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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 13, 2006
Hanesbrands Inc.
(Exact name of registrant as specified in its charter)
| Maryland | 001-32891 | 20-3552316 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
| 1000 East Hanes Mill Road Winston-Salem, NC |
27105 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (336) 519-4400
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)) |
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Item 2.05 Costs Associated with Exit or Disposal Activities
Item 7.01 Regulation FD Disclosure
Item 9.01 Financial Statements and Exhibits
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Item 2.05 Costs Associated with Exit or Disposal Activities
On September 13, 2006, in furtherance of its efforts to migrate portions of its manufacturing operations to lower-cost locations, Hanesbrands Inc. (the “Company”) announced the closing of three facilities: a sewing facility located in Mexico (the “Sewing Facility”) with approximately 1,700 employees, a textile manufacturing facility located in North Carolina (the “Manufacturing Facility”) with approximately 260 employees, and a hosiery knitting facility located in South Carolina with approximately 145 employees (the “Knitting Facility” and, together with the Manufacturing Facility and the Sewing Facility, the “Facilities”). The closings of the Sewing Facility and the Manufacturing Facility are expected to be completed in the second quarter of fiscal 2007, and the closing of the Knitting Facility is expected to be completed in the third quarter of fiscal 2007. As a result of the decisions to close the Facilities, the Company expects to recognize restructuring and related charges totaling approximately $27 million before taxes in fiscal 2007, primarily in the first half of fiscal 2007 (which ends December 30, 2006). These charges include cash charges primarily related to severance and disassembly costs totaling approximately $10 million and non-cash charges totaling approximately $17 million related to accelerated depreciation on the Facilities (including machinery and equipment).
Item 7.01 Regulation FD Disclosure
On September 13, 2006, the Company issued a press release relating to the matters described in this Current Report on Form 8-K. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by this reference. The information contained in the press release filed as Exhibit 99.1 hereto is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, and it shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, except as expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits
| (c) | Exhibits | |||
| Exhibit 99.1 | Press release dated September 13, 2006 | |||
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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 thereunto duly authorized.
| September 13, 2006 | HANESBRANDS INC. | |||
| By: | /s/ E. Lee Wyatt Jr. | |||
| E. Lee Wyatt Jr. | ||||
| Executive Vice President, | ||||
| Chief Financial Officer | ||||
Exhibit 99.1
Hanesbrands Inc.
1000 East Hanes Mill Road
Winston-Salem, NC 27105
news release
FOR IMMEDIATE RELEASE
| News Media, contact: | Matt Hall, (336) 519-3386 | |
| Analysts and Investors, contact: | Brian Lantz, (336) 519-7130 |
HANESBRANDS INC. WILL INCREASE ITS SUPPLY CHAIN COST COMPETITIVENESS AND FLEXIBILITY WITH THE CLOSURE OF THREE MANUFACTURING FACILITIES
Company Expects to Take Charges of $27 million in Fiscal 2007 Related to Latest Milestone in Continuing Manufacturing Reconfiguration
Winston-Salem, N.C. (Sept. 13, 2006) — Hanesbrands Inc. (NYSE: HBI) announced today that it will strengthen the competitiveness and flexibility of its global supply chain operations by moving production from three plants in the United States and Mexico to lower-cost domestic, Caribbean basin and Central American manufacturing facilities.
The company will close plants in Monclova, Mexico, Lumberton, N.C., and Marion, S.C., that primarily make fleece sweatshirts and pants, outerwear T-shirts, sport shirts and sheer hosiery. The closings will result in a reduction of approximately 2,185 jobs at these locations.
The actions, a continuation of the company’s long-term supply chain globalization strategy, will result in multiple benefits, including moving production to lower-cost manufacturing facilities, improving the alignment of sewing operations with the flow of textiles, leveraging the company’s large scale in high-volume products, and consolidating hosiery production capacity.
“These steps will strengthen our global supply chain by taking advantage of opportunities to improve the competitiveness, effectiveness and value of our operations,” Hanesbrands CEO Richard A. Noll said. “A cost competitive and flexible global supply chain plays a crucial role in contributing to our strong cash flow, increased profitability and investment in our brands and innovation.”
Hanesbrands Inc. Will Increase its Supply Chain
Cost Competitiveness and Flexibility – Page 2
Hanesbrands expects to take restructuring and related charges for the three plant actions, including severance costs and accelerated depreciation of fixed assets, totaling approximately $27 million in the fiscal year, primarily in the fiscal first half that ends Dec. 30, 2006. Approximately $17 million of the charges will be non-cash.
“We are making significant improvements to the Hanesbrands supply chain in order to maximize execution, service levels, value creation, consistency and speed to market,” said Gerald Evans, Hanesbrands executive vice president and chief global supply chain officer. “We regret that employees at these locations will lose jobs, but we must design and continually update our network to take advantage of lower-cost, more-effective production opportunities in order to remain competitive and generate growth that allows our overall organization to thrive.”
The Monclova, Mexico, plant, which has approximately 1,700 employees, sews fleece sweatshirts and pants and outerwear T-shirts. Production will be moved to other company facilities in the Caribbean basin and Central America. Production, which will be phased out, is expected to cease by the end of December 2006. Also, about 80 positions at the Rosita, Mexico, fabric cutting operation that supplies the Monclova plant will be eliminated as a result of the production transfer.
Production at the company’s Lumberton, N.C., textile facility, which produces fabric for sport shirts and outerwear T-shirts, will cease by the end of November 2006. The plant has approximately 260 employees. Production will be shifted to Central America and the company’s Forest City, N.C., plant.
The Marion, S.C., plant, which has approximately 145 employees, will cease production of sheer hosiery by the end of February 2007. Production will be consolidated into the company’s Clarksville, Ark., hosiery production plant.
Hanesbrands Inc.
Hanesbrands Inc. is a leading marketer of innerwear, outerwear and hosiery apparel under strong consumer brands, including Hanes, Champion, Playtex, Bali, Just My Size, barely there and Wonderbra. The company designs, manufactures, sources and sells T-shirts, bras, panties, men’s underwear, children’s underwear, socks, hosiery, casual wear and active wear. Hanesbrands has approximately 50,000 employees in 24 countries. More information about Hanesbrands Inc. may be found on the internet at http://www.hanesbrands.com.
Hanesbrands Inc. Will Increase its Supply Chain
Cost Competitiveness and Flexibility – Page 3
Cautionary Statement Concerning Forward-Looking Statements
All statements contained in this press release, other than statements of historical fact, are forward-looking statements, including those regarding the benefits expected from facility closures. These statements speak only as of the date of this press release and are based on our current plans and expectations, and they involve risks and uncertainties that could cause actual future events or results to be different than those described in or implied by such forward-looking statements. These risks and uncertainties include those relating to our ability to migrate our production and manufacturing operations to lower-cost centers around the world; the highly competitive and evolving nature of the industry in which we compete; our ability to effectively manage our inventory and reduce inventory reserves; any loss of or reduction in sales to any of our top customers; risks associated with our foreign operations or foreign supply sources; the impact of economic and business conditions and industry trends in the countries in which we operate our supply chain; any failure by us to protect against dramatic changes in the volatile market price of cotton; our substantial debt and debt-service requirements that restrict our operating and financial flexibility and impose significant interest and financing costs; future financial performance, including availability, terms and deployment of capital; and the outcome of any pending or threatened litigation. Further information about these matters can be found in our Securities and Exchange Commission filings, including our Registration Statement on Form 10. We expressly disclaim any intent or obligation to update these forward-looking statements, other than as required by law.
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