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HanesBrands to repay notes early, raises outlook

WINSTON -SALEM, N.C. (AP) -- HanesBrands said late Thursday that it plans to cut it will cut its debt and lower its interest expenses by prepaying half of its senior notes due in 2016 a year earlier than expected. The move prompted the company to raise its forecast for its 2013 fiscal year.

The clothing and underwear maker, based in Winston-Salem, N.C., is prepaying half of the $500 million of its notes. The redemption of the bonds on Dec. 27 will lower its total bond debt to $1.25 billion.

HanesBrands CEO Richard Noll said the company has a substantial amount of cash on hand now as a result of strong cash flow in 2012. And the company determined there is no benefit or need to wait to start prepaying the notes.

The company expects to take a pretax charge of approximately $34 million in the fourth quarter of 2012 for the prepayment expenses.

HanesBrands said that outside of that charge, its fourth-quarter guidance remains the same. It continues to expect earnings from continued operations of $1 to $1.06 per share, on revenue of $1.13 billion to $1.17 billion.

Analysts, on average, expect profit of $1.03 per share, on sales of $1.15 billion, according to FactSet.

A prepayment of bonds will reduce its interest expenses in 2013, although a resulting higher tax rate will partially offset the benefits. As a result of the changes, Hanes has increased its 2013 earnings guidance to a range of $3.25 to $3.40 per share on revenue of $4.6 billion to $4.7 billion. It previously forecast earnings in the low $3 range.

Analysts, on average, were expecting the company to earn $3.19 per share for 2013 on revenue of $4.68 billion.

HanesBrands shares closed Thursday trading down 2 cents at $35.74 and were unchanged in the aftermarket session.