553
|
|
|
7,154
|
|
|
6,950
|
|
||||
Total other comprehensive income (loss)
|
92,416
|
|
|
(4,807
|
)
|
|
(13,361
|
)
|
|
2,057
|
|
||||
Comprehensive income
|
$
|
253,597
|
|
|
$
|
144,748
|
|
|
$
|
139,946
|
|
|
$
|
232,700
|
|
|
June 27,
2020 |
|
December 28,
2019 |
|
June 29,
2019 |
||||||
Assets
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
683,114
|
|
|
$
|
328,876
|
|
|
$
|
257,941
|
|
Trade accounts receivable, net
|
1,196,826
|
|
|
815,210
|
|
|
1,011,816
|
|
|||
Inventories
|
1,958,443
|
|
|
1,905,845
|
|
|
2,223,199
|
|
|||
Other current assets
|
193,422
|
|
|
174,634
|
|
|
176,296
|
|
|||
Total current assets
|
4,031,805
|
|
|
3,224,565
|
|
|
3,669,252
|
|
|||
Property, net
|
565,849
|
|
|
587,896
|
|
|
597,444
|
|
|||
Right-of-use assets
|
479,677
|
|
|
487,787
|
|
|
484,168
|
|
|||
Trademarks and other identifiable intangibles, net
|
1,478,721
|
|
|
1,520,800
|
|
|
1,541,306
|
|
|||
Goodwill
|
1,233,184
|
|
|
1,235,711
|
|
|
1,240,853
|
|
|||
Deferred tax assets
|
200,047
|
|
|
203,331
|
|
|
220,927
|
|
|||
Other noncurrent assets
|
123,677
|
|
|
93,896
|
|
|
92,087
|
|
|||
Total assets
|
$
|
8,112,960
|
|
|
$
|
7,353,986
|
|
|
$
|
7,846,037
|
|
|
|
|
|
|
|
||||||
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
||||||
Accounts payable
|
$
|
1,152,273
|
|
|
$
|
959,006
|
|
|
$
|
1,026,863
|
|
Accrued liabilities
|
568,228
|
|
|
531,184
|
|
|
561,172
|
|
|||
Lease liabilities
|
160,432
|
|
|
166,091
|
|
|
144,453
|
|
|||
Notes payable
|
8,803
|
|
|
4,244
|
|
|
4,695
|
|
|||
Accounts Receivable Securitization Facility
|
—
|
|
|
—
|
|
|
190,311
|
|
|||
Current portion of long-term debt
|
112,512
|
|
|
110,914
|
|
|
156,189
|
|
|||
Total current liabilities
|
2,002,248
|
|
|
1,771,439
|
|
|
2,083,683
|
|
|||
Long-term debt
|
3,985,631
|
|
|
3,256,870
|
|
|
3,671,066
|
|
|||
Lease liabilities - noncurrent
|
362,570
|
|
|
358,281
|
|
|
371,964
|
|
|||
Pension and postretirement benefits
|
374,052
|
|
|
403,458
|
|
|
351,453
|
|
|||
Other noncurrent liabilities
|
309,139
|
|
|
327,343
|
|
|
342,485
|
|
|||
Total liabilities
|
7,033,640
|
|
|
6,117,391
|
|
|
6,820,651
|
|
|||
|
|
|
|
|
|
||||||
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 — 348,092,986, 362,449,037 and 361,530,648, respectively
|
3,481
|
|
|
3,624
|
|
|
3,615
|
|
|||
Additional paid-in capital
|
302,522
|
|
|
304,395
|
|
|
308,555
|
|
|||
Retained earnings
|
1,404,326
|
|
|
1,546,224
|
|
|
1,285,842
|
|
|||
Accumulated other comprehensive loss
|
(631,009
|
)
|
|
(617,648
|
)
|
|
(572,626
|
)
|
|||
Total stockholders’ equity
|
1,079,320
|
|
|
1,236,595
|
|
|
1,025,386
|
|
|||
Total liabilities and stockholders’ equity
|
$
|
8,112,960
|
|
|
$
|
7,353,986
|
|
|
$
|
7,846,037
|
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Total
|
|||||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||||||
Balances at March 28, 2020
|
348,035
|
|
|
$
|
3,480
|
|
|
$
|
297,456
|
|
|
$
|
1,296,060
|
|
|
$
|
(723,425
|
)
|
|
$
|
873,571
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
161,181
|
|
|
—
|
|
|
161,181
|
|
|||||
Dividends ($0.15 per common share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(52,915
|
)
|
|
—
|
|
|
(52,915
|
)
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
92,416
|
|
|
92,416
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
4,393
|
|
|
—
|
|
|
—
|
|
|
4,393
|
|
|||||
Net exercise of stock options, vesting of restricted stock units and other
|
58
|
|
|
1
|
|
|
673
|
|
|
—
|
|
|
—
|
|
|
674
|
|
|||||
Balances at June 27, 2020
|
348,093
|
|
|
$
|
3,481
|
|
|
$
|
302,522
|
|
|
$
|
1,404,326
|
|
|
$
|
(631,009
|
)
|
|
$
|
1,079,320
|
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Total
|
|||||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||||||
Balances at December 28, 2019
|
362,449
|
|
|
$
|
3,624
|
|
|
$
|
304,395
|
|
|
$
|
1,546,224
|
|
|
$
|
(617,648
|
)
|
|
$
|
1,236,595
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
153,307
|
|
|
—
|
|
|
153,307
|
|
|||||
Dividends ($0.30 per common share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(107,336
|
)
|
|
—
|
|
|
(107,336
|
)
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,361
|
)
|
|
(13,361
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
9,034
|
|
|
—
|
|
|
—
|
|
|
9,034
|
|
|||||
Net exercise of stock options, vesting of restricted stock units and other
|
108
|
|
|
2
|
|
|
1,348
|
|
|
—
|
|
|
—
|
|
|
1,350
|
|
|||||
Share repurchases
|
(14,464
|
)
|
|
(145
|
)
|
|
(12,255
|
)
|
|
(187,869
|
)
|
|
—
|
|
|
(200,269
|
)
|
|||||
Balances at June 27, 2020
|
348,093
|
|
|
$
|
3,481
|
|
|
$
|
302,522
|
|
|
$
|
1,404,326
|
|
|
$
|
(631,009
|
)
|
|
$
|
1,079,320
|
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Total
|
|||||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||||||
Balances at March 30, 2019
|
361,471
|
|
|
$
|
3,615
|
|
|
$
|
306,084
|
|
|
$
|
1,191,111
|
|
|
$
|
(567,819
|
)
|
|
$
|
932,991
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
149,555
|
|
|
—
|
|
|
149,555
|
|
|||||
Dividends ($0.15 per common share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(54,824
|
)
|
|
—
|
|
|
(54,824
|
)
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,807
|
)
|
|
(4,807
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
1,982
|
|
|
—
|
|
|
—
|
|
|
1,982
|
|
|||||
Net exercise of stock options, vesting of restricted stock units and other
|
60
|
|
|
—
|
|
|
489
|
|
|
—
|
|
|
—
|
|
|
489
|
|
|||||
Balances at June 29, 2019
|
361,531
|
|
|
$
|
3,615
|
|
|
$
|
308,555
|
|
|
$
|
1,285,842
|
|
|
$
|
(572,626
|
)
|
|
$
|
1,025,386
|
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Total
|
|||||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||||||
Balances at December 29, 2018
|
361,330
|
|
|
$
|
3,613
|
|
|
$
|
284,877
|
|
|
$
|
1,079,503
|
|
|
$
|
(495,867
|
)
|
|
$
|
872,126
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
230,643
|
|
|
—
|
|
|
230,643
|
|
|||||
Dividends ($0.30 per common share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(109,676
|
)
|
|
—
|
|
|
(109,676
|
)
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,057
|
|
|
2,057
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
7,039
|
|
|
—
|
|
|
—
|
|
|
7,039
|
|
|||||
Net exercise of stock options, vesting of restricted stock units and other
|
201
|
|
|
2
|
|
|
2,265
|
|
|
—
|
|
|
—
|
|
|
2,267
|
|
|||||
Modification of deferred compensation plans
|
—
|
|
|
—
|
|
|
14,374
|
|
|
—
|
|
|
—
|
|
|
14,374
|
|
|||||
Cumulative effect of change in adoption of leases standard
|
—
|
|
|
—
|
|
|
—
|
|
|
6,556
|
|
|
—
|
|
|
6,556
|
|
|||||
Stranded tax related to U.S. pension plan
|
—
|
|
|
—
|
|
|
—
|
|
|
78,816
|
|
|
(78,816
|
)
|
|
—
|
|
|||||
Balances at June 29, 2019
|
361,531
|
|
|
$
|
3,615
|
|
|
$
|
308,555
|
|
|
$
|
1,285,842
|
|
|
$
|
(572,626
|
)
|
|
$
|
1,025,386
|
|
HANESBRANDS INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
|
|||||||
|
Six Months Ended
|
||||||
|
June 27,
2020 |
|
June 29,
2019 |
||||
Operating activities:
|
|
|
|
||||
Net income
|
$
|
153,307
|
|
|
$
|
230,643
|
|
Adjustments to reconcile net income to net cash from operating activities:
|
|
|
|
||||
Depreciation
|
45,399
|
|
|
46,889
|
|
||
Amortization of acquisition intangibles
|
12,199
|
|
|
12,537
|
|
||
Other amortization
|
5,107
|
|
|
5,063
|
|
||
Impairment of intangible assets
|
20,319
|
|
|
—
|
|
||
Amortization of debt issuance costs
|
5,119
|
|
|
4,758
|
|
||
Stock compensation expense
|
9,189
|
|
|
7,247
|
|
||
Deferred taxes
|
(2,201
|
)
|
|
(2,582
|
)
|
||
Other
|
9,259
|
|
|
5,475
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(392,134
|
)
|
|
(137,445
|
)
|
||
Inventories
|
(61,409
|
)
|
|
(165,512
|
)
|
||
Other assets
|
(31,570
|
)
|
|
(28,579
|
)
|
||
Accounts payable
|
210,338
|
|
|
7,699
|
|
||
Accrued pension and postretirement benefits
|
(19,318
|
)
|
|
(18,321
|
)
|
||
Accrued liabilities and other
|
18,603
|
|
|
(25,235
|
)
|
||
Net cash from operating activities
|
(17,793
|
)
|
|
(57,363
|
)
|
||
Investing activities:
|
|
|
|
||||
Capital expenditures
|
(46,512
|
)
|
|
(58,285
|
)
|
||
Proceeds from sales of assets
|
66
|
|
|
518
|
|
||
Other
|
5,823
|
|
|
—
|
|
||
Net cash from investing activities
|
(40,623
|
)
|
|
(57,767
|
)
|
||
Financing activities:
|
|
|
|
||||
Borrowings on notes payable
|
116,669
|
|
|
162,592
|
|
||
Repayments on notes payable
|
(112,373
|
)
|
|
(163,703
|
)
|
||
Borrowings on Accounts Receivable Securitization Facility
|
227,061
|
|
|
123,812
|
|
||
Repayments on Accounts Receivable Securitization Facility
|
(227,061
|
)
|
|
(95,110
|
)
|
||
Borrowings on Revolving Loan Facilities
|
1,638,000
|
|
|
1,602,500
|
|
||
Repayments on Revolving Loan Facilities
|
(1,638,000
|
)
|
|
(1,422,500
|
)
|
||
Borrowings on Senior Notes
|
700,000
|
|
|
—
|
|
||
Repayments on Term Loan Facilities
|
—
|
|
|
(141,623
|
)
|
||
Borrowings on International Debt
|
31,222
|
|
|
7,141
|
|
||
Repayments on International Debt
|
—
|
|
|
(27,941
|
)
|
||
Share repurchases
|
(200,269
|
)
|
|
—
|
|
||
Cash dividends paid
|
(105,896
|
)
|
|
(108,449
|
)
|
||
Payments of debt issuance costs
|
(14,834
|
)
|
|
(768
|
)
|
||
Taxes paid related to net shares settlement of equity awards
|
(80
|
)
|
|
(1,157
|
)
|
||
Other
|
879
|
|
|
985
|
|
||
Net cash from financing activities
|
415,318
|
|
|
(64,221
|
)
|
||
Effect of changes in foreign exchange rates on cash
|
(2,669
|
)
|
|
4,282
|
|
||
Change in cash, cash equivalents and restricted cash
|
354,233
|
|
|
(175,069
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of year
|
329,923
|
|
|
455,732
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
684,156
|
|
|
280,663
|
|
||
Less restricted cash at end of period
|
1,042
|
|
|
22,722
|
|
||
Cash and cash equivalents per balance sheet at end of period
|
$
|
683,114
|
|
|
$
|
257,941
|
|
(1)
|
Basis of Presentation
|
(2)
|
Recent Accounting Pronouncements
|
(3)
|
Revenue Recognition
|
|
Quarters Ended
|
|
Six Months Ended
|
||||||||||||
|
June 27,
2020 |
|
June 29,
2019 |
|
June 27,
2020 |
|
June 29,
2019 |
||||||||
Third-party brick-and-mortar wholesale
|
$
|
1,345,016
|
|
|
$
|
1,360,994
|
|
|
$
|
2,323,143
|
|
|
$
|
2,592,417
|
|
Consumer-directed
|
393,763
|
|
|
399,933
|
|
|
732,098
|
|
|
756,534
|
|
||||
Total net sales
|
$
|
1,738,779
|
|
|
$
|
1,760,927
|
|
|
$
|
3,055,241
|
|
|
$
|
3,348,951
|
|
(4)
|
Acquisitions
|
(5)
|
Stockholders’ Equity
|
|
Quarters Ended
|
|
Six Months Ended
|
||||||||
|
June 27,
2020 |
|
June 29,
2019 |
|
June 27,
2020 |
|
June 29,
2019 |
||||
Basic weighted average shares outstanding
|
350,538
|
|
|
364,637
|
|
|
354,778
|
|
|
364,603
|
|
Effect of potentially dilutive securities:
|
|
|
|
|
|
|
|
||||
Stock options
|
143
|
|
|
480
|
|
|
182
|
|
|
475
|
|
Restricted stock units
|
143
|
|
|
415
|
|
|
165
|
|
|
335
|
|
Employee stock purchase plan and other
|
5
|
|
|
5
|
|
|
8
|
|
|
5
|
|
Diluted weighted average shares outstanding
|
350,829
|
|
|
365,537
|
|
|
355,133
|
|
|
365,418
|
|
(6)
|
Inventories
|
|
June 27,
2020 |
|
December 28,
2019 |
|
June 29,
2019 |
||||||
Raw materials
|
$
|
97,536
|
|
|
$
|
83,545
|
|
|
$
|
107,561
|
|
Work in process
|
137,508
|
|
|
136,592
|
|
|
169,509
|
|
|||
Finished goods
|
1,723,399
|
|
|
1,685,708
|
|
|
1,946,129
|
|
|||
|
$
|
1,958,443
|
|
|
$
|
1,905,845
|
|
|
$
|
2,223,199
|
|
(7)
|
Debt and Notes Payable
|
|
Interest
Rate as of June 27, 2020 |
|
Principal Amount
|
|
Maturity Date
|
||||||
|
June 27,
2020 |
|
December 28,
2019 |
|
|||||||
Senior Secured Credit Facility:
|
|
|
|
|
|
|
|
||||
Revolving Loan Facility
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
|
December 2022
|
Term Loan A
|
2.10%
|
|
625,000
|
|
|
625,000
|
|
|
December 2022
|
||
Term Loan B
|
1.93%
|
|
300,000
|
|
|
300,000
|
|
|
December 2024
|
||
Australian Revolving Loan Facility
|
1.67%
|
|
34,345
|
|
|
—
|
|
|
July 2021
|
||
5.375% Senior Notes
|
5.38%
|
|
700,000
|
|
|
—
|
|
|
May 2025
|
||
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%
|
|
562,556
|
|
|
558,847
|
|
|
June 2024
|
||
European Revolving Loan Facility
|
1.50%
|
|
112,512
|
|
|
110,914
|
|
|
September 2020
|
||
Accounts Receivable Securitization Facility
|
—
|
|
—
|
|
|
—
|
|
|
March 2021
|
||
Total debt
|
|
|
4,134,413
|
|
|
3,394,761
|
|
|
|
||
Notes payable
|
|
|
8,803
|
|
|
4,244
|
|
|
|
||
Total debt and notes payable
|
|
|
4,143,216
|
|
|
3,399,005
|
|
|
|
||
Less long-term debt issuance costs
|
|
|
36,270
|
|
|
26,977
|
|
|
|
||
Less notes payable
|
|
|
8,803
|
|
|
4,244
|
|
|
|
||
Less current maturities
|
|
|
112,512
|
|
|
110,914
|
|
|
|
||
Total long-term debt
|
|
|
$
|
3,985,631
|
|
|
$
|
3,256,870
|
|
|
|
(8)
|
Accumulated Other Comprehensive Loss
|
|
Cumulative Translation Adjustment(1)
|
|
Cash Flow Hedges
|
|
Defined Benefit Plans
|
|
Income Taxes
|
|
Accumulated Other Comprehensive Loss
|
||||||||||
Balance at December 28, 2019
|
$
|
(157,138
|
)
|
|
$
|
4,786
|
|
|
$
|
(629,360
|
)
|
|
$
|
164,064
|
|
|
$
|
(617,648
|
)
|
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
(8,174
|
)
|
|
10,289
|
|
|
(416
|
)
|
|
1,699
|
|
|||||
Current-period other comprehensive income (loss) activity
|
(22,121
|
)
|
|
13,029
|
|
|
(69
|
)
|
|
(5,899
|
)
|
|
(15,060
|
)
|
|||||
Total other comprehensive income (loss)
|
(22,121
|
)
|
|
4,855
|
|
|
10,220
|
|
|
(6,315
|
)
|
|
(13,361
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at June 27, 2020
|
$
|
(179,259
|
)
|
|
$
|
9,641
|
|
|
$
|
(619,140
|
)
|
|
$
|
157,749
|
|
|
$
|
(631,009
|
)
|
|
|
(1)
|
Cumulative Translation Adjustment includes translation adjustments and net investment hedges. See Note, “Financial Instruments and Risk Management” for additional disclosures about net investment hedges.
|
Component of AOCI
|
|
Location of Reclassification into Income
|
|
Amount of Reclassification from AOCI
|
||||||||||||||
|
Quarters Ended
|
|
Six Months Ended
|
|||||||||||||||
|
June 27,
2020 |
|
June 29,
2019 |
|
June 27,
2020 |
|
June 29,
2019 |
|||||||||||
Gain on foreign exchange contracts designated as cash flow hedges
|
|
Cost of sales
|
|
$
|
3,157
|
|
|
$
|
8,347
|
|
|
$
|
8,174
|
|
|
$
|
14,364
|
|
|
|
Income tax
|
|
(802
|
)
|
|
(1,887
|
)
|
|
(2,074
|
)
|
|
(3,408
|
)
|
||||
|
|
Net of tax
|
|
2,355
|
|
|
6,460
|
|
|
6,100
|
|
|
10,956
|
|
||||
Amortization of deferred actuarial loss and prior service cost
|
|
Other expenses
|
|
(5,423
|
)
|
|
(4,964
|
)
|
|
(10,289
|
)
|
|
(9,566
|
)
|
||||
|
|
Income tax
|
|
1,218
|
|
|
1,411
|
|
|
2,490
|
|
|
2,616
|
|
||||
|
|
Net of tax
|
|
(4,205
|
)
|
|
(3,553
|
)
|
|
(7,799
|
)
|
|
(6,950
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total reclassifications
|
|
|
|
$
|
(1,850
|
)
|
|
$
|
2,907
|
|
|
$
|
(1,699
|
)
|
|
$
|
4,006
|
|
(9)
|
Financial Instruments and Risk Management
|
|
Balance Sheet Location
|
|
Fair Value
|
||||||
|
June 27,
2020 |
|
December 28,
2019 |
||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
||||
Forward foreign exchange contracts
|
Other current assets
|
|
$
|
3,231
|
|
|
$
|
2,716
|
|
Cross-currency swap contracts
|
Other current assets
|
|
901
|
|
|
926
|
|
||
Cross-currency swap contracts
|
Other noncurrent assets
|
|
17,509
|
|
|
2,975
|
|
||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
||||
Forward foreign exchange contracts
|
Other current assets
|
|
3,926
|
|
|
5,314
|
|
||
Total derivative assets
|
|
|
25,567
|
|
|
11,931
|
|
||
|
|
|
|
|
|
||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
||||
Forward foreign exchange contracts
|
Accrued liabilities
|
|
(1,129
|
)
|
|
(2,246
|
)
|
||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
||||
Forward foreign exchange contracts
|
Accrued liabilities
|
|
(1,344
|
)
|
|
(1,147
|
)
|
||
Total derivative liabilities
|
|
|
(2,473
|
)
|
|
(3,393
|
)
|
||
|
|
|
|
|
|
||||
Net derivative asset
|
|
|
$
|
23,094
|
|
|
$
|
8,538
|
|
|
Amount of Gain (Loss) Recognized in AOCI on Derivative Instruments
|
||||||||||||||
|
Quarters Ended
|
|
Six Months Ended
|
||||||||||||
|
June 27,
2020 |
|
June 29,
2019 |
|
June 27,
2020 |
|
June 29,
2019 |
||||||||
Foreign exchange contracts
|
$
|
(7,051
|
)
|
|
$
|
1,274
|
|
|
$
|
13,029
|
|
|
$
|
1,714
|
|
|
Location of Gain
Reclassified from AOCI into Income |
|
Amount of Gain Reclassified from AOCI into Income
|
||||||||||||||
|
|
Quarters Ended
|
|
Six Months Ended
|
|||||||||||||
|
|
June 27,
2020 |
|
June 29,
2019 |
|
June 27,
2020 |
|
June 29,
2019 |
|||||||||
Foreign exchange contracts(1)
|
Cost of sales
|
|
$
|
3,157
|
|
|
$
|
8,347
|
|
|
$
|
8,174
|
|
|
$
|
14,364
|
|
|
|
(1)
|
The Company does not exclude amounts from effectiveness testing for cash flow hedges that would require recognition into earnings based on changes in fair value.
|
|
Quarters Ended
|
|
Six Months Ended
|
||||||||||||
|
June 27,
2020 |
|
June 29,
2019 |
|
June 27,
2020 |
|
June 29,
2019 |
||||||||
Total cost of sales in which the effects of cash flow hedges are recorded
|
$
|
1,105,767
|
|
|
$
|
1,085,404
|
|
|
$
|
1,948,497
|
|
|
$
|
2,053,397
|
|
|
|
|
Amount of Gain (Loss) Recognized in AOCI
|
||||||||||||||
|
|
|
Quarters Ended
|
|
Six Months Ended
|
||||||||||||
|
|
|
June 27,
2020 |
|
June 29,
2019 |
|
June 27,
2020 |
|
June 29,
2019 |
||||||||
Euro-denominated long-term debt
|
|
$
|
(4,196
|
)
|
|
$
|
—
|
|
|
$
|
(1,538
|
)
|
|
$
|
—
|
|
|
Cross-currency swap contracts
|
|
(1,004
|
)
|
|
—
|
|
|
10,728
|
|
|
—
|
|
|||||
Total
|
|
$
|
(5,200
|
)
|
|
$
|
—
|
|
|
$
|
9,190
|
|
|
$
|
—
|
|
|
Location of Gain Recognized in Income
|
|
Amount of Gain Recognized in Income
(Amount Excluded from Effectiveness Testing) |
||||||||||||||
|
|
Quarters Ended
|
|
Six Months Ended
|
|||||||||||||
|
|
June 27,
2020 |
|
June 29,
2019 |
|
June 27,
2020 |
|
June 29,
2019 |
|||||||||
Cross-currency swap contracts
|
Interest expense, net
|
|
$
|
2,020
|
|
|
$
|
—
|
|
|
$
|
3,967
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
Quarters Ended
|
|
Six Months Ended
|
||||||||||||
|
|
|
June 27,
2020 |
|
June 29,
2019 |
|
June 27,
2020 |
|
June 29,
2019 |
||||||||
Total interest expense, net in which the amounts excluded from effectiveness testing for net investment hedges are recorded
|
|
$
|
41,659
|
|
|
$
|
46,522
|
|
|
$
|
78,508
|
|
|
$
|
94,581
|
|
|
Location of Gain (Loss)
Recognized in Income on Derivatives |
|
Amount of Gain (Loss) Recognized in Income
|
||||||||||||||
|
Quarters Ended
|
|
Six Months Ended
|
||||||||||||||
|
June 27,
2020 |
|
June 29,
2019 |
|
June 27,
2020 |
|
June 29,
2019 |
||||||||||
Foreign exchange contracts
|
Cost of sales
|
|
$
|
(19,104
|
)
|
|
$
|
(9,361
|
)
|
|
$
|
(12,983
|
)
|
|
$
|
(18,758
|
)
|
Foreign exchange contracts
|
Selling, general and administrative expenses
|
|
1,959
|
|
|
(262
|
)
|
|
928
|
|
|
(921
|
)
|
||||
Total
|
|
|
$
|
(17,145
|
)
|
|
$
|
(9,623
|
)
|
|
$
|
(12,055
|
)
|
|
$
|
(19,679
|
)
|
(10)
|
Fair Value of Assets and Liabilities
|
|
Assets (Liabilities) at Fair Value as of
June 27, 2020 |
||||||||||||||
|
Total
|
|
Quoted Prices In
Active Markets for Identical Assets (Level 1) |
|
Significant
Other Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
Forward foreign exchange contracts - assets
|
$
|
7,157
|
|
|
$
|
—
|
|
|
$
|
7,157
|
|
|
$
|
—
|
|
Cross-currency swap contracts - assets
|
18,410
|
|
|
—
|
|
|
18,410
|
|
|
—
|
|
||||
Forward foreign exchange contracts - liabilities
|
(2,473
|
)
|
|
—
|
|
|
(2,473
|
)
|
|
—
|
|
||||
|
23,094
|
|
|
—
|
|
|
23,094
|
|
|
—
|
|
||||
Deferred compensation plan liability
|
(18,907
|
)
|
|
—
|
|
|
(18,907
|
)
|
|
—
|
|
||||
Total
|
$
|
4,187
|
|
|
$
|
—
|
|
|
$
|
4,187
|
|
|
$
|
—
|
|
|
Assets (Liabilities) at Fair Value as of
December 28, 2019 |
||||||||||||||
|
Total
|
|
Quoted Prices In
Active Markets for Identical Assets (Level 1) |
|
Significant
Other Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
Forward foreign exchange contracts - assets
|
$
|
8,030
|
|
|
$
|
—
|
|
|
$
|
8,030
|
|
|
$
|
—
|
|
Cross-currency swap contracts - assets
|
3,901
|
|
|
—
|
|
|
3,901
|
|
|
—
|
|
||||
Forward foreign exchange contracts - liabilities
|
(3,393
|
)
|
|
—
|
|
|
(3,393
|
)
|
|
—
|
|
||||
|
8,538
|
|
|
—
|
|
|
8,538
|
|
|
—
|
|
||||
Deferred compensation plan liability
|
(31,221
|
)
|
|
—
|
|
|
(31,221
|
)
|
|
—
|
|
||||
Total
|
$
|
(22,683
|
)
|
|
$
|
—
|
|
|
$
|
(22,683
|
)
|
|
$
|
—
|
|
(11)
|
Income Taxes
|
(12)
|
Business Segment Information
|
•
|
Innerwear includes sales of basic branded apparel products that are replenishment in nature under the product categories of men’s underwear, women’s panties, children’s underwear and socks, and intimate apparel, which includes bras and shapewear. Beginning in 2020, Innerwear also includes sales of PPE including products such as cloth face coverings and gowns.
|
•
|
Activewear includes sales of basic branded products that are primarily seasonal in nature to both retailers and wholesalers, as well as licensed sports apparel and licensed logo apparel in collegiate bookstores, mass retailers and other channels.
|
•
|
International includes sales of products in all of the Company’s categories, including PPE in 2020, outside the United States, primarily in Europe, Australia, Asia, Latin America and Canada.
|
|
Quarters Ended
|
|
Six Months Ended
|
||||||||||||
June 27,
2020 |
|
June 29,
2019 |
|
June 27,
2020 |
|
June 29,
2019 |
|||||||||
Net sales:
|
|
|
|
|
|
|
|
||||||||
Innerwear
|
$
|
1,094,814
|
|
|
$
|
678,604
|
|
|
$
|
1,517,216
|
|
|
$
|
1,154,549
|
|
Activewear
|
168,379
|
|
|
448,277
|
|
|
456,379
|
|
|
853,617
|
|
||||
International
|
456,875
|
|
|
568,863
|
|
|
1,012,776
|
|
|
1,215,043
|
|
||||
Other
|
18,711
|
|
|
65,183
|
|
|
68,870
|
|
|
125,742
|
|
||||
Total net sales
|
$
|
1,738,779
|
|
|
$
|
1,760,927
|
|
|
$
|
3,055,241
|
|
|
$
|
3,348,951
|
|
|
Quarters Ended
|
|
Six Months Ended
|
||||||||||||
|
June 27,
2020 |
|
June 29,
2019 |
|
June 27,
2020 |
|
June 29,
2019 |
||||||||
Segment operating profit:
|
|
|
|
|
|
|
|
||||||||
Innerwear
|
$
|
304,524
|
|
|
$
|
149,530
|
|
|
$
|
386,075
|
|
|
$
|
254,156
|
|
Activewear
|
(5,751
|
)
|
|
68,779
|
|
|
2,357
|
|
|
112,372
|
|
||||
International
|
79,124
|
|
|
81,078
|
|
|
131,142
|
|
|
180,851
|
|
||||
Other
|
(12,270
|
)
|
|
6,032
|
|
|
(18,395
|
)
|
|
6,786
|
|
||||
Total segment operating profit
|
365,627
|
|
|
305,419
|
|
|
501,179
|
|
|
554,165
|
|
||||
Items not included in segment operating profit:
|
|
|
|
|
|
|
|
||||||||
General corporate expenses
|
(52,079
|
)
|
|
(54,990
|
)
|
|
(115,712
|
)
|
|
(123,339
|
)
|
||||
Restructuring and other action-related charges
|
(63,296
|
)
|
|
(12,609
|
)
|
|
(92,495
|
)
|
|
(33,982
|
)
|
||||
Amortization of intangibles
|
(8,716
|
)
|
|
(8,220
|
)
|
|
(17,306
|
)
|
|
(17,600
|
)
|
||||
Total operating profit
|
241,536
|
|
|
229,600
|
|
|
275,666
|
|
|
379,244
|
|
||||
Other expenses
|
(5,050
|
)
|
|
(8,249
|
)
|
|
(11,540
|
)
|
|
(15,700
|
)
|
||||
Interest expense, net
|
(41,659
|
)
|
|
(46,522
|
)
|
|
(78,508
|
)
|
|
(94,581
|
)
|
||||
Income before income tax expense
|
$
|
194,827
|
|
|
$
|
174,829
|
|
|
$
|
185,618
|
|
|
$
|
268,963
|
|
(13)
|
Revisions of Previously Issued Condensed Consolidated Interim Financial Statements
|
|
Quarter Ended June 29, 2019
|
||||||||||
Condensed Consolidated Statement of Income Line Item
|
As Previously Reported
|
|
Adjustments
|
|
As Revised
|
||||||
Cost of sales
|
$
|
1,086,248
|
|
|
$
|
(844
|
)
|
|
$
|
1,085,404
|
|
Gross profit
|
674,679
|
|
|
844
|
|
|
675,523
|
|
|||
Selling, general and administrative expenses
|
440,662
|
|
|
5,261
|
|
|
445,923
|
|
|||
Operating profit
|
234,017
|
|
|
(4,417
|
)
|
|
229,600
|
|
|||
Income before income tax expense
|
179,246
|
|
|
(4,417
|
)
|
|
174,829
|
|
|||
Net income
|
153,972
|
|
|
(4,417
|
)
|
|
149,555
|
|
|||
|
|
|
|
|
|
||||||
Earnings per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
0.42
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.41
|
|
Diluted
|
$
|
0.42
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.41
|
|
|
Six Months Ended June 29, 2019
|
||||||||||
Condensed Consolidated Statement of Income Line Item
|
As Previously Reported
|
|
Adjustments
|
|
As Revised
|
||||||
Cost of sales
|
$
|
2,053,396
|
|
|
$
|
1
|
|
|
$
|
2,053,397
|
|
Gross profit
|
1,295,555
|
|
|
(1
|
)
|
|
1,295,554
|
|
|||
Selling, general and administrative expenses
|
913,500
|
|
|
2,810
|
|
|
916,310
|
|
|||
Operating profit
|
382,055
|
|
|
(2,811
|
)
|
|
379,244
|
|
|||
Income before income tax expense
|
271,774
|
|
|
(2,811
|
)
|
|
268,963
|
|
|||
Net income
|
233,454
|
|
|
(2,811
|
)
|
|
230,643
|
|
|||
|
|
|
|
|
|
||||||
Earnings per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
0.64
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.63
|
|
Diluted
|
$
|
0.64
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.63
|
|
|
Quarter Ended June 29, 2019
|
||||||||||
Condensed Consolidated Statement of Comprehensive Income Line Item
|
As Previously Reported
|
|
Adjustments
|
|
As Revised
|
||||||
Net income
|
$
|
153,972
|
|
|
$
|
(4,417
|
)
|
|
$
|
149,555
|
|
Comprehensive income
|
149,165
|
|
|
(4,417
|
)
|
|
144,748
|
|
|
Six Months Ended June 29, 2019
|
||||||||||
Condensed Consolidated Statement of Comprehensive Income Line Item
|
As Previously Reported
|
|
Adjustments
|
|
As Revised
|
||||||
Net income
|
$
|
233,454
|
|
|
$
|
(2,811
|
)
|
|
$
|
230,643
|
|
Translation adjustments
|
11,259
|
|
|
(7,075
|
)
|
|
4,184
|
|
|||
Total other comprehensive income
|
9,132
|
|
|
(7,075
|
)
|
|
2,057
|
|
|||
Comprehensive income
|
242,586
|
|
|
(9,886
|
)
|
|
232,700
|
|
|
June 29, 2019
|
||||||||||
Condensed Consolidated Balance Sheet Line Item
|
As Previously Reported
|
|
Adjustments
|
|
As Revised
|
||||||
Inventories
|
$
|
2,233,760
|
|
|
$
|
(10,561
|
)
|
|
$
|
2,223,199
|
|
Other current assets
|
152,925
|
|
|
23,371
|
|
|
176,296
|
|
|||
Total current assets
|
3,656,442
|
|
|
12,810
|
|
|
3,669,252
|
|
|||
Deferred tax assets
|
264,592
|
|
|
(43,665
|
)
|
|
220,927
|
|
|||
Total assets
|
7,876,892
|
|
|
(30,855
|
)
|
|
7,846,037
|
|
|||
Accrued liabilities
|
547,306
|
|
|
13,866
|
|
|
561,172
|
|
|||
Total current liabilities
|
2,069,817
|
|
|
13,866
|
|
|
2,083,683
|
|
|||
Other noncurrent liabilities
|
277,742
|
|
|
64,743
|
|
|
342,485
|
|
|||
Total liabilities
|
6,742,042
|
|
|
78,609
|
|
|
6,820,651
|
|
|||
Retained earnings
|
1,395,306
|
|
|
(109,464
|
)
|
|
1,285,842
|
|
|||
Total stockholders’ equity
|
1,134,850
|
|
|
(109,464
|
)
|
|
1,025,386
|
|
|||
Total liabilities and stockholders’ equity
|
7,876,892
|
|
|
(30,855
|
)
|
|
7,846,037
|
|
|
Quarter Ended June 29, 2019
|
||||||||||
Condensed Consolidated Statement of Stockholders’ Equity Line Item
|
As Previously Reported
|
|
Adjustments
|
|
As Revised
|
||||||
Balance at March 30, 2019
|
$
|
1,038,038
|
|
|
$
|
(105,047
|
)
|
|
$
|
932,991
|
|
Net income
|
153,972
|
|
|
(4,417
|
)
|
|
149,555
|
|
|||
Balance at June 29, 2019
|
1,134,850
|
|
|
(109,464
|
)
|
|
1,025,386
|
|
|
Six Months Ended June 29, 2019
|
||||||||||
Condensed Consolidated Statement of Stockholders’ Equity Line Item
|
As Previously Reported
|
|
Adjustments
|
|
As Revised
|
||||||
Balance at December 29, 2018
|
$
|
970,283
|
|
|
$
|
(98,157
|
)
|
|
$
|
872,126
|
|
Net income
|
233,454
|
|
|
(2,811
|
)
|
|
230,643
|
|
|||
Other comprehensive income
|
9,132
|
|
|
(7,075
|
)
|
|
2,057
|
|
|||
Cumulative effect of change in adoption of leases standard
|
7,977
|
|
|
(1,421
|
)
|
|
6,556
|
|
|||
Balance at June 29, 2019
|
1,134,850
|
|
|
(109,464
|
)
|
|
1,025,386
|
|
|
Six Months Ended June 29, 2019
|
||||||||||
Condensed Consolidated Statement of Cash Flows Line Item
|
As Previously Reported
|
|
Adjustments
|
|
As Revised
|
||||||
Operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
233,454
|
|
|
$
|
(2,811
|
)
|
|
$
|
230,643
|
|
Adjustments to reconcile net income to net cash from operating activities:
|
|
|
|
|
|
||||||
Other
|
12,550
|
|
|
(7,075
|
)
|
|
5,475
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Inventories
|
(178,453
|
)
|
|
12,941
|
|
|
(165,512
|
)
|
|||
Other assets
|
(27,354
|
)
|
|
(1,225
|
)
|
|
(28,579
|
)
|
|||
Accrued liabilities and other
|
(23,405
|
)
|
|
(1,830
|
)
|
|
(25,235
|
)
|
|||
Net cash from operating activities
|
(57,363
|
)
|
|
—
|
|
|
(57,363
|
)
|
|
Quarter Ended September 28, 2019
|
||||||||||
Condensed Consolidated Statement of Income Line Item
|
As Previously Reported
|
|
Adjustments
|
|
As Revised
|
||||||
Cost of sales
|
$
|
1,154,629
|
|
|
$
|
(4,695
|
)
|
|
$
|
1,149,934
|
|
Gross profit
|
712,338
|
|
|
4,695
|
|
|
717,033
|
|
|||
Selling, general and administrative expenses
|
442,582
|
|
|
7,380
|
|
|
449,962
|
|
|||
Operating profit
|
269,756
|
|
|
(2,685
|
)
|
|
267,071
|
|
|||
Income before income tax expense
|
218,599
|
|
|
(2,685
|
)
|
|
215,914
|
|
|||
Net income
|
187,776
|
|
|
(2,685
|
)
|
|
185,091
|
|
|||
|
|
|
|
|
|
||||||
Earnings per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
0.51
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.51
|
|
Diluted
|
$
|
0.51
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.51
|
|
|
Nine Months Ended September 28, 2019
|
||||||||||
Condensed Consolidated Statement of Income Line Item
|
As Previously Reported
|
|
Adjustments
|
|
As Revised
|
||||||
Cost of sales
|
$
|
3,208,025
|
|
|
$
|
(4,694
|
)
|
|
$
|
3,203,331
|
|
Gross profit
|
2,007,893
|
|
|
4,694
|
|
|
2,012,587
|
|
|||
Selling, general and administrative expenses
|
1,356,082
|
|
|
10,190
|
|
|
1,366,272
|
|
|||
Operating profit
|
651,811
|
|
|
(5,496
|
)
|
|
646,315
|
|
|||
Income before income tax expense
|
490,373
|
|
|
(5,496
|
)
|
|
484,877
|
|
|||
Net income
|
421,230
|
|
|
(5,496
|
)
|
|
415,734
|
|
|||
|
|
|
|
|
|
||||||
Earnings per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
1.16
|
|
|
$
|
(0.02
|
)
|
|
$
|
1.14
|
|
Diluted
|
$
|
1.15
|
|
|
$
|
(0.02
|
)
|
|
$
|
1.14
|
|
|
Quarter Ended September 28, 2019
|
||||||||||
Condensed Consolidated Statement of Comprehensive Income Line Item
|
As Previously Reported
|
|
Adjustments
|
|
As Revised
|
||||||
Net income
|
$
|
187,776
|
|
|
$
|
(2,685
|
)
|
|
$
|
185,091
|
|
Comprehensive income
|
148,443
|
|
|
(2,685
|
)
|
|
145,758
|
|
|
Nine Months Ended September 28, 2019
|
||||||||||
Condensed Consolidated Statement of Comprehensive Income Line Item
|
As Previously Reported
|
|
Adjustments
|
|
As Revised
|
||||||
Net income
|
$
|
421,230
|
|
|
$
|
(5,496
|
)
|
|
$
|
415,734
|
|
Translation adjustments
|
(33,738
|
)
|
|
(7,075
|
)
|
|
(40,813
|
)
|
|||
Total other comprehensive loss
|
(30,201
|
)
|
|
(7,075
|
)
|
|
(37,276
|
)
|
|||
Comprehensive income
|
391,029
|
|
|
(12,571
|
)
|
|
378,458
|
|
|
September 28, 2019
|
||||||||||
Condensed Consolidated Balance Sheet Line Item
|
As Previously Reported
|
|
Adjustments
|
|
As Revised
|
||||||
Inventories
|
$
|
2,108,281
|
|
|
$
|
(13,246
|
)
|
|
$
|
2,095,035
|
|
Other current assets
|
166,727
|
|
|
7,445
|
|
|
174,172
|
|
|||
Total current assets
|
3,625,970
|
|
|
(5,801
|
)
|
|
3,620,169
|
|
|||
Deferred tax assets
|
257,314
|
|
|
(43,665
|
)
|
|
213,649
|
|
|||
Total assets
|
7,773,298
|
|
|
(49,466
|
)
|
|
7,723,832
|
|
|||
Accrued liabilities
|
589,992
|
|
|
(2,060
|
)
|
|
587,932
|
|
|||
Total current liabilities
|
2,096,904
|
|
|
(2,060
|
)
|
|
2,094,844
|
|
|||
Other noncurrent liabilities
|
265,804
|
|
|
64,743
|
|
|
330,547
|
|
|||
Total liabilities
|
6,543,056
|
|
|
62,683
|
|
|
6,605,739
|
|
|||
Retained earnings
|
1,528,258
|
|
|
(112,149
|
)
|
|
1,416,109
|
|
|||
Total stockholders’ equity
|
1,230,242
|
|
|
(112,149
|
)
|
|
1,118,093
|
|
|||
Total liabilities and stockholders’ equity
|
7,773,298
|
|
|
(49,466
|
)
|
|
7,723,832
|
|
|
Quarter Ended September 28, 2019
|
||||||||||
Condensed Consolidated Statement of Stockholders’ Equity Line Item
|
As Previously Reported
|
|
Adjustments
|
|
As Revised
|
||||||
Balance at June 29, 2019
|
$
|
1,134,850
|
|
|
$
|
(109,464
|
)
|
|
$
|
1,025,386
|
|
Net income
|
187,776
|
|
|
(2,685
|
)
|
|
185,091
|
|
|||
Balance at September 28, 2019
|
1,230,242
|
|
|
(112,149
|
)
|
|
1,118,093
|
|
|
Nine Months Ended September 28, 2019
|
||||||||||
Condensed Consolidated Statement of Stockholders’ Equity Line Item
|
As Previously Reported
|
|
Adjustments
|
|
As Revised
|
||||||
Balance at December 29, 2018
|
$
|
970,283
|
|
|
$
|
(98,157
|
)
|
|
$
|
872,126
|
|
Net income
|
421,230
|
|
|
(5,496
|
)
|
|
415,734
|
|
|||
Other comprehensive income
|
(30,201
|
)
|
|
(7,075
|
)
|
|
(37,276
|
)
|
|||
Cumulative effect of change in adoption of leases standard
|
7,977
|
|
|
(1,421
|
)
|
|
6,556
|
|
|||
Balance at September 28, 2019
|
1,230,242
|
|
|
(112,149
|
)
|
|
1,118,093
|
|
|
Nine Months Ended September 28, 2019
|
||||||||||
Condensed Consolidated Statement of Cash Flows Line Item
|
As Previously Reported
|
|
Adjustments
|
|
As Revised
|
||||||
Operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
421,230
|
|
|
$
|
(5,496
|
)
|
|
$
|
415,734
|
|
Adjustments to reconcile net income to net cash from operating activities:
|
|
|
|
|
|
||||||
Other
|
8,737
|
|
|
(7,075
|
)
|
|
1,662
|
|
|||
Changes in assets and liabilities, net of acquisition of businesses:
|
|
|
|
|
|
||||||
Inventories
|
(72,096
|
)
|
|
15,626
|
|
|
(56,470
|
)
|
|||
Other assets
|
(40,732
|
)
|
|
14,701
|
|
|
(26,031
|
)
|
|||
Accrued liabilities and other
|
14,243
|
|
|
(17,756
|
)
|
|
(3,513
|
)
|
|||
Net cash from operating activities
|
244,700
|
|
|
—
|
|
|
244,700
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
decreased customer traffic in our retail stores and retail stores in which our products are sold;
|
•
|
changes in consumer confidence and consumer spending habits, including spending for the merchandise that we sell and negative trends in consumer purchasing patterns due to changes in consumers’ disposable income, credit availability and debt levels;
|
•
|
decreased discretionary consumer-directed channel spending independent of store closures;
|
•
|
decreased wholesale channel sales and increased likelihood of wholesale customer financial distress, including requests for extended payment terms or potential payment defaults;
|
•
|
disruption to our global supply chain including the manufacturing, supply, distribution, transportation and delivery of our products;
|
•
|
decreased productivity due to travel bans, work-from-home policies or shelter-in-place orders; and
|
•
|
a slowdown in the U.S. and global economies, and an uncertain global economic outlook or a potential credit crisis.
|
•
|
Total net sales in the second quarter of 2020 were $1.7 billion, compared with $1.8 billion in the same period of 2019, representing a 1% decrease.
|
•
|
Operating profit increased 5% to $242 million in the second quarter of 2020, compared with $230 million in the same period of 2019. As a percentage of sales, operating profit was 13.9% in the second quarter of 2020 compared to 13.0% in the same period of 2019. Included within operating profit were restructuring and other action-related charges of $63 million and $13 million for the quarters ended June 27, 2020 and June 29, 2019, respectively.
|
•
|
Sales of PPE used to help mitigate the spread of the COVID-19 virus were $752 million in the second quarter of 2020.
|
•
|
In April 2020, given the rapidly changing environment and level of uncertainty being created by the COVID-19 pandemic and the associated impact on future earnings, we amended our Senior Secured Credit Facility prior to any potential covenant violation in order to modify the financial covenants and to provide operating flexibility during the COVID-19 crisis.
|
•
|
In May 2020, we issued $700 million aggregate principal amount of 5.375% Senior Notes which mature in May 2025. The net proceeds from the issuance of $691 million were used to repay all outstanding borrowings under our Revolving Loan Facility, pay related fees and expenses, and for general corporate purposes.
|
|
Quarters Ended
|
|
|
|
|
|||||||||
|
June 27,
2020 |
|
June 29,
2019 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
1,738,779
|
|
|
$
|
1,760,927
|
|
|
$
|
(22,148
|
)
|
|
(1.3
|
)%
|
Cost of sales
|
1,105,767
|
|
|
1,085,404
|
|
|
20,363
|
|
|
1.9
|
|
|||
Gross profit
|
633,012
|
|
|
675,523
|
|
|
(42,511
|
)
|
|
(6.3
|
)
|
|||
Selling, general and administrative expenses
|
391,476
|
|
|
445,923
|
|
|
(54,447
|
)
|
|
(12.2
|
)
|
|||
Operating profit
|
241,536
|
|
|
229,600
|
|
|
11,936
|
|
|
5.2
|
|
|||
Other expenses
|
5,050
|
|
|
8,249
|
|
|
(3,199
|
)
|
|
(38.8
|
)
|
|||
Interest expense, net
|
41,659
|
|
|
46,522
|
|
|
(4,863
|
)
|
|
(10.5
|
)
|
|||
Income before income tax expense
|
194,827
|
|
|
174,829
|
|
|
19,998
|
|
|
11.4
|
|
|||
Income tax expense
|
33,646
|
|
|
25,274
|
|
|
8,372
|
|
|
33.1
|
|
|||
Net income
|
$
|
161,181
|
|
|
$
|
149,555
|
|
|
$
|
11,626
|
|
|
7.8
|
%
|
•
|
The disruption of our U.S. and International apparel businesses related to the negative effects of the COVID-19 pandemic;
|
•
|
The exit of our C9 Champion program at Target and the DKNY Intimates license in 2019 which, together, represented approximately $119 million of net sales in the second quarter of 2019; and
|
•
|
The unfavorable impact from foreign exchange rates in our International business of approximately $14 million.
|
•
|
Net sales of PPE of $752 million in the second quarter of 2020.
|
|
Net Sales
|
|
|
|
|
|||||||||
|
Quarters Ended
|
|
|
|
|
|||||||||
|
June 27,
2020 |
|
June 29,
2019 |
|
Higher
(Lower) |
|
Percent
Change |
|||||||
|
(dollars in thousands)
|
|||||||||||||
Innerwear
|
$
|
1,094,814
|
|
|
$
|
678,604
|
|
|
$
|
416,210
|
|
|
61.3
|
%
|
Activewear
|
168,379
|
|
|
448,277
|
|
|
(279,898
|
)
|
|
(62.4
|
)
|
|||
International
|
456,875
|
|
|
568,863
|
|
|
(111,988
|
)
|
|
(19.7
|
)
|
|||
Other
|
18,711
|
|
|
65,183
|
|
|
(46,472
|
)
|
|
(71.3
|
)
|
|||
Total
|
$
|
1,738,779
|
|
|
$
|
1,760,927
|
|
|
$
|
(22,148
|
)
|
|
(1.3
|
)%
|
|
Quarters Ended
|
||||||
|
June 27,
2020 |
|
June 29,
2019 |
||||
|
(dollars in thousands)
|
||||||
Restructuring and other action-related charges included in operating profit:
|
|
|
|
||||
Supply chain actions - 2019
|
$
|
1,896
|
|
|
$
|
12,598
|
|
Supply chain actions - 2020
|
3,241
|
|
|
—
|
|
||
Program exit costs
|
1,285
|
|
|
—
|
|
||
Other restructuring costs
|
4,695
|
|
|
11
|
|
||
COVID-19 related charges:
|
|
|
|
||||
Bad debt
|
11,375
|
|
|
—
|
|
||
Inventory
|
20,485
|
|
|
—
|
|
||
Intangible assets
|
20,319
|
|
|
—
|
|
||
Total restructuring and other action-related charges included in operating profit
|
$
|
63,296
|
|
|
$
|
12,609
|
|
|
Six Months Ended
|
|
|
|
|
|||||||||
|
June 27,
2020 |
|
June 29,
2019 |
|
Higher
(Lower)
|
|
Percent
Change
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Net sales
|
$
|
3,055,241
|
|
|
$
|
3,348,951
|
|
|
$
|
(293,710
|
)
|
|
(8.8
|
)%
|
Cost of sales
|
1,948,497
|
|
|
2,053,397
|
|
|
(104,900
|
)
|
|
(5.1
|
)
|
|||
Gross profit
|
1,106,744
|
|
|
1,295,554
|
|
|
(188,810
|
)
|
|
(14.6
|
)
|
|||
Selling, general and administrative expenses
|
831,078
|
|
|
916,310
|
|
|
(85,232
|
)
|
|
(9.3
|
)
|
|||
Operating profit
|
275,666
|
|
|
379,244
|
|
|
(103,578
|
)
|
|
(27.3
|
)
|
|||
Other expenses
|
11,540
|
|
|
15,700
|
|
|
(4,160
|
)
|
|
(26.5
|
)
|
|||
Interest expense, net
|
78,508
|
|
|
94,581
|
|
|
(16,073
|
)
|
|
(17.0
|
)
|
|||
Income before income tax expense
|
185,618
|
|
|
268,963
|
|
|
(83,345
|
)
|
|
(31.0
|
)
|
|||
Income tax expense
|
32,311
|
|
|
38,320
|
|
|
(6,009
|
)
|
|
(15.7
|
)
|
|||
Net income
|
$
|
153,307
|
|
|
$
|
230,643
|
|
|
$
|
(77,336
|
)
|
|
(33.5
|
)%
|
•
|
The disruption of our U.S. and International apparel businesses related to the negative effects of the COVID-19 pandemic, including temporary closures of retail stores owned and operated by us, as well as canceled orders from our wholesale brick- and-mortar customers;
|
•
|
The exit of our C9 Champion program at Target and the DKNY Intimates license in 2019 which, together, represented approximately $213 million of net sales in the six months of 2019; and
|
•
|
The unfavorable impact from foreign exchange rates in our International business of approximately $34 million.
|
•
|
Net sales of PPE of $752 million in the six months of 2020.
|
|
Operating Profit and Margin
|
|
|
|
|
|||||||||||||||
|
Six Months Ended
|
|
|
|
|
|||||||||||||||
|
June 27,
2020 |
|
June 29,
2019 |
|
Higher
(Lower) |
|
Percent
Change |
|||||||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
Innerwear
|
$
|
386,075
|
|
|
25.4
|
%
|
|
$
|
254,156
|
|
|
22.0
|
%
|
|
$
|
131,919
|
|
|
51.9
|
%
|
Activewear
|
2,357
|
|
|
0.5
|
|
|
112,372
|
|
|
13.2
|
|
|
(110,015
|
)
|
|
(97.9
|
)
|
|||
International
|
131,142
|
|
|
12.9
|
|
|
180,851
|
|
|
14.9
|
|
|
(49,709
|
)
|
|
(27.5
|
)
|
|||
Other
|
(18,395
|
)
|
|
(26.7
|
)
|
|
6,786
|
|
|
5.4
|
|
|
(25,181
|
)
|
|
(371.1
|
)
|
|||
Corporate
|
(225,513
|
)
|
|
NM
|
|
|
(174,921
|
)
|
|
NM
|
|
|
(50,592
|
)
|
|
(28.9
|
)
|
|||
Total
|
$
|
275,666
|
|
|
9.0
|
%
|
|
$
|
379,244
|
|
|
11.3
|
%
|
|
$
|
(103,578
|
)
|
|
(27.3
|
)%
|
|
Six Months Ended
|
||||||
|
June 27,
2020 |
|
June 29,
2019 |
||||
|
(dollars in thousands)
|
||||||
Restructuring and other action-related charges included in operating profit:
|
|
|
|
||||
Supply chain actions - 2019
|
$
|
5,698
|
|
|
$
|
30,290
|
|
Supply chain actions - 2020
|
13,504
|
|
|
—
|
|
||
Program exit costs
|
9,500
|
|
|
—
|
|
||
Other restructuring costs
|
11,614
|
|
|
3,692
|
|
||
COVID-19 related charges:
|
|
|
|
||||
Bad debt
|
11,375
|
|
|
—
|
|
||
Inventory
|
20,485
|
|
|
—
|
|
||
Intangible assets
|
20,319
|
|
|
—
|
|
||
Total restructuring and other action-related charges included in operating profit
|
$
|
92,495
|
|
|
$
|
33,982
|
|
|
As of June 27, 2020
|
||||||
Borrowing
Capacity
|
|
Available Liquidity
|
|||||
|
(dollars in thousands)
|
||||||
Senior Secured Credit Facility:
|
|
|
|
||||
Revolving Loan Facility
|
$
|
1,000,000
|
|
|
$
|
957,718
|
|
Australian Revolving Loan Facility
|
41,214
|
|
|
6,869
|
|
||
European Revolving Loan Facility
|
112,512
|
|
|
—
|
|
||
Accounts Receivable Securitization Facility(1)
|
81,868
|
|
|
81,868
|
|
||
Other international credit facilities
|
128,166
|
|
|
112,458
|
|
||
Total liquidity from credit facilities
|
$
|
1,363,760
|
|
|
$
|
1,158,913
|
|
Cash and cash equivalents
|
|
|
683,114
|
|
|||
Total liquidity
|
|
|
|
$
|
1,842,027
|
|
|
|
(1)
|
Borrowing availability under the Accounts Receivable Securitization Facility is subject to a quarterly fluctuating facility limit, not to exceed $225 million, and permitted only to the extent that the face of the receivables in the collateral pool, net of applicable reserves and other deductions, exceeds the outstanding loans.
|
•
|
The negative impact of the COVID-19 pandemic on our business as discussed above under “Impact of COVID-19 on Our Business.”
|
•
|
For the six months ended June 27, 2020 and prior to the expansion of COVID-19, we entered into transactions to repurchase approximately 14.5 million shares of our common stock at a total cost of $200 million. At June 27, 2020, the remaining repurchase authorization under our current share repurchase program totaled approximately 25.5
|
•
|
We have historically paid a regular quarterly dividend. The declaration of any future dividends and, if declared, the amount of any such dividends, will be subject to our actual future earnings, capital requirements, regulatory restrictions, debt covenants, other contractual restrictions and to the discretion of our Board of Directors.
|
•
|
We have principal and interest obligations under our debt and ongoing financial covenants under those debt facilities, even after taking into account recent amendments.
|
•
|
We have invested in efforts to accelerate worldwide omnichannel and global growth initiatives, as well as marketing and brand building. We anticipate capital expenditures to decrease for the remainder of 2020 compared to the prior year as we tightly manage spending to help mitigate the potential negative impact of the COVID-19 pandemic on our business and liquidity.
|
•
|
We expect to continue to invest in efforts to improve operating efficiencies and lower costs.
|
•
|
Although currently prohibited under our Senior Secured Credit Facility, in the future, we may pursue strategic business acquisitions.
|
•
|
We made a contribution of $25 million to our U.S. pension plan in the six months ended June 27, 2020. We may also elect to make additional voluntary contributions.
|
•
|
We may increase or decrease the portion of the current-year income of our foreign subsidiaries that we remit to the United States, which could impact our effective income tax rate. Consistent with our investment strategy as it pertains to our historical foreign earnings as of December 28, 2019, we intend to remit historical foreign earnings totaling approximately $1.0 billion.
|
•
|
We are obligated to make installment payments over an eight-year period related to our transition tax liability resulting from the implementation of the Tax Act, which began in 2018, in addition to any estimated income taxes due based on current year taxable income. In the six months ended June 27, 2020, we made no installment payments on our transition tax liability as the CARES Act extended the payment due date to July 15, 2020. On July 15, 2020, we made an installment payment of $10 million on our transition tax liability. We currently have a remaining balance due of approximately $91 million to be paid in installment payments through 2025.
|
•
|
In May 2020, we issued $700 million aggregate principal amount of 5.375% Senior Notes. The net proceeds from the issuance were used to repay all outstanding borrowings under our Revolving Loan Facility, pay related fees and expenses, and for general corporate purposes.
|
•
|
We have made more than 450 million face masks and more than 20 million medical gowns for the U.S. government. We are also producing masks to supply to consumers and large employers seeking to reopen business operations after being closed as a result of the COVID-19 pandemic. We expect to sell more than $150 million of PPE in the last half of 2020.
|
•
|
We expect the employee furloughs and pay cuts, as well as reductions in discretionary spending such as media and marketing expenses, to save approximately $200 million in 2020.
|
|
Six Months Ended
|
||||||
|
June 27,
2020 |
|
June 29,
2019 |
||||
|
(dollars in thousands)
|
||||||
Operating activities
|
$
|
(17,793
|
)
|
|
$
|
(57,363
|
)
|
Investing activities
|
(40,623
|
)
|
|
(57,767
|
)
|
||
Financing activities
|
415,318
|
|
|
(64,221
|
)
|
||
Effect of changes in foreign currency exchange rates on cash
|
(2,669
|
)
|
|
4,282
|
|
||
Change in cash, cash equivalents and restricted cash
|
354,233
|
|
|
(175,069
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of year
|
329,923
|
|
|
455,732
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
684,156
|
|
|
280,663
|
|
||
Less restricted cash at end of period
|
1,042
|
|
|
22,722
|
|
||
Cash and cash equivalents per balance sheet at end of period
|
$
|
683,114
|
|
|
$
|
257,941
|
|
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
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
3.3
|
|
|
|
|
|
3.4
|
|
|
|
|
|
3.5
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
10.3
|
|
|
|
|
|
10.4
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1
|
|
|
|
|
|
32.2
|
|
|
|
|
|
101.INS XBRL
|
|
Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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/ M. Scott Lewis
|
|
|
M. Scott Lewis
Interim Chief Financial Officer
(Duly authorized officer and principal financial officer)
|
|
HANESBRANDS INC.
By: /s/ Joia M. Johnson
Name: Joia M. Johnson Title: Chief Administrative Officer |
|
|
EXECUTIVE:
/s/ Gerald W. Evans, Jr.
Gerald W. Evans, Jr. |
HANESBRANDS INC.
By:
Name:
Title: |
|
CONSULTANT:
Gerald W. Evans, Jr. |
•
|
Tranche 1 – options to purchase 83,333 shares with a per share exercise price equivalent to 100% of the closing price of a share of the Company’s stock on your employment start date; tranche cliff vests after 1 year;
|
•
|
Tranche 2 – options to purchase 83,333 shares with a per share exercise price equivalent to 120% of the closing price of a share of the Company’s stock on your employment start date; tranche cliff vests after 2 years; and
|
•
|
Tranche 3 – options to purchase 83,334 shares with a per share exercise price equivalent to 140% of the closing price of a share of the Company’s stock on your employment start date; tranche cliff vests after 3 years.
|
•
|
Home sale assistance.
|
•
|
Home finding assistance (realtor) and certain closing costs.
|
•
|
Transportation of household goods.
|
•
|
The following payments upon receipt of an executed Repayment Agreement:
|
o
|
A one-time cash lump sum of $9,000 to cover expenses associated with house finding trips for you and your family, return home trips while in temporary living, and car rental while in temporary living, payable upon the initiation of relocation.
|
o
|
A one-time lump sum of $6,000, grossed up for applicable taxes, to cover incidental expenses associated with relocating you and your family, payable after employment starts.
|
o
|
An additional relocation stipend of $50,000 to cover temporary living expenses and any other relocation expenses not covered above, payable after employment starts.
|
/s/ Stephen B. Bratspies
|
6/2/2020
|
8/3/2020
|
Stephen B. Bratspies
|
Date
|
Start Date
|
/s/ Gerald W. Evans, Jr.
|
Gerald W. Evans, Jr.
Chief Executive Officer
|
/s/ M. Scott Lewis
|
M. Scott Lewis
Interim Chief Financial Officer
|
/s/ Gerald W. Evans, Jr.
|
Gerald W. Evans, Jr.
Chief Executive Officer
|
/s/ M. Scott Lewis
|
M. Scott Lewis
Interim Chief Financial Officer
|