Hanesbrands Inc. Acquires Textile Plant in El Salvador Capping Successful First Year as an Independent Company

WINSTON-SALEM, N.C.--(BUSINESS WIRE)--Hanesbrands Inc. (NYSE:HBI) today announced that it has acquired the textile manufacturing operations of Industrias Duraflex, S.A. de C.V., in San Juan Opico, El Salvador. The acquisition concluded a successful first year as an independent company.

“We are expanding in El Salvador as we create a balanced global supply chain and move production to lower-cost countries to remain competitive.”

The 1,300-employee Duraflex operation, which will be known as Hanesbrands El Salvador Textiles, is the company’s second self-owned offshore textile fabric manufacturing plant. In the past year, Hanesbrands also successfully ramped up production at its new textile plant built in Bonao, Dominican Republic. Hanesbrands, a leading manufacturer and marketer of innerwear, outerwear and hosiery apparel under leading brands such as Hanes, Champion, Playtex and Bali, also operates 27 sewing and cutting plants offshore.

Since Hanesbrands spun off as an independent company and its stock began trading publicly on Sept. 6, 2006, the company has made significant progress executing its key success strategies. The company has invested in its brands, improved its cost structure, and used its strong cash flow to reduce debt and fund key strategic initiatives.

“Hanesbrands and its employees worldwide have accomplished many important improvement initiatives in the first year as an independent public company,” said Hanesbrands Chief Executive Officer Richard A. Noll. “Our ability to manage change has been critical to our success and will continue to be integral to our efforts to achieve our long-term growth goals.

“The addition of fabric production capacity in El Salvador is another significant milestone in our efforts to create a lower-cost supply chain operating fewer, larger plants that are more effectively aligned with our production flow. We already own sewing plants in El Salvador and elsewhere in Central America. We now have a textile and sewing base in Central America that gives us flexibility to expand and leverage our large scale of production.”

The 350,000-square-foot Hanesbrands El Salvador Textiles plant, which already makes fleece, T-shirt and underwear fabric for Hanesbrands, will continue operations uninterrupted. The management team at the plant, located 20 miles west of San Salvador, will remain affiliated with Hanesbrands. Terms of the acquisition are not being disclosed.

Industrias Duraflex had supplied Hanesbrands with apparel fabric since the early 1990s. The companies entered a supply alliance in 2005 that allowed Duraflex to quadruple its production capacity. With the purchase, Hanesbrands expects to make additional investment for growth.

“This is an extremely strong operation with an outstanding management team and workforce who are already very familiar with our products and way of doing business,” said Gerald Evans, Hanesbrands executive vice president and chief global supply chain officer. “We are expanding in El Salvador as we create a balanced global supply chain and move production to lower-cost countries to remain competitive.”

A Year of Achievement

Hanesbrands and its employees have hit key improvement milestones throughout its first year in the areas of marketing and brand development, organization consolidation, supply chain globalization, and operations execution.

Hanesbrands continues to strengthen its largest, strongest brands in core categories through innovation in key items. First-year achievements include:

A double-digit increase in brand investment in working media.
Growth for the Hanes ComfortSoft product platform. Hanes national advertising campaigns for men’s and women’s new ComfortSoft products were launched featuring celebrities Jennifer Love Hewitt, Michael Jordan and Cuba Gooding Jr.
The launch this week of Playtex’s largest advertising and marketing campaign to support the core Playtex 18 Hour and Playtex Secrets product lines.
Successful advertising and marketing campaign launches for new Bali and Barely There intimate apparel. Outdoor advertising for Barely There won a 2007 OBIE Award, outdoor advertising’s highest honor.
Continued double-digit compound sales growth and distribution gains for Champion activewear over the past two years.

Hanesbrands has assembled a strong operating management team that has successfully transitioned the company from a collection of multiple operating units to one focused company. The company has also added new executive talent to operate as a public company.

The company has made significant progress on its global supply chain strategy to move production to lower-cost countries and in the longer term balance production between the Western Hemisphere and Asia. Achievements include:

The closure or announced intention to close 18 production plants and five distribution centers in order to operate fewer, larger facilities.
Continued movement of production operations to lower-cost countries. The company has established significant offshore textile production capability in the Western Hemisphere with company-owned plants in the Dominican Republic and El Salvador.
Establishment of the first company-owned plant in Asia. In November 2006, Hanesbrands acquired a sewing plant in Chonburi, Thailand. In addition to sewing, Hanesbrands operates sourcing and purchasing functions across Asia and selling organizations in Japan, China, India, the Philippines and elsewhere. In the past year, Hanesbrands has increased its Asian employment from approximately 350 to 1,900.

Hanesbrands continues to generate strong cash flow to fund business growth and execution of its supply chain strategy, as well as reduce debt and fund other financial management decisions. Achievements include:

Prepayment of $150 million of long-term debt since the spinoff.
Voluntary contribution of $90 million to increase the funded percentage of the company’s qualified pension plan.

“Hanesbrands has had a tremendously successful first year,” Noll said. “We have managed much change, while investing in our brands, reducing costs and generating cash. Hanesbrands is a much stronger organization today than a year ago. I am very proud of our organization’s ability to execute over the past 12 months and establish a strong foundation for continued success.”

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 more than 25 countries. More information about the company may be found on the Hanesbrands internet Web site at http://www.hanesbrands.com.

Cautionary Statement Concerning Forward-Looking Statements

Statements in this press release that are not statements of historical fact are forward-looking statements, including those regarding our launch as an independent company and the benefits expected from that launch, our long-term goals, and trends associated with our business. These forward-looking statements are made only as of the date of this press release and are based on our current intent, beliefs, plans and expectations. They involve risks and uncertainties that could cause actual future results, performance or developments to differ materially from those described in or implied by such forward-looking statements. These risks and uncertainties include the following: our ability to migrate our production and manufacturing operations to lower-cost countries around the world; our ability to effectively implement other components of our business strategy; costs and adverse publicity from violations of labor or environmental laws by us or our suppliers; our ability to successfully manage adverse changes in social, political, economic, legal and other conditions affecting our foreign operations; retailer consolidation and other changes in the apparel essentials industry; our ability to keep pace with changing consumer preferences; loss of or reduction in sales to, or financial difficulties experienced by, any of our top customers; fluctuations in the price or availability of cotton or labor; our substantial debt and debt-service requirements that restrict our operating and financial flexibility and impose significant interest and financing costs; and other risks identified from time to time in our most recent Securities and Exchange Commission reports, including the 2006 Annual Report on Form 10-K, 2007 quarterly reports on Form 10-Q and current reports on Form 8-K, registration statements, press releases and other communications. The company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time.