Hanesbrands Inc. to Review Its Long-Term Growth Strategies

Hanesbrands is continuing to execute its core sell-more, spend-less and generate-cash strategies to manage through the economic recession and drive competitiveness.

Sell More Strategy. The company has major initiatives under way, including launching new programs, in core categories with its strongest and largest brands, including Hanes, Champion, Playtex and Bali. The company is using its brands to advance strategic partnerships with key retailers.
Spend Less Strategy. Hanesbrands is ahead of schedule in realigning its global supply chain in lower-cost countries, consolidating its organization and distribution network, and leveraging the collective size of its strategic purchasing organization.
Generate Cash. The company has consistent cash flow and is focused on reducing its debt leverage by using free cash flow to prepay debt over the next 12 to 24 months.

Capital Structure
Hanesbrands had $2.18 billion of long-term debt at the end of 2008. Since the time of its spinoff in September 2006, the company has paid down $423 million of long-term debt, including $139 million in 2008.
Hanesbrands ended the year with a covenant leverage ratio of 3.3 times debt to adjusted EBITDA, compared with the required limit of 3.75 times.
“We are in compliance with all debt covenants,” Hanesbrands Executive Vice President and Chief Financial Officer E. Lee Wyatt said. “Although we ended 2008 with a reasonable level of debt-covenant cushion, the uncertainty in the consumer and financial markets creates risk. Our projections indicate that we should remain compliant, but we have decided that amending our first lien credit agreement is the prudent course of action. We launched the amendment process yesterday, and we should be in a position to know the results of the amendment process in about two weeks.”