For 2013, the prepayment of bonds will reduce interest expense, although a resulting higher tax rate will partially offset the benefits. The company expects interest expense of approximately $120 million in 2013, which includes approximately $15 million in expected prepayment expenses and accelerated noncash unamortized debt costs to retire the remaining $250 million of 8 percent notes in 2013. As a result, Hanes has increased its 2013 EPS guidance from the low $3 range to expectations of $3.25 to $3.40. Net sales are expected to be approximately $4.6 billion to $4.7 billion, and free cash flow is expected to be $300 million to $400 million.The company does not intend to speak in more detail about its 2013 guidance until the release of its fourth-quarter and full-year 2012 results. Note on Non-GAAP Terms and Definitions Free cash flow, EBITDA, and the ratio of long-term debt to EBITDA are not generally accepted accounting principle measures. Free cash flow is defined as cash from operations less net capital expenditures. Free cash flow may not be representative of the amount of residual cash flow that is available to the company for discretionary expenditures since it may not include deductions for mandatory debt-service requirements and other nondiscretionary expenditures. The company believes, however, that free cash flow is a useful measure of the cash-generating ability of the business relative to capital expenditures and financial performance. For 2013 guidance, net cash provided by operating activities (a GAAP measure) is expected to be between $350 million and $450 million and net capital expenditures are expected to be approximately $50 million, resulting in expectations for free cash flow of $300 million to $400 million. The ratio of long-term debt to EBITDA is calculated by dividing long-term debt (a GAAP measure) by EBITDA, which is defined as earnings from continuing operations before interest expense, taxes, depreciation and amortization. On a forward-looking basis, the company is unable to quantify certain amounts without unreasonable efforts that would be required to be included in the most directly comparable GAAP measure to EBITDA.
Hanes has chosen to provide these measures to investors to enable additional analyses of past, present and future operating performance and as a supplemental means of evaluating company operations. Non-GAAP information should not be considered a substitute for financial information presented in accordance with GAAP and may be different from non-GAAP or other pro forma measures used by other companies.Cautionary Statement Concerning Forward-Looking Statements Statements in this press release that are not statements of historical fact, including those regarding the company’s debt-reduction plans and future financial performance, are 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 are based on current intent, beliefs, plans and expectations and involve risks and uncertainties that may cause actual results to differ materially from HanesBrands’ historical experience and present expectations or projections. The company cautions investors not to place undue reliance on any forward-looking statements and encourages investors to review risk factors contained in the company’s most recent Securities and Exchange Commission reports, including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, registration statements, press releases and other communications, as well as in the investors section of our corporate website at http://tiny.cc/HanesBrandsIR. Any forward-looking statement speaks only as of the date on which such statement is made, and HanesBrands does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement was made. HanesBrands HanesBrands is a socially responsible leading marketer of everyday basic apparel under some of the world’s strongest apparel brands, including Hanes, Champion, Playtex, Bali, JMS/Just My Size, barely there, Wonderbra and Gear for Sports. The company sells T-shirts, bras, panties, men’s underwear, children’s underwear, socks, hosiery, casualwear and activewear produced in the company’s low-cost global supply chain. Ranked No. 512 on the Fortune 1000 list, Hanes has approximately 53,300 employees in more than 25 countries and takes pride in its strong reputation for ethical business practices. Hanes is a U.S. Environmental Protection Agency Energy Star 2012 Sustained Excellence Award winner and 2010 and 2011 Partner of the Year. The company ranks No. 141 on Newsweek magazine’s list of Top 500 greenest U.S. companies. More information about the company and its corporate social responsibility initiatives, including environmental, social compliance and community improvement achievements, may be found on the Hanes corporate website at www.hanesbrands.com.