Hanesbrands (HBI)

 

HANESBRANDS

Notes to Consolidated Financial Statements — (Continued)
Year ended December 29, 2007, six months ended December 30, 2006
and years ended July 1, 2006 and July 2, 2005
(amounts in thousands, except per share data)

 

agreement subject to the Company maintaining sufficient eligible receivables, by continuing to sell trade receivables to Receivables LLC, unless an event of default occurs.

 

Availability of funding under the facility depends primarily upon the eligible outstanding receivables balance. As of December 29, 2007, the Company had $250,000 outstanding under the Receivables Facility. The outstanding balance under the Receivables Facility is reported on the Company’s Consolidated Balance Sheet in long-term debt based on the three-year term of the agreement and the fact that remittances on the receivables do not automatically reduce the outstanding borrowings. All of the proceeds from the Receivables Facility were used to make a prepayment of principal under the Senior Secured Credit Facility. Unless the conduits fail to fund, the yield on the commercial paper, which is the conduits’ cost to issue the commercial paper plus certain dealer fees, is considered a financing cost and is included in interest expense on the Consolidated Statement of Income. If the conduits fail to fund, the Receivables Facility would be funded through committed bank purchasers, and the interest rate payable at the Company’s option at the rate announced from time to time by JPMorgan as its prime rate or at the LIBO Rate (as defined in the Receivables Facility) plus the applicable margin in effect from time to time. The average blended rate utilized for the period from November 27, 2007 through December 29, 2007 was 5.93%.

 

The total amount of receivables used as collateral for the credit facility was $495,245 at December 29, 2007 and is reported on the Company’s Consolidated Balance Sheet in trade accounts receivables less allowances.

 

 

On November 27, 2007, the Company entered into the
Receivables Facility, which provides for up to $250,000 in
funding accounted for as a secured borrowing, limited to the
availability of eligible receivables, and is secured by certain
domestic trade receivables. The Receivables Facility will
terminate on November 27, 2010. Under the terms of the
Receivables Facility, the company sells, on a revolving basis,
certain domestic trade receivables to HBI Receivables LLC
(“Receivables LLC”), a wholly-owned bankruptcy-remote
subsidiary that in turn uses the trade receivables to secure the
borrowings, which are funded through conduits that issue
commercial paper in the short-term market and are not affiliated
with the Company or through committed bank purchasers if the
conduits fail to fund. The assets and liabilities of Receivables
LLC are fully reflected on our Consolidated Balance Sheet, and
the securitization is treated as a secured borrowing for
accounting purposes. The borrowings under the Receivables
Facility remain outstanding throughout the term of the

 

HANESBRANDS



Notes to Consolidated Financial
Statements — (Continued)

Year ended December 29, 2007, six months ended
December 30, 2006

and years ended July 1, 2006 and July 2, 2005

(amounts in thousands, except per share data)

 

agreement subject to the Company maintaining sufficient eligible
receivables, by continuing to sell trade receivables to
Receivables LLC, unless an event of default occurs.

 

Availability of funding under the facility depends primarily
upon the eligible outstanding receivables balance. As of
December 29, 2007, the Company had $250,000 outstanding
under the Receivables Facility. The outstanding balance under
the Receivables Facility is reported on the Company’s
Consolidated Balance Sheet in long-term debt based on the
three-year term of the agreement and the fact that remittances
on the receivables do not automatically reduce the outstanding
borrowings. All of the proceeds from the Receivables Facility
were used to make a prepayment of principal under the Senior
Secured Credit Facility. Unless the conduits fail to fund, the
yield on the commercial paper, which is the conduits’ cost
to issue the commercial paper plus certain dealer fees, is
considered a financing cost and is included in interest expense
on the Consolidated Statement of Income. If the conduits fail to
fund, the Receivables Facility would be funded through committed
bank purchasers, and the interest rate payable at the
Company’s option at the rate announced from time to time by
JPMorgan as its prime rate or at the LIBO Rate (as defined in
the Receivables Facility) plus the applicable margin in effect
from time to time. The average blended rate utilized for the
period from November 27, 2007 through December 29,
2007 was 5.93%.

 

The total amount of receivables used as collateral for the
credit facility was $495,245 at December 29, 2007 and is
reported on the Company’s Consolidated Balance Sheet in
trade accounts receivables less allowances.