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HBI » Topics » Highlights from the Quarter Ended September 30, 2006

This excerpt taken from the HBI 10-Q filed Nov 13, 2006.
Highlights from the Quarter Ended September 30, 2006
 
  •  Net sales of $1.12 billion were down by 1.7% from $1.14 billion in the quarter ended October 1, 2005. Discontinuance of low-margin product lines and lower sales of sheer hosiery primarily accounted for the decrease.
 
  •  Operating profit decreased by 9.6% to $93.9 million from $103.8 million in the quarter ended October 1, 2005. The operating profit decline in the current quarter primarily reflected expenses associated with operating as an independent company, nonrecurring spin off and related costs, and restructuring and related charges for plant closures.
 
  •  Net income was $50.3 million, down 39.1% from $82.6 million in the quarter ended October 1, 2005. The decrease in net income primarily reflects increased interest expense, reduced operating profit and a higher income tax rate.
 
  •  Interest expense, net increased in the quarter ended September 30, 2006 to $17.6 million from $4.1 million in the quarter ended October 1, 2005. The increase is a result of higher debt incurred 31/2 weeks before the end of the quarter ended September 30, 2006 as a result of the spin off from Sara Lee. Long-term debt at the end of the quarter ended September 30, 2006 was $2.6 billion.
 
  •  The income tax rate for the quarter ended September 30, 2006 was 34.0%, up from 17.2% in the quarter ended October 1, 2005 as a result of our independent tax structure.
 
  •  The spin off from Sara Lee was completed on September 5, 2006. In connection with the spin off:
 
  –  We incurred indebtedness of $2.6 billion pursuant to a new $2.15 billion senior secured credit facility (which includes a $500 million revolving facility that was undrawn at the time of the spin off), a $450 million senior secured second lien credit facility and a $500 million bridge loan facility.


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  –  We paid a dividend of $1.95 billion to Sara Lee and repaid a loan to Sara Lee in the amount of $450 million.
 
  –  Sara Lee extinguished all amounts payable to or receivable from Sara Lee and its related entities.
 
  –  We assumed $299 million in unfunded employee benefit liabilities for pension, postretirement and other retirement benefit qualified and nonqualified plans from Sara Lee.
 
  –  We assumed $38 million of liabilities in connection with property, workers’ compensation, and other programs from Sara Lee.
 
  –  Our common stock began “regular way” trading on the New York Stock Exchange under the symbol “HBI” on September 6, 2006.
 
  •  We granted stock-based compensation awards to employees and non-employee directors.
 
  •  We announced an action to close two domestic facilities and one international facility which reduced income before taxes by $13.7 million.
 
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