Hanesbrands (HBI)

 

 

During the first quarter of 2009, we approved actions to close three manufacturing facilities and one distribution center in the Dominican Republic, Honduras, the United States and Canada, and eliminate an aggregate of approximately 2,600 positions in those countries and El Salvador. The production capacity represented by the manufacturing facilities has been relocated to lower cost locations in Asia, Central America and the Caribbean Basin. The distribution capacity has been relocated to our West Coast distribution facility in California in order to expand capacity for goods we source from Asia. In addition, approximately 50 management and administrative positions were eliminated, with the majority of these positions based in the United States. We recorded charges related to exiting supply contracts of $9 million, employee termination and other benefits of $6 million recognized in accordance with benefit plans previously communicated to the affected employee group and other exit costs of $4 million related to moving equipment from closed facilities and fixed asset impairment charges.

 

 

During the nine month period in 2008, we approved actions to close 11 manufacturing facilities and two distribution centers and eliminate approximately 9,400 positions in El Salvador, Mexico, Costa Rica, Honduras and the United States during the next twelve months. The production capacity represented by the manufacturing facilities will be relocated to lower cost locations in Asia, the Caribbean Basin and Central America. The distribution capacity will be relocated to our West Coast distribution facility in California in order to expand capacity for goods we source from Asia. We recorded a charge of $25 million that was primarily attributable to employee termination and other benefits recognized in accordance with benefit plans previously communicated to the affected employee group and $9 million in charges related to exiting supply contracts, which was partially offset by a $2 million favorable settlement of a lease obligation for a lower amount than previously estimated.

 

In the nine months of 2008, we recorded $14 million in one-time write-offs of stranded raw materials and work in process inventory determined not to be salvageable or cost-effective to relocate related to the closure of manufacturing facilities in the “Cost of sales” line. In addition, in connection with our consolidation and globalization strategy, in the nine months in 2008 and 2007, we recognized non-cash charges of $11 million and $29 million, respectively, in the “Cost of sales” line and a non-cash credit of $1 million and a non-cash charge of $2 million, respectively, in the “Selling, general and administrative expenses” line in the nine months of 2008 and 2007 related to accelerated depreciation of buildings and equipment for facilities that have been closed or will be closed.

 

These actions, which are a continuation of our consolidation and globalization strategy, are expected to result in benefits of moving production to lower-cost manufacturing facilities, leveraging our large scale in high-volume products and consolidating production capacity.

 

During the same nine months of 2007, we incurred $45 million in restructuring charges which primarily related to a charge of $35 million related to employee termination and other benefits associated with plant

 

 

During the six month period in 2008, we approved actions to close two manufacturing facilities and two distribution centers and eliminate approximately 1,300 positions in Heredia, Costa Rica, Aguascalientes, Mexico and the United States during the next twelve months. The production capacity related to the manufacturing facilities will be relocated to lower cost locations in Asia and Central America. The distribution capacity will be relocated to our West Coast distribution facility in California in order to expand capacity for goods we source from Asia. We recorded a charge of $5 million primarily attributable to employee termination and other benefits recognized in accordance with benefit plans previously communicated to the affected employee group. In connection with our consolidation and globalization strategy, in the six months in 2008 and 2007 we recognized non-cash charges of $7 million and $18 million, respectively, in the “Cost of sales” line and non-cash charges of $1 million in the “Selling, general and administrative expenses” line in the six months of each of 2008 and 2007 related to accelerated depreciation of buildings and equipment for facilities that have been closed or will be closed.

 

 

During the first quarter of 2008, we approved actions to close two manufacturing facilities and eliminate approximately 1,100 employees in Heredia, Costa Rica and Aguascalientes, Mexico during the next twelve months. This production capacity will be relocated to lower cost locations in Asia and Central America. We recorded a charge of $3 million primarily attributable to employee termination and other benefits recognized in accordance with benefit plans previously communicated to the affected employee group. In connection with our consolidation and globalization strategy, in the first quarters of 2008 and 2007 we recognized non-cash

 

 

The charge for restructuring in 2005 is primarily attributable to costs for severance actions related to the decision to terminate 1,126 employees, most of whom are located in the United States. The income from restructuring in 2006 resulted from the impact of certain restructuring actions that were completed for amounts more favorable than originally expected which is partially offset by $4 million of costs associated with the decision to terminate 449 employees.

 

 

 

The charge for restructuring in 2005 is primarily attributable
to costs for severance actions related to the decision to
terminate 1,126 employees, most of whom are located in the
United States. The income from restructuring in 2006 resulted
from the impact of certain restructuring actions that were
completed for amounts more favorable than originally expected
which is partially offset by $4 million of costs associated
with the decision to terminate 449 employees.

 

 

 

During the nine month period in 2007, we approved actions to close 14 manufacturing facilities and two distribution centers affecting approximately 7,475 employees in Canada, the Dominican Republic, Mexico, Brazil and the United States while moving production to lower-cost operations in Central America and Asia. In addition, approximately 428 management and administrative positions are being eliminated, with the majority of these positions based in the United States. These actions resulted in a charge of $45 million, representing costs associated with the planned termination of 7,903 employees, primarily attributable to employee and other termination benefits recognized in accordance with benefit plans previously communicated to the affected employee group. In addition, we recognized a charge of $10 million for estimated lease termination costs associated with facility closures announced in the nine months ended September 30, 2006, for facilities which were exited during 2007.

 

In connection with our consolidation and globalization strategy, a non-cash charge of $29 million and $2 million, respectively, of accelerated depreciation of buildings and equipment for facilities that have been closed or will be closed is reflected in the “Cost of sales” and “Selling, general and administrative expenses” lines of the Condensed Consolidated Statement of Income. These actions, which are a continuation of our consolidation and globalization strategy, are expected to result in benefits of moving production to lower-cost manufacturing facilities, leveraging our large scale in high-volume products and consolidating production capacity.

 

 

 

During the six month period in 2007, we approved actions to close 14 manufacturing facilities and two distribution centers affecting approximately 7,330 employees in Canada, the Dominican Republic, Mexico and the United States while moving production to lower-cost operations in Central America and Asia. In addition, approximately 350 management and administrative positions will be eliminated, with the majority of these positions based in the United States. These actions resulted in a charge of $34 million, representing costs associated with the planned termination of 7,680 employees, primarily attributable to employee and other termination benefits recognized in accordance with benefit plans previously communicated to the affected employee group. In addition, we recognized a charge of $10 million for estimated lease termination costs associated with facility closures announced in the six months ended December 30, 2006, for facilities which were exited during 2007. In connection with our consolidation and globalization strategy, a charge of $18 million and $1 million, respectively, of accelerated depreciation of buildings and equipment for facilities that have been closed or will be closed is reflected in the “Cost of sales” and “Selling, general and administrative expenses” lines of the Condensed Consolidated Statement of Income. The actions announced during 2007 are expected to be completed by the end of our first quarter 2008. These actions, which are a continuation of our consolidation and globalization strategy, are expected to result in benefits of moving

 

 

During the first quarter of 2007, we approved actions to close two textile manufacturing plants and two distribution centers in the United States. These actions resulted in a charge of $6 million, representing costs associated with the planned termination of 930 employees for employee and other termination benefits in accordance with benefit plans previously communicated to the affected employee group. In addition, we recognized a charge of $10 million for estimated lease termination costs associated with plant closures announced in the six months ended December 30, 2006, for facilities which were exited in the first quarter of 2007. In connection with the approved actions in the first quarter of 2007 and previously announced actions which were completed this quarter, a charge of $5 million for accelerated depreciation of buildings and equipment is reflected in the “Cost of sales” line of the Condensed Consolidated Statement of Income. The first quarter actions are expected to be completed during the balance of 2007. These actions, which are a continuation of our long-term supply chain globalization strategy, are expected to result in benefits of moving production to lower-cost manufacturing facilities, leveraging our large scale in high-volume products and consolidating production capacity.

 

 

 

The charge for restructuring in fiscal 2005 is primarily attributable to costs for severance actions related to the decision to terminate 1,126 employees, most of whom are located in the United States. The charge for restructuring in fiscal 2004 is primarily attributable to a charge for severance actions related to the decision to terminate 4,425 employees, most of whom are located outside the United States. The increase year over year is primarily attributable to the relative costs associated with terminating U.S. employees as compared to international employees.

 

 

 

During the quarter ended September 30, 2006, we approved an action to close two domestic facilities and one international facility. This action resulted in a charge of $9 million, representing costs associated with the planned termination of 2,275 employees for employee termination and other benefits in accordance with benefit plans previously communicated to the affected employee group. In connection with the restructuring action, a charge of $4 million for accelerated depreciation of buildings and equipment is reflected in the “Cost of sales” line of the Condensed Combined and Consolidated Statement of Income.