HBI-2014.06.28-10Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549FORM 10-Q |
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x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 28, 2014
or
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¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number: 001-32891
(Exact name of registrant as specified in its charter)
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Maryland | | 20-3552316 |
(State of incorporation) | | (I.R.S. employer identification no.) |
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1000 East Hanes Mill Road Winston-Salem, North Carolina | | 27105 |
(Address of principal executive office) | | (Zip code) |
(336) 519-8080
(Registrant’s telephone number including area code) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer | | x | | Accelerated filer | | ¨ |
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Non-accelerated filer | | ¨ (Do not check if a smaller reporting company) | | Smaller reporting company | | ¨ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
As of July 18, 2014, there were 99,631,359 shares of the registrant’s common stock outstanding.
TABLE OF CONTENTS
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Item 1. | | |
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Item 2. | | |
Item 3. | | |
Item 4. | | |
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PART II | | |
Item 1. | | |
Item 1A. | | |
Item 2. | | |
Item 3. | | |
Item 4. | | |
Item 5. | | |
Item 6. | | |
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Trademarks, Trade Names and Service Marks
We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that may appear in this Quarterly Report on Form 10-Q include the Hanes, Champion, C9 by Champion, Bali, Playtex, Maidenform, JMS/Just My Size, L’eggs, Flexees, barely there, Wonderbra, Gear for Sports, Lilyette, Zorba, Rinbros and Sol y Oro marks, which may be registered in the United States and other jurisdictions. We do not own any trademark, trade name or service mark of any other company appearing in this Quarterly Report on Form 10-Q.
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can generally be identified by the use of words such as “may,” “believe,” “will,” “expect,” “project,” “estimate,” “intend,” “anticipate,” “plan,” “continue” or similar expressions. In particular, statements under the heading “Outlook” and other information appearing under “Management's Discussion and Analysis of Financial Condition and Results of Operations” include forward-looking statements. Forward-looking statements inherently involve many risks and uncertainties that could cause actual results to differ materially from those projected in these statements.
Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is based on the current plans and expectations of our management, expressed in good faith and believed to have a reasonable basis. However, there can be no assurance that the expectation or belief will result or will be achieved or accomplished. More information on factors that could cause actual results or events to differ materially from those anticipated is included from time to time in our reports filed with the Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the year ended December 28, 2013, under the caption “Risk Factors,” as well in the “Investors” section of our corporate website, www.Hanes.com/investors.
All forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are expressly qualified in their entirety by the cautionary statements included in this Quarterly Report on Form 10-Q or our Annual Report on Form 10-K for the year ended December 28, 2013, particularly under the caption “Risk Factors.” We undertake no obligation to update or revise forward-looking statements that may be made to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events, other than as required by law.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the SEC. You can read our SEC filings over the Internet at the SEC’s website at www.sec.gov. To receive copies of public records not posted to the SEC’s web site at prescribed rates, you may complete an online form at www.sec.gov, send a fax to (202) 772-9337 or submit a written request to the SEC, Office of FOIA/PA Operations, 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information.
We make available free of charge at www.Hanes.com/investors (in the “Investors” section) copies of materials we file with, or furnish to, the SEC. By referring to our corporate website, www.Hanes.com/corporate, or any of our other websites, we do not incorporate any such website or its contents into this Quarterly Report on Form 10-Q.
PART I
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Item 1. | Financial Statements |
HANESBRANDS INC.
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(unaudited)
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| | | | | | | | | | | | | | | |
| Quarter Ended | | Six Months Ended |
| June 28,
2014 | | June 29,
2013 | | June 28,
2014 | | June 29,
2013 |
Net sales | $ | 1,342,052 |
| | $ | 1,199,205 |
| | $ | 2,401,422 |
| | $ | 2,144,666 |
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Cost of sales | 837,698 |
| | 763,723 |
| | 1,540,291 |
| | 1,381,885 |
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Gross profit | 504,354 |
| | 435,482 |
| | 861,131 |
| | 762,781 |
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Selling, general and administrative expenses | 297,230 |
| | 254,035 |
| | 582,219 |
| | 496,191 |
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Operating profit | 207,124 |
| | 181,447 |
| | 278,912 |
| | 266,590 |
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Other expenses | 660 |
| | 751 |
| | 1,095 |
| | 1,215 |
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Interest expense, net | 21,119 |
| | 25,221 |
| | 42,937 |
| | 50,844 |
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Income before income tax expense | 185,345 |
| | 155,475 |
| | 234,880 |
| | 214,531 |
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Income tax expense | 30,767 |
| | 33,889 |
| | 38,742 |
| | 41,566 |
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Net income | $ | 154,578 |
| | $ | 121,586 |
| | $ | 196,138 |
| | $ | 172,965 |
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| | | | | | | |
Earnings per share: | | | | | | | |
Basic | $ | 1.54 |
| | $ | 1.22 |
| | $ | 1.95 |
| | $ | 1.74 |
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Diluted | $ | 1.51 |
| | $ | 1.19 |
| | $ | 1.92 |
| | $ | 1.70 |
|
See accompanying notes to Condensed Consolidated Financial Statements.
2
HANESBRANDS INC.
Condensed Consolidated Statements of Comprehensive Income
(in thousands)
(unaudited)
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| | | | | | | | | | | | | | | |
| Quarter Ended | | Six Months Ended |
| June 28,
2014 | | June 29,
2013 | | June 28,
2014 | | June 29,
2013 |
Net income | $ | 154,578 |
| | $ | 121,586 |
| | $ | 196,138 |
| | $ | 172,965 |
|
Other comprehensive income (loss), net of tax of $481, $2,175, $1,288 and $3,671, respectively | 3,968 |
| | (3,260 | ) | | 3,187 |
| | (1,904 | ) |
Comprehensive income | $ | 158,546 |
| | $ | 118,326 |
| | $ | 199,325 |
| | $ | 171,061 |
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See accompanying notes to Condensed Consolidated Financial Statements.
3
HANESBRANDS INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts)
(unaudited)
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| | | | | | | |
| June 28,
2014 | | December 28,
2013 |
Assets | | | |
Cash and cash equivalents | $ | 143,617 |
| | $ | 115,863 |
|
Trade accounts receivable, net | 779,520 |
| | 578,558 |
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Inventories | 1,401,615 |
| | 1,283,331 |
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Deferred tax assets | 198,149 |
| | 197,260 |
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Other current assets | 64,835 |
| | 68,654 |
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Total current assets | 2,587,736 |
| | 2,243,666 |
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| | | |
Property, net | 571,744 |
| | 579,883 |
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Trademarks and other identifiable intangibles, net | 367,820 |
| | 377,751 |
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Goodwill | 626,568 |
| | 626,392 |
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Deferred tax assets | 208,703 |
| | 207,426 |
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Other noncurrent assets | 52,447 |
| | 54,930 |
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Total assets | $ | 4,415,018 |
| | $ | 4,090,048 |
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Liabilities and Stockholders’ Equity | | | |
Accounts payable | $ | 563,758 |
| | $ | 466,270 |
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Accrued liabilities | 325,778 |
| | 315,026 |
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Notes payable | 40,802 |
| | 36,192 |
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Accounts Receivable Securitization Facility | 225,000 |
| | 181,790 |
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Total current liabilities | 1,155,338 |
| | 999,278 |
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Long-term debt | 1,523,000 |
| | 1,467,000 |
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Pension and postretirement benefits | 220,014 |
| | 263,819 |
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Other noncurrent liabilities | 138,238 |
| | 129,328 |
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Total liabilities | 3,036,590 |
| | 2,859,425 |
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Stockholders’ equity: | | | |
Preferred stock (50,000,000 authorized shares; $.01 par value) | | | |
Issued and outstanding — None | — |
| | — |
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Common stock (500,000,000 authorized shares; $.01 par value) | | | |
Issued and outstanding — 99,630,343 and 99,455,478, respectively | 996 |
| | 995 |
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Additional paid-in capital | 294,514 |
| | 285,227 |
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Retained earnings | 1,316,748 |
| | 1,181,418 |
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Accumulated other comprehensive loss | (233,830 | ) | | (237,017 | ) |
Total stockholders’ equity | 1,378,428 |
| | 1,230,623 |
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Total liabilities and stockholders’ equity | $ | 4,415,018 |
| | $ | 4,090,048 |
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See accompanying notes to Condensed Consolidated Financial Statements.
4
HANESBRANDS INC. Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited)
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| Six Months Ended |
| June 28,
2014 | | June 29,
2013 |
Operating activities: | | | |
Net income | $ | 196,138 |
| | $ | 172,965 |
|
Adjustments to reconcile net income to net cash from operating activities: | | | |
Depreciation and amortization of long-lived assets | 46,040 |
| | 45,630 |
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Amortization of debt issuance costs | 2,853 |
| | 3,358 |
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Stock compensation expense | 8,554 |
| | 5,003 |
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Deferred taxes and other | (4,611 | ) | | 2,444 |
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Changes in assets and liabilities: | | | |
Accounts receivable | (200,973 | ) | | (115,907 | ) |
Inventories | (117,576 | ) | | (91,466 | ) |
Other assets | 6,560 |
| | (4,813 | ) |
Accounts payable | 93,954 |
| | 42,808 |
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Accrued liabilities and other | (26,001 | ) | | (41,696 | ) |
Net cash from operating activities | 4,938 |
| | 18,326 |
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| | | |
Investing activities: | | | |
Purchases of property, plant and equipment | (24,585 | ) | | (19,790 | ) |
Proceeds from sales of assets | 4,918 |
| | 3,617 |
|
Net cash from investing activities | (19,667 | ) | | (16,173 | ) |
| | | |
Financing activities: | | | |
Borrowings on notes payable | 66,737 |
| | 62,954 |
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Repayments on notes payable | (61,957 | ) | | (58,671 | ) |
Borrowings on Accounts Receivable Securitization Facility | 115,609 |
| | 81,358 |
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Repayments on Accounts Receivable Securitization Facility | (72,399 | ) | | (84,715 | ) |
Borrowings on Revolving Loan Facility | 1,782,500 |
| | 1,970,000 |
|
Repayments on Revolving Loan Facility | (1,726,500 | ) | | (1,913,000 | ) |
Cash dividends paid | (59,731 | ) | | (19,797 | ) |
Proceeds from stock options exercised | — |
| | 5,279 |
|
Taxes paid related to net shares settlement of equity awards | (10,342 | ) | | (20,004 | ) |
Excess tax benefit from stock-based compensation | 7,895 |
| | 14,892 |
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Other | 806 |
| | 259 |
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Net cash from financing activities | 42,618 |
| | 38,555 |
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Effect of changes in foreign exchange rates on cash | (135 | ) | | (1,199 | ) |
Change in cash and cash equivalents | 27,754 |
| | 39,509 |
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Cash and cash equivalents at beginning of year | 115,863 |
| | 42,796 |
|
Cash and cash equivalents at end of period | $ | 143,617 |
| | $ | 82,305 |
|
See accompanying notes to Condensed Consolidated Financial Statements.
5
HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements
(dollars and shares in thousands, except per share data)
(unaudited)
These statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and, in accordance with those rules and regulations, do not include all information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Management believes that the disclosures made are adequate for a fair statement of the results of operations, financial condition and cash flows of Hanesbrands Inc., a Maryland corporation, and its consolidated subsidiaries (the “Company” or “Hanesbrands”). In the opinion of management, the condensed consolidated interim financial statements reflect all adjustments, which consist only of normal recurring adjustments, necessary to state fairly the results of operations, financial condition and cash flows for the interim periods presented herein. The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make use of estimates and assumptions that affect the reported amounts and disclosures. Actual results may vary from these estimates.
These condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s most recent Annual Report on Form 10-K. The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the full year.
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(2) | Recent Accounting Pronouncements |
Disclosures About Offsetting Assets and Liabilities
In December 2011, the Financial Accounting Standards Board (the “FASB”) issued new accounting rules related to new disclosure requirements regarding the nature of an entity’s rights of setoff and related arrangements associated with its financial instruments and derivative instruments. The new rules were effective for the Company in the first quarter of 2014 with retrospective application required. The adoption of the new accounting rules did not have a material effect on the Company’s financial condition, results of operations or cash flows.
Presentation of an Unrecognized Tax Benefit
In July 2013, the FASB issued new accounting rules related to standardizing the financial statement presentation of an unrecognized tax benefit, or a portion thereof, when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The new rules were effective for the Company in the first quarter of 2014 and applied prospectively. The adoption of the new accounting rules did not have a material effect on the Company’s financial condition, results of operations or cash flows.
Discontinued Operations
In April 2014, the FASB issued new accounting rules related to updating the criteria for reporting discontinued operations and enhancing related disclosures requirements. The new rules are effective for the Company in the first quarter of 2015. The Company does not expect the adoption of the new accounting rules to have a material impact on the Company’s financial condition, results of operations or cash flows.
Revenue from Contracts with Customers
In May 2014, the FASB issued new accounting rules related to revenue recognition for contracts with customers requiring revenue recognition based on the transfer of promised goods or services to customers in an amount that reflects consideration the Company expects to be entitled to in exchange for goods or services. The new rules supercede prior revenue recognition requirements and most industry-specific accounting guidance. The new rules will be effective for the Company in the first quarter of 2017 with retrospective application required. The Company does not expect the adoption of the new accounting rules to have a material impact on the Company’s financial condition, results of operations or cash flows.
HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(dollars and shares in thousands, except per share data)
(unaudited)
On June 25, 2014, the Company announced its intentions to acquire DBA Lux Holding S.A. (“DBA”) from SLB Brands Holdings, Ltd and certain individual DBA shareholders, provided consultation with European and French works councils representing DBA employees is completed and customary closing conditions are met. DBA is a leading marketer of intimate apparel, hosiery and underwear in Europe. The all-cash transaction offer values DBA at €400,000 on an enterprise basis (approximately $550,000 at current exchange rates). The Company intends to finance the transaction with cash on hand and third-party borrowings. The acquisition could close as soon as the third quarter 2014. For additional information regarding the transaction, see the Company’s Current Report on Form 8-K filed on June 25, 2014.
In October 2013, the Company acquired 100% of the outstanding shares of Maidenform Brands, Inc. (“Maidenform”) at $23.50 per share for a total purchase price of $580,505. The acquisition was financed through a combination of cash on hand and short-term borrowing on the Company’s revolving credit facility.
Maidenform is a global intimate apparel brand with a portfolio of well-known brands including Maidenform, Flexees and Lilyette. The Company believes the acquisition will create growth and cost savings opportunities and increased scale to serve retailers. Maidenform sourced all of its products from manufacturers, while the Company utilizes its low cost supply chain supplemented by third party manufacturing to maximize the value of Maidenform to retailers and consumers.
The allocation of the Maidenform purchase price is preliminary and subject to change. For the six months ended June 28, 2014, the Company has not recorded any purchase price adjustments. The primary areas of the purchase price that are not yet finalized are related to certain income taxes and residual goodwill. Accordingly, adjustments will be made to the values of the assets acquired and liabilities assumed as additional information is obtained about the facts and circumstances which existed at the valuation date. Basic earnings per share (“EPS”) was computed by dividing net income by the number of weighted average shares of common stock outstanding. Diluted EPS was calculated to give effect to all potentially dilutive shares of common stock using the treasury stock method. The reconciliation of basic to diluted weighted average shares outstanding is as follows:
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| | | | | | | | | | | |
| Quarter Ended | | Six Months Ended |
| June 28,
2014 | | June 29,
2013 | | June 28,
2014 | | June 29,
2013 |
Basic weighted average shares outstanding | 100,480 |
| | 99,855 |
| | 100,432 |
| | 99,624 |
|
Effect of potentially dilutive securities: | | | | | | | |
Stock options | 1,163 |
| | 1,494 |
| | 1,211 |
| | 1,437 |
|
Restricted stock units | 414 |
| | 663 |
| | 393 |
| | 668 |
|
Employee stock purchase plan and other | — |
| | 1 |
| | — |
| | — |
|
Diluted weighted average shares outstanding | 102,057 |
| | 102,013 |
| | 102,036 |
| | 101,729 |
|
For the quarters and six months ended June 28, 2014 and June 29, 2013, there were no options or restricted stock units that were excluded from the diluted earnings per share calculation because their effect would be anti-dilutive.
Inventories consisted of the following:
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| | | | | | | |
| June 28,
2014 | | December 28,
2013 |
Raw materials | $ | 192,592 |
| | $ | 170,524 |
|
Work in process | 150,860 |
| | 142,713 |
|
Finished goods | 1,058,163 |
| | 970,094 |
|
| $ | 1,401,615 |
| | $ | 1,283,331 |
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(dollars and shares in thousands, except per share data)
(unaudited)
Debt consisted of the following:
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| | | | | | | | | | | |
| Interest
Rate as of
June 28,
2014 | | Principal Amount | | Maturity Date |
| June 28,
2014 | | December 28,
2013 | |
Revolving Loan Facility | 1.91% | | $ | 523,000 |
| | $ | 467,000 |
| | July 2018 |
6.375% Senior Notes | 6.38% | | 1,000,000 |
| | 1,000,000 |
| | December 2020 |
Accounts Receivable Securitization Facility | 1.11% | | 225,000 |
| | 181,790 |
| | March 2015 |
| | | 1,748,000 |
| | 1,648,790 |
| | |
Less current maturities | | | 225,000 |
| | 181,790 |
| | |
| | | $ | 1,523,000 |
| | $ | 1,467,000 |
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As of June 28, 2014, the Company had $566,113 of borrowing availability under the $1,100,000 revolving credit facility (the “Revolving Loan Facility”) under its senior secured credit facility after taking into account outstanding borrowings and $10,887 of standby and trade letters of credit issued and outstanding under this facility.
In March 2014, the Company amended the accounts receivable securitization facility that it entered into in November 2007 (the “Accounts Receivable Securitization Facility”). This amendment decreased certain fee rates, revised certain concentration limits and dilution triggers and extended the termination date to March 2015.
As of June 28, 2014, the Company was in compliance with all financial covenants under its credit facilities.
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(7) | Accumulated Other Comprehensive Loss |
The components of Accumulated other comprehensive loss (“AOCI”) are as follows:
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| | | | | | | | | | | | | | | | | | | |
| Cumulative Translation Adjustment | | Foreign Exchange Contracts | | Defined Benefit Plans | | Income Taxes | | Accumulated Other Comprehensive Loss |
| | | |
Balance at December 28, 2013 | $ | (21,928 | ) | | $ | 2,042 |
| | $ | (357,503 | ) | | $ | 140,372 |
| | $ | (237,017 | ) |
Amounts reclassified from accumulated other comprehensive loss | — |
| | (1,030 | ) | | 5,203 |
| | (1,629 | ) | | 2,544 |
|
Current-period other comprehensive income (loss) activity | 1,157 |
| | (855 | ) | | — |
| | 341 |
| | 643 |
|
Balance at June 28, 2014 | $ | (20,771 | ) | | $ | 157 |
| | $ | (352,300 | ) | | $ | 139,084 |
| | $ | (233,830 | ) |
HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(dollars and shares in thousands, except per share data)
(unaudited)
The Company had the following reclassifications out of Accumulated other comprehensive loss:
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| | | | | | | | | | | | | | | | | | |
Component of AOCI | | Location of Reclassification into Income | | Amount of Reclassification from AOCI | | Amount of Reclassification from AOCI |
| Quarter Ended | | Six Months Ended |
| June 28,
2014 | | June 29,
2013 | | June 28,
2014 | | June 29,
2013 |
Gain on foreign exchange contracts | | Cost of sales | | $ | 355 |
| | $ | 47 |
| | $ | 1,030 |
| | $ | 5 |
|
Gain on foreign exchange contracts | | Income tax | | (142 | ) | | (19 | ) | | (411 | ) | | (2 | ) |
Net of tax | | | | 213 |
| | 28 |
| | 619 |
| | 3 |
|
| | | | | | | | | | |
Amortization of deferred actuarial loss and prior service cost | | Selling, general and administrative expenses | | (2,602 | ) | | (3,847 | ) | | (5,203 | ) | | (7,709 | ) |
Amortization of deferred actuarial loss and prior service cost | | Income tax | | 1,020 |
| | 1,485 |
| | 2,040 |
| | 3,025 |
|
Net of tax | | | | (1,582 | ) | | (2,362 | ) | | (3,163 | ) | | (4,684 | ) |
| | | | | | | | | | |
Total reclassifications | | | | $ | (1,369 | ) | | $ | (2,334 | ) | | $ | (2,544 | ) | | $ | (4,681 | ) |
| |
(8) | Financial Instruments and Risk Management |
The Company uses forward foreign exchange contracts to manage its exposures to movements in foreign exchange rates. As of June 28, 2014, the notional U.S. dollar equivalent of commitments to sell and purchase foreign currencies within the Company’s derivative portfolio was $61,298 and $9,922 respectively, primarily consisting of contracts hedging exposures to the Mexican peso, Canadian dollar, Australian dollar, Brazilian real and Japanese yen.
Fair Values of Derivative Instruments
The fair values of derivative financial instruments recognized in the Condensed Consolidated Balance Sheets of the Company were as follows:
|
| | | | | | | | | |
| Balance Sheet Location | | Fair Value |
| June 28,
2014 | | December 28,
2013 |
Hedges | Other current assets | | $ | 49 |
| | $ | 32 |
|
Non-hedges | Other current assets | | 21 |
| | 970 |
|
Total derivative assets | | | 70 |
| | 1,002 |
|
| | | | | |
Hedges | Accrued liabilities | | (856 | ) | | — |
|
Non-hedges | Accrued liabilities | | (286 | ) | | (28 | ) |
Total derivative liabilities | | | (1,142 | ) | | (28 | ) |
| | | | | |
Net derivative asset (liability) | | | $ | (1,072 | ) | | $ | 974 |
|
Cash Flow Hedges
The Company uses forward foreign exchange contracts to reduce the effect of fluctuating foreign currencies on short-term foreign currency-denominated transactions, foreign currency-denominated investments and other known foreign currency exposures. Gains and losses on these contracts are intended to offset losses and gains on the hedged transaction in an effort to reduce the earnings volatility resulting from fluctuating foreign currency exchange rates.
HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(dollars and shares in thousands, except per share data)
(unaudited)
The Company expects to reclassify into earnings during the next 12 months a net loss from Accumulated other comprehensive loss of approximately $521.
The changes in fair value of derivatives excluded from the Company’s effectiveness assessments and the ineffective portion of the changes in the fair value of derivatives used as cash flow hedges are reported in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statements of Income.
The effect of cash flow hedge derivative instruments on the Condensed Consolidated Statements of Income and Accumulated other comprehensive loss is as follows:
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| | | | | | | | | | | | | | | |
| Amount of
Gain (Loss)
Recognized in
Accumulated Other
Comprehensive Loss
(Effective Portion) | | Amount of
Gain (Loss)
Recognized in
Accumulated Other
Comprehensive Loss
(Effective Portion) |
| Quarter Ended | | Six Months Ended |
| June 28,
2014 | | June 29,
2013 | | June 28,
2014 | | June 29,
2013 |
Foreign exchange contracts | $ | (997 | ) | | $ | 1,775 |
| | $ | (855 | ) | | $ | 1,624 |
|
|
| | | | | | | | | | | | | | | | | |
| Location of
Gain (Loss)
Reclassified from
Accumulated Other
Comprehensive
Loss into Income
(Effective Portion) | | Amount of
Gain (Loss)
Reclassified from
Accumulated
Other Comprehensive
Loss into Income
(Effective Portion) | | Amount of
Gain (Loss)
Reclassified from
Accumulated
Other Comprehensive
Loss into Income
(Effective Portion) |
| | Quarter Ended | | Six Months Ended |
| | June 28,
2014 | | June 29,
2013 | | June 28,
2014 | | June 29,
2013 |
Foreign exchange contracts | Cost of sales | | $ | 355 |
| | $ | 47 |
| | $ | 1,030 |
| | $ | 5 |
|
Derivative Contracts Not Designated As Hedges
The Company uses foreign exchange derivative contracts as economic hedges against the impact of foreign exchange fluctuations on existing accounts receivable and payable balances and intercompany lending transactions denominated in foreign currencies. These contracts are not designated as hedges under the accounting standards and are recorded at fair value in the Condensed Consolidated Balance Sheet. Any gains or losses resulting from changes in fair value are recognized directly into earnings. Gains or losses on these contracts largely offset the net remeasurement gains or losses on the related assets and liabilities.
The effect of derivative contracts not designated as hedges on the Condensed Consolidated Statements of Income is as follows:
|
| | | | | | | | | | | | | | | | | |
| Location of Loss
Recognized in Income on
Derivative | | Amount of Gain (Loss)
Recognized in Income | | Amount of Gain (Loss)
Recognized in Income |
| Quarter Ended | | Six Months Ended |
| June 28,
2014 | | June 29,
2013 | | June 28,
2014 | | June 29,
2013 |
Foreign exchange contracts | Selling, general and administrative expenses | | $ | (322 | ) | | $ | 2,349 |
| | $ | (372 | ) | | $ | 563 |
|
| |
(9) | Fair Value of Assets and Liabilities |
As of June 28, 2014, the Company held certain financial assets and liabilities related to foreign exchange derivative contracts that are required to be measured at fair value on a recurring basis. The fair values of foreign currency derivatives are determined using the cash flows of the foreign exchange contract, discount rates to account for the passage of time and current foreign exchange market data and are categorized as Level 2. The Company’s defined benefit pension plan investments are not required to be measured at fair value on a recurring basis.
HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(dollars and shares in thousands, except per share data)
(unaudited)
There were no changes during the quarter ended June 28, 2014 to the Company’s valuation techniques used to measure asset and liability fair values on a recurring basis. There were no transfers between the three level categories and there were no Level 3 assets or liabilities measured on a quarterly basis during the quarter ended June 28, 2014. As of and during the quarter and six months ended June 28, 2014, the Company did not have any non-financial assets or liabilities that were required to be measured at fair value on a recurring or non-recurring basis.
The following tables set forth, by level within the fair value hierarchy, the Company’s financial assets and liabilities accounted for at fair value on a recurring basis.
|
| | | | | | | | | | | |
| Assets (Liabilities) at Fair Value as of
June 28, 2014 |
| Quoted Prices In
Active Markets
for Identical
Assets
(Level 1) | | Significant
Other
Observable
Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) |
Foreign exchange derivative contracts | $ | — |
| | $ | 70 |
| | $ | — |
|
Foreign exchange derivative contracts | — |
| | (1,142 | ) | | — |
|
| — |
| | (1,072 | ) | | — |
|
| | | | | |
Deferred compensation plan liability | — |
| | (18,128 | ) | | — |
|
| | | | | |
Total | $ | — |
| | $ | (19,200 | ) | | $ | — |
|
|
| | | | | | | | | | | |
| Assets (Liabilities) at Fair Value as of
December 28, 2013 |
| Quoted Prices In
Active Markets
for Identical
Assets
(Level 1) | | Significant
Other
Observable
Inputs
(Level 2) | | Significant
Unobservable
Inputs
(Level 3) |
Foreign exchange derivative contracts | $ | — |
| | $ | 1,002 |
| | $ | — |
|
Foreign exchange derivative contracts | — |
| | (28 | ) | | — |
|
| — |
| | 974 |
| | — |
|
| | | | | |
Deferred compensation plan liability | — |
| | (17,036 | ) | | — |
|
| | | | | |
Total | $ | — |
| | $ | (16,062 | ) | | $ | — |
|
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, trade accounts receivable, notes receivable and accounts payable approximated fair value as of June 28, 2014 and December 28, 2013. The carrying amount of trade accounts receivable includes allowance for doubtful accounts, chargebacks and other deductions of $16,796 and $13,336 as of June 28, 2014 and December 28, 2013, respectively. The fair value of debt, which is classified as a Level 2 liability, was $1,831,635 and $1,744,115 as of June 28, 2014 and December 28, 2013, respectively. Debt had a carrying value of $1,748,000 and $1,648,790 as of June 28, 2014 and December 28, 2013, respectively. The fair values were estimated using quoted market prices as provided in secondary markets which consider the Company’s credit risk and market related conditions. The carrying amounts of the Company’s notes payable, which is classified as a Level 2 liability, approximated fair value as of June 28, 2014 and December 28, 2013, primarily due to the short-term nature of these instruments.
The Company’s effective income tax rate was 17% and 22% for the quarters ended June 28, 2014 and June 29, 2013, respectively. The Company’s effective tax rate was 16% and 19% for the six months ended June 28, 2014 and June 29, 2013, respectively. The lower effective income tax rates for the quarter and six months ended June 28, 2014 compared to the quarter
HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(dollars and shares in thousands, except per share data)
(unaudited)
and six months ended June 29, 2013 were primarily due to a lower proportion of earnings attributed to domestic subsidiaries, which are taxed at rates higher than foreign subsidiaries.
As part of the Company’s cash deployment strategy, in July 2014 the Company’s Board of Directors authorized a regular quarterly dividend of $0.30 per share to be paid September 3, 2014 to stockholders of record at the close of business on August 12, 2014. In January 2014 and April 2014, the Board of Directors also declared dividends of $0.30 per share on outstanding common stock which were paid on March 11, 2014 and June 3, 2014, respectively.
Cash paid for dividends was $29,881 and $59,731 for the quarter and six months ended June 28, 2014, respectively, and $19,797 for the quarter and six months ended June 29, 2013.
| |
(12) | Business Segment Information |
The Company’s operations are managed and reported in four operating segments, each of which is a reportable segment for financial reporting purposes: Innerwear, Activewear, Direct to Consumer and International. These segments are organized principally by product category, geographic location and distribution channel. Each segment has its own management that is responsible for the operations of the segment’s businesses, but the segments share a common supply chain and media and marketing platforms.
The types of products and services from which each reportable segment derives its revenues are as follows:
| |
• | Innerwear sells basic branded products that are replenishment in nature under the product categories of men’s underwear, children’s underwear, socks, panties, hosiery and intimates, which includes bras and shapewear. |
| |
• | Activewear sells basic branded products that are primarily seasonal in nature under the product categories of branded printwear and retail activewear, as well as licensed logo apparel in collegiate bookstores and other channels. |
| |
• | Direct to Consumer includes the Company’s value-based (“outlet”) stores and Internet operations which sell products from the Company’s portfolio of leading brands. The Company’s Internet operations are supported by its catalogs. |
| |
• | International primarily relates to the Asia, Latin America, Canada and Australia geographic locations that sell products that span across the Innerwear and Activewear reportable segments. |
The Company evaluates the operating performance of its segments based upon segment operating profit, which is defined as operating profit before general corporate expenses and amortization of intangibles. The accounting policies of the segments are consistent with those described in Note 2 to the Company’s consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 28, 2013.
|
| | | | | | | | | | | | | | | |
| Quarter Ended | | Six Months Ended |
June 28,
2014 | | June 29,
2013 | | June 28,
2014 | | June 29,
2013 |
Net sales: | | | | | | | |
Innerwear | $ | 788,330 |
| | $ | 687,319 |
| | $ | 1,359,484 |
| | $ | 1,184,344 |
|
Activewear | 317,814 |
| | 294,231 |
| | 612,318 |
| | 561,417 |
|
Direct to Consumer | 104,352 |
| | 92,633 |
| | 188,066 |
| | 172,716 |
|
International | 131,556 |
| | 125,022 |
| | 241,554 |
| | 226,189 |
|
Total net sales | $ | 1,342,052 |
| | $ | 1,199,205 |
| | $ | 2,401,422 |
| | $ | 2,144,666 |
|
HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(dollars and shares in thousands, except per share data)
(unaudited)
|
| | | | | | | | | | | | | | | |
| Quarter Ended | | Six Months Ended |
| June 28,
2014 | | June 29,
2013 | | June 28,
2014 | | June 29,
2013 |
Segment operating profit: | | | | | | | |
Innerwear | $ | 181,667 |
| | $ | 152,702 |
| | $ | 277,422 |
| | $ | 242,444 |
|
Activewear | 45,709 |
| | 37,120 |
| | 77,704 |
| | 58,429 |
|
Direct to Consumer | 11,848 |
| | 9,064 |
| | 11,147 |
| | 9,196 |
|
International | 16,060 |
| | 12,732 |
| | 24,371 |
| | 15,014 |
|
Total segment operating profit | 255,284 |
| | 211,618 |
| | 390,644 |
| | 325,083 |
|
Items not included in segment operating profit: | | | | | | | |
General corporate expenses | (19,892 | ) | | (26,874 | ) | | (36,931 | ) | | (51,825 | ) |
Acquisition, integration and other action related charges | (24,045 | ) | | — |
| | (66,682 | ) | | — |
|
Amortization of intangibles | (4,223 | ) | | (3,297 | ) | | (8,119 | ) | | (6,668 | ) |
Total operating profit | 207,124 |
| | 181,447 |
| | 278,912 |
| | 266,590 |
|
Other expenses | (660 | ) | | (751 | ) | | (1,095 | ) | | (1,215 | ) |
Interest expense, net | (21,119 | ) | | (25,221 | ) | | (42,937 | ) | | (50,844 | ) |
Income before income tax expense | $ | 185,345 |
| | $ | 155,475 |
| | $ | 234,880 |
| | $ | 214,531 |
|
The results of Maidenform have been included in the Company’s consolidated financial statements since the date of acquisition and are reported as part of the Innerwear, Direct to Consumer and International segments based on geographic location and distribution channel. For the quarter ended June 28, 2014, the Company incurred acquisition, integration and other action related charges of $24,045, of which $3,835 is reported in the “Cost of sales” line and $20,210 is reported in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statement of Income. For the six months ended June 28, 2014, the Company incurred acquisition, integration and other action related charges of $66,682, of which $18,662 is reported in the “Cost of sales” line and $48,020 is reported in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statement of Income.
| |
(13) | Consolidating Financial Information |
In accordance with the indenture governing the Company’s $1,000,000 6.375% Senior Notes issued on November 9, 2010, as supplemented from time to time, certain of the Company’s subsidiaries have guaranteed the Company’s obligations under the 6.375% Senior Notes. The following presents the condensed consolidating financial information separately for:
(i) Parent Company, the issuer of the guaranteed obligations. Parent Company includes Hanesbrands Inc. and its 100% owned operating divisions which are not legal entities, and excludes its subsidiaries which are legal entities;
(ii) Guarantor subsidiaries, on a combined basis, as specified in the Indentures;
(iii) Non-guarantor subsidiaries, on a combined basis;
(iv) Consolidating entries and eliminations representing adjustments to (a) eliminate intercompany transactions between or among Parent Company, the guarantor subsidiaries and the non-guarantor subsidiaries, (b) eliminate intercompany profit in inventory, (c) eliminate the investments in the Company’s subsidiaries and (d) record consolidating entries; and
(v) The Company, on a consolidated basis.
The 6.375% Senior Notes are fully and unconditionally guaranteed on a joint and several basis by each guarantor subsidiary, each of which is 100% owned, directly or indirectly, by Hanesbrands Inc. A guarantor subsidiary’s guarantee can be released in certain customary circumstances. Each entity in the consolidating financial information follows the same accounting policies as described in the consolidated financial statements, except for the use by the Parent Company and guarantor subsidiaries of the equity method of accounting to reflect ownership interests in subsidiaries which are eliminated upon consolidation.
HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(dollars and shares in thousands, except per share data)
(unaudited)
|
| | | | | | | | | | | | | | | | | | | |
| Condensed Consolidating Statement of Comprehensive Income
Quarter Ended June 28, 2014 |
| Parent
Company | | Guarantor
Subsidiaries | | Non-Guarantor
Subsidiaries | | Consolidating
Entries and
Eliminations | | Consolidated |
Net sales | $ | 1,186,489 |
| | $ | 190,946 |
| | $ | 607,973 |
| | $ | (643,356 | ) | | $ | 1,342,052 |
|
Cost of sales | 897,376 |
| | 90,178 |
| | 458,668 |
| | (608,524 | ) | | 837,698 |
|
Gross profit | 289,113 |
| | 100,768 |
| | 149,305 |
| | (34,832 | ) | | 504,354 |
|
Selling, general and administrative expenses | 215,474 |
| | 53,922 |
| | 29,619 |
| | (1,785 | ) | | 297,230 |
|
Operating profit | 73,639 |
| | 46,846 |
| | 119,686 |
| | (33,047 | ) | | 207,124 |
|
Equity in earnings of subsidiaries | 120,322 |
| | 93,613 |
| | — |
| | (213,935 | ) | | — |
|
Other expenses | 660 |
| | — |
| | — |
| | — |
| | 660 |
|
Interest expense, net | 19,058 |
| | (88 | ) | | 1,979 |
| | 170 |
| | 21,119 |
|
Income before income tax expense | 174,243 |
| | 140,547 |
| | 117,707 |
| | (247,152 | ) | | 185,345 |
|
Income tax expense | 19,665 |
| | 8,070 |
| | 3,032 |
| | — |
| | 30,767 |
|
Net income | $ | 154,578 |
| | $ | 132,477 |
| | $ | 114,675 |
| | $ | (247,152 | ) | | $ | 154,578 |
|
| | | | | | | | | |
Comprehensive income | $ | 158,546 |
| | $ | 132,477 |
| | $ | 117,159 |
| | $ | (249,636 | ) | | $ | 158,546 |
|
|
| | | | | | | | | | | | | | | | | | | |
| Condensed Consolidating Statement of Comprehensive Income
Quarter Ended June 29, 2013 |
| Parent
Company | | Guarantor
Subsidiaries | | Non-Guarantor
Subsidiaries | | Consolidating
Entries and
Eliminations | | Consolidated |
Net sales | $ | 1,054,318 |
| | $ | 168,376 |
| | $ | 603,380 |
| | $ | (626,869 | ) | | $ | 1,199,205 |
|
Cost of sales | 813,705 |
| | 78,781 |
| | 463,089 |
| | (591,852 | ) | | 763,723 |
|
Gross profit | 240,613 |
| | 89,595 |
| | 140,291 |
| | (35,017 | ) | | 435,482 |
|
Selling, general and administrative expenses | 188,889 |
| | 35,823 |
| | 30,651 |
| | (1,328 | ) | | 254,035 |
|
Operating profit | 51,724 |
| | 53,772 |
| | 109,640 |
| | (33,689 | ) | | 181,447 |
|
Equity in earnings of subsidiaries | 112,006 |
| | 78,211 |
| | — |
| | (190,217 | ) | | — |
|
Other expenses | 751 |
| | — |
| | — |
| | — |
| | 751 |
|
Interest expense, net | 23,756 |
| | — |
| | 1,465 |
| | — |
| | 25,221 |
|
Income before income tax expense | 139,223 |
| | 131,983 |
| | 108,175 |
| | (223,906 | ) | | 155,475 |
|
Income tax expense | 17,637 |
| | 7,754 |
| | 8,498 |
| | — |
| | 33,889 |
|
Net income | $ | 121,586 |
| | $ | 124,229 |
| | $ | 99,677 |
| | $ | (223,906 | ) | | $ | 121,586 |
|
| | | | | | | | | |
Comprehensive income | $ | 118,326 |
| | $ | 124,229 |
| | $ | 163,602 |
| | $ | (287,831 | ) | | $ | 118,326 |
|
HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(dollars and shares in thousands, except per share data)
(unaudited)
|
| | | | | | | | | | | | | | | | | | | |
| Condensed Consolidating Statement of Comprehensive Income
Six Months Ended June 28, 2014 |
| Parent
Company | | Guarantor
Subsidiaries | | Non-Guarantor
Subsidiaries | | Consolidating
Entries and
Eliminations | | Consolidated |
Net sales | $ | 2,078,819 |
| | $ | 410,896 |
| | $ | 1,168,159 |
| | $ | (1,256,452 | ) | | $ | 2,401,422 |
|
Cost of sales | 1,618,522 |
| | 223,659 |
| | 889,218 |
| | (1,191,108 | ) | | 1,540,291 |
|
Gross profit | 460,297 |
| | 187,237 |
| | 278,941 |
| | (65,344 | ) | | 861,131 |
|
Selling, general and administrative expenses | 406,179 |
| | 123,945 |
| | 56,098 |
| | (4,003 | ) | | 582,219 |
|
Operating profit | 54,118 |
| | 63,292 |
| | 222,843 |
| | (61,341 | ) | | 278,912 |
|
Equity in earnings of subsidiaries | 205,387 |
| | 168,473 |
| | — |
| | (373,860 | ) | | — |
|
Other expenses | 1,095 |
| | — |
| | — |
| | — |
| | 1,095 |
|
Interest expense, net | 36,942 |
| | 1,898 |
| | 4,035 |
| | 62 |
| | 42,937 |
|
Income before income tax expense | 221,468 |
| | 229,867 |
| | 218,808 |
| | (435,263 | ) | | 234,880 |
|
Income tax expense | 25,330 |
| | 5,756 |
| | 7,656 |
| | — |
| | 38,742 |
|
Net income | $ | 196,138 |
| | $ | 224,111 |
| | $ | 211,152 |
| | $ | (435,263 | ) | | $ | 196,138 |
|
| | | | | | | | | |
Comprehensive income | $ | 199,325 |
| | $ | 224,111 |
| | $ | 211,371 |
| | $ | (435,482 | ) | | $ | 199,325 |
|
|
| | | | | | | | | | | | | | | | | | | |
| Condensed Consolidating Statement of Comprehensive Income
Six Months Ended June 29, 2013 |
| Parent
Company | | Guarantor
Subsidiaries | | Non-Guarantor
Subsidiaries | | Consolidating
Entries and
Eliminations | | Consolidated |
Net sales | $ | 1,915,073 |
| | $ | 301,082 |
| | $ | 1,147,681 |
| | $ | (1,219,170 | ) | | $ | 2,144,666 |
|
Cost of sales | 1,497,562 |
| | 142,259 |
| | 902,076 |
| | (1,160,012 | ) | | 1,381,885 |
|
Gross profit | 417,511 |
| | 158,823 |
| | 245,605 |
| | (59,158 | ) | | 762,781 |
|
Selling, general and administrative expenses | 362,837 |
| | 74,131 |
| | 61,748 |
| | (2,525 | ) | | 496,191 |
|
Operating profit | 54,674 |
| | 84,692 |
| | 183,857 |
| | (56,633 | ) | | 266,590 |
|
Equity in earnings of subsidiaries | 187,866 |
| | 128,030 |
| | — |
| | (315,896 | ) | | — |
|
Other expenses | 1,215 |
| | — |
| | — |
| | — |
| | 1,215 |
|
Interest expense, net | 47,909 |
| | — |
| | 2,935 |
| | — |
| | 50,844 |
|
Income before income tax expense | 193,416 |
| | 212,722 |
| | 180,922 |
| | (372,529 | ) | | 214,531 |
|
Income tax expense | 20,451 |
| | 9,129 |
| | 11,986 |
| | — |
| | 41,566 |
|
Net income | $ | 172,965 |
| | $ | 203,593 |
| | $ | 168,936 |
| | $ | (372,529 | ) | | $ | 172,965 |
|
| | | | | | | | | |
Comprehensive income | $ | 171,061 |
| | $ | 203,593 |
| | $ | 162,637 |
| | $ | (366,230 | ) | | $ | 171,061 |
|
HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(dollars and shares in thousands, except per share data)
(unaudited)
|
| | | | | | | | | | | | | | | | | | | |
| Condensed Consolidating Balance Sheet
June 28, 2014 |
| Parent
Company | | Guarantor
Subsidiaries | | Non-Guarantor
Subsidiaries | | Consolidating
Entries and
Eliminations | | Consolidated |
Assets | | | | | | | | | |
Cash and cash equivalents | $ | 3,433 |
| | $ | 4,898 |
| | $ | 135,286 |
| | $ | — |
| | $ | 143,617 |
|
Trade accounts receivable, net | 132,718 |
| | 58,621 |
| | 589,182 |
| | (1,001 | ) | | 779,520 |
|
Inventories | 1,007,306 |
| | 129,194 |
| | 467,083 |
| | (201,968 | ) | | 1,401,615 |
|
Deferred tax assets | 179,483 |
| | 15,373 |
| | 3,293 |
| | — |
| | 198,149 |
|
Other current assets | 36,539 |
| | 9,126 |
| | 19,170 |
| | — |
| | 64,835 |
|
Total current assets | 1,359,479 |
| | 217,212 |
| | 1,214,014 |
| | (202,969 | ) | | 2,587,736 |
|
Property, net | 83,514 |
| | 47,540 |
| | 440,690 |
| | — |
| | 571,744 |
|
Trademarks and other identifiable intangibles, net | 6,261 |
| | 83,784 |
| | 277,775 |
| | — |
| | 367,820 |
|
Goodwill | 232,882 |
| | 124,247 |
| | 269,439 |
| | — |
| | 626,568 |
|
Investments in subsidiaries | 3,112,658 |
| | 1,703,831 |
| | — |
| | (4,816,489 | ) | | — |
|
Deferred tax assets | 140,190 |
| | 53,317 |
| | 15,196 |
| | — |
| | 208,703 |
|
Receivables from related entities | 4,799,460 |
| | 4,215,846 |
| | 1,985,892 |
| | (11,001,198 | ) | | — |
|
Other noncurrent assets | 50,554 |
| | 373 |
| | 1,520 |
| | — |
| | 52,447 |
|
Total assets | $ | 9,784,998 |
| | $ | 6,446,150 |
| | $ | 4,204,526 |
| | $ | (16,020,656 | ) | | $ | 4,415,018 |
|
| | | | | | | | | |
Liabilities and Stockholders’
Equity | | | | | | | | | |
Accounts payable | $ | 361,694 |
| | $ | 17,150 |
| | $ | 184,914 |
| | $ | — |
| | $ | 563,758 |
|
Accrued liabilities | 209,203 |
| | 37,972 |
| | 78,952 |
| | (349 | ) | | 325,778 |
|
Notes payable | — |
| | — |
| | 40,802 |
| | — |
| | 40,802 |
|
Accounts Receivable Securitization Facility | — |
| | — |
| | 225,000 |
| | — |
| | 225,000 |
|
Total current liabilities | 570,897 |
| | 55,122 |
| | 529,668 |
| | (349 | ) | | 1,155,338 |
|
Long-term debt | 1,523,000 |
| | — |
| | — |
| | — |
| | 1,523,000 |
|
Pension and postretirement benefits | 211,642 |
| | — |
| | 8,372 |
| | — |
| | 220,014 |
|
Payables to related entities | 5,986,970 |
| | 3,155,251 |
| | 1,571,663 |
| | (10,713,884 | ) | | — |
|
Other noncurrent liabilities | 114,061 |
| | 12,887 |
| | 11,143 |
| | 147 |
| | 138,238 |
|
Total liabilities | 8,406,570 |
| | 3,223,260 |
| | 2,120,846 |
| | (10,714,086 | ) | | 3,036,590 |
|
Stockholders’ equity | 1,378,428 |
| | 3,222,890 |
| | 2,083,680 |
| | (5,306,570 | ) | | 1,378,428 |
|
Total liabilities and stockholders’ equity | $ | 9,784,998 |
| | $ | 6,446,150 |
| | $ | 4,204,526 |
| | $ | (16,020,656 | ) | | $ | 4,415,018 |
|
HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(dollars and shares in thousands, except per share data)
(unaudited)
|
| | | | | | | | | | | | | | | | | | | |
| Condensed Consolidating Balance Sheet
December 28, 2013 |
| Parent
Company | | Guarantor
Subsidiaries | | Non-Guarantor
Subsidiaries | | Consolidating
Entries and
Eliminations | | Consolidated |
Assets | | | | | | | | | |
Cash and cash equivalents | $ | 5,695 |
| | $ | 7,811 |
| | $ | 102,357 |
| | $ | — |
| | $ | 115,863 |
|
Trade accounts receivable, net | 44,366 |
| | 69,944 |
| | 465,662 |
| | (1,414 | ) | | 578,558 |
|
Inventories | 825,300 |
| | 208,250 |
| | 405,756 |
| | (155,975 | ) | | 1,283,331 |
|
Deferred tax assets | 178,732 |
| | 15,373 |
| | 3,155 |
| | — |
| | 197,260 |
|
Other current assets | 37,429 |
| | 14,354 |
| | 16,871 |
| | — |
| | 68,654 |
|
Total current assets | 1,091,522 |
| | 315,732 |
| | 993,801 |
| | (157,389 | ) | | 2,243,666 |
|
Property, net | 82,786 |
| | 50,193 |
| | 446,904 |
| | — |
| | 579,883 |
|
Trademarks and other identifiable intangibles, net | 8,385 |
| | 88,716 |
| | 280,650 |
| | — |
| | 377,751 |
|
Goodwill | 232,882 |
| | 124,247 |
| | 269,263 |
| | — |
| | 626,392 |
|
Investments in subsidiaries | 2,881,739 |
| | 1,535,404 |
| | — |
| | (4,417,143 | ) | | — |
|
Deferred tax assets | 139,102 |
| | 53,317 |
| | 15,007 |
| | — |
| | 207,426 |
|
Receivables from related entities | 4,706,001 |
| | 4,065,909 |
| | 1,987,603 |
| | (10,759,513 | ) | | — |
|
Other noncurrent assets | 52,712 |
| | 412 |
| | 1,806 |
| | — |
| | 54,930 |
|
Total assets | $ | 9,195,129 |
| | $ | 6,233,930 |
| | $ | 3,995,034 |
| | $ | (15,334,045 | ) | | $ | 4,090,048 |
|
| | | | | | | | | |
Liabilities and Stockholders’
Equity | | | | | | | | | |
Accounts payable | $ | 253,494 |
| | $ | 61,964 |
| | $ | 150,812 |
| | $ | — |
| | $ | 466,270 |
|
Accrued liabilities | 184,653 |
| | 63,906 |
| | 66,497 |
| | (30 | ) | | 315,026 |
|
Notes payable | — |
| | — |
| | 36,192 |
| | — |
| | 36,192 |
|
Accounts Receivable Securitization Facility | — |
| | — |
| | 181,790 |
| | — |
| | 181,790 |
|
Total current liabilities | 438,147 |
| | 125,870 |
| | 435,291 |
| | (30 | ) | | 999,278 |
|
Long-term debt | 1,467,000 |
| | — |
| | — |
| | — |
| | 1,467,000 |
|
Pension and postretirement benefits | 253,299 |
| | 2,159 |
| | 8,361 |
| | — |
| | 263,819 |
|
Payables to related entities | 5,699,670 |
| | 3,114,701 |
| | 1,673,828 |
| | (10,488,199 | ) | | — |
|
Other noncurrent liabilities | 106,390 |
| | 11,318 |
| | 11,620 |
| | — |
| | 129,328 |
|
Total liabilities | 7,964,506 |
| | 3,254,048 |
| | 2,129,100 |
| | (10,488,229 | ) | | 2,859,425 |
|
Stockholders’ equity | 1,230,623 |
| | 2,979,882 |
| | 1,865,934 |
| | (4,845,816 | ) | | 1,230,623 |
|
Total liabilities and stockholders’ equity | $ | 9,195,129 |
| | $ | 6,233,930 |
| | $ | 3,995,034 |
| | $ | (15,334,045 | ) | | $ | 4,090,048 |
|
HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(dollars and shares in thousands, except per share data)
(unaudited)
|
| | | | | | | | | | | | | | | | | | | |
| Condensed Consolidating Statement of Cash Flows
Six Months Ended June 28, 2014 |
| Parent
Company | | Guarantor
Subsidiaries | | Non-Guarantor
Subsidiaries | | Consolidating
Entries and
Eliminations | | Consolidated |
Net cash from operating activities | $ | 210,832 |
| | $ | 150,068 |
| | $ | 18,064 |
| | $ | (374,026 | ) | | $ | 4,938 |
|
Investing activities: | | | | | | | | | |
Purchases of property, plant and equipment | (6,995 | ) | | (3,194 | ) | | (14,396 | ) | | — |
| | (24,585 | ) |
Proceeds from sales of assets | — |
| | — |
| | 4,918 |
| | — |
| | 4,918 |
|
Net cash from investing activities | (6,995 | ) | | (3,194 | ) | | (9,478 | ) | | — |
| | (19,667 | ) |
Financing activities: | | | | | | | | | |
Borrowings on notes payable | — |
| | — |
| | 66,737 |
| | — |
| | 66,737 |
|
Repayments on notes payable | — |
| | — |
| | (61,957 | ) | | — |
| | (61,957 | ) |
Borrowings on Accounts Receivable Securitization Facility | — |
| | — |
| | 115,609 |
| | — |
| | 115,609 |
|
Repayments on Accounts Receivable Securitization Facility | — |
| | — |
| | (72,399 | ) | | — |
| | (72,399 | ) |
Borrowings on Revolving Loan Facility | 1,782,500 |
| | — |
| | — |
| | — |
| | 1,782,500 |
|
Repayments on Revolving Loan Facility | (1,726,500 | ) | | — |
| | — |
| | — |
| | (1,726,500 | ) |
Cash dividends paid | (59,731 | ) | | — |
| | — |
| | — |
| | (59,731 | ) |
Taxes paid related to net shares settlement of equity awards | (10,342 | ) | | — |
| | — |
| | — |
| | (10,342 | ) |
Excess tax benefit from stock-based compensation | 7,895 |
| | — |
| | — |
| | — |
| | 7,895 |
|
Other | 1,146 |
| | — |
| | (486 | ) | | 146 |
| | 806 |
|
Net transactions with related entities | (201,067 | ) | | (149,787 | ) | | (23,026 | ) | | 373,880 |
| | — |
|
Net cash from financing activities | (206,099 | ) | | (149,787 | ) | | 24,478 |
| | 374,026 |
| | 42,618 |
|
Effect of changes in foreign exchange rates on cash | — |
| | — |
| | (135 | ) | | — |
| | (135 | ) |
Change in cash and cash equivalents | (2,262 | ) | | (2,913 | ) | | 32,929 |
| | — |
| | 27,754 |
|
Cash and cash equivalents at beginning of year | 5,695 |
| | 7,811 |
| | 102,357 |
| | — |
| | 115,863 |
|
Cash and cash equivalents at end of period | $ | 3,433 |
| | $ | 4,898 |
| | $ | 135,286 |
| | $ | — |
| | $ | 143,617 |
|
HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(dollars and shares in thousands, except per share data)
(unaudited)
|
| | | | | | | | | | | | | | | | | | | |
| Condensed Consolidating Statement of Cash Flows
Six Months Ended June 29, 2013 |
| Parent
Company | | Guarantor
Subsidiaries | | Non-Guarantor
Subsidiaries | | Consolidating
Entries and
Eliminations | | Consolidated |
Net cash from operating activities | $ | 165,172 |
| | $ | 105,792 |
| | $ | 63,256 |
| | $ | (315,894 | ) | | $ | 18,326 |
|
Investing activities: | | | | | | | | | |
Purchases of property, plant and equipment | (7,729 | ) | | (2,037 | ) | | (10,024 | ) | | — |
| | (19,790 | ) |
Proceeds from sales of assets | 3,402 | <