Hanesbrands Inc. (Exact Name of Registrant As Specified in Its Charter)
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Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 29, 2007 or o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-32891 Hanesbrands Inc. (Exact name of registrant as specified in its charter) Maryland 20-3552316 (State of incorporation) (I.R.S. employer identification no.) 1000 East Hanes Mill Road 27105 Winston-Salem, North Carolina (Zip code) (Address of principal executive office) (336) 519-4400 (Registrant’s telephone number including area code) Securities registered pursuant to Section 12(b) of the Act: Common Stock, par value $0.01 per share and related Preferred Stock Purchase Rights Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No o Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes o No Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference into Part III of this Form 10-K or any amendment to this Form 10-K. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer o Non-accelerated filer o Smaller reporting company o (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No As of June 29, 2007, the aggregate market value of the registrant’s common stock held by non-affiliates was approximately $2,181,556,448 (based on the closing price of the common stock of $27.03 per share on that date, as reported on the New York Stock Exchange and, for purposes of this computation only, the assumption that all of the registrant’s directors and executive officers are affiliates). As of February 1, 2008, there were 95,232,478 shares of the registrant’s common stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Part III of this Form 10-K incorporates by reference to portions of the registrant’s proxy statement for its 2008 annual meeting of stockholders. TABLE OF CONTENTS Page Forward-Looking Statements 2 Where You Can Find More Information 3 PART 1 Item 1 Business 4 Item 1A Risk Factors 16 Item 1B Unresolved Staff Comments 27 Item 1C Executive Officers of the Registrant 27 Item 2 Properties 29 Item 3 Legal Proceedings 30 Item 4 Submission of Matters to a Vote of Security Holders 30 PART II Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 30 Item 6 Selected Financial Data 33 Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations 34 Item 7A Quantitative and Qualitative Disclosures about Market Risk 78 Item 8 Financial Statements and Supplementary Data 78 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 78 Item 9A Controls and Procedures 79 Item 9B Other Information 79 PART III Item 10 Directors, Executive Officers and Corporate Governance 79 Item 11 Executive Compensation 79 Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 79 Item 13 Certain Relationships and Related Transactions, and Director Independence 79 Item 14 Principal Accounting Fees and Services 80 PART IV Item 15 Exhibits and Financial Statement Schedules 80 Signatures 81 Index to Exhibits 83 Financial Statements F-1 Exhibit 10.4 Exhibit 10.22 Exhibit 10.34 Exhibit 12.1 Exhibit 21.1 Exhibit 23.1 Exhibit 31.1 Exhibit 31.2 Exhibit 32.1 Exhibit 32.2 Trademarks, Trade Names and Service Marks We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this Annual Report on Form 10-K include the Hanes, Champion, Playtex, Bali, Just My Size, barely there, Wonderbra, C9 by Champion, L’eggs, Outer Banks, Duofold and Stedman marks, which may be registered in the United States and other jurisdictions. We do not own any trademark, trade name or service mark of any other company appearing in this Annual Report on Form 10-K. Table of Contents FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can generally be identified by the use of words such as “may,” “believe,” “will,” “expect,” “project,” “estimate,” “intend,” “anticipate,” “plan,” “continue” or similar expressions. In particular, information appearing under “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” includes forward- looking statements. Forward-looking statements inherently involve many risks and uncertainties that could cause actual results to differ materially from those projected in these statements. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is based on the current plans and expectations of our management and expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. The following include some but not all of the factors that could cause actual results or events to differ materially from those anticipated: • our ability to migrate our production and manufacturing operations to lower-cost locations around the world; • risks associated with our foreign operations or foreign supply sources, such as disruption of markets, changes in import and export laws, currency restrictions and currency exchange rate fluctuations; • the impact of economic and business conditions and industry trends in the countries in which we operate our supply chain; • the highly competitive and evolving nature of the industry in which we compete; • our ability to effectively manage our inventory and reduce inventory reserves; • our ability to keep pace with changing consumer preferences; • loss of or reduction in sales to any of our top customers, especially Wal-Mart; • financial difficulties experienced by any of our top customers; • failure by us to protect against dramatic changes in the volatile market price of cotton, the primary material used in the manufacture of our products; • the impact of increases in prices of other materials used in our products, such as dyes and chemicals, and increases in other costs, such as fuel, energy and utility costs; • costs and adverse publicity arising from violations of labor or environmental laws by us or any of our third-party manufacturers; • our ability to attract and retain key personnel; • our debt and debt service requirements that restrict our operating and financial flexibility, and impose interest and financing costs; • the risk of inflation or deflation; • consumer disposable income and spending levels, including the availability and amount of individual consumer debt; • retailer consolidation and other changes in the apparel essentials industry; • future financial performance, including availability, terms and deployment of capital; • new litigation or developments in existing litigation; • our ability to comply with environmental and occupational health and safety laws and regulations; • general economic conditions; and • possible terrorists attacks and ongoing military action in the Middle East and other parts of the world. 2 Table of Contents There may be other factors that may cause our actual results to differ materially from the forward-looking statements. Our actual results, performance or achievements could differ materially from those expressed in, or implied by, the forward-looking statements. We can give no assurances that any of the events anticipated by the forward-looking statements will occur or, if any of them does, what impact they will have on our results of operations and financial condition. You should carefully read the factors described in the “Risk Factors” section of this Annual Report on Form 10-K for a description of certain risks that could, among other things, cause our actual results to differ from these forward-looking statements. All forward-looking statements speak only as of the date of this Annual Report on Form 10-K and are expressly qualified in their entirety by the cautionary statements included in this Annual Report on Form 10-K. We undertake no obligation to update or revise forward-looking statements that may be made to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events, other than as required by law.