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Hanesbrands reaffirms 2010 sales growth guidance
Dec '09
Hanesbrands Inc. which is reaffirming its 2010 outlook for approximately $200 million in additional sales from net shelf-space gains, a 5 percent increase, completed a growth-focused debt refinancing that enables the company to simultaneously reduce leverage and consider acquisition opportunities.

The refinancing, which was positively received by the capital markets, gives the company much more flexibility in its use of excess cash flow, allows continued debt reduction, and provides a stable long-term capital structure with extended debt maturities at rates slightly lower than previous effective rates.

The combined benefits of the expected sales increase from net shelf-space gains, reduced interest expense through deleveraging, continued operating margin improvement from supply chain globalization, and growth potential through acquisitions are contributing to positive momentum for company earnings growth.

“We are focused on creating value in 2010 and beyond by taking market share and leveraging the growth platform we have built,” said Hanesbrands Chairman and Chief Executive Officer Richard A. Noll. “We have worked diligently over the past three years to create a new Hanesbrands, an apparel essentials powerhouse with strong cash flow, flexible capital structure, re-energized brands and a low-cost global supply chain. The combination of our brand power and supply-chain competitiveness gives us the potential to expand market share around the world through organic growth, retailer partnerships, enhanced shelf space, improved channel penetration, distribution expansion, and acquisitions.”

Hanesbrands Growth Model

The company's earnings growth potential is tied to its sales outlook, capital structure, cost-reduction efforts and ability to take advantage of other growth opportunities, including low-risk acquisitions.

Hanesbrands has secured significant additional net shelf space and new distribution for its products across all core product segments, all brands and all channels of trade in 2010. The net space gains are expected to add approximately $200 million, or approximately 5 percent, in sales next year, independent of consumer spending levels.

Continued benefits from the company's globalized supply chain may result in the company achieving its goal to improve operating profit margin by 50 to 100 basis points in 2010, despite expected minor increases in commodity costs.

In its refinancing completed today, Hanesbrands used the proceeds of the $500 million notes offering and borrowings from its new $1.15 billion credit facilities to refinance its borrowings under its former credit facility, to repay all of its borrowings under its second-lien credit facility and to pay fees and expenses related to the notes offering and refinancing.

Credit rating agency Standard & Poor's confirmed Hanesbrands' corporate credit rating at BB-, removed the company from CreditWatch, raised the company's rating on its unsecured debt to B+ from B, and gave the new notes the same B+ rating. Moody's confirmed Hanesbrands' corporate rating at Ba3, upgraded the company's outlook to stable, and assigned a B1 rating to its new senior unsecured notes.

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