Highlights from the Year Ended December 29, 2007 for Hanesbrands (HBI)

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Hanesbrands (HBI)

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HBI » Topics » Highlights from the Year Ended December 29, 2007

These excerpts taken from the HBI 10-K filed Feb 19, 2008.

Highlights from the Year Ended December 29, 2007


	•	Total net sales in the year ended December 29, 2007 were higher by $71 million at $4.5 billion compared to the year ended December 30, 2006. Net sales for three of our four largest brands, Hanes, Champion and Bali, all increased in 2007.

	•	Operating profit was $389 million in the year ended December 29, 2007, up from $366 million in the year ended December 30, 2006. The higher operating profit was a result of increased sales, cost reduction initiatives and lower spin off and related charges which more than offset higher costs associated with investments in our strategic initiatives and higher restructuring and related charges.

	•	Diluted earnings per share were $1.30 in the year ended December 29, 2007, compared with $2.16 in the year ended December 30, 2006. The full year decline reflected higher interest expense as a result of our independent structure since the spin off from Sara Lee on September 5, 2006, higher restructuring costs and a higher tax rate.

	•	Using cash flow from operating activities, we repaid a net $178 million of long-term debt, repurchased $44 million of company stock, and voluntarily contributed $48 million to our qualified pension plans during 2007.

	•	We completed the final separation of pension plan assets and liabilities from those of our former parent in 2007. As a result, our U.S. qualified pension plans are approximately 97% funded as of December 29, 2007.

	•	We approved actions to close 17 manufacturing facilities and three distribution centers in the Dominican Republic, Mexico, the United States, Brazil and Canada during 2007. In addition, we completed previously announced restructuring actions in 2007. The net impact of these actions was to reduce income before taxes for the year ended December 29, 2007 by $83 million.

	•	In February 2007, we entered into a first amendment to our senior secured credit facility with our lenders which primarily lowered the borrowing applicable margin with respect to the Term B loan facility from 2.25% to 1.75% on LIBOR based loans and from 1.25% to 0.75% on Base Rate loans.

	•	In August 2007, we acquired our second offshore textile plant, the 1,300-employee textile manufacturing operations of Industrias Duraflex, S.A. de C.V., in San Juan Opico, El Salvador. This acquisition provides a textile base in Central America from which to expand and leverage our large scale as well as supply our sewing network throughout Central America. Also, we announced plans in October 2007 to build a textile production plant in Nanjing, China, which will be our first company-owned textile production facility in Asia. The Nanjing textile facility will enable us to expand and leverage our production scale in Asia as we balance our supply chain across hemispheres.

	•	In October 2007, we announced a 10-year strategic alliance with The Walt Disney Company that includes basic apparel exclusivity for the Hanes and Champion brands, product co-branding, attraction sponsorships and other brand visibility and signage at Disney properties. The alliance included the naming rights for the stadium at Disney’s Wide World of Sports Complex, now known as Champion Stadium.

	•	In November 2007, we entered into the Receivables Facility, which provides for up to $250 million in funding accounted for as a secured borrowing, limited to the availability of eligible receivables, and is secured by certain domestic trade receivables and which we expect will reduce our overall borrowing costs in the future.

	•	In December 2007, we acquired the 900-employee sheer hosiery facility in Las Lourdes, El Salvador of Inversiones Bonaventure, S.A. de C.V. For the past 12 years, these operations had been a primary contract sewing operation for Hanes and L’eggs hosiery products. The acquisition streamlines a critical

part of our overall hosiery supply chain and is part of our strategy to operate larger, company-owned production facilities.

Highlights
from the Year Ended December 29, 2007


	•	Total net sales in the year ended December 29, 2007 were higher by $71 million at $4.5 billion compared to the year ended December 30, 2006. Net sales for three of our four largest brands, Hanes, Champion and Bali, all increased in 2007.

	•	Operating profit was $389 million in the year ended December 29, 2007, up from $366 million in the year ended December 30, 2006. The higher operating profit was a result of increased sales, cost reduction initiatives and lower spin off and related charges which more than offset higher costs associated with investments in our strategic initiatives and higher restructuring and related charges.

	•	Diluted earnings per share were $1.30 in the year ended December 29, 2007, compared with $2.16 in the year ended December 30, 2006. The full year decline reflected higher interest expense as a result of our independent structure since the spin off from Sara Lee on September 5, 2006, higher restructuring costs and a higher tax rate.

	•	Using cash flow from operating activities, we repaid a net $178 million of long-term debt, repurchased $44 million of company stock, and voluntarily contributed $48 million to our qualified pension plans during 2007.

	•	We completed the final separation of pension plan assets and liabilities from those of our former parent in 2007. As a result, our U.S. qualified pension plans are approximately 97% funded as of December 29, 2007.

	•	We approved actions to close 17 manufacturing facilities and three distribution centers in the Dominican Republic, Mexico, the United States, Brazil and Canada during 2007. In addition, we completed previously announced restructuring actions in 2007. The net impact of these actions was to reduce income before taxes for the year ended December 29, 2007 by $83 million.

	•	In February 2007, we entered into a first amendment to our senior secured credit facility with our lenders which primarily lowered the borrowing applicable margin with respect to the Term B loan facility from 2.25% to 1.75% on LIBOR based loans and from 1.25% to 0.75% on Base Rate loans.

	•	In August 2007, we acquired our second offshore textile plant, the 1,300-employee textile manufacturing operations of Industrias Duraflex, S.A. de C.V., in San Juan Opico, El Salvador. This acquisition provides a textile base in Central America from which to expand and leverage our large scale as well as supply our sewing network throughout Central America. Also, we announced plans in October 2007 to build a textile production plant in Nanjing, China, which will be our first company-owned textile production facility in Asia. The Nanjing textile facility will enable us to expand and leverage our production scale in Asia as we balance our supply chain across hemispheres.

	•	In October 2007, we announced a 10-year strategic alliance with The Walt Disney Company that includes basic apparel exclusivity for the Hanes and Champion brands, product co-branding, attraction sponsorships and other brand visibility and signage at Disney properties. The alliance included the naming rights for the stadium at Disney’s Wide World of Sports Complex, now known as Champion Stadium.

	•	In November 2007, we entered into the Receivables Facility, which provides for up to $250 million in funding accounted for as a secured borrowing, limited to the availability of eligible receivables, and is secured by certain domestic trade receivables and which we expect will reduce our overall borrowing costs in the future.

	•	In December 2007, we acquired the 900-employee sheer hosiery facility in Las Lourdes, El Salvador of Inversiones Bonaventure, S.A. de C.V. For the past 12 years, these operations had been a primary contract sewing operation for Hanes and L’eggs hosiery products. The acquisition streamlines a critical

part of our overall hosiery supply chain and is part of our
strategy to operate larger, company-owned production facilities.

This excerpt taken from the HBI 10-Q filed Nov 5, 2007.

Highlights from the Third Quarter and Nine Months Ended September 29, 2007


	•	Total net sales in the third quarter of 2007 were higher by $35 million at $1.15 billion compared to the same quarter in 2006. Total net sales for the nine month period in 2007 were higher by $43 million at $3.32 billion compared to the same nine month period in 2006. We had a strong sales performance in the third quarter in a challenging consumer environment. Many retailers have posted soft same store sales figures for September 2007 due to unusually warm weather affecting traffic and impacting demand for colder weather apparel items such as fleece. The short-term impact of these circumstances on our sales remains unclear, but we will continue to invest in our largest and strongest brands to achieve our long-term growth goals.

	•	Operating profit was $106 million in the third quarter of 2007, up from $94 million in the same quarter in 2006, and was $263 million in the nine month period in 2007, compared with $270 million in the same nine month period in 2006. The higher operating profit in the third quarter of 2007 compared to the same quarter in 2006 is primarily attributable to lower selling, general and administrative expenses and lower restructuring charges for facility closures partially offset by lower gross profit. The lower operating profit in the nine month period in 2007 compared to the same nine month period in 2006 is primarily attributable to higher restructuring charges for facility closures and lower gross profit partially offset by lower selling, general and administrative expenses.

	•	Diluted earnings per share were $0.40 in the third quarter of 2007, compared with $0.52 in the same quarter in 2006. For the nine month period in 2007 diluted earnings per share were $0.79 versus $1.91 a year ago. The decline in the third quarter was primarily a result of increased interest expense associated with our independent structure. In the nine month period in 2007, the decline in diluted earnings per share reflected increased interest expense, higher restructuring and related charges and a higher tax rate.


	•	Using cash flow from operating activities, we made a $75 million prepayment of long-term debt and repurchased $29 million of company stock during the third quarter of 2007. For the first nine months of the year, we repaid $128 million of long-term debt, repurchased $44 million in company stock and voluntarily contributed $48 million to our qualified pension plans.

	•	During the third quarter of 2007, we substantially completed the separation of pension plan assets and liabilities from those of our former parent. As a result, our qualified pension plans are approximately 97% funded.

	•	We acquired our second offshore textile plant, the 1,300-employee textile manufacturing operations of Industrias Duraflex, S.A. de C.V., in San Juan Opico, El Salvador. This acquisition provides a textile base in Central America from which to expand and leverage our large scale as well as supply our sewing network throughout Central America. Also, we announced plans to build a textile production plant in Nanjing, China which will be the first company-owned textile production facility in Asia. The Nanjing textile facility will enable us to expand and leverage our production scale in Asia as we balance our supply chain across hemispheres.

	•	In the nine month period in 2007, we entered into a first amendment to our senior secured credit facility with our lenders which primarily lowered the borrowing applicable margin with respect to the Term B loan facility from 2.25% to 1.75% on LIBOR based loans and from 1.25% to 0.75% on Base Rate loans.

	•	We approved actions to close 14 manufacturing facilities and two distribution centers in the United States, Canada, the Dominican Republic, Mexico, Brazil and Puerto Rico during the nine month period in 2007. In addition, we completed previously announced actions in the nine month period in 2007. The net impact of these actions was to reduce income before taxes for the nine month period in 2007 by $76 million.

This excerpt taken from the HBI 10-Q filed Aug 3, 2007.

Highlights from the Second Quarter and Six Months Ended June 30, 2007


	•	Total net sales in the second quarter of 2007 were higher by $2 million at $1.12 billion compared to the same quarter in 2006. Total net sales for the six month period in 2007 were higher by $9 million at $2.16 billion compared to the same six month period in 2006.

	•	Operating profit was $88 million in the second quarter of 2007, up from $80 million in the same quarter in 2006, and was $157 million in the six month period in 2007, compared with $176 million in the same six month period in 2006. The higher operating profit in the second quarter of 2007 compared to the same quarter in 2006 is primarily attributable to lower selling, general and administrative expenses and savings from our cost reduction initiatives and prior restructuring actions partially offset by higher restructuring charges and lower gross profit. The lower operating profit in the six month period in 2007 compared to the same six month period in 2006 is primarily attributable to higher restructuring charges and lower gross profit partially offset by lower selling, general and administrative expenses and savings from our cost reduction initiatives and prior restructuring actions.

	•	Net income was $25 million in the second quarter of 2007, down from $59 million in the same quarter in 2006, and was $37 million in the six month period in 2007, compared with $134 million in the same six month period in 2006. The lower net income reflected higher interest expense and a higher effective income tax rate as a result of the our independent structure, as well as higher restructuring and related charges.

	•	Using cash flow from operating activities, we paid down long-term debt by $53 million, of which $50 million was a prepayment, and repurchased $16 million of company stock during the second quarter of 2007.

	•	Using cash flow from operating activities, we made a voluntary $42 million pension contribution in the six month period in 2007, reducing our underfunded liability for qualified pension plans to approximately $131 million. Our qualified pension plan liability is now approximately 84% funded.

	•	In the six month period in 2007, we entered into a first amendment to our senior secured credit facility with our lenders which primarily lowered the borrowing applicable margin with respect to the Term B loan facility from 2.25% to 1.75% on LIBOR based loans and from 1.25% to 0.75% on Base Rate loans.

	•	We approved actions to close 14 manufacturing facilities and two distribution centers in the United States, Canada, the Dominican Republic, Mexico and Puerto Rico during the six month period in 2007. In addition, we completed previously announced actions in the six month period in 2007. The net impact of these actions was to reduce income before taxes for the six month period in 2007 by $61 million.

This excerpt taken from the HBI 10-Q filed May 14, 2007.

Highlights from the First Quarter Ended March 31, 2007


	•	Total net sales increased by $7 million, or 0.7%, to $1.04 billion, up from $1.03 billion in the year-ago quarter ended April 1, 2006. Growth in the outerwear segment resulted from double-digit gains for Champion activewear and Hanes casualwear and more than offset generally flat sales in the innerwear segment and declines in other segments, primarily Hosiery.

	•	Operating profit was $68.9 million, a decrease of 28.4% from $96.2 million a year ago. The profit decline primarily reflected restructuring and related charges for plant closures, higher cotton costs and increased investment in business operations.

	•	Net income for the quarter was $12.0 million, down from $74.6 million a year ago, primarily as a result of our new independent structure. The decrease in net income reflected a $49 million increase in interest expense, reduced operating profit and a higher effective rate of income taxes.

	•	Using cash flow from operations, we made a voluntary $42 million pension contribution in the first quarter, reducing our underfunded liability for qualified pension plans to approximately $131 million. Our qualified pension plan liability is now approximately 84% funded.

	•	We entered into a first amendment to our senior secured credit facility with our lenders which primarily lowered the borrowing applicable margin with respect to the Term B loan facility from 2.25% to 1.75% on LIBOR based loans and from 1.25% to 0.75% on Base Rate loans.

	•	We approved actions to close two textile facilities and two distribution centers in the United States. In addition, we completed previously announced actions in the first quarter of 2007. The net impact of these actions was to reduce income before income taxes by $22 million.

EXCERPTS ON THIS PAGE:

10-K (2 sections)	Feb 19, 2008

10-Q	Nov 5, 2007

10-Q	Aug 3, 2007

10-Q	May 14, 2007

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HBI » Topics » Highlights from the Year Ended December 29, 2007

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