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This excerpt taken from the HBI 10-Q filed Nov 5, 2007. Liquidity
and Capital Resources
Trends
and Uncertainties Affecting Liquidity
Our primary sources of liquidity are our cash flows from
operating activities and availability under our revolving loan
facility described below. The following has or is expected to
negatively impact our liquidity:
We believe that our cash provided from operating activities,
together with our available credit capacity, will enable us to
comply with the terms of our indebtedness and meet presently
foreseeable financial requirements.
We expect to continue the restructuring efforts that we have
undertaken since the spin off from Sara Lee. For example, during
the nine months ended September 29, 2007, in furtherance of
our efforts to execute our consolidation and globalization
strategy, we approved actions that will result in the closure of
14 manufacturing facilities and two distribution centers. The
implementation of these efforts, which are designed to improve
operating efficiencies and lower costs, has resulted and is
likely to continue to result in significant costs. As further
plans are developed and approved by management and our board of
directors, we expect to recognize additional restructuring costs
to eliminate duplicative functions within the organization and
transition a significant portion of our manufacturing capacity
to lower-cost locations in other countries. As a result of these
efforts, we expect to incur approximately $250 million in
restructuring and related charges over the three year period
following the spin off from Sara Lee approximately half of which
is expected to be noncash. As of September 29, 2007, we
have recognized approximately $109 million in restructuring
and related charges
Table of Contents
related to these efforts. We also expect to continue to incur
costs associated with the integration of our information
technology systems across our company over the next several
years.
As we continue to add new manufacturing capacity in Central
America, the Caribbean Basin and Asia, our exposure to events
that could disrupt our foreign supply chain, including political
instability, acts of war or terrorism or other international
events resulting in the disruption of trade, disruptions in
shipping and freight forwarding services, increases in oil
prices (which would increase the cost of shipping),
interruptions in the availability of basic services and
infrastructure and fluctuations in foreign currency exchange
rates, is increased. Disruptions in our foreign supply chain
could negatively impact our liquidity by interrupting production
in offshore facilities, increasing our cost of sales, disrupting
merchandise deliveries, delaying receipt of the products into
the United States or preventing us from sourcing our products at
all. Depending on timing, these events could also result in lost
sales, cancellation charges or excessive markdowns. For a
discussion of these and other risk factors facing our business,
see the risk factors section of our Report on
Form 10-KT
for the six months ended December 30, 2006 and “Risk
Factors” in this Quarterly Report on
Form 10-Q.
As a result of provisions of the Pension Protection Act of 2006,
we are required, commencing with plan years beginning after
2007, to make larger contributions to our pension plans than
Sara Lee made with respect to these plans in past years. The
final separation of our pension plan assets and liabilities from
those of Sara Lee which will result in a higher total amount of
pension assets being transferred to us than was originally
estimated prior to the spin off, together with our contributions
of $48 million in December 2006, $42 million in March
2007 and $6 million in September 2007 to our pension plans,
has resulted in our qualified pension plans currently being
approximately 97% funded which should result in minimal pension
funding requirements in the future. We have met our minimum
funding requirements for 2007.
Net
Cash Provided by Operating Activities
Net cash provided by operating activities was $236 million
in the nine month period in 2007 compared to $201 million
in the same nine month period in 2006. The higher cash provided
from operating activities of $35 million was primarily the
result of better management of working capital, which reflects
$48 million in pension contributions, partially offset by
lower earnings in the business primarily attributable to higher
interest expense, a higher effective income tax rate and higher
restructuring and related charges.
Net
Cash Used in Investing Activities
Net cash used in investing activities was $50 million in
the nine month period in 2007 compared to $76 million in
the same nine month period in 2006. The lower cash used in
investing activities of $26 million was primarily the
result of lower purchases of property and equipment and higher
cash received from sales of property and equipment relating to
our restructuring actions partially offset by the cash portion
of the cost of acquiring of the textile manufacturing operations
of Industrias Duraflex, S.A. de C.V. in El Salvador. While
capital spending can vary from quarter to quarter, we anticipate
that over the long term our capital expenditures will be
approximately level with our annual depreciation of
$110 million.
Net
Cash Used in Financing Activities
Net cash used in financing activities was $168 million in
the nine month period in 2007 compared to $428 million in
the same nine month period in 2006. The lower cash used in
financing activities of $260 million was primarily the
result of the elimination of net transactions with parent
companies and related entities subsequent to the spin off from
Sara Lee and lower net borrowings and repayments on notes
payable to banks in the nine month period in 2007, partially
offset by an increase in repayments of debt under credit
facilities and share repurchases in the nine month period in
2007.
During the nine month period in 2007, we repaid
$128 million of long-term debt, of which $125 million
was a prepayment. In addition, we repurchased $44 million
of company stock pursuant to a program approved by the Board of
Directors in January 2007 which authorizes repurchase of up to
10 million shares of our common stock.
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Cash
and Cash Equivalents
As of September 29, 2007 and December 30, 2006, cash
and cash equivalents were $176 million and
$156 million, respectively. The higher cash and cash
equivalents as of September 29, 2007 was primarily the
result of better management of working capital and the
elimination of net transactions with parent companies and
related entities subsequent to the spin off from Sara Lee,
partially offset by lower net income and the repayment of debt
under credit facilities in 2007.
Revolving
Loan Facility
We have significant liquidity based on our availability under
the Revolving Loan Facility provided under the senior secured
credit facility that we entered into in September 2006. As of
September 29, 2007, $69 million of standby and trade
letters of credit were issued under this facility and
$431 million was available for borrowings.
This excerpt taken from the HBI 10-Q filed Aug 3, 2007. Liquidity
and Capital Resources
Trends
and Uncertainties Affecting Liquidity
Our primary sources of liquidity are our cash flows from
operating activities and availability under our revolving loan
facility described below. The following has or is expected to
negatively impact our liquidity:
We believe that our cash provided from operating activities,
together with our available credit capacity, will enable us to
comply with the terms of our indebtedness and meet presently
foreseeable financial requirements.
We expect to continue the restructuring efforts that we have
undertaken since the spin off from Sara Lee. For example, during
the six months ended June 30, 2007, in furtherance of our
efforts to execute our consolidation and globalization strategy,
we approved actions that will result in the closure of 14
manufacturing facilities and two distribution centers. The
implementation of these efforts, which are designed to improve
operating efficiencies and lower costs, has resulted and is
likely to continue to result in significant costs. As further
plans are developed and approved by management and our board of
directors, we expect to recognize additional restructuring costs
to eliminate duplicative functions within the organization and
transition a significant portion of our manufacturing capacity
to lower-cost locations in other countries. As a result of these
efforts, we expect to incur approximately $250 million in
restructuring and related charges over the three year period
following the spin off from Sara Lee approximately half of which
is expected to be noncash. As of June 30, 2007, we have
recognized approximately $95 million in restructuring and
related charges related to these efforts. We also expect to
incur costs associated with the integration of our information
technology systems across our company over the next several
years.
Table of Contents
As we continue to add new manufacturing capacity in Central
America, the Caribbean Basin and Asia, our exposure to events
that could disrupt our foreign supply chain, including political
instability, acts of war or terrorism or other international
events resulting in the disruption of trade, disruptions in
shipping and freight forwarding services, increases in oil
prices (which would increase the cost of shipping),
interruptions in the availability of basic services and
infrastructure and fluctuations in foreign currency exchange
rates, is increased. Disruptions in our foreign supply chain
could negatively impact our liquidity by interrupting production
in offshore facilities, increasing our cost of sales, disrupting
merchandise deliveries, delaying receipt of the products into
the United States or preventing us from sourcing our products at
all. Depending on timing, these events could also result in lost
sales, cancellation charges or excessive markdowns. For a
discussion of these and other risk factors facing our business,
see the risk factors section of our Report on
Form 10-KT
for the six months ended December 30, 2006.
As a result of provisions of the Pension Protection Act of 2006,
we are required, commencing with plan years beginning after
2007, to make larger contributions to our pension plans than
Sara Lee made with respect to these plans in past years. We
contributed $48 million in December 2006 and
$42 million in March 2007 based upon minimum funding
estimates. While these contribution payments fulfill our minimum
funding requirements through fiscal 2007, if financial
conditions change or if the assumptions we have used to
calculate our pension costs and obligations turn out to be
inaccurate, we could be required to make contributions to the
pension plans in excess of our current expectations for future
years. A significant increase in our funding obligations could
have a negative impact on our liquidity. As of June 30,
2007, assets estimated to represent approximately 75% of the
total assets for the Hanesbrands Inc. Pension and Retirement
Plan have been transferred from Sara Lee’s master trust to
the master trust we maintain. A final transfer of assets from
Sara Lee’s master trust to the master trust maintained by
us will occur later in fiscal 2007 once the allocation of assets
and liabilities has been completed in accordance with
governmental regulations. The fair value of plan assets
represents a best estimate based upon a percentage allocation of
total assets of Sara Lee’s master trust and will be
adjusted once the final transfer is made, with an adjustment to
the liability.
Net
Cash Provided by Operating Activities
Net cash provided by operating activities was $102 million
in the six month period in 2007 compared to $144 million in
the same six month period in 2006. The lower cash provided from
operating activities of $42 million was the result of lower
earnings in the business primarily attributable to higher
interest expense and a higher effective income tax rate as a
result of our independent structure as well as higher
restructuring and related charges, a $42 million pension
contribution and other changes in the use of working capital.
Net
Cash Used in Investing Activities
Net cash used in investing activities was $11 million in
the six month period in 2007 compared to $58 million in the
same six month period in 2006. The lower cash used in investing
activities of $47 million was primarily the result of lower
purchases of property and equipment and higher cash received
from sales of property and equipment relating to our
restructuring actions. While capital spending can vary from
quarter to quarter, we anticipate that over the long term our
capital expenditures will be approximately level with our annual
depreciation of $110 million.
Net
Cash Used in Financing Activities
Net cash used in financing activities was $71 million in
the six month period in 2007 compared to $301 million in
the same six month period in 2006. The lower cash used in
financing activities was primarily the result of the elimination
of net transactions with parent companies and related entities
subsequent to the spin off from Sara Lee and lower repayments on
notes payable to banks in the six month period in 2007,
partially offset by an increase in bank overdraft in the same
six month period in 2006.
During the six month period in 2007, we paid down long-term debt
by $53 million, of which $50 million was a prepayment.
In addition, we repurchased $16 million of company stock
pursuant to a program approved
Table of Contents
by the Board of Directors in January 2007 which authorizes
repurchase of up to 10 million shares of our common stock.
Cash
and Cash Equivalents
As of June 30, 2007 and December 30, 2006, cash and
cash equivalents were $176 million and $156 million,
respectively. The higher cash and cash equivalents as of
June 30, 2007 was primarily the result of the elimination
of net transactions with parent companies and related entities
subsequent to the spin off from Sara Lee, partially offset by
lower net income and the repayment of debt under credit
facilities in 2007.
Revolving
Loan Facility
We have significant liquidity based on our availability under
the Revolving Loan Facility provided under the senior secured
credit facility that we entered into in September 2006. As of
June 30, 2007, $74 million of standby and trade
letters of credit were issued under this facility and
$426 million was available for borrowings.
This excerpt taken from the HBI 10-Q filed May 14, 2007. Liquidity
and Capital Resources
Trends
and Uncertainties Affecting Liquidity
Our primary sources of liquidity are our cash flows from
operating activities and availability under our revolving loan
facility described below. The following has or is expected to
negatively impact our liquidity:
We believe that our cash provided from operating activities,
together with our available credit capacity, will enable us to
comply with the terms of our indebtedness and meet presently
foreseeable financial requirements.
We expect to continue the restructuring efforts that we have
undertaken since the spin off from Sara Lee. For example, during
the first quarter ended March 31, 2007, we approved actions
that will result in the closure of two textile manufacturing
plants and two distribution centers. The implementation of these
efforts, which are designed to improve operating efficiencies
and lower costs, has resulted and is likely to continue to
result in significant costs. As further plans are developed and
approved by management and our board of directors, we expect to
recognize additional restructuring costs to eliminate
duplicative functions within the organization and transition a
significant portion of our manufacturing capacity to lower-cost
locations in other countries. As a result of these efforts, we
expect to incur approximately $250 million in restructuring
and related charges over the three year period following the
spin off from Sara Lee approximately half of which is expected
to be noncash. As of March 31, 2007, we have incurred
$55 million in restructuring and related charges related to
these efforts. We also expect to incur costs associated with the
integration of our information technology systems across our
company.
As we continue to add new manufacturing capacity in Central
America, the Caribbean Basin and Asia, our exposure to events
that could disrupt our foreign supply chain, including political
instability, acts of war or terrorism or other international
events resulting in the disruption of trade, disruptions in
shipping and freight forwarding services, increases in oil
prices (which would increase the cost of shipping),
interruptions in the availability of basic services and
infrastructure and fluctuations in foreign currency exchange
rates, is increased. Disruptions in our foreign supply chain
could negatively impact our liquidity by interrupting production
in offshore facilities, increasing our cost of sales, disrupting
merchandise deliveries, delaying receipt of the products into
the United States or preventing us from sourcing our products at
all. Depending on
Table of Contents
timing, these events could also result in lost sales,
cancellation charges or excessive markdowns. For a discussion of
these and other risk factors facing our business, see the risk
factors section of our Report on
Form 10-KT
for the six months ended December 30, 2006.
As a result of provisions of the Pension Protection Act of 2006,
we are required, commencing with plan years beginning after
2007, to make larger contributions to our pension plans than
Sara Lee made with respect to these plans in past years. We
contributed $48 million in December 2006 and
$42 million in March 2007 based upon minimum funding
estimates. While these contribution payments fulfill our minimum
funding requirements through fiscal 2007, if financial
conditions change or if the assumptions we have used to
calculate our pension costs and obligations turn out to be
inaccurate, we could be required to make contributions to the
pension plans in excess of our current expectations for future
years. A significant increase in our funding obligations could
have a negative impact on our liquidity.
Net
Cash Provided by (Used in) Operating Activities
Net cash used in operating activities decreased to
$1 million in the first quarter ended March 31, 2007
from cash provided by operating activities of $102 million
in the first quarter ended April 1, 2006. The
$103 million decrease was primarily the result of lower
earnings in the business due to higher interest expense, a
$42 million pension contribution and changes in the use of
working capital.
Net
Cash Used in Investing Activities
Net cash used in investing activities decreased to
$4 million in the first quarter ended March 31, 2007
from $20 million in the first quarter ended April 1,
2006. The $16 million decrease was primarily the result of
lower purchases of property and equipment and higher cash
received from sales of property and equipment. While capital
spending can vary from quarter to quarter, we anticipate that
over the long term our capital expenditures will be
approximately level with our annual depreciation of
$110 million.
Net
Cash Used in Financing Activities
Net cash used in financing activities decreased to
$3 million in the first quarter ended March 31, 2007
from $137 million in the first quarter ended April 1,
2006. The decrease was primarily the result of the elimination
of net transactions with parent companies and related entities
subsequent to the spin off from Sara Lee and lower repayments on
notes payable to banks in the first quarter ended March 31,
2007.
Cash
and Cash Equivalents
As of March 31, 2007 and December 30, 2006, cash and
cash equivalents were $149 million and $156 million,
respectively. The decrease in cash and cash equivalents as of
March 31, 2007 was primarily the result of changes in
working capital balances and a $42 million pension
contribution.
Revolving
Loan Facility
We have significant liquidity based on our availability under
the Revolving Loan Facility provided under the senior
secured credit facility that we entered into in September 2006.
As of March 31, 2007, $73 million of standby and trade
letters of credit were issued under this facility and
$427 million was available for borrowings.
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