x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Maryland | 20-3552316 | |
(State of incorporation) | (I.R.S. employer identification no.) | |
1000 East Hanes Mill Road Winston-Salem, North Carolina | 27105 | |
(Address of principal executive office) | (Zip code) |
Large accelerated filer | x | Accelerated filer | ¨ | ||||||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ | Emerging growth company | ¨ |
Page | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
Item 1. | Financial Statements |
Quarter Ended | |||||||
March 31, 2018 | April 1, 2017 | ||||||
Net sales | $ | 1,471,504 | $ | 1,380,355 | |||
Cost of sales | 892,583 | 840,824 | |||||
Gross profit | 578,921 | 539,531 | |||||
Selling, general and administrative expenses | 432,863 | 413,102 | |||||
Operating profit | 146,058 | 126,429 | |||||
Other expenses | 5,761 | 6,545 | |||||
Interest expense, net | 45,763 | 42,137 | |||||
Income from continuing operations before income tax expense | 94,534 | 77,747 | |||||
Income tax expense | 15,125 | 4,665 | |||||
Income from continuing operations | 79,409 | 73,082 | |||||
Loss from discontinued operations, net of tax | — | (2,465 | ) | ||||
Net income | $ | 79,409 | $ | 70,617 | |||
Earnings (loss) per share — basic: | |||||||
Continuing operations | $ | 0.22 | $ | 0.20 | |||
Discontinued operations | — | (0.01 | ) | ||||
Net income | $ | 0.22 | $ | 0.19 | |||
Earnings (loss) per share — diluted: | |||||||
Continuing operations | $ | 0.22 | $ | 0.19 | |||
Discontinued operations | — | (0.01 | ) | ||||
Net income | $ | 0.22 | $ | 0.19 |
Quarter Ended | |||||||
March 31, 2018 | April 1, 2017 | ||||||
Net income | $ | 79,409 | $ | 70,617 | |||
Other comprehensive income (loss), net of tax of ($1,187) and $4,092, respectively | (11,493 | ) | 16,226 | ||||
Comprehensive income | $ | 67,916 | $ | 86,843 |
March 31, 2018 | December 30, 2017 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 373,662 | $ | 421,566 | |||
Trade accounts receivable, net | 874,684 | 903,318 | |||||
Inventories | 2,044,680 | 1,874,990 | |||||
Other current assets | 106,800 | 186,496 | |||||
Total current assets | 3,399,826 | 3,386,370 | |||||
Property, net | 630,669 | 623,991 | |||||
Trademarks and other identifiable intangibles, net | 1,668,876 | 1,402,857 | |||||
Goodwill | 1,282,504 | 1,167,007 | |||||
Deferred tax assets | 233,279 | 234,932 | |||||
Other noncurrent assets | 112,621 | 79,618 | |||||
Total assets | $ | 7,327,775 | $ | 6,894,775 | |||
Liabilities and Stockholders’ Equity | |||||||
Accounts payable | $ | 813,981 | $ | 867,649 | |||
Accrued liabilities | 523,166 | 649,634 | |||||
Notes payable | 17,830 | 11,873 | |||||
Accounts Receivable Securitization Facility | 157,081 | 125,209 | |||||
Current portion of long-term debt | 165,702 | 124,380 | |||||
Total current liabilities | 1,677,760 | 1,778,745 | |||||
Long-term debt | 4,185,252 | 3,702,054 | |||||
Pension and postretirement benefits | 408,787 | 405,238 | |||||
Other noncurrent liabilities | 350,281 | 322,536 | |||||
Total liabilities | 6,622,080 | 6,208,573 | |||||
Stockholders’ equity: | |||||||
Preferred stock (50,000,000 authorized shares; $.01 par value) | |||||||
Issued and outstanding — None | — | — | |||||
Common stock (2,000,000,000 authorized shares; $.01 par value) | |||||||
Issued and outstanding — 360,363,608 and 360,125,894, respectively | 3,604 | 3,601 | |||||
Additional paid-in capital | 277,755 | 271,462 | |||||
Retained earnings | 875,035 | 850,345 | |||||
Accumulated other comprehensive loss | (450,699 | ) | (439,206 | ) | |||
Total stockholders’ equity | 705,695 | 686,202 | |||||
Total liabilities and stockholders’ equity | $ | 7,327,775 | $ | 6,894,775 |
HANESBRANDS INC. Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) | |||||||
Quarter Ended | |||||||
March 31, 2018 | April 1, 2017 | ||||||
Operating activities: | |||||||
Net income | $ | 79,409 | $ | 70,617 | |||
Adjustments to reconcile net income to net cash from operating activities: | |||||||
Depreciation and amortization of long-lived assets | 31,925 | 28,765 | |||||
Amortization of debt issuance costs | 2,343 | 2,701 | |||||
Stock compensation expense | 4,746 | 3,528 | |||||
Deferred taxes and other | (2,795 | ) | 6,931 | ||||
Changes in assets and liabilities, net of acquisition of businesses: | |||||||
Accounts receivable | 36,932 | 49,553 | |||||
Inventories | (150,768 | ) | (140,610 | ) | |||
Other assets | 13,840 | (6,775 | ) | ||||
Accounts payable | (63,655 | ) | (14,328 | ) | |||
Accrued pension and postretirement benefits | 4,441 | 6,341 | |||||
Accrued liabilities and other | (84,561 | ) | (29,521 | ) | |||
Net cash from operating activities | (128,143 | ) | (22,798 | ) | |||
Investing activities: | |||||||
Purchases of property, plant and equipment | (19,804 | ) | (16,049 | ) | |||
Proceeds from sales of assets | 1,506 | 4,603 | |||||
Acquisition of business, net of cash acquired | (334,915 | ) | (524 | ) | |||
Disposition of businesses | — | 37,434 | |||||
Net cash from investing activities | (353,213 | ) | 25,464 | ||||
Financing activities: | |||||||
Borrowings on notes payable | 83,920 | 27,893 | |||||
Repayments on notes payable | (81,426 | ) | (42,540 | ) | |||
Borrowings on Accounts Receivable Securitization Facility | 79,449 | 213,539 | |||||
Repayments on Accounts Receivable Securitization Facility | (47,577 | ) | (65,274 | ) | |||
Borrowings on Revolving Loan Facilities | 1,267,860 | 1,265,000 | |||||
Repayments on Revolving Loan Facilities | (771,000 | ) | (1,009,500 | ) | |||
Repayments on Term Loan Facilities | (10,625 | ) | (13,594 | ) | |||
Repayments on International Debt | (997 | ) | (16,226 | ) | |||
Share repurchases | — | (299,919 | ) | ||||
Cash dividends paid | (54,053 | ) | (55,875 | ) | |||
Payment of contingent consideration | (3,540 | ) | — | ||||
Taxes paid related to net shares settlement of equity awards | (2,757 | ) | (1,669 | ) | |||
Other | (170 | ) | 2,676 | ||||
Net cash from financing activities | 459,084 | 4,511 | |||||
Effect of changes in foreign exchange rates on cash | 1,186 | (3,799 | ) | ||||
Change in cash, cash equivalents and restricted cash | (21,086 | ) | 3,378 | ||||
Cash and cash equivalents at beginning of year | 421,566 | 460,245 | |||||
Cash, cash equivalents and restricted cash at end of period | 400,480 | 463,623 | |||||
Less restricted cash at end of period | 26,818 | — | |||||
Cash and cash equivalents per balance sheet at end of period | $ | 373,662 | $ | 463,623 |
(1) | Basis of Presentation |
(2) | Recent Accounting Pronouncements |
(3) | Revenue Recognition |
Quarter Ended | |||
March 31, 2018 | |||
Third-party brick-and-mortar wholesale | $ | 1,164,308 | |
Consumer-directed | 307,196 | ||
Total net sales | $ | 1,471,504 |
(4) | Acquisitions |
Cash and cash equivalents | $ | 2,765 | |
Accounts receivable, net | 197 | ||
Inventories | 10,110 | ||
Other current assets | 1,637 | ||
Property, net | 12,417 | ||
Trademarks and other identifiable intangibles | 278,214 | ||
Deferred tax assets and other noncurrent assets | 2,539 | ||
Total assets acquired | 307,879 | ||
Accounts payable | 4,929 | ||
Accrued liabilities and other | 16,339 | ||
Deferred tax liabilities and other noncurrent liabilities | 7,663 | ||
Total liabilities assumed | 28,931 | ||
Net assets acquired | 278,948 | ||
Goodwill | 112,624 | ||
Total purchase price | $ | 391,572 |
Cash consideration paid | $ | 337,123 | |
Indemnification escrow asset | 27,507 | ||
Debt assumed | 26,942 | ||
Total purchase price | $ | 391,572 |
Quarter Ended | |||||||
March 31, 2018 | April 1, 2017 | ||||||
Net sales | $ | 1,501,315 | $ | 1,427,069 | |||
Net income from continuing operations | 82,641 | 78,764 | |||||
Earnings per share from continuing operations: | |||||||
Basic | $ | 0.23 | $ | 0.21 | |||
Diluted | 0.23 | 0.21 |
(5) | Stockholders’ Equity |
Quarter Ended | |||||
March 31, 2018 | April 1, 2017 | ||||
Basic weighted average shares outstanding | 361,882 | 373,218 | |||
Effect of potentially dilutive securities: | |||||
Stock options | 1,067 | 1,640 | |||
Restricted stock units | 335 | 385 | |||
Employee stock purchase plan and other | 7 | 8 | |||
Diluted weighted average shares outstanding | 363,291 | 375,251 |
(6) | Inventories |
March 31, 2018 | December 30, 2017 | ||||||
Raw materials | $ | 135,327 | $ | 129,287 | |||
Work in process | 213,029 | 226,659 | |||||
Finished goods | 1,696,324 | 1,519,044 | |||||
$ | 2,044,680 | $ | 1,874,990 |
(7) | Debt |
Interest Rate as of March 31, 2018 | Principal Amount | Maturity Date | |||||||||
March 31, 2018 | December 30, 2017 | ||||||||||
Senior Secured Credit Facility: | |||||||||||
Revolving Loan Facility | 3.24% | $ | 457,000 | $ | — | December 2022 | |||||
Term Loan A | 3.23% | 740,625 | 750,000 | December 2022 | |||||||
Term Loan B | 3.63% | 498,750 | 500,000 | December 2024 | |||||||
Australian Term A-1 | 3.22% | 133,323 | 135,826 | July 2019 | |||||||
4.875% Senior Notes | 4.88% | 900,000 | 900,000 | May 2026 | |||||||
4.625% Senior Notes | 4.63% | 900,000 | 900,000 | May 2024 | |||||||
3.5% Senior Notes | 3.50% | 615,460 | 599,649 | June 2024 | |||||||
European Revolving Loan Facility | 1.50% | 123,092 | 81,539 | September 2018 | |||||||
Accounts Receivable Securitization Facility | 2.54% | 157,081 | 125,209 | March 2019 | |||||||
Other International Debt | Various | 23,074 | 1,044 | Various | |||||||
4,548,405 | 3,993,267 | ||||||||||
Less long-term debt issuance cost | 40,370 | 41,624 | |||||||||
Less current maturities | 322,783 | 249,589 | |||||||||
$ | 4,185,252 | $ | 3,702,054 |
(8) | Accumulated Other Comprehensive Loss |
Cumulative Translation Adjustment | Hedges | Defined Benefit Plans | Income Taxes | Accumulated Other Comprehensive Loss | |||||||||||||||
Balance at December 30, 2017 | $ | (43,505 | ) | $ | (25,461 | ) | $ | (614,000 | ) | $ | 243,760 | $ | (439,206 | ) | |||||
Amounts reclassified from accumulated other comprehensive loss | — | 1,665 | 3,067 | (1,480 | ) | 3,252 | |||||||||||||
Current-period other comprehensive income (loss) activity | (13,330 | ) | (1,708 | ) | — | 293 | (14,745 | ) | |||||||||||
Balance at March 31, 2018 | $ | (56,835 | ) | $ | (25,504 | ) | $ | (610,933 | ) | $ | 242,573 | $ | (450,699 | ) |
Component of AOCI | Location of Reclassification into Income | Amount of Reclassification from AOCI | ||||||||
Quarter Ended | ||||||||||
March 31, 2018 | April 1, 2017 | |||||||||
Gain (loss) on foreign exchange contracts | Cost of sales | $ | (1,665 | ) | $ | 298 | ||||
Income tax | 302 | (113 | ) | |||||||
Net of tax | (1,363 | ) | 185 | |||||||
Amortization of deferred actuarial loss and prior service cost | Selling, general and administrative expenses | (3,067 | ) | (4,810 | ) | |||||
Income tax | 1,178 | 1,847 | ||||||||
Net of tax | (1,889 | ) | (2,963 | ) | ||||||
Total reclassifications | $ | (3,252 | ) | $ | (2,778 | ) |
(9) | Financial Instruments and Risk Management |
Balance Sheet Location | Fair Value | ||||||||
March 31, 2018 | December 30, 2017 | ||||||||
Hedges | Other current assets | $ | 1,990 | $ | 1,464 | ||||
Non-hedges | Other current assets | 181 | 136 | ||||||
Total derivative assets | 2,171 | 1,600 | |||||||
Hedges | Accrued liabilities | (11,421 | ) | (14,750 | ) | ||||
Non-hedges | Accrued liabilities | (6,611 | ) | (7,818 | ) | ||||
Total derivative liabilities | (18,032 | ) | (22,568 | ) | |||||
Net derivative liability | $ | (15,861 | ) | $ | (20,968 | ) |
Amount of Loss Recognized in AOCI (Effective Portion) | |||||||
Quarter Ended | |||||||
March 31, 2018 | April 1, 2017 | ||||||
Foreign exchange contracts | $ | (1,708 | ) | $ | (18,114 | ) |
Location of Gain (Loss) Reclassified from AOCI into Income (Effective Portion) | Amount of Gain (Loss) Reclassified from AOCI into Income (Effective Portion) | ||||||||
Quarter Ended | |||||||||
March 31, 2018 | April 1, 2017 | ||||||||
Foreign exchange contracts | Cost of sales | $ | (1,665 | ) | $ | 298 |
Location of Gain (Loss) Recognized in Income on Derivatives | Amount of Gain (Loss) Recognized in Income | ||||||||
Quarter Ended | |||||||||
March 31, 2018 | April 1, 2017 | ||||||||
Foreign exchange contracts | Cost of sales | $ | 9,100 | $ | — | ||||
Foreign exchange contracts | Selling, general and administrative expenses | 303 | (4,264 | ) | |||||
Total | $ | 9,403 | $ | (4,264 | ) |
(10) | Fair Value of Assets and Liabilities |
Assets (Liabilities) at Fair Value as of March 31, 2018 | |||||||||||||||
Total | 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 - assets | $ | 2,171 | $ | — | $ | 2,171 | $ | — | |||||||
Foreign exchange derivative contracts - liabilities | (18,032 | ) | — | (18,032 | ) | — | |||||||||
(15,861 | ) | — | (15,861 | ) | — | ||||||||||
Deferred compensation plan liability | (45,082 | ) | — | (45,082 | ) | — | |||||||||
Total | $ | (60,943 | ) | $ | — | $ | (60,943 | ) | $ | — |
Assets (Liabilities) at Fair Value as of December 30, 2017 | |||||||||||||||
Total | 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 - assets | $ | 1,600 | $ | — | $ | 1,600 | $ | — | |||||||
Foreign exchange derivative contracts - liabilities | (22,568 | ) | — | (22,568 | ) | — | |||||||||
(20,968 | ) | — | (20,968 | ) | — | ||||||||||
Deferred compensation plan liability | (52,758 | ) | — | (52,758 | ) | — | |||||||||
Total | $ | (73,726 | ) | $ | — | $ | (73,726 | ) | $ | — |
(11) | Income Taxes |
(12) | Discontinued Operations |
Quarter Ended | |||
April 1, 2017 | |||
Net sales | $ | 6,865 | |
Cost of sales | 4,507 | ||
Gross profit | 2,358 | ||
Selling, general and administrative expenses | 3,731 | ||
Operating loss | (1,373 | ) | |
Other expenses | 303 | ||
Net loss on disposal of businesses | 766 | ||
Loss from discontinued operations before income tax expense | (2,442 | ) | |
Income tax expense | 23 | ||
Net loss from discontinued operations, net of tax | $ | (2,465 | ) |
(13) | Business Segment Information |
• | Innerwear sells basic branded products that are replenishment in nature under the product categories of men’s underwear, panties, children’s underwear, socks and intimate apparel, 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, mass retail and other channels. |
• | International primarily relates to the Europe, Australia, Asia, Latin America and Canada geographic locations that sell products that primarily span across the Innerwear and Activewear product categories. |
Quarter Ended | |||||||
March 31, 2018 | April 1, 2017 | ||||||
Net sales: | |||||||
Innerwear | $ | 491,078 | $ | 505,190 | |||
Activewear | 346,125 | 327,343 | |||||
International | 569,887 | 477,398 | |||||
Other | 64,414 | 70,424 | |||||
Total net sales | $ | 1,471,504 | $ | 1,380,355 |
Quarter Ended | |||||||
March 31, 2018 | April 1, 2017 | ||||||
Segment operating profit: | |||||||
Innerwear | $ | 101,419 | $ | 116,622 | |||
Activewear | 38,287 | 43,350 | |||||
International | 77,061 | 52,662 | |||||
Other | 2,627 | 2,628 | |||||
Total segment operating profit | 219,394 | 215,262 | |||||
Items not included in segment operating profit: | |||||||
General corporate expenses | (44,531 | ) | (43,281 | ) | |||
Acquisition, integration and other action-related charges | (19,617 | ) | (38,367 | ) | |||
Amortization of intangibles | (9,188 | ) | (7,185 | ) | |||
Total operating profit | 146,058 | 126,429 | |||||
Other expenses | (5,761 | ) | (6,545 | ) | |||
Interest expense, net | (45,763 | ) | (42,137 | ) | |||
Income from continuing operations before income tax expense | $ | 94,534 | $ | 77,747 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | Total net sales in the first quarter of 2018 were $1.47 billion, compared with $1.38 billion in the same period of 2017, representing a 7% increase. |
• | Operating profit increased 16% to $146 million in the first quarter of 2018, compared with $126 million in the same period of 2017. As a percentage of sales, operating profit was 9.9% in the first quarter of 2018 compared to 9.2% in the same period of 2017. Included within operating profit for both the first quarter of 2018 and 2017 were acquisition, integration and other action-related charges of $20 million and $38 million, respectively. |
• | Diluted earnings per share from continuing operations increased 16% to $0.22 in the first quarter of 2018, compared with $0.19 in the same period of 2017. |
• | We acquired BNT Holdco Pty Limited (“Bras N Things”) on February 12, 2018 for a total purchase price of A$498 million. Bras N Things is a leading intimate apparel retailer and e-commerce business in Australia, New Zealand and South Africa. Bras N Things sells proprietary bras, panties and lingerie sets through a retail network of approximately 170 stores and an e-commerce platform. We believe this acquisition will create opportunities for expansion of the Bras N Things consumer-directed model. |
Quarter Ended | ||||||||||||||
March 31, 2018 | April 1, 2017 | Higher (Lower) | Percent Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Net sales | $ | 1,471,504 | $ | 1,380,355 | $ | 91,149 | 6.6 | % | ||||||
Cost of sales | 892,583 | 840,824 | 51,759 | 6.2 | ||||||||||
Gross profit | 578,921 | 539,531 | 39,390 | 7.3 | ||||||||||
Selling, general and administrative expenses | 432,863 | 413,102 | 19,761 | 4.8 | ||||||||||
Operating profit | 146,058 | 126,429 | 19,629 | 15.5 | ||||||||||
Other expenses | 5,761 | 6,545 | (784 | ) | (12.0 | ) | ||||||||
Interest expense, net | 45,763 | 42,137 | 3,626 | 8.6 | ||||||||||
Income from continuing operations before income tax expense | 94,534 | 77,747 | 16,787 | 21.6 | ||||||||||
Income tax expense | 15,125 | 4,665 | 10,460 | 224.2 | ||||||||||
Income from continuing operations | 79,409 | 73,082 | 6,327 | 8.7 | ||||||||||
Loss from discontinued operations, net of tax | — | (2,465 | ) | 2,465 | NM | |||||||||
Net income | $ | 79,409 | $ | 70,617 | $ | 8,792 | 12.5 | % |
• | Acquisition of Bras N Things in 2018 and Alternative Apparel in 2017, which added incremental net sales of approximately $32 million in the first quarter of 2018; |
• | Organic sales on a constant currency basis, defined as sales excluding the impact of foreign currency and businesses acquired within 12 months, increased approximately 1% in the quarter driven by international, Champion and online sales growth, offset in part by declines in our Hanes activewear business, hosiery and slower traffic at our outlet stores; and |
• | Favorable impact of foreign exchange rates in our International businesses of approximately $45 million. |
Net Sales | Operating Profit | ||||||||||||||
Quarter Ended | Quarter Ended | ||||||||||||||
March 31, 2018 | April 1, 2017 | March 31, 2018 | April 1, 2017 | ||||||||||||
(dollars in thousands) | |||||||||||||||
Innerwear | $ | 491,078 | $ | 505,190 | $ | 101,419 | $ | 116,622 | |||||||
Activewear | 346,125 | 327,343 | 38,287 | 43,350 | |||||||||||
International | 569,887 | 477,398 | 77,061 | 52,662 | |||||||||||
Other | 64,414 | 70,424 | 2,627 | 2,628 | |||||||||||
Corporate | — | — | (73,336 | ) | (88,833 | ) | |||||||||
Total | $ | 1,471,504 | $ | 1,380,355 | $ | 146,058 | $ | 126,429 |
Quarter Ended | ||||||||||||||
March 31, 2018 | April 1, 2017 | Higher (Lower) | Percent Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Net sales | $ | 491,078 | $ | 505,190 | $ | (14,112 | ) | (2.8 | )% | |||||
Segment operating profit | 101,419 | 116,622 | (15,203 | ) | (13.0 | ) | ||||||||
Segment operating margin | 20.7 | % | 23.1 | % |
Quarter Ended | ||||||||||||||
March 31, 2018 | April 1, 2017 | Higher (Lower) | Percent Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Net sales | $ | 346,125 | $ | 327,343 | $ | 18,782 | 5.7 | % | ||||||
Segment operating profit | 38,287 | 43,350 | (5,063 | ) | (11.7 | ) | ||||||||
Segment operating margin | 11.1 | % | 13.2 | % |
Quarter Ended | ||||||||||||||
March 31, 2018 | April 1, 2017 | Higher (Lower) | Percent Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Net sales | $ | 569,887 | $ | 477,398 | $ | 92,489 | 19.4 | % | ||||||
Segment operating profit | 77,061 | 52,662 | 24,399 | 46.3 | ||||||||||
Segment operating margin | 13.5 | % | 11.0 | % |
• | Our acquisition of Bras N Things in the first quarter of 2018, which contributed incremental net sales of approximately $16 million; |
• | Increased net sales driven by our global Champion sales growth, primarily in the Europe and Asia markets; and |
• | Favorable impact of foreign currency exchange rates of approximately $45 million. |
Quarter Ended | ||||||||||||||
March 31, 2018 | April 1, 2017 | Higher (Lower) | Percent Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Net sales | $ | 64,414 | $ | 70,424 | $ | (6,010 | ) | (8.5 | )% | |||||
Segment operating profit | 2,627 | 2,628 | (1 | ) | — | |||||||||
Segment operating margin | 4.1 | % | 3.7 | % |
Quarter Ended | |||||||
March 31, 2018 | April 1, 2017 | ||||||
(dollars in thousands) | |||||||
Acquisition, integration and other action-related costs: | |||||||
Hanes Europe Innerwear | $ | 8,576 | $ | 19,878 | |||
Hanes Australasia | 6,092 | 12,008 | |||||
Champion Europe | 1,880 | 1,168 | |||||
Bras N Things | 1,245 | — | |||||
Smaller acquisitions and other action-related costs | 1,824 | 5,313 | |||||
Total acquisition, integration and other action-related costs | $ | 19,617 | $ | 38,367 |
As of March 31, 2018 | |||||||
Borrowing Capacity | Borrowing Availability | ||||||
(dollars in thousands) | |||||||
Senior Secured Credit Facility: | |||||||
Revolving Loan Facility | $ | 1,000,000 | $ | 538,915 | |||
Australian Revolving Loan Facility | 49,805 | 49,805 | |||||
European Revolving Loan Facility | 123,092 | — | |||||
Accounts Receivable Securitization Facility | 200,000 | 42,919 | |||||
Other international credit facilities | 145,581 | 111,713 | |||||
Total liquidity from credit facilities | $ | 1,518,478 | $ | 743,352 |
• | we have principal and interest obligations under our debt; |
• | we acquired Bras N Things in February 2018 and Alternative Apparel in October 2017 and we may pursue additional strategic business acquisitions in the future; |
• | we expect to continue to invest in efforts to accelerate worldwide omnichannel and global growth initiatives, as well as marketing and brand building; |
• | contributions to our pension plans; |
• | our Board of Directors has authorized a regular quarterly dividend; and |
• | our Board of Directors has authorized share repurchases. |
Quarter Ended | |||||||
March 31, 2018 | April 1, 2017 | ||||||
(dollars in thousands) | |||||||
Operating activities | $ | (128,143 | ) | $ | (22,798 | ) | |
Investing activities | (353,213 | ) | 25,464 | ||||
Financing activities | 459,084 | 4,511 | |||||
Effect of changes in foreign currency exchange rates on cash | 1,186 | (3,799 | ) | ||||
Change in cash, cash equivalents and restricted cash | (21,086 | ) | 3,378 | ||||
Cash and cash equivalents at beginning of year | 421,566 | 460,245 | |||||
Cash, cash equivalents and restricted cash at end of period | 400,480 | 463,623 | |||||
Less restricted cash at end of period | 26,818 | — | |||||
Cash and cash equivalents per balance sheet at end of period | $ | 373,662 | $ | 463,623 |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. | Defaults Upon Senior Securities |
Item 4. | Mine Safety Disclosures |
Item 5. | Other Information |
Item 6. | Exhibits |
Exhibit Number | Description | |
2.1 | ||
2.2 | ||
3.1 | ||
3.2 | ||
3.3 | ||
3.4 | ||
3.5 | ||
4.1 | ||
10.1 | ||
31.1 | ||
31.2 | ||
32.1 | ||
32.2 | ||
101.INS XBRL | Instance Document | |
101.SCH XBRL | Taxonomy Extension Schema Document | |
101.CAL XBRL | Taxonomy Extension Calculation Linkbase Document | |
101.LAB XBRL | Taxonomy Extension Label Linkbase Document | |
101.PRE XBRL | Taxonomy Extension Presentation Linkbase Document | |
101.DEF XBRL | Taxonomy Extension Definition Linkbase Document |
HANESBRANDS INC. | ||
By: | /s/ Barry A. Hytinen | |
Barry A. Hytinen Chief Financial Officer (Duly authorized officer and principal financial officer) |
(a) | Executive agrees that for a period of two years following the Retirement Date Executive will not, without the prior written consent of the Company, either alone or in association with others, (1) solicit for employment, or assist or encourage the solicitation for employment of, any employee at or above the rank of “manager” of the Company or any of its subsidiaries or affiliates, including any employee at or above the rank of “manager” with whom Executive had material contact during the last two years of Executive’s employment with the Company; (2) induce or attempt to induce any customer (i) with whom Executive or any employee under Executive’s direct supervision had material contact during the last two years of Executive’s employment with the Company or (ii) about whom Executive obtained trade secrets or confidential information in the course of Executive’s employment with the Company to cease or reduce doing business with the Company or any of its subsidiaries or affiliates, or interfere with the relationship between the Company or any of its subsidiaries or affiliates, on the one hand, and any such customer, on the other hand; or (3) directly or indirectly counsel, advise, perform services for, or be employed by, or otherwise engage or participate in any Competing Business (regardless of whether Executive receives compensation of any kind). | ||||
(b) | For purposes of this Agreement, a “Competing Business” is defined as any business (1) with total revenues in excess of $50 million within the basic innerwear (underwear, socks, panties, bras, shapewear and hosiery) or activewear apparel markets during its most recently completed fiscal year preceding the conduct prohibited by Section (a)(3) above, (2) that is operating commercially within the Territory, and (3) that has commercial operations in one or more product categories within the basic innerwear or activewear apparel markets that overlap product categories comprising in excess of 10% of the Company’s total revenues during the Company’s most recently completed fiscal year. The “Territory” shall mean (i) anywhere in the world in which the Company or any of its subsidiaries or affiliates engaged in commercial operations during the last two years of Executive’s employment with the Company, including (without limitation) the United States of America, Canada, Mexico, France, Australia, New Zealand, Japan, Italy, Germany, Spain, the United Kingdom, Brazil, China, and/or the Caribbean Basin and (ii) any geographic area with respect to which Executive had direct or indirect responsibility during the last two years of Executive’s employment. Upon request from Executive, the Company will cooperate with Executive to provide calculations regarding the Company’s revenues within the basic innerwear or activewear apparel markets for a given fiscal year to assist Executive in assessing compliance with the covenants included in this paragraph 6. Executive may rely on a written communication from the Company’s Chief Executive Officer or Chief Legal Officer regarding a determination by the Company that the provisions of this paragraph 6 would not prohibit specified activities proposed to be undertaken by Executive. | ||||
(a) | Executive on behalf of Executive, Executive’s heirs, executors, administrators and assigns, does hereby knowingly and voluntarily release, acquit and forever discharge the Company and any of its subsidiaries, affiliates, successors, assigns and past, present and future directors, officers, employees, trustees and shareholders (the “Released Parties”) from and against any and all complaints, claims, cross-claims, third-party claims, counterclaims, contribution claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses of any nature whatsoever, known or unknown, suspected or unsuspected, foreseen or unforeseen, matured or unmatured, which, at any time up to and including the date on which Executive signs this Agreement, exists, have existed, or may arise from any matter whatsoever occurring, including, but not limited to, any claims arising out of or in any way related to Executive’s employment with the Company or its subsidiaries or affiliates and the conclusion thereof, which Executive, or any of Executive’s heirs, executors, administrators, assigns, affiliates, and agents ever had, now has or at any time hereafter may have, own or hold against any of the Released Parties based on any matter existing on or before the date on which Executive signs this Agreement. Executive acknowledges that in exchange for this release, the Company is providing Executive with total consideration, financial or otherwise, which exceeds what Executive would have been given without this release. By executing this Agreement, Executive is waiving, without limitation, all claims (except for the filing of a charge with an administrative agency) against the Released Parties arising under federal, state and local labor and antidiscrimination laws, any employment related claims under the Employee Retirement Income Security Act of 1974, as amended, and any other restriction on the right to terminate employment, including, without limitation, Title VII of the Civil Rights Act of 1964, as amended, the Americans with Disabilities Act of 1990, as amended, and the North Carolina Equal Employment Practices Act, as amended. Nothing herein shall release any party from any obligation under this Agreement. Executive acknowledges and agrees that this release and the covenant not to sue set forth in paragraph (c) below are essential and material terms of this Agreement and that, without such release and covenant not to sue, no agreement would have been reached by the parties. Executive understands and acknowledges the significance and consequences of this release and this Agreement. Notwithstanding the foregoing, nothing contained in this paragraph 8(a) shall (i) waive, release or otherwise discharge any claim or cause of action that cannot legally be waived, including, but not limited to, any claim for workers’ compensation benefits, unemployment benefits; (ii) affect any rights of defense or indemnification, or to be held harmless, or any coverage under directors and officers liability insurance or any other insurance or rights or claims of contribution or advancement of expenses that Executive has; or (iii) affect any rights as a shareholder of the Company that Executive has. | |||||||
(b) | EXECUTIVE SPECIFICALLY WAIVES AND RELEASES THE RELEASED PARTIES FROM ALL CLAIMS EXECUTIVE MAY HAVE AS OF THE DATE EXECUTIVE SIGNS THIS AGREEMENT REGARDING CLAIMS OR RIGHTS ARISING UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, AS AMENDED, 29 U.S.C. § 621 (“ADEA”). EXECUTIVE FURTHER AGREES: (i) THAT EXECUTIVE’S WAIVER OF RIGHTS UNDER THIS RELEASE IS KNOWING AND VOLUNTARY AND IN COMPLIANCE WITH THE OLDER WORKERS BENEFIT PROTECTION ACT OF 1990; (ii) THAT EXECUTIVE UNDERSTANDS THE TERMS OF THIS RELEASE; (iii) THAT EXECUTIVE’S WAIVER OF RIGHTS IN THIS RELEASE IS IN EXCHANGE FOR CONSIDERATION THAT WOULD NOT OTHERWISE BE OWING TO EXECUTIVE PURSUANT TO ANY PREEXISTING OBLIGATION OF ANY KIND HAD EXECUTIVE NOT SIGNED THIS RELEASE; (iv) THAT EXECUTIVE HEREBY IS AND HAS BEEN ADVISED IN WRITING BY THE COMPANY TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS RELEASE; (v) THAT THE COMPANY HAS GIVEN EXECUTIVE A PERIOD OF AT LEAST TWENTY-ONE DAYS WITHIN WHICH TO CONSIDER THIS RELEASE; (vi) THAT EXECUTIVE REALIZES THAT FOLLOWING EXECUTIVE’S EXECUTION OF THIS RELEASE, EXECUTIVE HAS SEVEN DAYS IN WHICH TO REVOKE THIS RELEASE BY WRITTEN NOTICE TO THE UNDERSIGNED, AND (vii) THAT THIS ENTIRE AGREEMENT SHALL BE VOID AND OF NO FORCE AND EFFECT IF EXECUTIVE CHOOSES TO SO REVOKE, AND IF EXECUTIVE CHOOSES NOT TO SO REVOKE, THAT THIS AGREEMENT AND RELEASE THEN BECOME EFFECTIVE AND ENFORCEABLE UPON THE EIGHTH DAY AFTER EXECUTIVE SIGNS THIS AGREEMENT. | |||||||
(c) | To the maximum extent permitted by law, Executive covenants not to sue or to institute or cause to be instituted any action in any federal, state, or local agency or court against any of the Released Parties, including, but not limited to, any of the claims released by this Agreement. Notwithstanding the foregoing, nothing herein shall prevent Executive or any of the Released Parties from filing a charge or complaint with an administrative agency, from instituting any action required to enforce the terms of this Agreement, or from challenging the validity of this Agreement. In addition, nothing herein shall be construed to prevent Executive from enforcing any rights Executive may have to recover vested benefits under the Employee Retirement Income Security Act of 1974, as amended. | |||||||
(d) | Executive represents and warrants that: (i) Executive has not filed or initiated any legal, equitable, administrative, or other proceeding(s) against any of the Released Parties; (ii) no such proceeding(s) have been initiated against any of the Released Parties on Executive’s behalf; (iii) Executive is the sole owner of the actual or alleged claims, demands, rights, causes of action, and other matters that are released in this paragraph 8; (iv) the same have not been transferred or assigned or caused to be transferred or assigned to any other person, firm, corporation or other legal entity; and (v) Executive has the full right and power to grant, execute, and deliver the releases, undertakings, and agreements contained in this Agreement. | |||||||
(e) | The consideration offered herein is accepted by Executive as being in full accord, satisfaction, compromise and settlement of any and all claims or potential claims, and Executive expressly agrees that Executive is not entitled to and shall not receive any further payments, benefits, or other compensation or recovery of any kind from the Company or any of the other Released Parties. Executive further agrees that in the event of any further proceedings whatsoever based upon any matter released herein, the Company and each of the other Released Parties shall have no further monetary or other obligation of any kind to Executive, including without limitation any obligation for any costs, expenses and attorneys’ fees incurred by or on behalf of Executive. |
EXECUTIVE | HANESBRANDS INC. | |||||||
/s/ Richard A. Noll | By: | /s/ Gerald W. Evans, Jr. | ||||||
Richard A. Noll | Title: Chief Executive Officer | |||||||
/s/ Gerald W. Evans, Jr. |
Gerald W. Evans, Jr. Chief Executive Officer |
/s/ Barry A. Hytinen |
Barry A. Hytinen Chief Financial Officer |
/s/ Gerald W. Evans, Jr. |
Gerald W. Evans, Jr. Chief Executive Officer |
/s/ Barry A. Hytinen |
Barry A. Hytinen Chief Financial Officer |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Apr. 27, 2018 |
|
Document Documentand Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | HBI | |
Entity Registrant Name | Hanesbrands Inc. | |
Entity Central Index Key | 0001359841 | |
Current Fiscal Year End Date | --12-29 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 360,370,371 |
Condensed Consolidated Statements of Income (Unaudted) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Apr. 01, 2017 |
|
Income Statement [Abstract] | ||
Net sales | $ 1,471,504 | $ 1,380,355 |
Cost of sales | 892,583 | 840,824 |
Gross profit | 578,921 | 539,531 |
Selling, general and administrative expenses | 432,863 | 413,102 |
Operating profit | 146,058 | 126,429 |
Other expenses | 5,761 | 6,545 |
Interest expense, net | 45,763 | 42,137 |
Income from continuing operations before income tax expense | 94,534 | 77,747 |
Income tax expense | 15,125 | 4,665 |
Income from continuing operations | 79,409 | 73,082 |
Loss from discontinued operations, net of tax | 0 | (2,465) |
Net income | $ 79,409 | $ 70,617 |
Earnings (loss) per share — basic: | ||
Continuing operations | $ 0.22 | $ 0.20 |
Discontinued operations | 0.00 | (0.01) |
Net income | 0.22 | 0.19 |
Earnings per share — diluted: | ||
Continuing operations | 0.22 | 0.19 |
Discontinued operations | 0.00 | (0.01) |
Net income | $ 0.22 | $ 0.19 |
Condensed Consolidated Statement of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Apr. 01, 2017 |
|
Condensed Consolidated Statements Of Comprehensive Income (Unaudited) [Abstract] | ||
Net income | $ 79,409 | $ 70,617 |
Other comprehensive income (loss), net of tax of ($1,187) and $4,092, respectively | (11,493) | 16,226 |
Comprehensive income | $ 67,916 | $ 86,843 |
Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Apr. 01, 2017 |
|
Condensed Consolidated Statements Of Comprehensive Income (Unaudited) [Abstract] | ||
Tax on other comprehensive income | $ (1,187) | $ 4,092 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Mar. 31, 2018 |
Dec. 30, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 2,000,000,000 | 2,000,000,000 |
Common stock, shares issued | 360,363,608 | 360,125,894 |
Common stock, shares outstanding | 360,363,608 | 360,125,894 |
Basis of Presentation |
3 Months Ended |
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Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation 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. Four subsidiaries of the Company close on a day which is less than a week different than the Company’s consolidated quarter end. The difference in reporting of financial information for these subsidiaries did not have a material impact on the Company’s financial condition, results of operations or cash flows. 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 year end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the full year. |
Recent Accounting Pronouncements |
3 Months Ended |
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Mar. 31, 2018 | |
Text Block [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Revenue from Contracts with Customers In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”, a new accounting standard on revenue recognition that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The FASB has subsequently issued updates to the standard to provide additional clarification on specific topics. The new standard was effective for the Company in the first quarter of 2018 and applied using a modified retrospective method. The Company has included enhanced disclosures related to disaggregation of revenue sources and accounting policies. The adoption of the new accounting rules did not have a material impact on the Company’s financial condition, results of operations or cash flows, but did result in additional disclosures. Refer to Note, “Revenue Recognition.” Statement of Cash Flows In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” The new guidance addresses the classification of debt prepayment and extinguishment costs and contingent consideration payments made after a business combination. The new standard was effective for the Company in the first quarter of 2018. The adoption of the new accounting rules did not have a material impact on the Company’s financial condition, results of operations or cash flows. In November 2016, the FASB issued ASU 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force)." This standard requires that restricted cash and restricted cash equivalents be included in cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown in the statement of cash flows. The Company adopted the provisions of ASU 2016-18 in the first quarter of 2018 using the retrospective transition method. The Company did not have restricted cash in prior periods, therefore the adoption of the new guidance did not have an impact to previously reported cash flows. The Condensed Consolidated Statement of Cash Flow for the quarter ended March 31, 2018 includes restricted cash of $26,818. Retirement Benefits In March 2017, the FASB issued ASU 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the presentation of net periodic pension cost and net periodic postretirement benefit cost.” The new rules require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. The new standard was effective for the Company in the first quarter of 2018 and applied with retrospective treatment. Accordingly, the Company reclassified $5,161 from the “Selling, general and administrative expenses” line to the “Other expenses” line within the Condensed Consolidated Statements of Income for the first quarter 2017. The adoption of the new accounting rules did not have a material impact on the Company’s financial condition, results of operations or cash flows. Income Taxes In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory.” The new rules eliminate the exception for an intra-entity transfer of an asset other than inventory, which aligns the recognition of income tax consequences for such transfers. The new rules require the recognition of current and deferred income taxes resulting from these transfers when the transfer occurs rather than when it is sold to an external party. The new standard was effective for the Company in the first quarter of 2018. The adoption of the new accounting rules did not have a material impact on the Company’s financial condition, results of operations or cash flows. Definition of a Business In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business.” The new rules provide for the application of a screen test to consider whether substantially all the fair value of the assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If the screen test determines this to be true, the set is not a business. The new standard was effective for the Company in the first quarter of 2018. The adoption of the new accounting rules did not have a material impact on the Company’s financial condition, results of operations or cash flows. Stock Compensation In May 2017, the FASB issued ASU 2017-09, “Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting.” The new rules provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Under the new rules, an entity should account for the effects of a modification unless the fair value, vesting conditions and classification of the modified award are the same as the original award immediately before the original award is modified. The new standard was effective for the Company in the first quarter of 2018. The adoption of the new accounting rules did not have a material impact on the Company’s financial condition, results of operations or cash flows. Lease Accounting In February 2016, the FASB issued ASU 2016-02, “Leases”, which will require lessees to recognize a right-of-use asset and a lease liability for all leases that are not short-term in nature. The new rules will be effective for the Company in the first quarter of 2019. The Company is currently in the process of evaluating the impact of adoption of the new rules on the Company’s financial condition, results of operations and cash flows. Derivatives and Hedging In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.” The new rules expand the hedging strategies that qualify for hedge accounting, including contractually-specified price components of a commodity purchase or sale, hedges of the benchmark rate component of the contractual coupon cash flows of fixed-rate assets and liabilities, hedges of the portion of a closed portfolio of prepayable assets and partial-term hedges of fixed-rate assets and liabilities. The new rules also allow additional time to complete hedge effectiveness testing and allow qualitative assessments subsequent to initial quantitative tests if there is a supportable expectation that the hedge will remain highly effective. The new rules will be effective for the Company in the first quarter of 2019, with early adoption permitted. 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 and cash flows. Comprehensive Income In February 2018, the FASB issued ASU 2018-02, “Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” The new rules allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The new rules will be effective for the Company in the first quarter of 2019. The Company is in the process of assessing the impact of the new accounting rules on the Company’s financial condition and does not expect the adoption of the new accounting rules to have an impact on the Company’s results of operations or cash flows. Goodwill Impairment In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” The new rules simplify how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount. The new rules will be effective for the Company in the first quarter of 2020. 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 and cash flows. |
Revenue Recognition |
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Mar. 31, 2018 | |||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||
Revenue Recognition | Revenue Recognition On December 31, 2017, the Company adopted ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“Topic 606”) using the modified retrospective method applied to contracts which were pending as of December 31, 2017. Financial results included in the Company’s Condensed Consolidated Statement of Income for the quarter ended March 31, 2018 are presented under Topic 606, while prior year amounts have not been restated and continue to be reported in accordance with ASC 605, “Revenue Recognition” (“Topic 605”). As a result of adopting Topic 606, the Company did not adjust opening retained earnings. Revenue is recognized when obligations under the terms of a contract with a customer are satisfied, which occurs at a point in time, upon either shipment or delivery to the customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods, which includes estimates for variable consideration. Variable consideration includes trade discounts, rebates, volume-based incentives, cooperative advertising and product returns, which are offered within contracts between the Company and its customers, employing the practical expedient for contract costs. Incidental items that are immaterial to the context of the contract are recognized as expense at the transaction date. The following table presents the Company’s revenues disaggregated by method of purchase:
Revenue Sources Third-Party Brick-and-Mortar Wholesale Revenue Third-party brick-and-mortar wholesale revenue is primarily generated through sales to retailers to support their brick-and-mortar operations. Also included within third-party brick-and-mortar wholesale revenues is revenue from royalty agreements. The Company earns royalties through license agreements with manufacturers of other consumer products that incorporate certain of the Company’s brands. The Company accrues revenue earned under these contracts based upon reported sales from the licensees. Consumer-Directed Revenue Consumer-directed revenue is primarily generated through sales driven directly by the consumer through company-operated stores and e-commerce platforms, which include both owned sites and the sites of the Company’s retail customers. Variable Consideration Trade discounts and rebates The Company provides customers with discounts and rebates that are explicitly stated in the Company’s contracts and are recorded as a reduction of revenue in the period the product revenue is recognized. The cost of these incentives is estimated using a number of factors, including historical utilization and redemption rates. The Company includes incentives offered in the form of free products in the determination of cost of sales. Volume based incentives Volume-based incentives involve rebates or refunds of cash that are redeemable only if the customer completes a specified number of sales transactions. Under these incentive programs, the Company estimates the anticipated rebate to be paid and allocates a portion of the estimated cost of the rebate to each underlying sales transaction with the customer. Cooperative advertising Under cooperative advertising arrangements, the Company agrees to reimburse the retailer for a portion of the costs incurred by the retailer to advertise and promote certain of the Company’s products. The Company recognizes the cost of cooperative advertising programs in the period in which the advertising and promotional activity takes place. Product returns The Company generally offers customers a limited right of return for a purchased product. The Company estimates the amount of its product sales that may be returned by its customers and records this as a reduction of revenue in the period the related product revenue is recognized. For all variable consideration, where appropriate, the Company estimates the amount using the expected value, which takes into consideration historical experience, current contractual requirements, specific known market events and forecasted customer buying and payment patterns. Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which the customer is entitled based on the terms of the contracts. |
Acquisitions |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | Acquisitions Bras N Things On February 12, 2018, the Company acquired 100% of the outstanding equity of BNT Holdco Pty Limited (“Bras N Things”) for a total purchase price of A$498,236 (US$391,572), which includes a cash payment of A$428,956 (US$337,123), an indemnification escrow of A$35,000 (US$27,507) and assumed debt of A$34,280 (US$26,942). U.S. dollar equivalents are based on acquisition date exchange rates. The Company funded the acquisition with a combination of short-term borrowings under its Revolving Loan Facility and cash on hand. The A$35,000 indemnification escrow is held in a retention account for a period of 18 months after the date of the acquisition to secure indemnification claims or other obligations of the sellers under the purchase agreement. The remaining balance of the indemnification escrow, including interest earned, if any, will be paid to the sellers at the end of the 18 month period. The indemnification escrow, held in one of the Company’s bank accounts, is recognized and classified as restricted cash and included in the “Other noncurrent assets” line of the Condensed Consolidated Balance Sheet as of March 31, 2018. Bras N Things contributed net revenues of $16,137 and pretax earnings of $3,178 (excluding acquisition and integration related charges of approximately $936) since the date of acquisition. The results of operations of Bras N Things have been included in the Company’s condensed consolidated financial statements since the date of acquisition and are reported as part of the International segment. Bras N Things is a leading intimate apparel retailer and e-commerce business in Australia, New Zealand and South Africa. Bras N Things sells proprietary bras, panties and lingerie sets through a retail network of approximately 170 stores and an e-commerce platform. The Company believes this acquisition will create opportunities for expansion of the Bras N Things’ consumer-directed sales model. Factors that contribute to the amount of goodwill recognized for the acquisition include the value of entry into the outlet store sector, expansion of online presence, including the third-party marketplace and expected synergies with existing Company functions. Goodwill associated with the acquisition is not tax deductible. The Bras N Things trademark and brand name, which management believes to have an indefinite life, has been valued at $275,071. Amortizable intangible assets have been assigned values of $2,358 for noncompete agreements and $785 for customer lists. Noncompete agreements are being amortized over one year and the customer list is being amortized over three years. The Company is still in the process of valuing the assets acquired and liabilities assumed. The allocation of purchase price is preliminary and subject to change. Accordingly, adjustments may be made to the values of the acquired assets and assumed liabilities as additional information is obtained about the facts and circumstances which existed at the acquisition date. The acquired assets and liabilities as of the date of acquisition (February 12, 2018) include the following:
Total purchase price of the Bras N Things acquisition consisted of the following components:
Unaudited pro forma results of operations for the Company are presented below for the quarters ending March 31, 2018 and April 1, 2017, assuming that the acquisition of Bras N Things had occurred on January 1, 2017. Pro forma operating results for the quarter ended April 1, 2017 include expenses totaling $1,129, for acquisition-related adjustments primarily related to inventory and intangible assets.
Champion Europe In 2016, the Company acquired 100% of Champion Europe S.p.A. (“Champion Europe”), in an all-cash transaction valued at €220,751 (US$245,554) on an enterprise value basis, less working capital adjustments as defined in the purchase agreement, which included an estimated contingent consideration of €40,700 (US$45,277). The final contingent consideration for the Champion Europe acquisition was determined to be €64,250 (US$73,738), of which €37,820 (US$41,250) was paid in April 2017 and €26,430 (US$32,488) was paid in February 2018. |
Stockholders' Equity |
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Stockholders' Equity | Stockholders’ Equity 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:
For the quarters ended March 31, 2018 and April 1, 2017, no options were excluded from the diluted earnings per share calculation because their effect would be anti-dilutive. For the quarter ended March 31, 2018, no restricted stock units were excluded from the diluted earnings per share calculation, and for the quarter ended April 1, 2017, 42 restricted stock units were excluded from the diluted earnings per share calculation because their effect would be anti-dilutive. For the quarters ended March 31, 2018 and April 1, 2017, the Company declared cash dividends of $0.15 per share. On April 24, 2018, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.15 per share on outstanding shares of common stock to be paid on June 5, 2018 to stockholders of record at the close of business on May 15, 2018. On April 27, 2016, the Company’s Board of Directors approved the current share repurchase program for up to 40,000 shares to be repurchased in open market transactions, subject to market conditions, legal requirements and other factors. The Company did not repurchase any shares during the quarter ended March 31, 2018. For the quarter ended April 1, 2017, the Company repurchased 14,696 shares at a weighted average purchase price of $20.39 per share. The shares were repurchased at a total cost of $299,919. At March 31, 2018, the remaining repurchase authorization totaled 20,360 shares. The program does not obligate the Company to acquire any particular amount of common stock and may be suspended or discontinued at any time at the Company’s discretion. |
Inventories |
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Inventories | Inventories Inventories consisted of the following:
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Debt |
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Debt | Debt Debt consisted of the following:
As of March 31, 2018, the Company had $538,915 of borrowing availability under the $1,000,000 Revolving Loan Facility after taking into account outstanding borrowings and $4,085 of standby and trade letters of credit issued and outstanding under this facility. The Company also had $42,919 of borrowing availability under the Accounts Receivable Securitization Facility, $49,805 of borrowing availability under the Australian Revolving Loan Facility, no borrowing availability under the European Revolving Loan Facility and $111,713 of borrowing availability under other international lines of credit after taking into account outstanding borrowings and letters of credit outstanding under the applicable facility. In March 2018, the Company amended the Accounts Receivable Securitization Facility that it entered into in November 2007 (the “Accounts Receivable Securitization Facility”). This amendment primarily extended the maturity date to March 2019. As of March 31, 2018, the Company was in compliance with all financial covenants under its credit facilities. |
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Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The components of accumulated other comprehensive loss (“AOCI”) are as follows:
The Company had the following reclassifications out of AOCI:
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Financial Instruments and Risk Management | Financial Instruments and Risk Management The Company uses forward foreign exchange contracts to manage its exposures to movements in foreign exchange rates. As of March 31, 2018, the notional U.S. dollar equivalent of the Company’s derivative portfolio was $665,122, primarily consisting of contracts hedging exposures to the Euro, Australian dollar, Canadian dollar and Mexican peso. 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:
Cash Flow Hedges A hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability is designated as a cash flow hedge. 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. The Company expects to reclassify into earnings during the next 12 months a net loss from AOCI of approximately $18,534. The ineffective portion of the changes in the fair value of derivatives used as cash flow hedges are reported in the “Cost of sales” line in the Condensed Consolidated Statements of Income. The effect of cash flow hedge derivative instruments on the Condensed Consolidated Statements of Income and AOCI is as follows:
Mark to Market Hedges A derivative used as a hedging instrument whose change in fair value is recognized to act as an economic hedge against changes in the values of the hedged item is designated a mark to market hedge. 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. Foreign exchange derivative contracts are recorded as mark to market hedges when the hedged item is a recorded asset or liability that is revalued in each accounting period. These contracts are not designated as hedges under the accounting standards and are recorded at fair value in the Condensed Consolidated Balance Sheets. 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:
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Fair Value of Assets and Liabilities |
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Fair Value of Assets and Liabilities | Fair Value of Assets and Liabilities As of March 31, 2018, the Company held certain financial assets and liabilities that are required to be measured at fair value on a recurring basis. These consisted of the Company’s derivative instruments related to foreign exchange rates and deferred compensation plan liabilities. The fair values of foreign exchange rate 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 which are all based on inputs readily available in public markets and are categorized as Level 2. The fair value of deferred compensation plans is based on readily available current market data and is 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. There were no changes during the quarter ended March 31, 2018 to the Company’s valuation techniques used to measure asset and liability fair values on a recurring basis. There were no transfers into or out of Level 1, Level 2 or Level 3 during the quarter ended March 31, 2018. As of and during the quarter ended March 31, 2018, 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.
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 March 31, 2018 and December 30, 2017. The carrying amount of trade accounts receivable included allowance for doubtful accounts, chargebacks and other deductions of $29,049 and $26,096 as of March 31, 2018 and December 30, 2017, respectively. The fair value of debt, which is classified as a Level 2 liability, was $4,562,178 and $4,093,229 as of March 31, 2018 and December 30, 2017, respectively. Debt had a carrying value of $4,548,405 and $3,993,267 as of March 31, 2018 and December 30, 2017, 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 March 31, 2018 and December 30, 2017, primarily due to the short-term nature of these instruments. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s effective income tax rate for continuing operations was 16% and 6% for the quarters ended March 31, 2018 and April 1, 2017, respectively. The higher effective income tax rate for the quarter ended March 31, 2018 compared to the quarter ended April 1, 2017 was primarily due to certain provisions of the Tax Cuts and Jobs Act (the “Tax Act”), specifically the base-broadening provision which imposed a new minimum tax on global intangible low-tax income (“GILTI”), as well as a discrete charge of $3,723 resulting from a tax law change in foreign a jurisdiction. The recently enacted Tax Act significantly revised U.S. corporate income tax law by, among other things, reducing the federal income tax rate to 21% and implementing a modified territorial tax system that includes a one-time transition tax on deemed repatriated earnings of foreign subsidiaries. In response to the Tax Act, the SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”) which allows issuers to recognize provisional estimates of the impact of the Tax Act in their financial statements, or in circumstances where estimates cannot be made, to disclose and recognize at a later date. As of March 31, 2018, the Company is in the process of evaluating the impact of the Tax Act on being partially reinvested with respect to prior year undistributed earnings. A provisional charge of $1,457 was recognized in the quarter ending March 31, 2018 for actual and planned distributions; however, the Company is continuing to evaluate the overall impact of its partial permanent reinvestment assertion. For the year ended December 30, 2017, the Company included in its financial statements provisional charges for the revaluation of the Company’s net domestic deferred tax assets, a one-time charge for the deemed repatriation of historic unremitted earnings, as well as other less material provisions of the Tax Act. There were no additional changes to the provisional amounts recorded as of the year ended December 30, 2017. The accounting is expected to be completed and disclosed within the one-year measurement period as allowed by SAB 118. For the quarter ended March 31, 2018, the Company recorded a liability for an unrecognized tax benefit of $17,643, related to the acquisition of Bras N Things, as part of purchase accounting. During the quarter ended March 31, 2018, the Company finalized its accounting policy decision with respect to the new GILTI tax rules, and has concluded that GILTI will be treated as a periodic charge in the year in which it arises, and will not record deferred taxes for the basis associated with GILTI earnings. |
Discontinued Operations |
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Discontinued Operations | Discontinued Operations As part of the Company’s acquisition of Hanes Australasia in 2016, the Company acquired Hanes Australasia’s legacy Dunlop Flooring and Tontine Pillow businesses. The Company concluded that these businesses were not a strategic fit; therefore, the decision was made to divest the businesses. In February 2017, the Company sold its Dunlop Flooring business for A$34,564 (US$26,219) in net cash proceeds at the time of sale, with an additional A$1,334 (US$1,012) of proceeds received in April 2017 related to a working capital adjustment, resulting in a pre-tax loss of A$2,715 (US$2,083). U.S. dollar equivalents are based on exchange rates on the date of the sale transaction. The Dunlop Flooring business was reported as part of discontinued operations since the date of acquisition. In March 2017, the Company sold its Tontine Pillow business for A$13,500 (US$10,363) in net cash proceeds at the time of sale. A working capital adjustment of A$966 (US$742) was paid to the buyer in April 2017, resulting in a net pre-tax gain of A$2,415 (US$1,856). U.S. dollar equivalents are based on exchange rates on the date of the sale transaction. The Tontine Pillow business was reported as part of discontinued operations since the date of acquisition. The operating results of these discontinued operations only reflect revenues and expenses that are directly attributable to these businesses that were eliminated from ongoing operations. The key components from discontinued operations related to the Dunlop Flooring and Tontine Pillow businesses were as follows:
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Business Segment Information |
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Business Segment Information | Business Segment Information The Company’s operations are managed and reported in three operating segments, each of which is a reportable segment for financial reporting purposes: Innerwear, Activewear and International. These segments are organized principally by product category and geographic location. 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. Other consists of the Company’s U.S. value-based (“outlet”) stores and U.S. hosiery business. The types of products and services from which each reportable segment derives its revenues are as follows:
The Company evaluates the operating performance of its segments based upon segment operating profit, which is defined as operating profit before general corporate expenses, acquisition, integration and other action-related charges and amortization of intangibles. In the first quarter of 2018, the Company eliminated the allocation of certain corporate overhead selling, general and administrative expenses related to the legal, human resources, information technology, finance and real estate departments to the segments, in order to reflect the manner in which the business is managed and results are reviewed by the chief executive officer, who is the Company’s chief operating decision maker. Prior year segment operating profit disclosures have been revised to conform to the current year presentation. 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 30, 2017.
For the quarter ended March 31, 2018, the Company incurred acquisition, integration and other action-related charges that impact operating profit of $19,617, of which $10,753 is reported in the “Cost of sales” line and $8,864 is reported in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statement of Income. For the quarter ended April 1, 2017, the Company incurred acquisition-related and integration charges of $38,367, of which $15,475 is reported in the “Cost of sales” line and $22,892 is reported in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statement of Income. As part of the Hanes Europe Innerwear acquisition strategy, in 2015 the Company identified management and administrative positions that were considered non-essential and/or duplicative that have or will be eliminated. As of December 30, 2017, the Company had accrued $22,302 for expected benefit payments related to employee termination and other benefits for affected employees. During the quarter ended March 31, 2018, there were $2,513 of benefit payments and foreign currency adjustments, resulting in an ending accrual of $19,789, of which, $9,645 and $10,144, is included in the “Accrued liabilities” and “Other noncurrent liabilities” lines of the Condensed Consolidated Balance Sheet, respectively. |
Revenue Recognition (Policies) |
3 Months Ended |
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Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue recognition, policy | Revenue is recognized when obligations under the terms of a contract with a customer are satisfied, which occurs at a point in time, upon either shipment or delivery to the customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods, which includes estimates for variable consideration. Variable consideration includes trade discounts, rebates, volume-based incentives, cooperative advertising and product returns, which are offered within contracts between the Company and its customers, employing the practical expedient for contract costs. Incidental items that are immaterial to the context of the contract are recognized as expense at the transaction date. |
Revenue recognition, variable consideration, policy | Variable Consideration Trade discounts and rebates The Company provides customers with discounts and rebates that are explicitly stated in the Company’s contracts and are recorded as a reduction of revenue in the period the product revenue is recognized. The cost of these incentives is estimated using a number of factors, including historical utilization and redemption rates. The Company includes incentives offered in the form of free products in the determination of cost of sales. Volume based incentives Volume-based incentives involve rebates or refunds of cash that are redeemable only if the customer completes a specified number of sales transactions. Under these incentive programs, the Company estimates the anticipated rebate to be paid and allocates a portion of the estimated cost of the rebate to each underlying sales transaction with the customer. Cooperative advertising Under cooperative advertising arrangements, the Company agrees to reimburse the retailer for a portion of the costs incurred by the retailer to advertise and promote certain of the Company’s products. The Company recognizes the cost of cooperative advertising programs in the period in which the advertising and promotional activity takes place. Product returns The Company generally offers customers a limited right of return for a purchased product. The Company estimates the amount of its product sales that may be returned by its customers and records this as a reduction of revenue in the period the related product revenue is recognized. For all variable consideration, where appropriate, the Company estimates the amount using the expected value, which takes into consideration historical experience, current contractual requirements, specific known market events and forecasted customer buying and payment patterns. Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which the customer is entitled based on the terms of the contracts. |
Revenue Recognition (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||
Disaggregation of Revenue [Table Text Block] | The following table presents the Company’s revenues disaggregated by method of purchase:
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Acquisitions (Tables) - Bras N Things |
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Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of acquired assets and liabilities assumed | The acquired assets and liabilities as of the date of acquisition (February 12, 2018) include the following:
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Schedule of components of purchase price | Total purchase price of the Bras N Things acquisition consisted of the following components:
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Unaudited pro forma results of operations | Pro forma operating results for the quarter ended April 1, 2017 include expenses totaling $1,129, for acquisition-related adjustments primarily related to inventory and intangible assets.
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Stockholders' Equity (Tables) |
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Reconciliation of Basic to Diluted Weighted Average Shares | The reconciliation of basic to diluted weighted average shares outstanding is as follows:
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Inventories (Tables) |
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Inventories | Inventories consisted of the following:
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Debt (Tables) |
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Debt | Debt consisted of the following:
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Accumulated Other Comprehensive Loss (Tables) |
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Loss | The components of accumulated other comprehensive loss (“AOCI”) are as follows:
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Schedule of Reclassifications Out of Accumulated Other Comprehensive Loss | The Company had the following reclassifications out of AOCI:
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Financial Instruments and Risk Management (Tables) |
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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:
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Effect of Cash Flow Hedge Derivative Instruments | The effect of cash flow hedge derivative instruments on the Condensed Consolidated Statements of Income and AOCI is as follows:
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Effect of Mark to Market Hedge Derivative Instruments on Condensed Consolidated Statements of Income | The effect of derivative contracts not designated as hedges on the Condensed Consolidated Statements of Income is as follows:
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Fair Value of Assets and Liabilities (Tables) |
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Fair Value of Financial Assets and Liabilities Measured on a 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.
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Discontinued Operations (Tables) |
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Tontine Pillow and Dunlop Flooring | Discontinued Operations | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Statement and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued operations | The key components from discontinued operations related to the Dunlop Flooring and Tontine Pillow businesses were as follows:
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Business Segment Information (Tables) |
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Net Sales |
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Segment Operating Profit |
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Recent Accounting Pronouncements Recent Accounting Pronouncements (Details) - USD ($) |
3 Months Ended | |
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Mar. 31, 2018 |
Apr. 01, 2017 |
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New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Restricted cash | $ 26,818,000 | $ 0 |
Accounting Standards Update 2017-07 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Prior Period Reclassification Adjustment | $ 5,161 |
Revenue Recognition (Details) $ in Thousands |
3 Months Ended |
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Mar. 31, 2018
USD ($)
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Disaggregation of Revenue | |
Net sales | $ 1,471,504 |
Third-party brick-and-mortar wholesale | |
Disaggregation of Revenue | |
Net sales | 1,164,308 |
Consumer-directed | |
Disaggregation of Revenue | |
Net sales | $ 307,196 |
Acquisitions (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Feb. 12, 2018 |
Dec. 30, 2017 |
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Business Acquisition [Line Items] | |||
Goodwill | $ 1,282,504 | $ 1,167,007 | |
Bras N Things | |||
Business Acquisition [Line Items] | |||
Cash and cash equivalents | $ 2,765 | ||
Accounts receivable, net | 197 | ||
Inventories | 10,110 | ||
Other current assets | 1,637 | ||
Property, net | 12,417 | ||
Trademarks and other identifiable intangibles | 278,214 | ||
Deferred tax assets and other noncurrent assets | 2,539 | ||
Total assets acquired | 307,879 | ||
Accounts payable | 4,929 | ||
Accrued liabilities and other | 16,339 | ||
Deferred tax liabilities and other noncurrent liabilities | 7,663 | ||
Total liabilities assumed | 28,931 | ||
Net assets acquired | 278,948 | ||
Goodwill | 112,624 | ||
Total purchase price | $ 391,572 |
Acquisitions Components of Purchase Price (Details) - Feb. 12, 2018 - Bras N Things $ in Thousands, $ in Thousands |
AUD ($) |
USD ($) |
USD ($) |
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Business Acquisition [Line Items] | |||
Cash consideration paid | $ 428,956 | $ 337,123 | |
Indemnification escrow asset | 35,000 | $ 27,507 | |
Debt assumed | 34,280 | $ 26,942 | |
Total purchase price | $ 498,236 | $ 391,572 |
Acquisition Pro Forma (Details) - Bras N Things - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
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Mar. 31, 2018 |
Apr. 01, 2017 |
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Business Acquisition [Line Items] | ||
Acquisition Related Costs | $ 1,129 | |
Pro Forma | ||
Business Acquisition [Line Items] | ||
Acquisition Related Costs | $ 936 | |
Pro forma revenue | 1,501,315 | 1,427,069 |
Pro forma net income | $ 82,641 | $ 78,764 |
Pro forma earnings per share, basic | $ 0.23 | $ 0.21 |
Pro forma earnings per share, diluted | $ 0.23 | $ 0.21 |
Stockholders' Equity (Reconciliation of basic to diluted weighted average shares) (Detail) - shares shares in Thousands |
3 Months Ended | |
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Mar. 31, 2018 |
Apr. 01, 2017 |
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Disclosure Reconciliation Of Basic To Diluted Weighted Average Shares [Abstract] | ||
Basic weighted average shares outstanding | 361,882 | 373,218 |
Effect of potentially dilutive securities: | ||
Stock options | 1,067 | 1,640 |
Restricted stock units | 335 | 385 |
Employee stock purchase plan and other | 7 | 8 |
Diluted weighted average shares outstanding | 363,291 | 375,251 |
Inventories (Detail) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 30, 2017 |
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Inventory Disclosure [Abstract] | ||
Raw materials | $ 135,327 | $ 129,287 |
Work in process | 213,029 | 226,659 |
Finished goods | 1,696,324 | 1,519,044 |
Total Inventories | $ 2,044,680 | $ 1,874,990 |
Debt (Additional Information) (Detail) $ in Thousands |
Mar. 31, 2018
USD ($)
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Revolving Loan Facility | |
Debt Instrument [Line Items] | |
Remaining capacity | $ 538,915 |
Maximum borrowing capacity under revolving credit facility | 1,000,000 |
Trade letters of credit issued | 4,085 |
European Revolving Loan Facility | |
Debt Instrument [Line Items] | |
Remaining capacity | 0 |
Australian Revolving Facility | |
Debt Instrument [Line Items] | |
Remaining capacity | 49,805 |
Accounts Receivable Securitization Facility | |
Debt Instrument [Line Items] | |
Remaining capacity | 42,919 |
Other International Debt | |
Debt Instrument [Line Items] | |
Remaining capacity | $ 111,713 |
Financial Instruments and Risk Management (Additional Information) (Detail) $ in Thousands |
3 Months Ended |
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Mar. 31, 2018
USD ($)
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Derivative [Line Items] | |
Amount expected to be reclassified into earnings | $ (18,534) |
Foreign Exchange Contract | Designated as Hedging Instrument | |
Derivative [Line Items] | |
Commitments to purchase and sell foreign currencies in foreign currency cash flow hedge derivative portfolio | $ 665,122 |
Financial Instruments and Risk Management (Fair Values of Derivative Instruments) (Detail) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 30, 2017 |
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Derivatives, Fair Value [Line Items] | ||
Fair value of assets and liabilities | $ (15,861) | $ (20,968) |
Other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Total derivative assets | 2,171 | 1,600 |
Other current assets | Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Total derivative assets | 1,990 | 1,464 |
Other current assets | Non-hedges | ||
Derivatives, Fair Value [Line Items] | ||
Total derivative assets | 181 | 136 |
Accrued liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Total derivative liabilities | 18,032 | 22,568 |
Accrued liabilities | Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Total derivative liabilities | 11,421 | 14,750 |
Accrued liabilities | Non-hedges | ||
Derivatives, Fair Value [Line Items] | ||
Total derivative liabilities | $ 6,611 | $ 7,818 |
Financial Instruments and Risk Management (Effect of cash flow hedge derivative instruments) (Detail) - Foreign Exchange Contract - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2018 |
Apr. 01, 2017 |
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Derivatives, Fair Value [Line Items] | ||
Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Loss (Effective Portion) | $ (1,708) | $ (18,114) |
Cost of Sales | ||
Derivatives, Fair Value [Line Items] | ||
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion) | $ (1,665) | $ 298 |
Financial Instruments and Risk Management (Effect of mark to market hedge derivative instruments on Condensed Consolidated Statements of Income) (Detail) - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2018 |
Apr. 01, 2017 |
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Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Recognized in Income | $ 9,403 | $ (4,264) |
Foreign Exchange Contract | Cost of Sales | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Recognized in Income | 9,100 | 0 |
Foreign Exchange Contract | Selling, General and Administrative Expenses | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Recognized in Income | $ 303 | $ (4,264) |
Fair Value of Assets and Liabilities (Additional Information) (Detail) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 30, 2017 |
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Allowance for Doubtful Accounts Receivable, Current | $ 29,049 | $ 26,096 |
Carrying value of debt | 4,548,405 | 3,993,267 |
Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of debt | $ 4,562,178 | $ 4,093,229 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2018 |
Apr. 01, 2017 |
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Unrecognized Tax Benefits [Line Items] | ||
Income tax expense | $ 15,125 | $ 4,665 |
Effective Income Tax Rate, Percent | 16.00% | 6.00% |
Discrete charge | ||
Unrecognized Tax Benefits [Line Items] | ||
Income tax expense | $ 3,723 | |
Tax Cuts and Jobs Act | Discrete charge | ||
Unrecognized Tax Benefits [Line Items] | ||
Income tax expense | 1,457 | |
Bras N Things | ||
Unrecognized Tax Benefits [Line Items] | ||
Unrecognized Tax Benefits, Increase Resulting from Acquisition | $ 17,643 |
Discontinued Operations (Details) - Discontinued Operations - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Apr. 01, 2017 |
|
Income Statement and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Net sales | $ 0 | $ 6,865 |
Cost of sales | 0 | 4,507 |
Gross profit | 0 | 2,358 |
Selling, general and administrative expenses | 0 | 3,731 |
Operating loss | 0 | (1,373) |
Other expenses | 0 | 303 |
Net (loss) on disposal of businesses | 0 | (766) |
Loss from discontinued operations before income tax expense | 0 | (2,442) |
Income tax expense | 0 | 23 |
Net loss from discontinued operations, net of tax | $ 0 | $ (2,465) |
Discontinued Operations Narrative (Details) $ in Thousands, $ in Thousands |
1 Months Ended | 3 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Apr. 30, 2017
AUD ($)
|
Apr. 30, 2017
USD ($)
|
Mar. 31, 2017
AUD ($)
|
Mar. 31, 2017
USD ($)
|
Feb. 28, 2017
AUD ($)
|
Feb. 28, 2017
USD ($)
|
Mar. 31, 2018
AUD ($)
|
Mar. 31, 2018
USD ($)
|
|
Dunlop Flooring [Member] | ||||||||
Income Statement and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Proceeds from Divestiture of Businesses | $ 34,564 | $ 26,219 | ||||||
Adjustments to Proceeds from Previous Divestiture | $ 1,334 | $ 1,012 | ||||||
Gain (Loss) on Disposition of Business | $ (2,715) | $ (2,083) | ||||||
Tontine Pillow [Member] | ||||||||
Income Statement and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Proceeds from Divestiture of Businesses | $ 13,500 | $ 10,363 | ||||||
Adjustments to Proceeds from Previous Divestiture | $ (966) | $ (742) | ||||||
Gain (Loss) on Disposition of Business | $ 2,415 | $ 1,856 |
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