Consolidating Financial Information |
Consolidating Financial Information In accordance with the indenture governing the Company’s $250,000 8% Senior Notes issued on December 10, 2009 and the indenture governing the Company’s $1,000,000 6.375% Senior Notes issued on November 9, 2010, as supplemented from time to time (together, the “Indentures”), certain of the Company’s subsidiaries have guaranteed the Company’s obligations under the 8% Senior Notes and the 6.375% Senior Notes, respectively. The following presents the condensed consolidating financial information separately for: (i) Parent Company, the issuer of the guaranteed obligations. Parent Company includes Hanesbrands Inc. and its 100% owned operating divisions which are not legal entities, and excludes its subsidiaries which are legal entities; (ii) Guarantor subsidiaries, on a combined basis, as specified in the Indentures; (iii) Non-guarantor subsidiaries, on a combined basis; (iv) Consolidating entries and eliminations representing adjustments to (a) eliminate intercompany transactions between or among Parent Company, the guarantor subsidiaries and the non-guarantor subsidiaries, (b) eliminate intercompany profit in inventory, (c) eliminate the investments in the Company’s subsidiaries and (d) record consolidating entries; and (v) The Company, on a consolidated basis. The 8% Senior Notes and the 6.375% Senior Notes are fully and unconditionally guaranteed on a joint and several basis by each guarantor subsidiary, each of which is 100% owned, directly or indirectly, by Hanesbrands Inc. A guarantor subsidiary’s guarantee can be released in certain customary circumstances. Each entity in the consolidating financial information follows the same accounting policies as described in the consolidated financial statements, except for the use by the Parent Company and guarantor subsidiaries of the equity method of accounting to reflect ownership interests in subsidiaries which are eliminated upon consolidation. | | | | | | | | | | | | | | | | | | | | | | Condensed Consolidating Statement of Comprehensive Income Quarter Ended September 28, 2013 | | Parent Company | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Consolidating Entries and Eliminations | | Consolidated | Net sales | $ | 1,006,219 |
| | $ | 201,097 |
| | $ | 621,751 |
| | $ | (631,721 | ) | | $ | 1,197,346 |
| Cost of sales | 788,512 |
| | 100,344 |
| | 493,115 |
| | (606,305 | ) | | 775,666 |
| Gross profit | 217,707 |
| | 100,753 |
| | 128,636 |
| | (25,416 | ) | | 421,680 |
| Selling, general and administrative expenses | 184,566 |
| | 34,010 |
| | 27,715 |
| | (1,509 | ) | | 244,782 |
| Operating profit | 33,141 |
| | 66,743 |
| | 100,921 |
| | (23,907 | ) | | 176,898 |
| Equity in earnings of subsidiaries | 127,032 |
| | 70,951 |
| | — |
| | (197,983 | ) | | — |
| Other expenses | 795 |
| | — |
| | — |
| | — |
| | 795 |
| Interest expense, net | 23,049 |
| | — |
| | 1,953 |
| | — |
| | 25,002 |
| Income from continuing operations before income tax expense | 136,329 |
| | 137,694 |
| | 98,968 |
| | (221,890 | ) | | 151,101 |
| Income tax expense | 11,066 |
| | 7,962 |
| | 6,810 |
| | — |
| | 25,838 |
| Income from continuing operations | 125,263 |
| | 129,732 |
| | 92,158 |
| | (221,890 | ) | | 125,263 |
| Loss from discontinued operations, net of tax | — |
| | — |
| | — |
| | — |
| | — |
| Net income | $ | 125,263 |
| | $ | 129,732 |
| | $ | 92,158 |
| | $ | (221,890 | ) | | $ | 125,263 |
| Comprehensive income | $ | 126,325 |
| | $ | 129,732 |
| | $ | 91,023 |
| | $ | (220,755 | ) | | $ | 126,325 |
|
| | | | | | | | | | | | | | | | | | | | | | Condensed Consolidating Statement of Comprehensive Income Quarter Ended September 29, 2012 | | Parent Company | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Consolidating Entries and Eliminations | | Consolidated | Net sales | $ | 1,015,571 |
| | $ | 197,538 |
| | $ | 632,167 |
| | $ | (626,595 | ) | | $ | 1,218,681 |
| Cost of sales | 824,981 |
| | 99,793 |
| | 494,452 |
| | (600,475 | ) | | 818,751 |
| Gross profit | 190,590 |
| | 97,745 |
| | 137,715 |
| | (26,120 | ) | | 399,930 |
| Selling, general and administrative expenses | 187,016 |
| | 32,865 |
| | 24,758 |
| | (1,217 | ) | | 243,422 |
| Operating profit | 3,574 |
| | 64,880 |
| | 112,957 |
| | (24,903 | ) | | 156,508 |
| Equity in earnings of subsidiaries | 135,794 |
| | 78,342 |
| | — |
| | (214,136 | ) | | — |
| Other expenses | 3,373 |
| | — |
| | — |
| | — |
| | 3,373 |
| Interest expense, net | 30,214 |
| | (1 | ) | | 2,687 |
| | (3 | ) | | 32,897 |
| Income from continuing operations before income tax expense (benefit) | 105,781 |
| | 143,223 |
| | 110,270 |
| | (239,036 | ) | | 120,238 |
| Income tax expense (benefit) | (5,567 | ) | | 8,926 |
| | 5,696 |
| | — |
| | 9,055 |
| Income from continuing operations | 111,348 |
| | 134,297 |
| | 104,574 |
| | (239,036 | ) | | 111,183 |
| Income (loss) from discontinued operations, net of tax | (1,456 | ) | | — |
| | 165 |
| | — |
| | (1,291 | ) | Net income | $ | 109,892 |
| | $ | 134,297 |
| | $ | 104,739 |
| | $ | (239,036 | ) | | $ | 109,892 |
| Comprehensive income | $ | 114,773 |
| | $ | 134,297 |
| | $ | 105,962 |
| | $ | (240,259 | ) | | $ | 114,773 |
|
| | | | | | | | | | | | | | | | | | | | | | Condensed Consolidating Statement of Comprehensive Income Nine Months Ended September 28, 2013 | | Parent Company | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Consolidating Entries and Eliminations | | Consolidated | Net sales | $ | 2,921,292 |
| | $ | 502,179 |
| | $ | 1,769,432 |
| | $ | (1,850,891 | ) | | $ | 3,342,012 |
| Cost of sales | 2,286,074 |
| | 242,603 |
| | 1,395,191 |
| | (1,766,317 | ) | | 2,157,551 |
| Gross profit | 635,218 |
| | 259,576 |
| | 374,241 |
| | (84,574 | ) | | 1,184,461 |
| Selling, general and administrative expenses | 547,403 |
| | 108,141 |
| | 89,463 |
| | (4,034 | ) | | 740,973 |
| Operating profit | 87,815 |
| | 151,435 |
| | 284,778 |
| | (80,540 | ) | | 443,488 |
| Equity in earnings of subsidiaries | 314,898 |
| | 198,981 |
| | — |
| | (513,879 | ) | | — |
| Other expenses | 2,010 |
| | — |
| | — |
| | — |
| | 2,010 |
| Interest expense, net | 70,958 |
| | — |
| | 4,888 |
| | — |
| | 75,846 |
| Income from continuing operations before income tax expense | 329,745 |
| | 350,416 |
| | 279,890 |
| | (594,419 | ) | | 365,632 |
| Income tax expense | 31,517 |
| | 17,091 |
| | 18,796 |
| | — |
| | 67,404 |
| Income from continuing operations | 298,228 |
| | 333,325 |
| | 261,094 |
| | (594,419 | ) | | 298,228 |
| Loss from discontinued operations, net of tax | — |
| | — |
| | — |
| | — |
| | — |
| Net income | $ | 298,228 |
| | $ | 333,325 |
| | $ | 261,094 |
| | $ | (594,419 | ) | | $ | 298,228 |
| Comprehensive income | $ | 297,386 |
| | $ | 333,325 |
| | $ | 253,660 |
| | $ | (586,985 | ) | | $ | 297,386 |
|
| | | | | | | | | | | | | | | | | | | | | | Condensed Consolidating Statement of Comprehensive Income Nine Months Ended September 29, 2012 | | Parent Company | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Consolidating Entries and Eliminations | | Consolidated | Net sales | $ | 2,909,716 |
| | $ | 499,345 |
| | $ | 1,727,880 |
| | $ | (1,764,476 | ) | | $ | 3,372,465 |
| Cost of sales | 2,399,275 |
| | 239,531 |
| | 1,414,140 |
| | (1,702,457 | ) | | 2,350,489 |
| Gross profit | 510,441 |
| | 259,814 |
| | 313,740 |
| | (62,019 | ) | | 1,021,976 |
| Selling, general and administrative expenses | 548,650 |
| | 97,836 |
| | 91,767 |
| | (3,381 | ) | | 734,872 |
| Operating profit (loss) | (38,209 | ) | | 161,978 |
| | 221,973 |
| | (58,638 | ) | | 287,104 |
| Equity in earnings of subsidiaries | 238,712 |
| | 153,265 |
| | — |
| | (391,977 | ) | | — |
| Other expenses | 4,829 |
| | — |
| | — |
| | — |
| | 4,829 |
| Interest expense, net | 98,534 |
| | (8 | ) | | 7,979 |
| | (2 | ) | | 106,503 |
| Income from continuing operations before income tax expense (benefit) | 97,140 |
| | 315,251 |
| | 213,994 |
| | (450,613 | ) | | 175,772 |
| Income tax expense (benefit) | (14,646 | ) | | 24,656 |
| | 11,534 |
| | — |
| | 21,544 |
| Income from continuing operations | 111,786 |
| | 290,595 |
| | 202,460 |
| | (450,613 | ) | | 154,228 |
| Loss from discontinued operations, net of tax | (27,493 | ) | | (31,791 | ) | | (14,636 | ) | | 3,985 |
| | (69,935 | ) | Net income | $ | 84,293 |
| | $ | 258,804 |
| | $ | 187,824 |
| | $ | (446,628 | ) | | $ | 84,293 |
| Comprehensive income | $ | 92,489 |
| | $ | 258,804 |
| | $ | 187,116 |
| | $ | (445,920 | ) | | $ | 92,489 |
|
| | | | | | | | | | | | | | | | | | | | | | Condensed Consolidating Balance Sheet September 28, 2013 | | Parent Company | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Consolidating Entries and Eliminations | | Consolidated | Assets | | | | | | | | | | Cash and cash equivalents | $ | 14,056 |
| | $ | 2,682 |
| | $ | 115,582 |
| | $ | — |
| | $ | 132,320 |
| Trade accounts receivable, net | 48,092 |
| | 54,203 |
| | 485,196 |
| | (1,781 | ) | | 585,710 |
| Inventories | 996,230 |
| | 110,845 |
| | 415,863 |
| | (208,967 | ) | | 1,313,971 |
| Deferred tax assets | 164,013 |
| | 1,015 |
| | 3,310 |
| | — |
| | 168,338 |
| Other current assets | 27,915 |
| | 10,729 |
| | 18,337 |
| | (267 | ) | | 56,714 |
| Total current assets | 1,250,306 |
| | 179,474 |
| | 1,038,288 |
| | (211,015 | ) | | 2,257,053 |
| Property, net | 83,852 |
| | 37,391 |
| | 445,533 |
| | — |
| | 566,776 |
| Trademarks and other identifiable intangibles, net | 8,718 |
| | 88,161 |
| | 14,960 |
| | — |
| | 111,839 |
| Goodwill | 232,882 |
| | 124,247 |
| | 75,850 |
| | — |
| | 432,979 |
| Investments in subsidiaries | 2,555,730 |
| | 1,453,875 |
| | — |
| | (4,009,605 | ) | | — |
| Deferred tax assets | 233,926 |
| | 154,325 |
| | 16,884 |
| | — |
| | 405,135 |
| Receivables from related entities | 4,322,565 |
| | 3,442,323 |
| | 2,055,671 |
| | (9,820,559 | ) | | — |
| Other noncurrent assets | 59,290 |
| | 316 |
| | 1,629 |
| | — |
| | 61,235 |
| Total assets | $ | 8,747,269 |
| | $ | 5,480,112 |
| | $ | 3,648,815 |
| | $ | (14,041,179 | ) | | $ | 3,835,017 |
| | | | | | | | | | | Liabilities and Stockholders’ Equity | | | | | | | | | | Accounts payable | $ | 258,338 |
| | $ | 12,179 |
| | $ | 169,840 |
| | $ | — |
| | $ | 440,357 |
| Accrued liabilities | 171,848 |
| | 53,482 |
| | 76,305 |
| | (130 | ) | | 301,505 |
| Notes payable | — |
| | — |
| | 5,209 |
| | — |
| | 5,209 |
| Accounts Receivable Securitization Facility | — |
| | — |
| | 166,614 |
| | — |
| | 166,614 |
| Total current liabilities | 430,186 |
| | 65,661 |
| | 417,968 |
| | (130 | ) | | 913,685 |
| Long-term debt | 1,250,000 |
| | — |
| | — |
| | — |
| | 1,250,000 |
| Pension and postretirement benefits | 393,272 |
| | — |
| | 11,282 |
| | — |
| | 404,554 |
| Payables to related entities | 5,429,729 |
| | 2,686,892 |
| | 1,438,538 |
| | (9,555,159 | ) | | — |
| Other noncurrent liabilities | 91,978 |
| | 11,130 |
| | 11,566 |
| | — |
| | 114,674 |
| Total liabilities | 7,595,165 |
| | 2,763,683 |
| | 1,879,354 |
| | (9,555,289 | ) | | 2,682,913 |
| Stockholders’ equity | 1,152,104 |
| | 2,716,429 |
| | 1,769,461 |
| | (4,485,890 | ) | | 1,152,104 |
| Total liabilities and stockholders’ equity | $ | 8,747,269 |
| | $ | 5,480,112 |
| | $ | 3,648,815 |
| | $ | (14,041,179 | ) | | $ | 3,835,017 |
|
| | | | | | | | | | | | | | | | | | | | | | Condensed Consolidating Balance Sheet December 29, 2012 | | Parent Company | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Consolidating Entries and Eliminations | | Consolidated | Assets | | | | | | | | | | Cash and cash equivalents | $ | 5,617 |
| | $ | 1,919 |
| | $ | 35,260 |
| | $ | — |
| | $ | 42,796 |
| Trade accounts receivable, net | 39,379 |
| | 32,199 |
| | 434,825 |
| | (125 | ) | | 506,278 |
| Inventories | 882,290 |
| | 102,121 |
| | 413,340 |
| | (144,615 | ) | | 1,253,136 |
| Deferred tax assets | 161,935 |
| | 1,015 |
| | 3,239 |
| | — |
| | 166,189 |
| Other current assets | 30,692 |
| | 11,917 |
| | 16,563 |
| | (46 | ) | | 59,126 |
| Total current assets | 1,119,913 |
| | 149,171 |
| | 903,227 |
| | (144,786 | ) | | 2,027,525 |
| Property, net | 90,820 |
| | 41,326 |
| | 464,012 |
| | — |
| | 596,158 |
| Trademarks and other identifiable intangibles, net | 10,662 |
| | 93,727 |
| | 15,725 |
| | — |
| | 120,114 |
| Goodwill | 232,882 |
| | 124,247 |
| | 76,171 |
| | — |
| | 433,300 |
| Investments in subsidiaries | 2,220,706 |
| | 1,284,516 |
| | — |
| | (3,505,222 | ) | | — |
| Deferred tax assets | 224,559 |
| | 154,325 |
| | 18,645 |
| | — |
| | 397,529 |
| Receivables from related entities | 3,967,079 |
| | 3,198,153 |
| | 1,785,466 |
| | (8,950,698 | ) | | — |
| Other noncurrent assets | 51,686 |
| | 271 |
| | 5,117 |
| | — |
| | 57,074 |
| Total assets | $ | 7,918,307 |
| | $ | 5,045,736 |
| | $ | 3,268,363 |
| | $ | (12,600,706 | ) | | $ | 3,631,700 |
| | | | | | | | | | | Liabilities and Stockholders’ Equity | | | | | | | | | | Accounts payable | $ | 217,645 |
| | $ | 8,209 |
| | $ | 177,790 |
| | $ | — |
| | $ | 403,644 |
| Accrued liabilities | 145,962 |
| | 57,375 |
| | 68,666 |
| | (31 | ) | | 271,972 |
| Notes payable | — |
| | — |
| | 26,216 |
| | — |
| | 26,216 |
| Accounts Receivable Securitization Facility | — |
| | — |
| | 173,836 |
| | — |
| | 173,836 |
| Total current liabilities | 363,607 |
| | 65,584 |
| | 446,508 |
| | (31 | ) | | 875,668 |
| Long-term debt | 1,317,500 |
| | — |
| | — |
| | — |
| | 1,317,500 |
| Pension and postretirement benefits | 433,490 |
| | — |
| | 12,777 |
| | — |
| | 446,267 |
| Payables to related entities | 4,835,465 |
| | 2,582,287 |
| | 1,281,957 |
| | (8,699,709 | ) | | — |
| Other noncurrent liabilities | 81,379 |
| | 10,977 |
| | 13,043 |
| | — |
| | 105,399 |
| Total liabilities | 7,031,441 |
| | 2,658,848 |
| | 1,754,285 |
| | (8,699,740 | ) | | 2,744,834 |
| Stockholders’ equity | 886,866 |
| | 2,386,888 |
| | 1,514,078 |
| | (3,900,966 | ) | | 886,866 |
| Total liabilities and stockholders’ equity | $ | 7,918,307 |
| | $ | 5,045,736 |
| | $ | 3,268,363 |
| | $ | (12,600,706 | ) | | $ | 3,631,700 |
|
| | | | | | | | | | | | | | | | | | | | | | Condensed Consolidating Statement of Cash Flows Nine Months Ended September 28, 2013 | | Parent Company | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Consolidating Entries and Eliminations | | Consolidated | Net cash provided by operating activities | $ | 423,624 |
| | $ | 177,525 |
| | $ | 169,730 |
| | $ | (513,894 | ) | | $ | 256,985 |
| Investing activities: | | | | | | | | | | Capital expenditures | (13,106 | ) | | (3,601 | ) | | (14,014 | ) | | — |
| | (30,721 | ) | Proceeds from sales of assets | 3,402 |
| | 26 |
| | 2,468 |
| | — |
| | 5,896 |
| Net cash used in investing activities | (9,704 | ) | | (3,575 | ) | | (11,546 | ) | | — |
| | (24,825 | ) | Financing activities: | | | | | | | | | | Borrowings on notes payable | — |
| | — |
| | 68,333 |
| | — |
| | 68,333 |
| Repayments on notes payable | — |
| | — |
| | (89,168 | ) | | — |
| | (89,168 | ) | Borrowings on Accounts Receivable Securitization Facility | — |
| | — |
| | 100,731 |
| | — |
| | 100,731 |
| Repayments on Accounts Receivable Securitization Facility | — |
| | — |
| | (107,953 | ) | | — |
| | (107,953 | ) | Borrowings on Revolving Loan Facility | 2,629,000 |
| | — |
| | — |
| | — |
| | 2,629,000 |
| Repayments on Revolving Loan Facility | (2,696,500 | ) | | — |
| | — |
| | — |
| | (2,696,500 | ) | Cash dividends paid | (39,615 | ) | | — |
| | — |
| | — |
| | (39,615 | ) | Proceeds from stock options exercised | 5,279 |
| | — |
| | — |
| | — |
| | 5,279 |
| Taxes paid related to net shares settlement of equity awards | (24,832 | ) | | — |
| | — |
| | — |
| | (24,832 | ) | Excess tax benefit from stock-based compensation | 18,220 |
| | — |
| | — |
| | — |
| | 18,220 |
| Other | (4,602 | ) | | — |
| | (309 | ) | | (3 | ) | | (4,914 | ) | Net transactions with related entities | (292,431 | ) | | (173,187 | ) | | (48,279 | ) | | 513,897 |
| | — |
| Net cash used in financing activities | (405,481 | ) | | (173,187 | ) | | (76,645 | ) | | 513,894 |
| | (141,419 | ) | Effect of changes in foreign exchange rates on cash | — |
| | — |
| | (1,217 | ) | | — |
| | (1,217 | ) | Increase in cash and cash equivalents | 8,439 |
| | 763 |
| | 80,322 |
| | — |
| | 89,524 |
| Cash and cash equivalents at beginning of year | 5,617 |
| | 1,919 |
| | 35,260 |
| | — |
| | 42,796 |
| Cash and cash equivalents at end of period | $ | 14,056 |
| | $ | 2,682 |
| | $ | 115,582 |
| | $ | — |
| | $ | 132,320 |
|
| | | | | | | | | | | | | | | | | | | | | | Condensed Consolidating Statement of Cash Flows Nine Months Ended September 29, 2012 | | Parent Company | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Consolidating Entries and Eliminations | | Consolidated | Net cash provided by operating activities | $ | 531,201 |
| | $ | 116,698 |
| | $ | 53,477 |
| | $ | (391,971 | ) | | $ | 309,405 |
| Investing activities: | | | | | | | | | | Capital expenditures | (6,177 | ) | | (5,163 | ) | | (18,135 | ) | | — |
| | (29,475 | ) | Proceeds from sales of assets | 70 |
| | 16 |
| | 227 |
| | — |
| | 313 |
| Disposition of business | — |
| | — |
| | 12,708 |
| | — |
| | 12,708 |
| Net cash used in investing activities | (6,107 | ) | | (5,147 | ) | | (5,200 | ) | | — |
| | (16,454 | ) | Financing activities: | | | | | | | | | | Borrowings on notes payable | — |
| | — |
| | 43,251 |
| | — |
| | 43,251 |
| Repayments on notes payable | — |
| | — |
| | (55,645 | ) | | — |
| | (55,645 | ) | Borrowings on Accounts Receivable Securitization Facility | — |
| | — |
| | 156,817 |
| | — |
| | 156,817 |
| Repayments on Accounts Receivable Securitization Facility | — |
| | — |
| | (129,775 | ) | | — |
| | (129,775 | ) | Borrowings on Revolving Loan Facility | 2,177,000 |
| | — |
| | — |
| | — |
| | 2,177,000 |
| Repayments on Revolving Loan Facility | (2,191,500 | ) | | — |
| | — |
| | — |
| | (2,191,500 | ) | Redemption of Floating Rate Senior Notes | (148,092 | ) | | — |
| | — |
| | — |
| | (148,092 | ) | Proceeds from stock options exercised | 4,103 |
| | — |
| | — |
| | — |
| | 4,103 |
| Excess tax benefit from stock-based compensation | 491 |
| | — |
| | — |
| | — |
| | 491 |
| Other | (2,542 | ) | | — |
| | (297 | ) | | — |
| | (2,839 | ) | Dividends paid to related entities | — |
| | (4,623 | ) | | (4,867 | ) | | 9,490 |
| | — |
| Net transactions with related entities | (280,859 | ) | | (106,625 | ) | | 5,003 |
| | 382,481 |
| | — |
| Net cash provided by (used in) financing activities | (441,399 | ) | | (111,248 | ) | | 14,487 |
| | 391,971 |
| | (146,189 | ) | Effect of changes in foreign exchange rates on cash | 1 |
| | — |
| | 161 |
| | — |
| | 162 |
| Increase in cash and cash equivalents | 83,696 |
| | 303 |
| | 62,925 |
| | — |
| | 146,924 |
| Cash and cash equivalents at beginning of year | 8,330 |
| | 2,726 |
| | 24,289 |
| | — |
| | 35,345 |
| Cash and cash equivalents at end of period | $ | 92,026 |
| | $ | 3,029 |
| | $ | 87,214 |
| | $ | — |
| | $ | 182,269 |
|
|