UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class |
Trading |
Name of each exchange on which registered | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.01 | Completion of Acquisition or Disposition of Assets. |
As previously announced, on June 4, 2024, Hanesbrands Inc. (the “Company”) entered into a Stock and Asset Purchase Agreement (the “Purchase Agreement”) with ABG-Champion LLC (f/k/a ABG-Sparrow IPCo LLC), a Delaware limited liability company (“Authentic”), and, solely for purposes of Section 11.17 of the Purchase Agreement, Authentic Brands Group LLC, a Delaware limited liability company, pursuant to which the Company agreed to sell the intellectual property and certain operating assets of the Company’s global Champion business (the “Business”) to Authentic (the “Transaction”). On September 30, 2024, the Company completed the previously announced sale of the Business to Authentic.
The Company will continue to provide certain transition services to Authentic and will continue to operate the Business in certain sectors and geographies through a transition period ending on January 31, 2025 (the “Deferred Business”). At the end of the transition period, Authentic or one or more of its designees will purchase from the Company certain remaining assets of the Deferred Business. As previously disclosed, the Transaction excluded the operating assets of the Business in Japan and the Company will continue to operate the Business in Japan as a licensee of Authentic.
The material terms of the Purchase Agreement, including the consideration to be received by the Company at the completion of the Transaction, were previously reported in Item 1.01 of the Current Report on Form 8-K filed on June 6, 2024, with the U.S. Securities and Exchange Commission, all of which are incorporated herein by reference.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
As previously disclosed, Vanessa LeFebvre, the Company’s President, Activewear – Global, ceased employment with the Company upon the closing of the Transaction.
| Item 7.01 | Regulation FD Disclosure. |
On September 30, 2024, the Company issued a press release with respect to the closing of the Transaction, a copy of which is attached hereto and furnished as Exhibit 99.1.
| Item 9.01 | Financial Statements and Exhibits. |
(b) Pro Forma Financial Information.
The unaudited pro forma condensed financial information of the Company giving effect to the Transaction is filed as Exhibit 99.2 hereto and is incorporated herein by reference.
(d) Exhibits
| Exhibit No. |
Description | |
| 10.1 | Stock and Asset Purchase Agreement, dated as of June 4, 2024, by and among Hanesbrands Inc., ABG-Sparrow IPCo LLC, and, solely for purposes of Section 11.17, Authentic Brands Group LLC (incorporated by reference to Exhibit 10.1 to Hanesbrands Inc.’s Current Report on Form 8-K filed June 4, 2024 (File No. 001-32891) filed June 6, 2024).* | |
| 99.1 | Press Release dated September 30, 2024. | |
| 99.2 | Unaudited Pro Forma Consolidated Financial Information. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |
| * | Certain schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally to the U.S. Securities and Exchange Commission a copy of any omitted schedule or exhibit upon request. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| HANESBRANDS INC. | ||||||
| Date: September 30, 2024 | By: | /s/ Kristin L. Oliver | ||||
| Name: | Kristin L. Oliver | |||||
| Title: | EVP, Chief Human Resources Officer & Interim Chief Legal Officer | |||||
Exhibit 99.1
news release
FOR IMMEDIATE RELEASE
HanesBrands Completes Sale of Global Champion Business to Authentic
Brands Group
WINSTON-SALEM, N.C. - September 30, 2024 - HanesBrands Inc. (NYSE: HBI), a global leader in iconic apparel brands, today announced that it has completed the sale of the intellectual property and certain operating assets of the Company’s global Champion business to Authentic Brands Group (“Authentic”).
“Today marks a major milestone on our journey to strengthen and simplify our business and is the culmination of a significant team effort to position HanesBrands on the optimal path for the future,” said Steve Bratspies, CEO. “With the successful completion of this transaction, combined with our internal cash generation, we expect to pay down approximately $1 billion of debt in the second half of 2024. Looking ahead, we believe we are well-positioned to generate strong shareholder returns over the next several years through topline growth, margin expansion, double-digit earnings per share growth, and further deleveraging of our balance sheet.”
Mr. Bratspies concluded, “I’d like to express my gratitude to the global Champion team for their contributions. We wish them well as the Champion brand writes the next chapter of its storied journey.”
The Company is providing additional details on a Form 8-K that has been filed with the U.S. Securities and Exchange Commission and is available on the Company’s investor relations website.
Advisors
Goldman Sachs & Co. LLC and Evercore are serving as financial advisors to HanesBrands, and Kirkland & Ellis LLP and Jones Day are serving as its legal advisors.
Cautionary Statement Concerning Forward-Looking Statements
This news release contains certain information that may constitute forward-looking statements, as defined under U.S. federal securities laws. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can generally be identified by the use of words such as “may,” “believe,” “could,” “will,” “expect,” “outlook,” “potential,” “project,” “estimate,” “future,” “intend,” “anticipate,” “plan,” “continue” or similar expressions, including statements herein regarding the expected benefits and financial impact of the sale of the global Champion business, including the use of proceeds therefrom for debt reduction. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements with respect to our intent, belief and current expectations about our
strategic direction, prospects and future results are forward-looking statements and are subject to risks and uncertainties that could cause actual results to differ materially from those implied or expressed by such statements. These risks and uncertainties include, but are not limited to, such things as, our ability to execute, and realize benefits, successfully, or at all, from the completed sale of the global Champion business; our ability to successfully implement our strategic plans, including our supply chain restructuring and consolidation and other cost savings initiatives; trends associated with our business; the rapidly changing retail environment and the level of consumer demand; the effects of any geopolitical conflicts (including the ongoing Russia-Ukraine conflict and Middle East conflicts) or public health emergencies or severe global health crises, including effects on consumer spending, global supply chains, critical supply routes and the financial markets; our ability to deleverage on the anticipated time frame or at all, which could negatively impact our ability to satisfy the financial covenants in our Credit Agreement or other contractual arrangements; any inadequacy, interruption, integration failure or security failure with respect to our information technology; future intangible assets or goodwill impairment due to changes in our business, market conditions, or other factors, including significant fluctuations in foreign exchange rates; legal, regulatory, political and economic risks related to our international operations; our ability to effectively manage our complex international tax structure; our future financial performance; and other risks identified from time to time in our most recent Securities and Exchange Commission reports, including our annual report on Form 10-K and quarterly reports on Form 10-Q. Since it is not possible to predict or identify all of the risks, uncertainties and other factors that may affect future results, the above list should not be considered a complete list. Any forward-looking statement speaks only as of the date on which such statement is made, and HanesBrands undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, other than as required by law.
About HanesBrands
HanesBrands (NYSE: HBI) is a global leader in manufacturing basics and Innerwear brands that are synonymous with comfort, quality, and value, and have been trusted by consumers around the world for generations. Among the company’s iconic brands are Hanes, the leading basic apparel brand in the U.S.; Bonds, an Australian staple since 1915 that is setting new standards for design and innovation; Maidenform, America’s number one shapewear brand; and Bali, Americas number one national bra brand in the U.S. HanesBrands owns the majority of its worldwide manufacturing facilities and has built a strong reputation for workplace quality and ethical business practices. The company, a longtime leader in sustainability, has set 2030 goals to improve the lives of people, protect the planet and produce sustainable products.
Contacts
News Media, contact: Nicole Ducouer, nicole.ducouer@hanes.com
Analysts and Investors, contact: T.C. Robillard, tc.robillard@hanes.com
Exhibit 99.2
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
Introduction
On June 4, 2024, Hanesbrands Inc. (the “Company”) entered into a purchase and sale agreement (the “Purchase Agreement”) with ABG-Champion LLC (f/k/a ABG-Sparrow IPCo LLC), a Delaware limited liability company (“Authentic”), and, solely for purposes of Section 11.17 of the Purchase Agreement, Authentic Brands Group LLC, a Delaware limited liability company, pursuant to which the Company agreed to sell the intellectual property and certain operating assets of the Company’s global Champion business (the “Business”) to Authentic. On September 30, 2024, the Company completed the previously announced sale of the Business to Authentic (such completion, the “Initial Closing”). The Company will continue to provide certain transition services to Authentic pursuant to the terms of a Transition Services Agreement entered into between the Company, Authentic and the applicable service recipients (the “Transition Services Agreement”) and will continue to operate the Business in certain sectors and geographies through a transition period ending on January 31, 2025 (the “Deferred Business”). At the end of the transition period, Authentic will purchase from the Company certain remaining assets of the Deferred Business (the closing of such transaction, the “Deferred Closing”). The global Champion business sale transaction excluded the operating assets of the Business in Japan and the Company will continue to operate the Business in Japan as a licensee of Authentic. On July 27, 2024, the Company entered into a purchase agreement with Restore Capital (HCR Stores), LLC, pursuant to which the Company sold its U.S.-based outlet store business.
The following unaudited pro forma condensed consolidated balance sheet as of June 29, 2024, presents the Company’s consolidated financial position giving pro forma effect to the sale of both the global Champion business and the U.S.-based outlet store business (the “Transactions”) as if each had occurred on June 29, 2024. The unaudited pro forma condensed consolidated statement of operations for the six months ended June 29, 2024, and consolidated statements of operations for the years ended December 30, 2023, December 31, 2022 and January 1, 2022 present the Company’s consolidated results of operations giving pro forma effect to reflect the presentation of the global Champion business and the U.S.-based outlet store business as discontinued operations in accordance with Accounting Standards Codification 205-20, Discontinued Operations (“ASC 205”). In addition, the unaudited pro forma condensed consolidated statement of operations for the six months ended June 29, 2024 and consolidated statement of operations for the year ended December 30, 2023 reflect certain adjustments that are incremental to those related to the application of ASC 205, which adjustments are described herein, as if they had occurred on January 1, 2023.
The unaudited pro forma consolidated financial statements presented below have been derived from the Company’s historical consolidated financial statements. While the historical consolidated financial statements reflect the past financial results of the Company, the pro forma consolidated financial statements are included for informational purposes only and are intended to illustrate how the Transactions might have affected the historical consolidated financial statements had each been completed at an earlier time as indicated herein. The Transactions combined constituted a significant disposition for purposes of Item 2.01 of Form 8-K and these unaudited pro forma consolidated financial statements have been prepared in accordance with Article 11 of Regulation S-X, Pro Forma Financial Information and ASC 205, and include adjustments to the extent that they are directly attributable to the Transactions.
These pro forma adjustments are based on currently available information, estimates and assumptions that the Company believes are reasonable in order to reflect, on a pro forma basis, the impact of the Transactions on the Company’s historical consolidated financial statements, and are not necessarily indicative of the Company’s future financial position and future results of operations and do not reflect all actions that may be taken by the Company following the closing of the Transactions. The actual financial position and results of operations of the Company may differ significantly from the pro forma amounts reflected herein due to a variety of factors.
The unaudited pro forma consolidated financial statements do not reflect the realization of any expected cost savings, synergies or dis-synergies as a result of the Transactions. The Company considered the impact of the Transition Services Agreement and determined that no further pro forma adjustments were necessary as the Company does not believe presenting such adjustments would enhance an understanding of the pro forma effects of the Transactions because such agreement is not expected to have a material impact on the unaudited pro forma condensed consolidated balance sheet as of June 29, 2024, the unaudited pro forma condensed consolidated statement of operations for the six months ended June 29, 2024, or the unaudited pro forma consolidated statement of operations for the year ended December 30, 2023.
These unaudited pro forma consolidated financial statements should be read in connection with:
| • | the Company’s unaudited interim historical condensed consolidated financial statements, the accompanying notes thereto, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Quarterly Report on Form 10-Q for the quarter and six months ended June 29, 2024; and |
| • | the Company’s historical audited consolidated financial statements, the accompanying notes thereto, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K for the year ended December 30, 2023. |
About HanesBrands
HanesBrands (NYSE: HBI) is a global leader in manufacturing basics and Innerwear brands that are synonymous with comfort, quality, and value, and have been trusted by consumers around the world for generations. Among the company’s iconic brands are Hanes, the leading basic apparel brand in the U.S.; Bonds, an Australian staple since 1915 that is setting new standards for design and innovation; Maidenform, America’s number one shapewear brand; and Bali, Americas number one national bra brand in the U.S. Hanesbrands owns the majority of its worldwide manufacturing facilities and has built a strong reputation for workplace quality and ethical business practices. The company, a longtime leader in sustainability, has set 2030 goals to improve the lives of people, protect the planet and produce sustainable products.
2
HANESBRANDS INC.
Pro Forma Condensed Consolidated Balance Sheet
(in thousands)
(unaudited)
| Transaction Accounting Adjustments | Transaction Accounting Adjustments |
|||||||||||||||||||||||||||
| As Reported June 29, 2024(1) |
Disposition of Global Champion Business - Initial Closing(2) |
Disposition of Global Champion Business - Deferred Closing(2) |
Other Disposition Adjustments - Global Champion Business(5) |
Pro Forma Disposition of Global Champion Business |
Disposition of U.S.- Based Outlet Store Business(6) |
Pro Forma June 29, 2024 |
||||||||||||||||||||||
| Assets |
||||||||||||||||||||||||||||
| Cash and cash equivalents |
$ | 213,767 | $ | 818,553 | $ | 146,747 | $ | (917,328 | ) | $ | 261,719 | $ | (5,676 | ) | $ | 256,043 | ||||||||||||
| Trade accounts receivable, net |
483,951 | — | — | — | 483,951 | — | 483,951 | |||||||||||||||||||||
| Inventories |
937,980 | — | — | — | 937,980 | — | 937,980 | |||||||||||||||||||||
| Other current assets |
189,347 | — | — | — | 189,347 | — | 189,347 | |||||||||||||||||||||
| Current assets held for sale |
460,863 | (312,056 | ) | (148,807 | ) | — | — | — | — | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total current assets |
2,285,908 | 506,477 | (2,060 | ) | (917,328 | ) | 1,872,997 | (5,676 | ) | 1,867,321 | ||||||||||||||||||
| Property, net |
209,801 | — | — | — | 209,801 | — | 209,801 | |||||||||||||||||||||
| Right-of-use assets |
240,219 | — | — | — | 240,219 | — | 240,219 | |||||||||||||||||||||
| Trademarks and other identifiable intangibles, net |
936,294 | — | — | — | 936,294 | — | 936,294 | |||||||||||||||||||||
| Goodwill |
658,736 | — | — | — | 658,736 | — | 658,736 | |||||||||||||||||||||
| Deferred tax assets |
17,029 | — | — | — | 17,029 | — | 17,029 | |||||||||||||||||||||
| Other noncurrent assets |
126,385 | 96,246 | — | — | 222,631 | — | 222,631 | |||||||||||||||||||||
| Noncurrent assets held for sale |
905,472 | (849,208 | ) | (50,588 | ) | — | 5,676 | (5,676 | ) | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total assets |
$ | 5,379,844 | $ | (246,485 | ) | $ | (52,648 | ) | $ | (917,328 | ) | $ | 4,163,383 | $ | (11,352 | ) | $ | 4,152,031 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Liabilities |
||||||||||||||||||||||||||||
| Accounts payable |
$ | 704,114 | $ | — | $ | — | $ | — | $ | 704,114 | $ | — | $ | 704,114 | ||||||||||||||
| Accrued liabilities |
512,717 | 15,482 | (10,482 | ) | — | 517,717 | — | 517,717 | ||||||||||||||||||||
| Lease liabilities |
65,136 | — | — | — | 65,136 | — | 65,136 | |||||||||||||||||||||
| Current portion of long-term debt |
44,250 | — | — | — | 44,250 | — | 44,250 | |||||||||||||||||||||
| Current liabilities held for sale |
240,263 | (219,405 | ) | (13,867 | ) | — | 6,991 | (6,991 | ) | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total current liabilities |
1,566,480 | (203,923 | ) | (24,349 | ) | — | 1,338,208 | (6,991 | ) | 1,331,217 | ||||||||||||||||||
| Long-term debt |
3,224,155 | — | — | (906,929 | ) | 2,317,226 | — | 2,317,226 | ||||||||||||||||||||
| Lease liabilities - noncurrent |
217,483 | — | — | — | 217,483 | — | 217,483 | |||||||||||||||||||||
| Pension and postretirement benefits |
95,067 | — | — | — | 95,067 | — | 95,067 | |||||||||||||||||||||
| Other noncurrent liabilities |
93,705 | (2,027 | ) | — | — | 91,678 | — | 91,678 | ||||||||||||||||||||
| Noncurrent liabilities held for sale |
118,551 | (85,891 | ) | (28,299 | ) | — | 4,361 | (4,361 | ) | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total liabilities |
5,315,441 | (291,841 | ) | (52,648 | ) | (906,929 | ) | 4,064,023 | (11,352 | ) | 4,052,671 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Stockholders’ equity |
||||||||||||||||||||||||||||
| Preferred stock |
— | — | — | — | — | — | — | |||||||||||||||||||||
| Common stock |
3,516 | — | — | — | 3,516 | — | 3,516 | |||||||||||||||||||||
| Additional paid-in capital |
363,078 | — | — | — | 363,078 | — | 363,078 | |||||||||||||||||||||
| Retained earnings |
217,400 | 43,424 | (3) | — | (10,399 | ) | 250,425 | — | 250,425 | |||||||||||||||||||
| Accumulated other comprehensive loss |
(519,591 | ) | 1,932 | (4) | — | — | (517,659 | ) | — | (517,659 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total stockholders’ equity |
64,403 | 45,356 | — | (10,399 | ) | 99,360 | — | 99,360 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total liabilities and stockholders’ equity |
$ | 5,379,844 | $ | (246,485 | ) | $ | (52,648 | ) | $ | (917,328 | ) | $ | 4,163,383 | $ | (11,352 | ) | $ | 4,152,031 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
3
HANESBRANDS INC.
Pro Forma Condensed Consolidated Balance Sheet (continued)
(in thousands)
(unaudited)
Notes to the Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 29, 2024:
| (1) | Represents the Company’s unaudited condensed consolidated balance sheet in the Quarterly Report on Form 10-Q for the six months ended June 29, 2024. |
| (2) | Adjustments reflect the estimated aggregate cash proceeds of $965 million to be realized from the sale of the global Champion business at the Initial Closing and the Deferred Closing, as adjusted per the terms of the Purchase Agreement, net of transaction costs of $27 million (primarily financial advisor fees). Adjustments also reflect the recognition of the fair value of contingent consideration of $96 million and the elimination of the assets and liabilities attributable to the global Champion business that are directly attributable to the transaction and expected taxes due on the disposition of the global Champion business. A significant portion of the gain on the sale of the global Champion business relates to the U.S. which is primarily offset by attribute carryforwards for federal and state tax purposes. The utilization of these attributes is offset by a change in valuation allowance. The remaining taxes payable relates to certain state taxes and the sale of the Champion foreign operations. The Initial Closing of the sale of the global Champion business was completed on September 30, 2024. The Deferred Closing of the sale of the global Champion business is expected to close on January 31, 2025. The variable components of the purchase price (including working capital of the Business) and sale proceeds have been estimated utilizing balances as of June 29, 2024. The final gain recognized and cash proceeds received on the sale transaction will reflect final balances at the time of the Initial Closing and the Deferred Closing and may differ materially from the estimates used above, as a result of, among other things, changes in the amount of working capital of the Business at the Initial Closing and the Deferred Closing. |
| (3) | This adjustment reflects the estimated pro forma gain on disposal, which is calculated as the difference between the estimated aggregate net cash proceeds to be realized from the sale of the global Champion business at the Initial Closing and the Deferred Closing and the carrying value of the disposal group as of June 29, 2024 net of estimated income taxes. The actual gain on disposal, and the Company’s estimate of income taxes, will be based on the balance sheet information as of the Initial Closing and the Deferred Closing and the finalization of the Company’s current fiscal year tax provision, and may differ materially from the estimates used above. The pro forma gain on disposal has not been reflected in the unaudited pro forma condensed consolidated statements of operations as this amount pertains to discontinued operations and does not impact income from continuing operations. |
| (4) | This adjustment reflects the release of the June 29, 2024 unrealized foreign currency translation adjustment balances into earnings for disposed foreign entities. |
| (5) | Adjustments reflect the Company’s estimated required debt repayment of $917 million utilizing aggregate net proceeds from the sale of the global Champion business to be realized at the Initial Closing and the Deferred Closing, in accordance with requirements of the Company’s senior secured credit facility, as well as the write-off of debt issuance costs of $10 million as a result of the debt repayment. Estimated net sale proceeds utilized for the debt repayment include estimated proceeds of nearly $819 million for the Initial Closing and estimated proceeds of nearly $147 million for the Deferred Closing, less funds of approximately $48 million that will be retained by the Company to cover expenses incurred by the Company directly attributable to the completion of the sale of the global Champion business. The variable components of the purchase price (including working capital of the Business) and net sale proceeds have been estimated utilizing balances as of June 29, 2024. The final purchase price and net sale proceeds received on the sale transaction will reflect final balances at the time of Initial Closing and Deferred Closing and may differ materially from the estimates used above as a result of, among other things, changes in the working capital of the Business at the Initial Closing and Deferred Closing. |
| (6) | Adjustments reflect the final settlement at the U.S.-based outlet store business transaction closing and elimination of the assets and liabilities attributable to the U.S.-based outlet store business. |
4
HANESBRANDS INC.
Pro Forma Condensed Consolidated Statement of Operations
(in thousands, except per share data)
(unaudited)
| Transaction Accounting Adjustments |
Transaction Accounting Adjustments |
|||||||||||||||||||||||
| As Reported Six Months Ended June 29, 2024(1) |
Global Champion Business Discontinued Operations(2) |
Other Disposition Adjustments - Global Champion Business |
Pro Forma Disposition of Global Champion Business |
U.S.-Based Outlet Store Business Discontinued Operations(2) |
Pro Forma Six Months Ended June 29, 2024 |
|||||||||||||||||||
| Net sales |
$ | 1,773,606 | $ | — | $ | — | $ | 1,773,606 | $ | — | $ | 1,773,606 | ||||||||||||
| Cost of sales |
1,157,218 | — | 4,582 | (3) | 1,161,800 | — | 1,161,800 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Gross profit |
616,388 | — | (4,582 | ) | 611,806 | — | 611,806 | |||||||||||||||||
| Selling, general and administrative expenses |
640,409 | — | — | 640,409 | — | 640,409 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Operating loss |
(24,021 | ) | — | (4,582 | ) | (28,603 | ) | — | (28,603 | ) | ||||||||||||||
| Other expenses |
20,014 | — | — | 20,014 | — | 20,014 | ||||||||||||||||||
| Interest expense, net |
100,905 | — | — | 100,905 | — | 100,905 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Loss from continuing operations before income taxes |
(144,940 | ) | — | (4,582 | ) | (149,522 | ) | — | (149,522 | ) | ||||||||||||||
| Income tax expense |
22,215 | — | — | 22,215 | — | 22,215 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Loss from continuing operations |
$ | (167,155 | ) | $ | — | $ | (4,582 | ) | $ | (171,737 | ) | $ | — | $ | (171,737 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Loss from continuing operations per share: |
||||||||||||||||||||||||
| Basic |
$ | (0.48 | ) | $ | (0.49 | ) | $ | (0.49 | ) | |||||||||||||||
| Diluted |
$ | (0.48 | ) | $ | (0.49 | ) | $ | (0.49 | ) | |||||||||||||||
| Weighted average shares outstanding: |
||||||||||||||||||||||||
| Basic |
351,783 | 351,783 | 351,783 | |||||||||||||||||||||
| Diluted |
351,783 | 351,783 | 351,783 | |||||||||||||||||||||
Notes to the Unaudited Pro Forma Condensed Consolidated Statement of Operations for the six months ended June 29, 2024:
| (1) | Represents the Company’s unaudited condensed consolidated statement of operations in the Quarterly Report on Form 10-Q for the six months ended June 29, 2024. |
| (2) | Adjustments reflecting the disposition of the global Champion business and the U.S.-based outlet store business were not necessary for the six months ended June 29, 2024 because the combined businesses were presented as discontinued operations in the historical financial statements for that period, including the allocation of interest expense to discontinued operations related to the required debt pay down utilizing the net proceeds from the sale of the global Champion business in accordance with the requirements of the Company’s senior secured credit facility. |
| (3) | Adjustment represents royalty expense resulting from the license agreement with Authentic for the Japan Champion business effective at the Initial Closing of the sale of the global Champion business. |
5
HANESBRANDS INC.
Pro Forma Consolidated Statement of Operations
(in thousands, except per share data)
(unaudited)
| Transaction Accounting Adjustments |
Transaction Accounting Adjustments |
|||||||||||||||||||||||
| As Reported Year Ended December 30, 2023(1) |
Global Champion Business Discontinued Operations(2) |
Other Disposition Adjustments - Global Champion Business |
Pro Forma Disposition of Global Champion Business |
U.S.-Based Outlet Store Business Discontinued Operations(2) |
Pro Forma Year Ended December 30, 2023 |
|||||||||||||||||||
| Net sales |
$ | 5,636,523 | $ | (1,750,352 | ) | $ | — | $ | 3,886,171 | $ | (126,817 | ) | $ | 3,759,354 | ||||||||||
| Cost of sales |
3,740,113 | (1,275,279 | ) | 9,183 | (4) | 2,474,017 | (49,614 | ) | 2,424,403 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Gross profit |
1,896,410 | (475,073 | ) | (9,183 | ) | 1,412,154 | (77,203 | ) | 1,334,951 | |||||||||||||||
| Selling, general and administrative expenses |
1,607,628 | (455,506 | ) | — | 1,152,122 | (82,466 | ) | 1,069,656 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Operating profit |
288,782 | (19,567 | ) | (9,183 | ) | 260,032 | 5,263 | 265,295 | ||||||||||||||||
| Other expenses |
38,520 | (194 | ) | 10,399 | (5) | 48,725 | — | 48,725 | ||||||||||||||||
| Interest expense, net |
275,354 | (61,287 | )(3) | — | 214,067 | 226 | 214,293 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income (loss) from continuing operations before income taxes |
(25,092 | ) | 41,914 | (19,582 | ) | (2,760 | ) | 5,037 | 2,277 | |||||||||||||||
| Income tax benefit |
(7,366 | ) | (6,544 | ) | — | (13,910 | ) | — | (13,910 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income (loss) from continuing operations |
$ | (17,726 | ) | $ | 48,458 | $ | (19,582 | ) | $ | 11,150 | $ | 5,037 | $ | 16,187 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income (loss) from continuing operations per share: |
||||||||||||||||||||||||
| Basic |
$ | (0.05 | ) | $ | 0.03 | $ | 0.05 | |||||||||||||||||
| Diluted |
$ | (0.05 | ) | $ | 0.03 | $ | 0.05 | |||||||||||||||||
| Weighted average shares outstanding: |
||||||||||||||||||||||||
| Basic |
350,592 | 350,592 | 350,592 | |||||||||||||||||||||
| Diluted |
350,592 | 351,057 | 351,057 | |||||||||||||||||||||
Notes to the Unaudited Pro Forma Consolidated Statement of Operations for the year ended December 30, 2023:
| (1) | Represents the Company’s consolidated statement of operations in the Annual Report on Form 10-K for the year ended December 30, 2023. |
| (2) | Adjustments to reflect the results of the global Champion business and U.S.-based outlet store business as discontinued operations. |
| (3) | The Company allocated interest expense to discontinued operations resulting from the requirement to pay down a portion of the Company’s outstanding term debt under the Company’s senior secured credit facility with the estimated net sale proceeds from the sale of the global Champion business. |
| (4) | This adjustment represents the royalty expense resulting from the license agreement with Authentic Brands Group LLC for the Japan Champion business effective at the Initial Closing of the sale of the global Champion business. |
| (5) | This adjustment reflects the write-off of debt issuance costs resulting from the requirement to pay down a portion of the Company’s outstanding term debt under the Company’s senior secured credit facility with the estimated net sale proceeds from the sale of the global Champion business. |
6
HANESBRANDS INC.
Pro Forma Consolidated Statement of Operations
(in thousands, except per share data)
(unaudited)
| Transaction Accounting Adjustments |
Transaction Accounting Adjustments |
|||||||||||||||||||
| As Reported Year Ended December 31, 2022(1) |
Global Champion Business Discontinued Operations(2) |
Pro Forma Disposition of Global Champion Business |
U.S.-Based Outlet Store Business Discontinued Operations(2) |
Pro Forma Year Ended December 31, 2022 |
||||||||||||||||
| Net sales |
$ | 6,233,650 | $ | (2,098,179 | ) | $ | 4,135,471 | $ | (147,579 | ) | $ | 3,987,892 | ||||||||
| Cost of sales |
4,012,542 | (1,363,543 | ) | 2,648,999 | (62,402 | ) | 2,586,597 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Gross profit |
2,221,108 | (734,636 | ) | 1,486,472 | (85,177 | ) | 1,401,295 | |||||||||||||
| Selling, general and administrative expenses |
1,701,563 | (487,136 | ) | 1,214,427 | (88,547 | ) | 1,125,880 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Operating profit |
519,545 | (247,500 | ) | 272,045 | 3,370 | 275,415 | ||||||||||||||
| Other expenses |
9,734 | (496 | ) | 9,238 | — | 9,238 | ||||||||||||||
| Interest expense, net |
157,073 | (25,396 | )(3) | 131,677 | 53 | 131,730 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Income from continuing operations before income taxes |
352,738 | (221,608 | ) | 131,130 | 3,317 | 134,447 | ||||||||||||||
| Income tax expense |
483,907 | (36,125 | ) | 447,782 | — | 447,782 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Loss from continuing operations |
$ | (131,169 | ) | $ | (185,483 | ) | $ | (316,652 | ) | $ | 3,317 | $ | (313,335 | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Loss from continuing operations per share: |
||||||||||||||||||||
| Basic |
$ | (0.37 | ) | $ | (0.90 | ) | $ | (0.90 | ) | |||||||||||
| Diluted |
$ | (0.37 | ) | $ | (0.90 | ) | $ | (0.90 | ) | |||||||||||
| Weighted average shares outstanding: |
||||||||||||||||||||
| Basic |
349,970 | 349,970 | 349,970 | |||||||||||||||||
| Diluted |
349,970 | 349,970 | 349,970 | |||||||||||||||||
Notes to the Unaudited Pro Forma Consolidated Statement of Operations for the year ended December 31, 2022:
| (1) | Represents the Company’s consolidated statement of operations in the Annual Report on Form 10-K for the year ended December 31, 2022. |
| (2) | Adjustments to reflect the results of the global Champion business and U.S.-based outlet store business as discontinued operations. |
| (3) | The Company allocated interest expense to discontinued operations resulting from the requirement to pay down a portion of the Company’s outstanding term debt under the Company’s senior secured credit facility with the estimated net sale proceeds from the sale of the global Champion business. |
7
HANESBRANDS INC.
Pro Forma Consolidated Statement of Operations
(in thousands, except per share data)
(unaudited)
| Transaction Accounting Adjustments |
Transaction Accounting Adjustments |
|||||||||||||||||||
| As Reported Year Ended January 1, 2022(1) |
Global Champion Business Discontinued Operations(2) |
Pro Forma Disposition of Global Champion Business |
U.S.-Based Outlet Store Business Discontinued Operations(2) |
Pro Forma Year Ended January 1, 2022 |
||||||||||||||||
| Net sales |
$ | 6,801,240 | $ | (2,323,816 | ) | $ | 4,477,424 | $ | (180,505 | ) | $ | 4,296,919 | ||||||||
| Cost of sales |
4,149,541 | (1,417,222 | ) | 2,732,319 | (71,822 | ) | 2,660,497 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Gross profit |
2,651,699 | (906,594 | ) | 1,745,105 | (108,683 | ) | 1,636,422 | |||||||||||||
| Selling, general and administrative expenses |
1,853,971 | (505,023 | ) | 1,348,948 | (95,837 | ) | 1,253,111 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Operating profit |
797,728 | (401,571 | ) | 396,157 | (12,846 | ) | 383,311 | |||||||||||||
| Other expenses |
53,586 | (129 | ) | 53,457 | — | 53,457 | ||||||||||||||
| Interest expense, net |
163,067 | (12,357 | )(3) | 150,710 | 8 | 150,718 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Income from continuing operations before income taxes |
581,075 | (389,085 | ) | 191,990 | (12,854 | ) | 179,136 | |||||||||||||
| Income tax expense (benefit) |
60,107 | (73,759 | ) | (13,652 | ) | (3,213 | ) | (16,865 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Income from continuing operations |
$ | 520,968 | $ | (315,326 | ) | $ | 205,642 | $ | (9,641 | ) | $ | 196,001 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Income from continuing operations per share: |
||||||||||||||||||||
| Basic |
$ | 1.48 | $ | 0.59 | $ | 0.56 | ||||||||||||||
| Diluted |
$ | 1.48 | $ | 0.58 | $ | 0.56 | ||||||||||||||
| Weighted average shares outstanding: |
||||||||||||||||||||
| Basic |
351,028 | 351,028 | 351,028 | |||||||||||||||||
| Diluted |
352,078 | 352,078 | 352,078 | |||||||||||||||||
Notes to the Unaudited Pro Forma Consolidated Statement of Operations for the year ended January 1, 2022:
| (1) | Represents the Company’s consolidated statement of operations in the Annual Report on Form 10-K for the year ended January 1, 2022. |
| (2) | Adjustments to reflect the results of the global Champion business and U.S.-based outlet store business as discontinued operations. |
| (3) | The Company allocated interest expense to discontinued operations resulting from the requirement to pay down a portion of the Company’s outstanding term debt under the Company’s senior secured credit facility with the estimated net sale proceeds from the sale of the global Champion business. |
8
Minimum 15 minutes delayed. Source: LSEG