Hanesbrands 2009 Annual Report

2009 annual report A Powerful Growth Platform a strong Hanesbrands has built a powerful three-plank growth portfolio of great brands platform designed to use big brands to increase sales around the world domestically and internationally, use a low-cost worldwide supply chain to expand margins, and ® use strong cash flow to support multiple strategies to create value. ®® ® ® caribbean cluster asian cluster ® central america cluster ® global growth driven by 7 major commercial geographies and 3 balanced production clusters ® big brands, big markets, big potential ® Investment in our brands, product development and marketing has generated brand equity that has never been greater for our company. For 2010, we earned the equivalent of 62 miles of additional shelf space from our retail customers in the United States, and our major international commercial businesses operate in the fast-growing Mexico, Canada, Japan, India, Brazil and China markets. manufacturing scale and power We have built a low-cost, high-scale supply chain spanning both the Western and Eastern hemispheres that creates a competitive advantage for our brands and products around the globe. We can favorably take advantage of trade rules in reaching 70 percent of the world’s gross domestic product. flexibility of strong cash flow ® Hanesbrands has established a long-term flexible capital structure that allows strong free cash flow to be used for debt reduction, small tactical acquisitions, or both. To Our Investors: hanesbrands is at an exciting inflection point. Our company has emerged from the recession of 2009 with significant momentum, and we are ready to bring to bear the full power of the new growth platform we have steadily built over the past three years. We have remade our company through focused investment, diligent change management, and a carefully crafted set of sell more, spend less and generate cash strategies. Our mission is simple: To be the largest apparel essentials company in the world by leveraging the three planks of our growth platform: using our big brands to drive sales growth domestically and internationally; using our low-cost global supply chain to drive margin improvement; and using our strong cash flow for further earnings growth. Growth Platform The first plank of our growth platform is the size and power of our brands. We have made significant investment in our consumer insights capability, innovative product development, and marketing. We have very large U.S. share positions, with the No. 1 share in all of our innerwear categories and strong positions in outerwear categories, but we have ample opportunities to further build share. Internationally, our commercial markets include Mexico, Canada, Japan, India, Brazil and China where a substantial amount of gross domestic product growth outside the United States will be concentrated over the next decade. The growth platform’s second plank is the unique, low-cost global supply chain that we have built. No other company in the world has a supply chain as geographically balanced and as low cost across the entire apparel essentials category. The scale and position of our supply chain is designed for the global market, not just the United States. Our supply chain has generated significant cost savings, margin expansion and contributions to cash flow and will continue to do so as we further optimize our size, scale and production capability. Our third growth plank is our ability to consistently generate strong cash flow. Over the past four years, we used $1.3 billion to invest in our business and significantly delever our balance sheet. We have the potential to increase cash flow, and we have a new flexible long-term capital structure that allows us to use cash in executing multiple strategies for earnings growth, including debt reduction and selective tactical acquisitions. Long-Term Goals This is a very exciting time for Hanesbrands. As we leverage our growth platform, our long-term growth targets are 2 percent to 4 percent for net sales and 10 percent to 20 percent for EPS. Because of the collective efforts in our company to reshape our business, manage change and confront the recession, we have a very bright future. We are now poised like never before to drive growth, build market share and change the profile of our company. Richard A. Noll, Chairman and Chief Executive Officer March 2, 2010 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K R ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 2, 2010 or £ 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) 519-8080 (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 Name of each exchange on which registered: New York Stock Exchange Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes R No £ 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£ No R 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 R No £ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes£ No £ 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. R 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 R Accelerated filer £ Non-accelerated filer £ Smaller reporting company £ (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£ No R As of July 2, 2009, the aggregate market value of the registrant’s common stock held by non-affiliates was approximately $1,387,889,493 (based on the closing price of the common stock of $14.72 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 and that beneficial holders of 5% or more of the outstanding common stock are not affiliates). As of February 1, 2010, there were 95,399,708 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 2010 annual meeting of stockholders. HANESBRANDS INC. 2009 annual report ON FORM 10-K TABLE OF CONTENTS Page Forward-Looking Statements . 2 Where You Can Find More Information . 2 PART 1 Item 1 Business ..................................................................................... 3 Item 1A Risk Factors . 12 Item 1B Unresolved Staff Comments . 22 Item 1C Executive Officers of the Registrant................................................................ 22 Item 2 Properties .................................................................................... 23 Item 3 Legal Proceedings.............................................................................. 24 Item 4 Submission of Matters to a Vote of Security Holders ................................................... 24 PART II Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities . 25 Item 6 Selected Financial Data.......................................................................... 26 Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations ...................... 27 Item 7A Quantitative and Qualitative Disclosures about Market Risk . 57 Item 8 Financial Statements and Supplementary Data . 58 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . 58 Item 9A Controls and Procedures . 58 Item 9B Other Information .............................................................................. 58 PART III Item 10 Directors, Executive Officers and Corporate Governance . 59 Item 11 Executive Compensation . 59 Item 12 Security

Load more