UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 26, 2020~~October 2, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-32891

Hanesbrands Inc.

(Exact name of registrant as specified in its charter)


Maryland		20-3552316
(State of incorporation)		(I.R.S. employer identification no.)

1000 East Hanes Mill Road
Winston-Salem,	North Carolina	27105
(Address of principal executive office)		(Zip code)

(336) 519-8080

(Registrant’s telephone number including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, Par Value $0.01	HBI	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

~~Securities registered pursuant to Section 12(b) of the Act:~~


~~Title of each class~~	~~Trading Symbol~~	~~Name of each exchange on which registered~~
~~Common Stock, Par Value $0.01~~	~~HBI~~	~~New York Stock Exchange~~

As of October ~~30, 2020,~~29, 2021, there were ~~348,324,092~~349,204,513 shares of the registrant’s common stock outstanding.

Table of Contents

TABLE OF CONTENTS


		Page
Forward-Looking Statements		1

PART I
Item 1.	Financial Statements (unaudited):
	Condensed Consolidated Statements of Income for the quarters and nine months ended ~~September~~October 2 6, 2021 and September 26 , 2020 ~~and~~ ~~Sept~~em ~~ber~~ 2 8 ~~, 2019~~	2
	Condensed Consolidated Statements of Comprehensive Income for the quarters and nine months ended ~~September~~October 2,6 ~~, 2020~~ 2021 and September 2 8 ~~, 2019~~ 26, 2020	3
	Condensed Consolidated Balance Sheets at October 2 , 2021, January 2, 2021 and September 26 , 2020 ~~December 28, 2019 and~~ ~~September~~ 2 8 ~~, 2019~~	4
	Condensed Consolidated Statements of Stockholders’ Equity for the quarters and nine months ended ~~September~~October 2,6 , 2021 and September 26, 2020 ~~and~~ ~~September~~ 2 8 ~~, 2019~~	5
	Condensed Consolidated Statements of Cash Flows for the nine months ended ~~September~~October 2,6 ~~, 2020~~ 2021 and September 2 8 ~~, 2019~~ 26, 2020	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2425
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	36
Item 4.	Controls and Procedures	36

PART II
Item 1.	Legal Proceedings	3736
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3837
Item 3.	Defaults Upon Senior Securities	3837
Item 4.	Mine Safety Disclosures	3837
Item 5.	Other Information	3837
Item 6.	Exhibits	3938
Signatures		4139

Table of Contents

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains information that may constitute “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 (the “Exchange Act”). Forward-looking statements include all statements that do not relate solely to historical or current facts, and can generally be identified by the use of words such as “may,” “believe,” “will,” “expect,” “project,” “estimate,” “intend,” “anticipate,” “plan,” “continue” or similar expressions. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements regarding our intent, belief and current expectations about our strategic direction, prospects and future results are forward-looking statements. Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. In particular, statements with respect to trends associated with our business, our Full Potential plan, our future financial performance and the potential effects of the ongoing global ~~COVID-19~~ coronavirus ~~outbreak~~(“COVID-19”) pandemic included in this Quarterly Report on Form 10-Q specifically appearing under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” include forward-looking statements.

More information on factors that could cause actual results or events to differ materially from those anticipated is included from time to time in our reports filed with the Securities and Exchange Commission (the “SEC”), including ~~this Quarterly Report on Form 10-Q, our Quarterly Report on Form 10-Q for the quarter ended March 28, 2020 and~~ our Annual Report on Form 10-K for the year ended ~~December 28, 2019,~~January 2, 2021, under the caption “Risk Factors,” and available on the “Investors” section of our corporate website, www.Hanes.com/investors. The contents of our corporate website are not incorporated by reference in this Quarterly Report on Form 10-Q.

Table of Contents

PART I


Item 1.			Financial Statements

HANESBRANDS INC.

Condensed Consolidated Statements of Income

(in thousands, except per share ~~amounts)~~data)

(unaudited)

Quarters Ended Nine Months Ended
September 26,
2020 September 28,
2019 September 26,
2020 September 28,
2019
Net sales $ 1,808,266 $ 1,866,967 $ 4,863,507 $ 5,215,918
Cost of sales 1,191,553 1,149,934 3,140,050 3,203,331
Gross profit 616,713 717,033 1,723,457 2,012,587
Selling, general and administrative expenses 442,142 449,962 1,273,220 1,366,272
Operating profit 174,571 267,071 450,237 646,315
Other expenses 5,309 8,066 16,849 23,766
Interest expense, net 43,868 43,091 122,376 137,672
Income before income tax expense 125,394 215,914 311,012 484,877
Income tax expense 22,116 30,823 54,427 69,143
Net income $ 103,278 $ 185,091 $ 256,585 $ 415,734
Earnings per share:
Basic $ 0.29 $ 0.51 $ 0.73 $ 1.14
Diluted $ 0.29 $ 0.51 $ 0.72 $ 1.14


	Quarters Ended				Nine Months Ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Net sales	$	1,789,551	$	1,691,863	$	5,048,891	$	4,438,016
Cost of sales	1,089,890		1,120,392		3,064,920		2,934,515
Gross profit	699,661		571,471		1,983,971		1,503,501
Selling, general and administrative expenses	465,015		382,384		1,341,809		1,064,328
Operating profit	234,646		189,087		642,162		439,173
Other expenses	1,811		4,898		6,227		15,652
Interest expense, net	40,860		43,500		127,760		120,602
Income from continuing operations before income tax expense	191,975		140,689		508,175		302,919
Income tax expense	15,228		22,464		55,161		43,008
Income from continuing operations	176,747		118,225		453,014		259,911
Loss from discontinued operations, net of tax	(24,970)		(14,947)		(435,823)		(3,326)
Net income	$	151,777	$	103,278	$	17,191	$	256,585

Earnings (loss) per share - basic:
Continuing operations	$	0.50	$	0.34	$	1.29	$	0.74
Discontinued operations	(0.07)		(0.04)		(1.24)		(0.01)
Net income	$	0.43	$	0.29	$	0.05	$	0.73

Earnings (loss) per share - diluted:
Continuing operations	$	0.50	$	0.34	$	1.29	$	0.73
Discontinued operations	(0.07)		(0.04)		(1.24)		(0.01)
Net income	$	0.43	$	0.29	$	0.05	$	0.72

See accompanying notes to Condensed Consolidated Financial Statements.

Table of Contents

HANESBRANDS INC.

Condensed Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)

Quarters Ended Nine Months Ended
September 26,
2020 September 28,
2019 September 26,
2020 September 28,
2019
Net income $ 103,278 $ 185,091 $ 256,585 $ 415,734
Other comprehensive income (loss):
Translation adjustments 23,678 (44,997) 1,557 (40,813)
Unrealized gain (loss) on qualifying cash flow hedges, net of tax of $3,035, $(920), $(214) and $2,653, respectively (11,250) 2,059 (9,644) (7,018)
Unrecognized income from pension and postretirement plans, net of tax of $(1,396), $(1,358), $(4,462) and $(3,974), respectively 3,798 3,605 10,952 10,555
Total other comprehensive income (loss) 16,226 (39,333) 2,865 (37,276)
Comprehensive income $ 119,504 $ 145,758 $ 259,450 $ 378,458


	Quarters Ended				Nine Months Ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Net income	$	151,777	$	103,278	$	17,191	$	256,585
Other comprehensive income (loss):
Translation adjustments	(42,330)		23,678		(78,762)		1,557
Unrealized gain (loss) on qualifying cash flow hedges, net of tax of $(2,637), $3,035, $(8,953) and $(214), respectively	7,124		(11,250)		18,520		(9,644)
Unrecognized income from pension and postretirement plans, net of tax of $(1,647), $(1,396), $(5,262) and $(4,462), respectively	4,806		3,798		15,873		10,952
Total other comprehensive income (loss)	(30,400)		16,226		(44,369)		2,865
Comprehensive income (loss)	$	121,377	$	119,504	$	(27,178)	$	259,450

See accompanying notes to Condensed Consolidated Financial Statements.

Table of Contents

HANESBRANDS INC.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share ~~amounts)~~data)

(unaudited)

September 26,
2020 December 28,
2019 September 28,
2019
Assets
Cash and cash equivalents $ 731,481 $ 328,876 $ 317,024
Trade accounts receivable, net 984,571 815,210 1,033,938
Inventories 2,170,552 1,905,845 2,095,035
Other current assets 210,617 174,634 174,172
Total current assets 4,097,221 3,224,565 3,620,169
Property, net 553,748 587,896 581,971
Right-of-use assets 461,117 487,787 475,037
Trademarks and other identifiable intangibles, net 1,501,161 1,520,800 1,493,969
Goodwill 1,246,113 1,235,711 1,223,216
Deferred tax assets 200,877 203,331 213,649
Other noncurrent assets 99,447 93,896 115,821
Total assets $ 8,159,684 $ 7,353,986 $ 7,723,832
Liabilities and Stockholders’ Equity
Accounts payable $ 1,144,190 $ 959,006 $ 997,069
Accrued liabilities 716,590 531,184 587,932
Lease liabilities 156,709 166,091 145,055
Notes payable 5,257 4,244 4,275
Accounts Receivable Securitization Facility 0 0 208,604
Current portion of long-term debt 0 110,914 151,909
Total current liabilities 2,022,746 1,771,439 2,094,844
Long-term debt 3,972,212 3,256,870 3,467,591
Lease liabilities - noncurrent 347,604 358,281 364,083
Pension and postretirement benefits 371,330 403,458 348,674
Other noncurrent liabilities 296,259 327,343 330,547
Total liabilities 7,010,151 6,117,391 6,605,739
Stockholders’ equity:
Preferred stock (50,000,000 authorized shares; $.01 par value)
Issued and outstanding — None 0 0 0
Common stock (2,000,000,000 authorized shares; $.01 par value)
Issued and outstanding — 348,288,056, 362,449,037 and 361,612,383, respectively 3,483 3,624 3,616
Additional paid-in capital 306,157 304,395 310,327
Retained earnings 1,454,676 1,546,224 1,416,109
Accumulated other comprehensive loss (614,783) (617,648) (611,959)
Total stockholders’ equity 1,149,533 1,236,595 1,118,093
Total liabilities and stockholders’ equity $ 8,159,684 $ 7,353,986 $ 7,723,832


	October 2, 2021		January 2, 2021		September 26, 2020
Assets
Cash and cash equivalents	$	873,628	$	900,615	$	716,921
Trade accounts receivable, net	928,039		768,221		921,434
Inventories	1,629,506		1,367,758		1,996,851
Other current assets	172,617		158,700		191,541
Current assets of discontinued operations	304,124		234,086		279,331
Total current assets	3,907,914		3,429,380		4,106,078
Property, net	440,804		477,821		484,939
Right-of-use assets	372,212		432,631		422,543
Trademarks and other identifiable intangibles, net	1,227,457		1,293,847		1,230,757
Goodwill	1,136,173		1,158,938		1,154,449
Deferred tax assets	327,196		367,976		193,015
Other noncurrent assets	51,049		64,773		93,849
Noncurrent assets of discontinued operations	—		494,501		482,911
Total assets	$	7,462,805	$	7,719,867	$	8,168,541

Liabilities and Stockholders’ Equity
Accounts payable	$	1,239,960	$	891,868	$	1,088,556
Accrued liabilities	718,545		609,864		590,778
Lease liabilities	122,545		136,510		143,753
Notes payable	—		—		11

Current portion of long-term debt	37,500		263,936		—
Current liabilities of discontinued operations	299,498		222,183		208,506
Total current liabilities	2,418,048		2,124,361		2,031,604
Long-term debt	3,626,547		3,739,434		3,972,212
Lease liabilities - noncurrent	276,595		331,577		317,834
Pension and postretirement benefits	321,323		381,457		324,683
Other noncurrent liabilities	183,723		216,091		256,238
Noncurrent liabilities of discontinued operations	—		112,989		116,437
Total liabilities	6,826,236		6,905,909		7,019,008

Stockholders’ equity:
Preferred stock (50,000,000 authorized shares; $.01 par value)
Issued and outstanding — None	—		—		—
Common stock (2,000,000,000 authorized shares; $.01 par value)
Issued and outstanding — 349,204,407, 348,802,220 and 348,288,056, respectively	3,492		3,488		3,483
Additional paid-in capital	316,112		307,883		306,157
Retained earnings	928,293		1,069,546		1,454,676
Accumulated other comprehensive loss	(611,328)		(566,959)		(614,783)
Total stockholders’ equity	636,569		813,958		1,149,533
Total liabilities and stockholders’ equity	$	7,462,805	$	7,719,867	$	8,168,541

See accompanying notes to Condensed Consolidated Financial Statements.

Table of Contents

HANESBRANDS INC.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except per share data)

(unaudited)

Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total
Shares Amount
Balances at June 27, 2020 348,093 $ 3,481 $ 302,522 $ 1,404,326 $ (631,009) $ 1,079,320
Net income — — — 103,278 — 103,278
Dividends ($0.15 per common share) — — — (52,928) — (52,928)
Other comprehensive income — — — — 16,226 16,226
Stock-based compensation — — 4,538 — — 4,538
Net exercise of stock options, vesting of restricted stock units and other 195 2 (903) — — (901)
Balances at September 26, 2020 348,288 $ 3,483 $ 306,157 $ 1,454,676 $ (614,783) $ 1,149,533


	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
	Shares	Amount
Balances at July 3, 2021	349,115	$	3,491	$	310,148	$	829,479	$	(580,928)	$	562,190
Net income	—	—		—		151,777		—		151,777
Dividends ($0.15 per common share)	—	—		—		(52,963)		—		(52,963)
Other comprehensive loss	—	—		—		—		(30,400)		(30,400)
Stock-based compensation	—	—		6,079		—		—		6,079
Net exercise of stock options, vesting of restricted stock units and other	89	1		(115)		—		—		(114)
Balances at October 2, 2021	349,204	$	3,492	$	316,112	$	928,293	$	(611,328)	$	636,569

Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total
Shares Amount
Balances at December 28, 2019 362,449 $ 3,624 $ 304,395 $ 1,546,224 $ (617,648) $ 1,236,595
Net income — — — 256,585 — 256,585
Dividends ($0.45 per common share) — — — (160,264) — (160,264)
Other comprehensive income — — — — 2,865 2,865
Stock-based compensation — — 13,572 — — 13,572
Net exercise of stock options, vesting of restricted stock units and other 303 4 445 — — 449
Share repurchases (14,464) (145) (12,255) (187,869) — (200,269)
Balances at September 26, 2020 348,288 $ 3,483 $ 306,157 $ 1,454,676 $ (614,783) $ 1,149,533


	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
	Shares	Amount
Balances at January 2, 2021	348,802	$	3,488	$	307,883	$	1,069,546	$	(566,959)	$	813,958
Net income	—	—		—		17,191		—		17,191
Dividends ($0.45 per common share)	—	—		—		(158,444)		—		(158,444)
Other comprehensive loss	—	—		—		—		(44,369)		(44,369)
Stock-based compensation	—	—		9,887		—		—		9,887
Net exercise of stock options, vesting of restricted stock units and other	402	4		(1,658)		—		—		(1,654)
Balances at October 2, 2021	349,204	$	3,492	$	316,112	$	928,293	$	(611,328)	$	636,569

See accompanying notes to Condensed Consolidated Financial Statements.

Table of Contents

HANESBRANDS INC.

Condensed Consolidated Statements of Stockholders’ Equity - (Continued)

(in thousands, except per share data)

(unaudited)


		Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total			Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
		Shares	Amount											Shares	Amount
Balances at June 29, 2019		361,531	$	3,615	$	308,555	$	1,285,842	$	(572,626)	$	1,025,386
Balances at June 27, 2020													Balances at June 27, 2020	348,093	$	3,481	$	302,522	$	1,404,326	$	(631,009)	$	1,079,320
Net income	Net income	—	—		—		185,091		—		185,091		Net income	—	—		—		103,278		—		103,278
Dividends ($0.15 per common share)	Dividends ($0.15 per common share)	—	—		—		(54,824)		—		(54,824)		Dividends ($0.15 per common share)	—	—		—		(52,928)		—		(52,928)
Other comprehensive loss		—	—		—		—		(39,333)		(39,333)
Other comprehensive income													Other comprehensive income	—	—		—		—		16,226		16,226
Stock-based compensation	Stock-based compensation	—	—		1,467		—		—		1,467		Stock-based compensation	—	—		4,538		—		—		4,538
Net exercise of stock options, vesting of restricted stock units and other	Net exercise of stock options, vesting of restricted stock units and other	81	1		305		—		—		306		Net exercise of stock options, vesting of restricted stock units and other	195	2		(903)		—		—		(901)
Balances at September 28, 2019		361,612	$	3,616	$	310,327	$	1,416,109	$	(611,959)	$	1,118,093
Balances at September 26, 2020													Balances at September 26, 2020	348,288	$	3,483	$	306,157	$	1,454,676	$	(614,783)	$	1,149,533

Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total
Shares Amount
Balances at December 29, 2018 361,330 $ 3,613 $ 284,877 $ 1,079,503 $ (495,867) $ 872,126
Net income — — — 415,734 — 415,734
Dividends ($0.45 per common share) — — — (164,500) — (164,500)
Other comprehensive loss — — — — (37,276) (37,276)
Stock-based compensation — — 8,506 — — 8,506
Net exercise of stock options, vesting of restricted stock units and other 282 3 2,570 — — 2,573
Modification of deferred compensation plans — — 14,374 — — 14,374
Cumulative effect of change in adoption of leases standard — — — 6,556 — 6,556
Stranded tax related to U.S. pension plan — — — 78,816 (78,816) —
Balances at September 28, 2019 361,612 $ 3,616 $ 310,327 $ 1,416,109 $ (611,959) $ 1,118,093


	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
	Shares	Amount
Balances at December 28, 2019	362,449	$	3,624	$	304,395	$	1,546,224	$	(617,648)	$	1,236,595
Net income	—	—		—		256,585		—		256,585
Dividends ($0.45 per common share)	—	—		—		(160,264)		—		(160,264)
Other comprehensive income	—	—		—		—		2,865		2,865
Stock-based compensation	—	—		13,572		—		—		13,572
Net exercise of stock options, vesting of restricted stock units and other	303	4		445		—		—		449
Share repurchases	(14,464)	(145)		(12,255)		(187,869)		—		(200,269)
Balances at September 26, 2020	348,288	$	3,483	$	306,157	$	1,454,676	$	(614,783)	$	1,149,533

See accompanying notes to Condensed Consolidated Financial Statements.

Table of Contents

HANESBRANDS INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Nine Months Ended
September 26,
2020 September 28,
2019
Operating activities:
Net income $ 256,585 $ 415,734
Adjustments to reconcile net income to net cash from operating activities:
Depreciation 67,676 71,612
Amortization of acquisition intangibles 18,503 18,709
Other amortization 8,091 7,521
Impairment of intangible assets 20,319 0
Amortization of debt issuance costs 8,303 7,021
Stock compensation expense 13,801 8,794
Deferred taxes 6,853 (3,661)
Other 5,004 1,662
Changes in assets and liabilities:
Accounts receivable (175,879) (170,348)
Inventories (259,367) (56,470)
Other assets (43,359) (26,031)
Accounts payable 189,566 (11,969)
Accrued pension and postretirement benefits (18,965) (14,361)
Accrued liabilities and other 134,091 (3,513)
Net cash from operating activities 231,222 244,700
Investing activities:
Capital expenditures (49,033) (79,950)
Proceeds from sales of assets 331 3,530
Acquisition of business 0 (21,360)
Other 7,618 0
Net cash from investing activities (41,084) (97,780)
Financing activities:
Borrowings on notes payable 166,558 250,712
Repayments on notes payable (166,108) (252,084)
Borrowings on Accounts Receivable Securitization Facility 227,061 207,105
Repayments on Accounts Receivable Securitization Facility (227,061) (160,110)
Borrowings on Revolving Loan Facilities 1,638,000 2,584,277
Repayments on Revolving Loan Facilities (1,756,189) (2,585,592)
Borrowings on Senior Notes 700,000 0
Repayments on Term Loan Facilities 0 (152,248)
Borrowings on International Debt 31,222 27,680
Repayments on International Debt (36,383) (41,424)
Share repurchases (200,269) 0
Cash dividends paid (158,132) (162,689)
Payments of debt issuance costs (14,938) (1,098)
Taxes paid related to net shares settlement of equity awards (1,615) (1,523)
Other 1,295 1,378
Net cash from financing activities 203,441 (285,616)
Effect of changes in foreign exchange rates on cash 9,052 1,008
Change in cash, cash equivalents and restricted cash 402,631 (137,688)
Cash, cash equivalents and restricted cash at beginning of year 329,923 455,732
Cash, cash equivalents and restricted cash at end of period 732,554 318,044
Less restricted cash at end of period 1,073 1,020
Cash and cash equivalents per balance sheet at end of period $ 731,481 $ 317,024


	Nine Months Ended
	October 2, 2021(1)		September 26, 2020(1)
Operating activities:
Net income	$	17,191	$	256,585
Adjustments to reconcile net income to net cash from operating activities:
Depreciation	63,183		67,676
Amortization of acquisition intangibles	15,696		18,503
Other amortization	8,610		8,091
Impairment of intangible assets and goodwill	163,047		20,319
Loss on classification of assets held for sale	266,742		—
Amortization of debt issuance costs	10,250		8,303
Other	(1,888)		25,658
Changes in assets and liabilities:
Accounts receivable	(201,925)		(175,879)
Inventories	(292,465)		(259,367)
Other assets	7,042		(43,359)
Accounts payable	391,034		189,566
Accrued pension and postretirement benefits	(40,468)		(18,965)
Accrued liabilities and other	121,327		134,091
Net cash from operating activities	527,376		231,222
Investing activities:
Capital expenditures	(55,320)		(49,033)
Proceeds from sales of assets	2,479		331

Other	8,437		7,618
Net cash from investing activities	(44,404)		(41,084)
Financing activities:
Repayments on Term Loan Facilities	(315,625)		—
Borrowings on Accounts Receivable Securitization Facility	—		227,061
Repayments on Accounts Receivable Securitization Facility	—		(227,061)
Borrowings on Revolving Loan Facilities	—		1,638,000
Repayments on Revolving Loan Facilities	—		(1,756,189)
Borrowings on Senior Notes	—		700,000
Borrowings on International Debt	—		31,222
Repayments on International Debt	—		(36,383)
Borrowings on notes payable	109,397		166,558
Repayments on notes payable	(109,597)		(166,108)
Share repurchases	—		(200,269)
Cash dividends paid	(157,099)		(158,132)


Other	(3,000)		(15,258)
Net cash from financing activities	(475,924)		203,441
Effect of changes in foreign exchange rates on cash	(27,207)		9,052
Change in cash, cash equivalents and restricted cash	(20,159)		402,631
Cash, cash equivalents and restricted cash at beginning of year	910,603		329,923
Cash, cash equivalents and restricted cash at end of period	890,444		732,554
Less restricted cash at end of period	—		1,073
Cash and cash equivalents at end of period	$	890,444	$	731,481

Balances included in the Condensed Consolidated Balance Sheets:
Cash and cash equivalents	$	873,628	$	716,921
Cash and cash equivalents included in current assets of discontinued operations	16,816		14,560
Cash and cash equivalents at end of period	$	890,444	$	731,481

(1)The cash flows related to discontinued operations have not been segregated and remain included in the major classes of assets and liabilities. Accordingly, the Condensed Consolidated Statements of Cash Flows include the results of continuing and discontinued operations.

Capital expenditures included in accounts payable at ~~September 26, 2020~~October 2, 2021 and ~~December 28, 2019,~~January 2, 2021 were ~~$8,817~~$4,569 and ~~$19,327,~~$17,931, respectively. For the nine months ended October 2, 2021 and September 26, 2020, ~~and September 28, 2019,~~ right-of-use assets obtained in exchange for lease obligations were ~~$39,532~~$46,039 and ~~$54,524,~~$39,532, respectively.

See accompanying notes to Condensed Consolidated Financial Statements.

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HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share data)

(unaudited)

(1) Basis of Presentation

These statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and, in accordance with those rules and regulations, do not include all information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Management believes that the disclosures made are adequate for a fair statement of the results of operations, financial condition and cash flows of Hanesbrands Inc. and its consolidated subsidiaries (the “Company” or “Hanesbrands”). In the opinion of management, the condensed consolidated interim financial statements reflect all adjustments, which consist only of normal recurring adjustments, necessary to state fairly the results of operations, financial condition and cash flows for the interim periods presented herein. The preparation of condensed consolidated interim financial statements in conformity with GAAP requires management to make use of estimates and assumptions that affect the reported amounts and disclosures. The duration and severity of the global novel coronavirus ("COVID-19") pandemic, which is subject to uncertainty, is having a significant impact on the Company’s business. Management's estimates and assumptions have contemplated both current and expected impacts related to COVID-19 based on available information. Actual results may vary from these estimates.

These condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s ~~2019~~ Annual Report on Form ~~10-K. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP.~~10-K for the year ended January 2, 2021. The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the full year.

~~Impact~~In the first quarter of ~~COVID-19~~

2021, the Company announced that as part of its strategic plan, it was exploring alternatives for its European Innerwear business and subsequently reached the decision to exit this business. The ~~COVID-19 pandemic has impacted the Company’s~~Company determined that its European Innerwear business met held-for-sale and discontinued operations and financial results in 2020. During the nine months of 2020, the rapid expansion of the COVID-19 pandemic has resulted in a sharp decline in net sales and earnings in the Company’s apparel businesses due to decreased customer traffic and temporary retail store closures worldwide. While most of the Company’s retail stores were temporarily closed for varying periods of time throughout the second quarter, most reopened byaccounting criteria at the end of the ~~second~~first quarter ~~but have experienced, and are expected~~of 2021. Accordingly, the Company began to ~~continue to experience, reductions in customer traffic and therefore, net sales. In addition, many of~~separately report the Company’s wholesale customers have also experienced business disruptions, including lower traffic and consumer demand, resulting in decreased shipments to these customers. Sales of personal protective equipment (“PPE”), used to help mitigate the spread of the COVID-19 virus, partially offset the negative impact of the decline in net sales and earnings due to the COVID-19 pandemic on the Company’s financial results. In addition, the Company’s e-commerce sites have remained open in all regions and online sales have grown as consumer spending continued to shift towards online shopping experiences due to the changing retail landscape as a result of the COVID-19 pandemic. The Company’s operating results also reflected impairment charges related to intangible assets, charges to reserve for increased excess and obsolete inventory, bad debt charges and charges to re-start the Company’s supply chain following the extended shut-down of parts of its ~~manufacturing network due~~European Innerwear business as discontinued operations in its Condensed Consolidated Statements of Income, and to present the ~~ongoing effects of the COVID-19 pandemic. While many retail stores have reopened~~related assets and many government restrictions have been removed or lightened, the ultimate impact of the COVID-19 pandemic remains highly uncertain and could continue to have a material adverse impact on the Company’s business operations and financial results, including net sales, earnings and cash flowsliabilities as held for ~~the remainder of 2020, and beyond.~~

Goodwill and indefinite-lived intangible assets are evaluated for impairment at least annually as of the first day of the third quarter, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit or intangible asset below its carrying values. During the second quarter of 2020, the Company completed a quantitative impairment analysis for certain indefinite-lived intangible assets as a result of the significant impact of the COVID-19 pandemic on their performance. Based on this analysis, the Company recorded impairment charges of $20,319 on trademarks and other intangible assets which are reflected in the “Selling, general and administrative expenses” linesale in the Condensed Consolidated ~~Statement of Income.~~

~~In connection with~~Balance Sheets. These changes have been applied to all periods presented. Unless otherwise noted, discussion within these notes to the annual goodwill impairment testing performed in the third quarter of 2020, the Company performed a quantitative assessment utilizing an income approach to estimate the fair value of each reporting unit. The most significant assumptions include the weighted average cost of capital, revenue growth rate, terminal growth rate and operating profit margin, all of which are used to estimate the fair value of the reporting units and indefinite-lived intangible assets. The tests indicated the reporting units had fair values that exceeded their carrying values. Certain reporting units, including Hanes

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~~HANESBRANDS INC.~~

~~Notes to Condensed Consolidated Financial Statements — (Continued)~~

~~(amounts in thousands, except per share data)~~

~~(unaudited)~~

Europe Innerwear and U.S. Hosiery, are considered to be at a higher risk for future impairment if any assumptions used in the estimate of the reporting units’ fair values change in the future given their respective fair values exceeded their carrying values by less than 20% and trends in the associated businesses indicate a declining fair value. In particular, as of September 26, 2020, the fair value of the Hanes Europe Innerwear reporting unit is slightly higher than its carrying value. The combined goodwill associated with these reporting units was approximately $120,000. Additionally, in connection with the annual impairment testing, the Company performed a quantitative assessment, utilizing an income approach to estimate the fair value of each indefinite-lived intangible asset. The tests indicated the indefinite-lived intangible assets have fair values that exceeded their carrying values. Certain indefinite-lived trademarks are considered to be at a higher risk for future impairment if any assumptions used in the estimate of the trademarks’ fair value change in the future given their respective fair values exceeded their carrying values by less than 20% and trends in the associated businesses indicate a declining fair value. As of September 26, 2020, the Company considered four trademarks within the Hanes Europe Innerwear business to be at a higher risk for future impairment. The carrying value of these four indefinite-lived trademarks was approximately $80,000. Although the Company determined that no impairment exists for the Company's goodwill or indefinite-lived intangible assets, these assets could be at risk for future impairment should global economic conditions continue to deteriorate beyond current expectations as a result of the COVID-19 pandemic.

~~Revisions of Previously Issued Consolidated Financial Statements~~

As previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 28, 2019, during the fourth quarter of 2019 the Company identified tax errors, which originated prior to 2017, in its previously issued 2018 and 2017 annual consolidated financial statements and quarterly condensed consolidated interim financial statements relates to continuing operations. See note “Discontinued Operations” for each of the quarterly periods of 2018 and the first three quarterly periods of 2019. Although the Company assessed the materiality of the errors and concluded that the errors were not material to the previously issued annual or interim financial statements, the Company did revise its previously issued 2018 and 2017 annual financial statements to correct for such tax errors in connection with the filing of its 2019 Annual Report on Form 10-K, and disclosed that it would be revising its 2019 condensed consolidated interim financial statements in connection with the filing of its Quarterly Reports on Form 10-Q during 2020. In connection with such revision, the Company also corrected for certain other immaterial errors. In connection with the filing of this Quarterly Report on Form 10-Q, the Company has revised the accompanying condensed consolidated interim financial statements as of and for the quarter and nine months ended September 28, 2019 to correct for the impact of such errors, including the impact to retained earnings as of September 28, 2019 to correct for the errors which originated in periods prior to 2019, which primarily related to the tax errors. The accompanying footnotes have also been corrected to reflect the impact of the revisions of the previously filed condensed consolidated interim financial statements. See Note, "Revisions of Previously Issued Condensed Consolidated Interim Financial Statements" for reconciliations between as reported and as revised amounts as of and for the quarter and nine months ended September 28, 2019.additional information.

(2) Recent Accounting Pronouncements

~~Financial Instruments - Credit Losses~~

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which requires a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected. The new accounting rules eliminate the probable initial recognition threshold and, instead, reflect an entity’s current estimate of all expected credit losses. The new accounting rules were effective for the Company in the first quarter of 2020 and apply to its trade receivables.

Under the new accounting rules, trade receivables are now evaluated on a collective (pool) basis and aggregated on the basis of similar risk characteristics. These classifications will be reassessed at each measurement date. A combination of factors, such as industry trends, customers’ financial strength, credit standing and payment and default history are considered in determining the appropriate estimate of expected credit losses. The adoption of the new accounting rules did not have a material impact on the Company’s financial condition, results of operations or cash flows.

~~Goodwill Impairment~~

In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” The new accounting rules simplify how an entity is required to test goodwill for impairment by

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~~HANESBRANDS INC.~~

~~Notes to Condensed Consolidated Financial Statements — (Continued)~~

~~(amounts in thousands, except per share data)~~

~~(unaudited)~~

eliminating Step 2 from the goodwill impairment test which previously measured a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount. The new accounting rules were effective for the Company in the first quarter of 2020. As a result of adopting the new rules, the Company compared the estimated fair value of its reporting units to their respective carrying values when evaluating the recoverability of goodwill. When the carrying value of a reporting unit exceeds its fair value, an impairment charge will be recognized for the amount by which its carrying value exceeds the reporting unit’s fair value; however, the loss recognized will not exceed the goodwill allocated to the reporting unit. The adoption of the new accounting rules did not have an impact on the Company’s financial condition, results of operations or cash flows.

~~Fair Value~~

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820),” which modifies the disclosure requirements on fair value measurements. The new accounting rules were effective for the Company in the first quarter of 2020. The adoption of the new accounting rules did not have a material impact on the Company’s financial condition, results of operations or cash flows; however, its disclosures were updated upon adoption.

~~Retirement Benefits~~

In August 2018, the FASB issued ASU 2018-14, “Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20).” The new accounting rules expand disclosure requirements for employer sponsored defined benefit pension and other retirement plans. The new accounting rules were effective for the Company in the first quarter of 2020. The adoption of the new accounting rules did not have a material impact on the Company’s financial condition, results of operations or cash flows; however, expanded disclosures will be required on the Company’s Annual Report on Form 10-K for the year ended January 2, 2021.

~~Internal-Use Software~~

In August 2018, the FASB issued ASU 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 340-40),” which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The new accounting rules were effective for the Company in the first quarter of 2020. The adoption of the new accounting rules did not have a material impact on the Company’s financial condition, results of operations or cash flows.

~~Codification Improvements to Financial Instruments~~

In March 2020, the FASB issued ASU 2020-03, “Codification Improvements to Financial Instruments.” The new accounting rules clarify guidance around several subtopics by adopting enhanced verbiage to the following subtopics: fair value option disclosures, fair value measurement, investments - debt and equities securities, debt modifications and extinguishments, credit losses, and sales of financial assets. The standard was effective for the Company in the first quarter of 2020. The adoption of the new accounting rules did not have a material impact on the Company’s results of operations or cash flows.

Income Taxes

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” The new accounting rules reduce complexity by removing specific exceptions to general principles related to intraperiod tax allocations, ownership changes in foreign investments, and interim period income tax accounting for year-to-date losses that exceed anticipated losses. The new accounting rules also simplify accounting for franchise taxes that are partially based on income, transactions with a government that result in a step up in the tax basis of goodwill, separate financial statements of legal entities that are not subject to tax, and enacted changes in tax laws in interim periods. The new accounting rules ~~will be~~were effective for the Company in the first quarter of 2021. The ~~Company does not expect the~~ adoption of the new accounting rules todid not have a material impact on the Company’s financial condition, results of operations, cash flows or disclosures.

Codification Improvements

In October 2020, the FASB issued ASU 2020-10, “Codification Improvements.” The new accounting rules improve the consistency of the Codification by including all disclosure guidance in the appropriate Disclosure Section (Section 50) that had only been included in the Other Presentation Matters Section (Section 45) of the Codification. Additionally, the new rules also clarify guidance across various topics including defined benefit plans, foreign currency transactions, and interest expense. The new accounting rules were effective for the Company in the first quarter of 2021. The adoption of the new accounting rules did not have a material impact on the Company’s financial condition, results of operations, cash flows or disclosures.

Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” In January 2021, the FASB clarified the scope of that guidance with the issuance of ASU 2021-01, “Reference Rate Reform: Scope.” The new accounting rules provide optional expedients and

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HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

~~Reference Rate Reform~~

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The new accounting rules provide optional expedients and exceptions for applying ~~generally accepted accounting principles~~GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform. The amendments in this standard can be ~~applied anytime between the first quarter of 2020 and~~adopted any time before the fourth quarter of 2022. The Company is currently in the process of evaluating the impact of adoption of the new rules on the Company’s financial condition, results of operations, cash flows and disclosures.

(3) Discontinued Operations

In the first quarter of 2021, the Company announced that as part of its strategic plan, it was exploring alternatives for its European Innerwear business and subsequently reached the decision to exit this business. The Company determined that its European Innerwear business met held-for-sale and discontinued operations accounting criteria at the end of the first quarter of 2021. Accordingly, the Company began to separately report the results of its European Innerwear business as discontinued operations in its Condensed Consolidated Statements of Income, and to present the related assets and liabilities as held for sale in the Condensed Consolidated Balance Sheets. These changes have been applied to all periods presented. On November 4, 2021, the Company announced that it has reached an agreement to sell its European Innerwear business to an affiliate of Regent, L.P., pending the completion of consultation with the European and French works councils representing employees of the European Innerwear business and customary closing conditions. Under the agreement, the purchaser will receive all the assets and operating liabilities of the European Innerwear business. The transaction is expected to close in the first quarter of 2022.

The operations of the European Innerwear business were previously reported primarily in the International segment. Certain expenses related to its operations were included in general corporate expenses, restructuring and other action-related charges and amortization of intangibles which were previously excluded from segment operating profit and have been reclassified to discontinued operations for all periods presented. Discontinued operations does not include any allocation of corporate overhead expense or interest expense.

Upon meeting the criteria for held for sale classification which qualified as a triggering event, the Company performed a full impairment analysis of the disposal group's indefinite-lived intangible assets and goodwill. As a result of the strategic decision to exit the European Innerwear business, forecasts were revised to include updated market conditions and the removal of strategic operating decisions that would no longer occur under the Company's ownership. The revised forecasts indicated impairment charges of certain indefinite-lived trademarks and license agreements as well as the full goodwill balance attributable to the European Innerwear business. As a result of this impairment analysis, a non-cash charge of $155,745 was recorded as "Impairment of intangible assets and goodwill" in the summarized discontinued operations financial information for the nine months ended October 2, 2021. In addition, the Company recorded non-cash charges of $30,562 and $266,742 as "Loss on classification of assets held for sale" in the summarized discontinued operations financial information for the quarter and nine months ended October 2, 2021, respectively, to record a valuation allowance against the net assets held for sale to write down the carrying value of the disposal group to the estimated fair value less costs of disposal. The non-cash charge recorded in the quarter ended October 2, 2021 primarily resulted from changes in working capital balances and foreign exchange rates. The Company will continue to assess the valuation allowance in each interim period until the European Innerwear business is sold. Additionally, the Company recorded an impairment charge of $7,302 in continuing operations on an indefinite-lived trademark for the nine months ended October 2, 2021 which is reflected in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statement of Income. This charge relates to the full impairment of an indefinite-lived trademark related to a specific brand within the European Innerwear business that was excluded from the disposal group as it is not being marketed for sale. The Company intends to exit this brand subsequent to the sale of the European Innerwear business.

During the second quarter of 2020, the Company completed a quantitative impairment analysis for certain indefinite-lived intangible assets as a result of the significant impact of the COVID-19 pandemic on their performance. Based on this analysis, the Company recorded impairment charges of $20,319 on certain indefinite-lived trademarks and other intangible assets within the European Innerwear business which are reflected in the “Impairment of intangible assets and goodwill” line in the summarized discontinued operations financial information for the nine months ended September 26, 2020.

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HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

The Company expects to continue certain sales from its supply chain to the European Innerwear business on a transitional basis after the sale of the business. Those sales and the related profit are included in continuing operations in the Condensed Consolidated Statements of Income and in “Other” in note “Business Segment Information” in all periods presented and have not been eliminated as intercompany transactions in consolidation. The related receivables from the European Innerwear business have been reclassified to “Trade accounts receivable, net” in the Condensed Consolidated Balance Sheets for all periods presented.

The operating results of the discontinued operations only reflect revenues and expenses that are directly attributable to the European Innerwear business that will be eliminated from continuing operations. The key components from discontinued operations related to the European Innerwear business are as follows:


	Quarters Ended				Nine Months Ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Net sales	$	147,529	$	125,913	$	400,880	$	459,175
Cost of sales	75,171		80,671		213,831		239,219
Gross profit	72,358		45,242		187,049		219,956
Selling, general and administrative expenses	64,941		59,758		209,467		188,573
Impairment of intangible assets and goodwill	—		—		155,745		20,319
Loss on classification of assets held for sale	30,562		—		266,742		—
Operating income (loss)	(23,145)		(14,516)		(444,905)		11,064
Other expenses	271		411		885		1,197
Interest expense, net	110		368		269		1,774
Income (loss) from discontinued operations before income tax expense	(23,526)		(15,295)		(446,059)		8,093
Income tax expense (benefit)	1,444		(348)		(10,236)		11,419
Net loss from discontinued operations, net of tax	$	(24,970)	$	(14,947)	$	(435,823)	$	(3,326)

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HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

Assets and liabilities of discontinued operations classified as held for sale in the Condensed Consolidated Balance Sheets as of October 2, 2021, January 2, 2021 and September 26, 2020 consist of the following:


	October 2, 2021		January 2, 2021(1)		September 26, 2020(1)
Cash and cash equivalents	$	16,816	$	8,822	$	14,560
Trade accounts receivable, net	88,684		84,632		71,994
Inventories	127,209		123,337		173,701
Other current assets	16,066		17,295		19,076
Property, net	61,898		67,950		68,809
Right-of-use assets	33,680		34,637		38,574
Trademarks and other identifiable intangibles, net	208,108		284,170		270,404
Goodwill	—		96,692		91,664
Deferred tax assets	7,990		5,438		7,862
Other noncurrent assets	4,360		5,614		5,598
Allowance to adjust assets to estimated fair value, less costs of disposal	(260,687)		—		—
Total assets of discontinued operations	$	304,124	$	728,587	$	762,242

Accounts payable	$	69,122	$	77,636	$	64,492
Accrued liabilities	118,076		133,431		125,812
Lease liabilities	8,544		10,332		12,956
Notes payable	595		784		5,246
Lease liabilities - noncurrent	26,536		28,775		29,770
Pension and postretirement benefits	42,076		46,569		46,647
Other noncurrent liabilities	34,549		37,645		40,020
Total liabilities of discontinued operations	$	299,498	$	335,172	$	324,943

(1)Amounts at January 2, 2021 and September 26, 2020 have been classified as current and long-term in the Condensed Consolidated Balance Sheets.

The cash flows related to discontinued operations have not been segregated and are included in the Condensed Consolidated Statements of Cash Flows. The following table presents cash flow and non-cash information related to discontinued operations:


	Quarters Ended				Nine Months Ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Depreciation	$	—	$	2,803	$	2,608	$	8,150
Amortization	$	—	$	1,333	$	1,460	$	3,877
Capital expenditures	$	2,085	$	724	$	6,155	$	6,124
Impairment of intangible assets and goodwill	$	—	$	—	$	155,745	$	20,319
Loss on classification of assets held for sale	$	30,562	$	—	$	266,742	$	—
Other investing activities	$	1,501	$	1,795	$	4,875	$	3,626
Capital expenditures included in accounts payable at end of period	$	70	$	35	$	70	$	35
Right-of-use assets obtained in exchange for lease obligations	$	1,454	$	197	$	4,591	$	398

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HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

(4) Revenue Recognition

Revenue is recognized when obligations under the terms of a contract with a customer are satisfied, which occurs at a point in time, upon either shipment or delivery to the customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods, which includes estimates for variable consideration. Variable consideration includes trade discounts, rebates, volume-based incentives, cooperative advertising and product returns, which are offered within contracts between the Company and its customers, employing the practical expedient for contract costs. Incidental items that are immaterial to the context of the contract are recognized as expense at the transaction date.

The following table presents the Company’s revenues disaggregated by the customer’s method of purchase:


		Quarters Ended				Nine Months Ended					Quarters Ended				Nine Months Ended
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019			October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Third-party brick-and-mortar wholesale	Third-party brick-and-mortar wholesale	$	1,277,261	$	1,436,935	$	3,600,404	$	4,029,352	Third-party brick-and-mortar wholesale	$	1,312,440	$	1,192,959	$	3,570,710	$	3,243,572
Consumer-directed	Consumer-directed	531,005		430,032		1,263,103		1,186,566		Consumer-directed	477,111		498,904		1,478,181		1,194,444
Total net sales	Total net sales	$	1,808,266	$	1,866,967	$	4,863,507	$	5,215,918	Total net sales	$	1,789,551	$	1,691,863	$	5,048,891	$	4,438,016

Revenue Sources

Third-Party Brick-and-Mortar Wholesale Revenue

Third-party brick-and-mortar wholesale revenue is primarily generated by sales of the Company’s products to retailers to support their brick-and-mortar operations. Also included within third-party brick-and-mortar wholesale ~~revenues~~revenue is royalty revenue from licensing agreements. The Company earns royalties through license agreements with manufacturers of other consumer products that incorporate certain of the Company’s brands. The Company accrues revenue earned under these contracts based upon reported sales from the licensees. Additionally, in the quarter and nine months ended September 26, 2020, third-party brick-and-mortar wholesale revenue ~~includes~~included $4,053 and ~~$645,776~~$518,309, respectively, of revenue from contracts with governments generated from the sale of both cloth face coverings and gowns for use ~~to help mitigate the spread of the virus~~ during the COVID-19 ~~pandemic, respectively.~~pandemic.

Consumer-Directed Revenue

Consumer-directed revenue is primarily generated through sales driven directly by the consumer through company-operated stores and e-commerce platforms, which include both owned sites and the sites of the Company’s retail customers.

~~(4) Acquisitions~~

~~Bras N Things~~

On February 12, 2018, the Company acquired 100% of the outstanding equity of BNT Holdco Pty Limited (“Bras N Things”) for a total purchase price of A$498,236 (U.S.$391,572). During 2018, due to the final working capital adjustment, the purchase consideration was reduced by A$3,012 (U.S.$2,367), ultimately resulting in a revised purchase price of A$495,224 (U.S.$389,205), which included a cash payment of A$428,956 (U.S.$337,123), an indemnification escrow of A$31,988 (U.S.$25,140) and debt assumed of A$34,280 (U.S.$26,942). U.S. dollar equivalents are based on acquisition date exchange rates.

The Company funded the acquisition with a combination of short-term borrowings under its existing revolving loan facility (the “Revolving Loan Facility”) and cash on hand. During the third quarter of 2019, A$31,425 (U.S.$21,360) of the

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~~HANESBRANDS INC.~~

~~Notes to Condensed Consolidated Financial Statements — (Continued)~~

~~(amounts in thousands, except per share data)~~

~~(unaudited)~~

indemnification escrow, including interest earned, was paid to the sellers. The remaining indemnification escrow, held in one of the Company’s bank accounts, is recognized and classified as restricted cash, with the balance as of September 26, 2020 included in the “Other current assets” line of the Condensed Consolidated Balance Sheet.

Since February 12, 2018, goodwill related to the Bras N Things acquisition decreased by $792 as a result of measurement period adjustments, primarily related to working capital adjustments. The purchase price allocation was finalized in the first quarter of 2019.

(5) Stockholders’ Equity

Basic earnings per share (“EPS”) was computed by dividing net income (loss) by the number of weighted average shares of common stock outstanding during the period. Diluted EPS was calculated to give effect to all potentially issuable dilutive shares of common stock using the treasury stock method.

The reconciliation of basic to diluted weighted average shares outstanding is as follows:


		Quarters Ended		Nine Months Ended			Quarters Ended		Nine Months Ended
		September 26, 2020	September 28, 2019	September 26, 2020	September 28, 2019		October 2, 2021	September 26, 2020	October 2, 2021	September 26, 2020
Basic weighted average shares outstanding	Basic weighted average shares outstanding	350,703	364,743	353,419	364,650	Basic weighted average shares outstanding	351,071	350,703	351,020	353,419
Effect of potentially dilutive securities:	Effect of potentially dilutive securities:					Effect of potentially dilutive securities:
Stock options	Stock options	90	437	151	463	Stock options	20	90	17	151
Restricted stock units	Restricted stock units	809	412	380	361	Restricted stock units	1,157	809	956	380
Employee stock purchase plan and other	Employee stock purchase plan and other	2	5	6	4	Employee stock purchase plan and other	3	2	3	6
Diluted weighted average shares outstanding	Diluted weighted average shares outstanding	351,604	365,597	353,956	365,478	Diluted weighted average shares outstanding	352,251	351,604	351,996	353,956

~~For the quarters ended September 26, 2020 and September 28, 2019, there~~

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HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

The following securities were ~~0 anti-dilutive restricted stock units. For the nine months ended September 26, 2020 and September 28, 2019, there were 499 and 5 restricted stock units~~ excluded from the diluted earnings per share calculation ~~respectively,~~ because their effect would be anti-dilutive. For the quarter and nine months ended September 26, 2020, there were 151 and 50 stock options to purchase shares of common stock excluded from the diluted earnings per share calculation, respectively, because their effect would be anti-dilutive. For the quarter and nine months ended September 28, 2019, there were no anti-dilutive stock options to purchase shares of common stock.anti-dilutive:


	Quarters Ended		Nine Months Ended
	October 2, 2021	September 26, 2020	October 2, 2021	September 26, 2020
Stock options	83	151	167	50
Restricted stock units	48	—	40	499

On October ~~27, 2020,~~26, 2021, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.15 per share on outstanding shares of common stock to be paid on ~~December 1, 2020~~November 30, 2021 to stockholders of record at the close of business on November ~~10, 2020.~~9, 2021.

On February 6, 2020, the Company’s Board of Directors approved a new share repurchase program for up to 40,000 shares to be repurchased in open market transactions, subject to market conditions, legal requirements and other factors. Additionally, management has been granted authority to establish aone or more trading ~~plan~~plans under Rule 10b5-1 of the Exchange Act in connection with share repurchases, which will allow the Company to repurchase shares in the open market during periods in which the stock trading window is otherwise closed for the Company and certain of the Company’s officers and employees pursuant to the Company’s insider trading policy. Unless terminated earlier by the Company’s Board of Directors, the new program will expire when the Company has repurchased all shares authorized for repurchase under the new program. The new program replaced the Company’s previous share repurchase program for up to 40,000 shares that was originally approved in 2016. For the ~~quarter~~quarters ended October 2, 2021 and September 26, 2020 and the nine months ended October 2, 2021, the Company did not enter into any transactions to repurchase shares under the new program. For the nine months ended September 26, 2020, the Company entered into transactions to repurchase 14,464 shares at a weighted average repurchase price of $13.83 per share under the new program. The shares were repurchased at a total cost of $200,269. The Company did not repurchase any shares under the previous share repurchase program during 2020 through the expiration of the program on February 6, 2020 or during the quarter or nine months ended September 28, 2019. At ~~September 26, 2020,~~October 2, 2021, the remaining repurchase authorization under the current share repurchase program totaled 25,536 shares. The primary objective of the share repurchase program is to utilize excess cash to generate shareholder value. Share repurchases ~~are currently~~were previously prohibited under the Senior Secured Credit ~~Facility.~~Facility as a result of the amendment signed in April 2020. The Company terminated such amendment when it submitted its April 3, 2021 compliance certificate which removed the prohibition from that point forward. See Note “Debt” for additional information on the Company’s debt facilities.

(6) Inventories

Inventories consisted of the following:


	October 2, 2021		January 2, 2021		September 26, 2020
Raw materials	$	71,893	$	67,111	$	74,791
Work in process	103,927		108,844		115,189
Finished goods	1,453,686		1,191,803		1,806,871
	$	1,629,506	$	1,367,758	$	1,996,851

1213

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HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

~~(6) Inventories~~(7) Debt

~~Inventories~~Debt consisted of the following:

September 26,
2020 December 28,
2019 September 28,
2019
Raw materials $ 90,386 $ 83,545 $ 98,374
Work in process 124,902 136,592 137,248
Finished goods 1,955,264 1,685,708 1,859,413
$ 2,170,552 $ 1,905,845 $ 2,095,035

~~(7) Debt and Notes Payable~~

~~Debt and notes payable consisted of the following:~~


		Interest Rate as of September 26, 2020	Principal Amount				Maturity Date		Interest Rate as of October 2, 2021	Principal Amount				Maturity Date
			September 26, 2020		December 28, 2019					October 2, 2021		January 2, 2021
Senior Secured Credit Facility:	Senior Secured Credit Facility:							Senior Secured Credit Facility:
Revolving Loan Facility	Revolving Loan Facility	0	$	0	$	0	December 2022	Revolving Loan Facility	—	$	—	$	—	December 2022

Term Loan A	Term Loan A	2.10%	625,000		625,000		December 2022	Term Loan A	1.33%	609,375		625,000		December 2022
Term Loan B	Term Loan B	1.91%	300,000		300,000		December 2024	Term Loan B	—	—		300,000		December 2024

Australian Revolving Loan Facility	Australian Revolving Loan Facility	0	0		0		July 2021	Australian Revolving Loan Facility	—	—		—		July 2022
5.375% Senior Notes	5.375% Senior Notes	5.38%	700,000		0		May 2025	5.375% Senior Notes	5.38%	700,000		700,000		May 2025
4.875% Senior Notes	4.875% Senior Notes	4.88%	900,000		900,000		May 2026	4.875% Senior Notes	4.88%	900,000		900,000		May 2026
4.625% Senior Notes	4.625% Senior Notes	4.63%	900,000		900,000		May 2024	4.625% Senior Notes	4.63%	900,000		900,000		May 2024
3.5% Senior Notes	3.5% Senior Notes	3.50%	581,531		558,847		June 2024	3.5% Senior Notes	3.50%	579,643		610,724		June 2024
European Revolving Loan Facility		0	0		110,914		December 2020
Accounts Receivable Securitization Facility	Accounts Receivable Securitization Facility	0	0		0		March 2021	Accounts Receivable Securitization Facility	—	—		—		June 2022
Total debt	Total debt		4,006,531		3,394,761			Total debt		3,689,018		4,035,724
Notes payable			5,257		4,244
Total debt and notes payable			4,011,788		3,399,005
Less long-term debt issuance costs	Less long-term debt issuance costs		34,319		26,977			Less long-term debt issuance costs		24,971		32,354
Less notes payable			5,257		4,244
Less current maturities	Less current maturities		0		110,914			Less current maturities		37,500		263,936
Total long-term debt	Total long-term debt		$	3,972,212	$	3,256,870		Total long-term debt		$	3,626,547	$	3,739,434

As of ~~September 26, 2020,~~October 2, 2021, the Company had ~~$989,097~~$995,824 of borrowing availability under the $1,000,000 Revolving Loan Facility after taking into account ~~$10,903~~$4,176 of standby and trade letters of credit issued and outstanding under this facility. In March ~~2020, in response to the uncertainty of the circumstances surrounding the COVID-19 pandemic,~~2021, the Company ~~drew down $630,000 under~~repaid the Revolving Loan Facility as a precautionary measure to provide the Company with additional financial flexibility to manage its business with a safety-first emphasis during the unknown duration and impact of the COVID-19 pandemic. The Company repaid $490,000 of its borrowings under the Revolving Loan Facility in April 2020. The remaining outstanding balance ~~on the Revolving~~of Term Loan ~~Facility was repaid in connection with the issuance~~B which consisted of ~~the 5.375% Senior Notes in May 2020 discussed below.~~a required excess cash flow prepayment of $238,936 and a voluntary prepayment of $61,064.

The ~~Company entered into an~~Company’s accounts receivable securitization facility (the “Accounts Receivable Securitization Facility”) entered into in November ~~2007.~~2007 was amended in March 2021. The ~~Company’s maximum~~latest amendment decreased the fluctuating facility limit to $175,000 (previously $225,000) and extended the maturity date to June 2022. Additionally, the amendment changed certain ratios and borrowing ~~capacity under~~base calculations, raised pricing and added certain receivables to the ~~Accounts Receivable Securitization Facility was $225,000 as of September 26, 2020.~~pledged collateral pool for the facility. Borrowings under the Accounts Receivable Securitization Facility are permitted only to the extent that the face of the receivables in the collateral pool, net of applicable reserves and other deductions, exceeds the outstanding loans and also subject to a fluctuating facility limit, not to exceed ~~$225,000.~~$175,000. The Company’s maximum borrowing capacity under the Accounts Receivable Securitization Facility was $175,000 as of October 2, 2021. The Company had 0$166,214 of borrowing availability under the Accounts Receivable Securitization Facility at ~~September 26, 2020.~~October 2, 2021.

The Company had ~~$42,433~~$43,051 of borrowing availability under the Australian Revolving Loan Facility ~~$116,604 borrowing availability under the European Revolving Loan Facility~~ and ~~$117,953~~$13,856 of borrowing availability under other international credit

~~Table of Contents~~

~~HANESBRANDS INC.~~

~~Notes to Condensed Consolidated Financial Statements — (Continued)~~

~~(amounts in thousands, except per share data)~~

~~(unaudited)~~

facilities after taking into account outstanding borrowings and letters of credit outstanding under the applicable facilities at ~~September 26, 2020.~~

In March 2020, the Company amended the Accounts Receivable Securitization Facility. This amendment primarily decreased the fluctuating facility limit to $225,000 (previously $300,000) and extended the maturity date to MarchOctober 2, 2021. As a result of the COVID-19 pandemic, in May 2020, the Company amended the Accounts Receivable Securitization Facility which changed certain ratios, inserted a floor and raised pricing, as well as removed certain receivables from being pledged as collateral for the facility, increased limits on other receivables pledged as collateral and required the Company to maintain the same minimum liquidity covenant contained in the Senior Secured Credit Facility.

~~In May 2020, the Company issued $700,000 aggregate principal amount of 5.375% Senior Notes, with interest payable on May 15 and November 15 of each year commencing on November 15, 2020.~~ The ~~5.375% Senior Notes will mature on May 15, 2025. The sale of the 5.375% Senior Notes resulted in net proceeds of $691,250 which were used to repay all outstanding borrowings under its~~Australian Revolving Loan Facility, ~~pay related fees and expenses, and for general corporate purposes. The issuance of the 5.375% Senior Notes resulted~~originally entered into in ~~$12,223 of capitalized debt issuance costs. Debt issuance costs are amortized to interest expense over the life of the debt instrument.~~

~~On and after May 15, 2022, the Company has the right to redeem all or a portion of the 5.375% Senior Notes, at the redemption prices set forth~~July 2016, was amended in ~~the indenture governing the 5.375% Senior Notes, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.~~

Prior to May 15, 2022, the Company has the right to redeem all or of a portion of the 5.375% Senior Notes at a redemption price equal to 100% of the principal amount plus a “make-whole” premium and accrued and unpaid interest, if any, to, but excluding, the redemption date. In addition, prior to May 15, 2022, the Company may on any one or more occasions redeem up to 40% of the notes with the net proceeds from certain equity offerings at a redemption price equal to 105.375% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

The 5.375% Senior Notes are senior unsecured obligations of the Company and are fully and unconditionally guaranteed by the Company and each of its domestic subsidiaries that guarantee the Company’s Senior Secured Credit Facility. The indenture governing the 5.375% Senior Notes includes covenants that limit the ability of the Company and its subsidiaries to incur certain liens, enter into certain sale and leaseback transactions and the ability of the Company and the guarantors to consolidate, merge or sell all or substantially all of their assets. The indenture also contains customary events of default which include (subject in certain cases to customary grace and cure periods), among others, nonpayment of principal or interest; breach of other agreements in the indenture; failure to pay certain other indebtedness; certain events of bankruptcy, insolvency or reorganization; failure to pay certain final judgments; and failure of certain guarantees to be enforceable.

In the event of a change of control of the Company and a rating downgrade, the Company will be required to offer to repurchase all outstanding 5.375% Senior Notes at 101% of their principal amount, plus accrued and unpaid interest, if any, to, but excluding, the repurchase date.

~~The 5.375% Senior Notes were issued in a transaction exempt from registration under the Securities Act and do not require disclosure of separate financial information for the guarantor subsidiaries.~~

~~In September 2020, the Company amended the European Revolving Loan Facility primarily~~July 2021 to extend the maturity date to ~~December 2020.~~July 2022 and to reduce the bilateral cash advance limit from A$50,000 to A$46,000 with an offsetting increase in the bank overdraft limit from A$10,000 to A$14,000.

In April 2020, given the rapidly changing business environment and level of uncertainty being created by the COVID-19 pandemic and the associated impact on future earnings, the Company amended its Senior Secured Credit Facility prior to any potential covenant violation in order to modify the financial covenants and to provide operating flexibility during the COVID-19 crisis. The amendment changed certain provisions and covenants under the Senior Secured Credit Facility through the fiscal quarter ended July 3, 2021, after which the covenants were to revert to their original, pre-amendment levels. The Company voluntarily terminated the covenant relief amendment when it submitted its April 3, 2021 compliance certificate. After termination, the covenants reverted to their original, pre-amendment levels for the fiscal quarter ended July 3, 2021.

As of ~~September 26, 2020,~~October 2, 2021, the Company was in compliance with all financial covenants under its credit facilities and other outstanding indebtedness. ~~The Company continues to monitor its covenant compliance.~~ Under the terms of its Senior Secured Credit Facility, among other financial and non-financial covenants,the Company is required to maintain a minimum interest coverage ratio and a maximum leverage ratio. The interest coverage ratio covenant is the ratio of the Company’s EBITDA for the preceding four fiscal quarters to its consolidated total interest expense and the maximum leverage ratio covenant is the ratio of the Company’s net debt to EBITDA for the preceding ~~four fiscal quarters. EBITDA is defined as earnings before interest, income taxes, depreciation expense and amortization, as computed pursuant to the Senior Secured Credit Facility.~~

In April 2020, given the rapidly changing environment and level of uncertainty being created by the COVID-19 pandemic and the associated impact on future earnings, the Company amended its Senior Secured Credit Facility prior to any potential covenant violation in order to modify the financial covenants and to provide operating flexibility during the COVID-19 crisis.

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HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

~~The amendment effects changes~~four fiscal quarters. EBITDA is defined as earnings before interest, income taxes, depreciation expense and amortization, as computed pursuant to ~~certain provisions and covenants under~~ the Senior Secured Credit Facility during the period beginning with the fiscal quarter ended June 27, 2020 and continuing through the fiscal quarter ending July 3, 2021 (such period of time, the “Covenant Relief Period”), including: (a) suspension of compliance with the maximum leverage ratio; (b) reduction of the minimum interest coverage ratio from 3.00 to 1.00 to (i) 2.00 to 1.00 for the fiscal quarters ending June 27, 2020 through April 3, 2021 and (ii) 2.25 to 1.00 for the fiscal quarter ending July 3, 2021; (c) a minimum last twelve months EBITDA covenant of $625,000 as of June 27, 2020, $505,000 as of September 26, 2020, $445,000 as of January 2, 2021, $435,000 as of April 3, 2021 and $505,000 as of July 3, 2021; (d) a minimum liquidity covenant of $300,000, increasing to $400,000 upon certain conditions; (e) increased limitations on investments, acquisitions, restricted payments and the incurrence of indebtedness; and (f) anti-cash hoarding provisions. During the Covenant Relief Period, the applicable margin and applicable commitment fee margin will be calculated assuming the leverage ratio is greater than or equal to 4.50 to 1.00. The amendment also permanently amends the definition of “leverage ratio” for purposes of the financial covenant calculation to remove the maximum amount of cash allowed to be netted from the definition of “indebtedness” and to allow for the netting of cash from certain foreign subsidiaries. Facility.

The Company expects to maintain compliance with its covenants for at least one year from the date of these financial statements based on its current expectations and forecasts. If economic conditions caused by the COVID-19 pandemic do not continue to improve or otherwise worsen, including as a result of any new virus variants or vaccine distribution or efficacy, and the Company’s earnings and operating cash flows do not ~~start~~continue to recover as currently estimated by management, this could impact the Company’s ability to maintain compliance with its financial covenants and require the Company to seek additional amendments to its Senior Secured Credit Facility. If the Company is not able to obtain such necessary additional amendments, this would lead to an event of default and, if not cured timely, its lenders could require the Company to repay its outstanding debt. In that situation, the Company may not be able to raise sufficient debt or equity capital, or divest assets, to refinance or repay the lenders.

The Company intends to refinance its Senior Secured Credit Facility in the fourth quarter of 2021, subject to market conditions. In conjunction with the refinancing, the Company intends to redeem its 5.375% Senior Notes using proceeds from the transaction and cash on hand. Redemption of the 5.375% Senior Notes will require payment of a make-whole premium, which along with transaction fees is estimated to result in a one-time charge of approximately $45,000 in the fourth quarter of 2021.

(8) Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss (“AOCI”) are as follows:

Cumulative Translation Adjustment(1)
Cash Flow Hedges Defined Benefit Plans Income Taxes Accumulated Other Comprehensive Loss
Balance at December 28, 2019 $ (157,138) $ 4,786 $ (629,360) $ 164,064 $ (617,648)
Amounts reclassified from accumulated other comprehensive loss 0 (15,452) 15,717 241 506
Current-period other comprehensive income (loss) activity 1,557 6,022 (303) (4,917) 2,359
Total other comprehensive income (loss) 1,557 (9,430) 15,414 (4,676) 2,865
Balance at September 26, 2020 $ (155,581) $ (4,644) $ (613,946) $ 159,388 $ (614,783)


	Cumulative Translation Adjustment(1)		Cash Flow Hedges		Defined Benefit Plans		Income Taxes		Accumulated Other Comprehensive Loss
Balance at July 3, 2021	$	(89,252)	$	(8,826)	$	(654,048)	$	171,198	$	(580,928)
Amounts reclassified from accumulated other comprehensive loss	—		14,905		6,179		(3,980)		17,104
Current-period other comprehensive income (loss) activity	(42,330)		(5,144)		274		(304)		(47,504)
Total other comprehensive income (loss)	(42,330)		9,761		6,453		(4,284)		(30,400)

Balance at October 2, 2021	$	(131,582)	$	935	$	(647,595)	$	166,914	$	(611,328)


	Cumulative Translation Adjustment(1)		Cash Flow Hedges		Defined Benefit Plans		Income Taxes		Accumulated Other Comprehensive Loss
Balance at January 2, 2021	$	(52,820)	$	(26,538)	$	(668,730)	$	181,129	$	(566,959)
Amounts reclassified from accumulated other comprehensive loss	—		24,818		19,286		(9,977)		34,127
Current-period other comprehensive income (loss) activity	(78,762)		2,655		1,849		(4,238)		(78,496)
Total other comprehensive income (loss)	(78,762)		27,473		21,135		(14,215)		(44,369)

Balance at October 2, 2021	$	(131,582)	$	935	$	(647,595)	$	166,914	$	(611,328)

(1)Cumulative Translation Adjustment includes translation adjustments and net investment hedges. See Note, “Financial Instruments and Risk Management” for additional disclosures about net investment hedges.

Table of Contents

HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)


	Cumulative Translation Adjustment(1)		Cash Flow Hedges		Defined Benefit Plans		Income Taxes		Accumulated Other Comprehensive Loss
Balance at June 27, 2020	$	(179,259)	$	9,641	$	(619,140)	$	157,749	$	(631,009)
Amounts reclassified from accumulated other comprehensive loss	—		(7,278)		5,428		657		(1,193)
Current-period other comprehensive income (loss) activity	23,678		(7,007)		(234)		982		17,419
Total other comprehensive income (loss)	23,678		(14,285)		5,194		1,639		16,226

Balance at September 26, 2020	$	(155,581)	$	(4,644)	$	(613,946)	$	159,388	$	(614,783)


	Cumulative Translation Adjustment(1)		Cash Flow Hedges		Defined Benefit Plans		Income Taxes		Accumulated Other Comprehensive Loss
Balance at December 28, 2019	$	(157,138)	$	4,786	$	(629,360)	$	164,064	$	(617,648)
Amounts reclassified from accumulated other comprehensive loss	—		(15,452)		15,717		241		506
Current-period other comprehensive income (loss) activity	1,557		6,022		(303)		(4,917)		2,359
Total other comprehensive income (loss)	1,557		(9,430)		15,414		(4,676)		2,865

Balance at September 26, 2020	$	(155,581)	$	(4,644)	$	(613,946)	$	159,388	$	(614,783)

The Company had the following reclassifications out of AOCI:


Component of AOCI	Component of AOCI	Location of Reclassification into Income	Amount of Reclassification from AOCI								Component of AOCI	Location of Reclassification into Income	Amount of Reclassification from AOCI
			Quarters Ended				Nine Months Ended						Quarters Ended				Nine Months Ended
			September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019				October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Gain on foreign exchange contracts designated as cash flow hedges		Cost of sales	$	7,278	$	6,991	$	15,452	$	21,355
Gain (loss) on forward foreign exchange contracts designated as cash flow hedges											Gain (loss) on forward foreign exchange contracts designated as cash flow hedges	Cost of sales	$	(4,506)	$	5,949	$	(14,161)	$	10,576
												Income tax	1,203		(1,757)		3,855		(3,002)
												Loss from discontinued operations, net of tax	(876)		1,004		(2,398)		3,722
												Net of tax	(4,179)		5,196		(12,704)		11,296

Gain (loss) on cross-currency swap contracts designated as cash flow hedges											Gain (loss) on cross-currency swap contracts designated as cash flow hedges	Selling, general and administrative expenses	(8,134)		—		(5,523)		—
												Interest expense, net	(1,187)		—		(2,205)		—
												Income tax	996		—		773		—
		Income tax	(2,082)		(1,646)		(4,156)		(5,054)			Net of tax	(8,325)		—		(6,955)		—
		Net of tax	5,196		5,345		11,296		16,301
Amortization of deferred actuarial loss and prior service cost	Amortization of deferred actuarial loss and prior service cost	Other expenses	(5,428)		(4,963)		(15,717)		(14,529)		Amortization of deferred actuarial loss and prior service cost	Other expenses	(6,026)		(5,430)		(19,814)		(13,658)
		Income tax	1,425		1,358		3,915		3,974			Income tax	1,580		1,425		4,922		3,919
		Net of tax	(4,003)		(3,605)		(11,802)		(10,555)			Loss from discontinued operations, net of tax	(154)		2		424		(2,063)
												Net of tax	(4,600)		(4,003)		(14,468)		(11,802)

Total reclassifications	Total reclassifications		$	1,193	$	1,740	$	(506)	$	5,746	Total reclassifications		$	(17,104)	$	1,193	$	(34,127)	$	(506)

Table of Contents

HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

(9) Financial Instruments and Risk Management

The Company uses forward foreign exchange contracts and cross-currency swap contracts to manage its exposures to movements in foreign exchange ~~rates.~~rates primarily related to the Australian dollar, Euro, Canadian dollar and Mexican peso. The Company also uses a combination of ~~derivative instruments~~cross-currency swap contracts and long-term debt to manage its exposure to foreign currency risk associated with the Company’s net investment in ~~its~~certain European subsidiaries.

As of September 26, 2020, the notional U.S. dollar equivalent of the Company’s derivative portfolio of forward foreign exchange contracts was $599,297, consisting of contracts hedging exposures primarily related to the Australian dollar, Euro, Canadian dollar and Mexican peso. As of September 26, 2020, the U.S. dollar equivalent carrying value of long-term debt designated as a partial European net investment hedge was $581,531. The notional U.S. dollar equivalent of the Company’s cross-currency swap contracts, which are also designated as partial European net investment hedges, was $335,940 as of September 26, 2020.


	Hedge Type	October 2, 2021		January 2, 2021
U.S. dollar equivalent notional amount of derivative instruments:
Forward foreign exchange contracts	Cash Flow and Mark to Market	$	362,743	$	617,912
Cross-currency swap contracts	Cash Flow	$	352,920	$	—
Cross-currency swap contracts	Net Investment	$	335,940	$	335,940

Fair Values of Derivative Instruments

The fair values of derivative financial instruments related to forward foreign exchange contracts and cross-currency swap contracts recognized in the Condensed Consolidated Balance Sheets of the Company were as follows:


		Balance Sheet Location	Fair Value					Balance Sheet Location	Fair Value
			September 26, 2020		December 28, 2019				October 2, 2021		January 2, 2021
Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:						Derivatives designated as hedging instruments:
Forward foreign exchange contracts	Forward foreign exchange contracts	Other current assets	$	1,095	$	2,716	Forward foreign exchange contracts	Other current assets	$	4,588	$	1
Cross-currency swap contracts	Cross-currency swap contracts	Other current assets	2,706		926		Cross-currency swap contracts	Other current assets	2,839		918
Cross-currency swap contracts		Other noncurrent assets	3,139		2,975
Forward foreign exchange contracts							Forward foreign exchange contracts	Current assets of discontinued operations	—		40
Forward foreign exchange contracts							Forward foreign exchange contracts	Other noncurrent assets	232		—

Derivatives not designated as hedging instruments:	Derivatives not designated as hedging instruments:						Derivatives not designated as hedging instruments:
Forward foreign exchange contracts							Forward foreign exchange contracts	Other current assets	3,846		2,459
Forward foreign exchange contracts	Forward foreign exchange contracts	Other current assets	6,442		5,314		Forward foreign exchange contracts	Current assets of discontinued operations	185		198
Total derivative assets	Total derivative assets		13,382		11,931		Total derivative assets		11,690		3,616

Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:						Derivatives designated as hedging instruments:
Forward foreign exchange contracts	Forward foreign exchange contracts	Accrued liabilities	(5,054)		(2,246)		Forward foreign exchange contracts	Accrued liabilities	(55)		(12,898)
Cross-currency swap contracts							Cross-currency swap contracts	Accrued liabilities	(1,410)		—
Forward foreign exchange contracts							Forward foreign exchange contracts	Current liabilities of discontinued operations	(4)		(4,747)
Forward foreign exchange contracts							Forward foreign exchange contracts	Other noncurrent liabilities	(1)		(2,190)
Cross-currency swap contracts							Cross-currency swap contracts	Other noncurrent liabilities	(8,741)		(16,526)
Derivatives not designated as hedging instruments:	Derivatives not designated as hedging instruments:						Derivatives not designated as hedging instruments:
Forward foreign exchange contracts							Forward foreign exchange contracts	Accrued liabilities	(820)		(16,488)
Forward foreign exchange contracts	Forward foreign exchange contracts	Accrued liabilities	(4,335)		(1,147)		Forward foreign exchange contracts	Current liabilities of discontinued operations	(73)		(2,195)
Total derivative liabilities	Total derivative liabilities		(9,389)		(3,393)		Total derivative liabilities		(11,104)		(55,044)

Net derivative asset			$	3,993	$	8,538
Net derivative asset (liability)							Net derivative asset (liability)		$	586	$	(51,428)

1617

Table of Contents

HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

Cash Flow Hedges

The Company uses forward foreign exchange contracts and cross-currency swap contracts to reduce the effect of fluctuating foreign currencies on ~~short-term~~ foreign currency-denominated transactions, foreign currency-denominated investments and other known foreign currency exposures. Gains and losses on these contracts are intended to offset losses and gains on the hedged transaction in an effort to reduce the earnings volatility resulting from fluctuating foreign currency exchange rates.

On April 1, 2021, in connection with a reduction in the amount of the 3.5% Senior Notes designated in the European net investment hedge discussed below, the Company entered into 3 pay-fixed rate, receive-fixed rate cross-currency swap contracts with a total notional amount of €300,000. The Company designated these cross-currency swap contracts to hedge the undesignated portion of the foreign currency cash flow exposure related to the Company’s 3.5% Senior Notes, which had a carrying amount of €500,000 as of October 2, 2021. These cross-currency swap contracts, which mature on June 15, 2024, swap Euro-denominated interest payments for U.S. dollar-denominated interest payments, thereby economically converting €300,000 of the Company’s €500,000 fixed-rate 3.5% Senior Notes to a fixed-rate 4.7945% USD-denominated obligation.

The Company expects to reclassify into earnings during the next 12 months a net loss from AOCI of approximately ~~$4,295.~~$2,474. The Company is hedging exposure to the variability in future foreign currency-denominated cash flows for forecasted transactions over the next 1517 months and for long-term debt over the next 33 months.

The effect of cash flow hedge derivative instruments on the Condensed Consolidated Statements of Income and AOCI is as follows:

Amount of Gain (Loss) Recognized in AOCI on Derivative Instruments
Quarters Ended Nine Months Ended
September 26,
2020 September 28,
2019 September 26,
2020 September 28,
2019
Foreign exchange contracts $ (7,007) $ 9,970 $ 6,022 $ 11,684


	Amount of Gain (Loss) Recognized in AOCI on Derivative Instruments
	Quarters Ended				Nine Months Ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020

Forward foreign exchange contracts	$	4,827	$	(7,007)	$	11,921	$	6,022
Cross-currency swap contracts	(9,971)		—		(9,266)		—

Total	$	(5,144)	$	(7,007)	$	2,655	$	6,022

Location of Gain
Reclassified from AOCI
into Income Amount of Gain Reclassified from AOCI into Income
Quarters Ended Nine Months Ended
September 26,
2020 September 28,
2019 September 26,
2020 September 28,
2019
Foreign exchange contracts(1)
Cost of sales $ 7,278 $ 6,991 $ 15,452 $ 21,355


	Location of Gain (Loss) Reclassified from AOCI into Income	Amount of Gain (Loss) Reclassified from AOCI into Income
		Quarters Ended				Nine Months Ended
		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020


Forward foreign exchange contracts(1)	Cost of sales	$	(4,506)	$	5,949	$	(14,161)	$	10,576
Forward foreign exchange contracts(1)	Loss from discontinued operations, net of tax	(1,078)		1,329		(2,929)		4,876
Cross-currency swap contracts(1)	Selling, general and administrative expenses	(8,134)		—		(5,523)		—
Cross-currency swap contracts(1)	Interest expense, net	(1,187)		—		(2,205)		—

Total		$	(14,905)	$	7,278	$	(24,818)	$	15,452

(1)The Company does not exclude amounts from effectiveness testing for cash flow hedges that would require recognition into earnings based on changes in fair value.

Quarters Ended Nine Months Ended

September 26,
2020 September 28,
2019 September 26,
2020 September 28,
2019
Total cost of sales in which the effects of cash flow hedges are recorded $ 1,191,553 $ 1,149,934 $ 3,140,050 $ 3,203,331

Table of Contents

HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)


	Quarters Ended				Nine Months Ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Total cost of sales in which the effects of cash flow hedges are recorded	$	1,089,890	$	1,120,392	$	3,064,920	$	2,934,515
Total selling, general and administrative expenses in which the effects of cash flow hedges are recorded	$	465,015	$	382,384	$	1,341,809	$	1,064,328
Total interest expense, net in which the effects of cash flow hedges are recorded	$	40,860	$	43,500	$	127,760	$	120,602
Total loss from discontinued operations, net of tax in which the effects of cash flow hedges are recorded	$	(24,970)	$	(14,947)	$	(435,823)	$	(3,326)

Net Investment Hedges

In July 2019, the Company entered into 2 pay-fixed rate, receive-fixed rate cross-currency swap contracts with a total notional amount of €300,000 that were designated as hedges of a portion of the beginning balance of the Company’s net investment in ~~its~~certain European subsidiaries. These cross-currency swap contracts, which mature on May 15, 2024, swap U.S. dollar-denominated interest payments for Euro-denominated interest payments, thereby economically converting a portion of the Company’s fixed-rate 4.625% Senior Notes to a fixed-rate 2.3215% Euro-denominated obligation.

In July 2019, the Company also designated the full amount of its 3.5% Senior Notes with a carrying value of €500,000, which is a nonderivative financial instrument, as a hedge of a portion of the beginning balance of the Company’s European net investment. As of April 1, 2021, the Company reduced the amount of its 3.5% Senior Notes designated in the European net investment hedge from €500,000 to €200,000. As of October 2, 2021 and January 2, 2021, the U.S. dollar equivalent carrying value of Euro-denominated long-term debt designated as a partial European net investment hedge was $231,857 and $610,724, respectively.

The amount of after-tax gains (losses) included in AOCI in the Condensed Consolidated Balance Sheets related to derivative instruments and nonderivative financial instruments designated as net investment hedges and the amount of gains included in the “Interest expense, net” line in the Condensed Consolidated Statements of Income related to amounts excluded from the assessment of hedge effectiveness for derivative instruments designated as net investment hedges are as follows:


		Amount of Gain (Loss) Recognized in AOCI									Amount of Gain (Loss) Recognized in AOCI
		Quarters Ended				Nine Months Ended					Quarters Ended				Nine Months Ended
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019			October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Euro-denominated long-term debt	Euro-denominated long-term debt	$	(13,815)	$	9,845	$	(15,353)	$	9,845	Euro-denominated long-term debt	$	3,966	$	(13,815)	$	21,722	$	(15,353)
Cross-currency swap contracts	Cross-currency swap contracts	(10,611)		6,436		117		6,436		Cross-currency swap contracts	5,650		(10,611)		10,957		117
Total	Total	$	(24,426)	$	16,281	$	(15,236)	$	16,281	Total	$	9,616	$	(24,426)	$	32,679	$	(15,236)


	Location of Gain Recognized in Income	Amount of Gain Recognized in Income (Amount Excluded from Effectiveness Testing)
		Quarters Ended				Nine Months Ended
		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Cross-currency swap contracts	Interest expense, net	$	1,870	$	1,805	$	5,484	$	5,772


		Quarters Ended				Nine Months Ended
		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Total interest expense, net in which the amounts excluded from effectiveness testing for net investment hedges are recorded		$	40,860	$	43,500	$	127,760	$	120,602

1719

Table of Contents

HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

Location of Gain Recognized in Income Amount of Gain Recognized in Income
(Amount Excluded from Effectiveness Testing)
Quarters Ended Nine Months Ended
September 26,
2020 September 28,
2019 September 26,
2020 September 28,
2019
Cross-currency swap contracts Interest expense, net $ 1,805 $ 1,672 $ 5,772 $ 1,672
Quarters Ended Nine Months Ended
September 26,
2020 September 28,
2019 September 26,
2020 September 28,
2019
Total interest expense, net in which the amounts excluded from effectiveness testing for net investment hedges are recorded $ 43,868 $ 43,091 $ 122,376 $ 137,672

Mark to Market Hedges

A derivative used as a hedging instrument whose change in fair value is recognized to act as a hedge against changes in the values of the hedged item is designated as a mark to market hedge. The Company uses forward foreign exchange derivative contracts as hedges against the impact of foreign exchange fluctuations on existing accounts receivable and payable balances and intercompany lending transactions denominated in foreign currencies. ~~Foreign~~Forward foreign exchange derivative contracts are recorded as mark to market hedges when the hedged item is a recorded asset or liability that is revalued in each accounting period. These contracts are not designated as hedges under the accounting standards and are recorded at fair value in the Condensed Consolidated Balance Sheets. Any gains or losses resulting from changes in fair value are recognized directly into earnings. Gains or losses on these contracts largely offset the net remeasurement gains or losses on the related assets and liabilities.

The effect of derivative contracts not designated as hedges on the Condensed Consolidated Statements of Income is as follows:

Location of Gain (Loss)
Recognized in Income
on Derivatives Amount of Gain (Loss) Recognized in Income
Quarters Ended Nine Months Ended
September 26,
2020 September 28,
2019 September 26,
2020 September 28,
2019
Foreign exchange contracts Cost of sales $ (1,611) $ (3,055) $ (14,594) $ (21,813)
Foreign exchange contracts Selling, general and administrative expenses 3,718 2,546 4,646 1,625
Total $ 2,107 $ (509) $ (9,948) $ (20,188)


	Location of Gain (Loss) Recognized in Income on Derivatives	Amount of Gain (Loss) Recognized in Income
		Quarters Ended				Nine Months Ended
		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Forward foreign exchange contracts	Cost of sales	$	6,087	$	(1,472)	$	24,711	$	(11,004)
Forward foreign exchange contracts	Selling, general and administrative expenses	(597)		3,718		2,494		4,646
Forward foreign exchange contracts	Loss from discontinued operations, net of tax	859		(139)		4,812		(3,590)
Total		$	6,349	$	2,107	$	32,017	$	(9,948)

(10) Fair Value of Assets and Liabilities

As of ~~September 26, 2020,~~October 2, 2021, the Company held certain financial assets and liabilities that are required to be measured at fair value on a recurring basis. These consisted of the Company’s derivative instruments related to forward foreign exchange derivative contracts, cross-currency swap derivative contracts and deferred compensation plan liabilities. The fair values of forward foreign exchange derivative contracts are determined using the cash flows of the forward contracts, discount rates to account for the passage of time and current foreign exchange market data which are all based on inputs readily available in public markets and are categorized as Level 2. The fair values of cross-currency swap derivative contracts are determined using the cash flows of the swap contracts, discount rates to account for the passage of time, current foreign exchange and interest rate market data and credit risk, which are all based on inputs readily available in public markets and are categorized as Level 2. The fair value of deferred compensation plans is based on readily available current market data and is categorized as Level 2. The Company’s defined benefit pension plan investments are not required to be measured at fair value on a quarterly recurring basis.

There were no changes during the quarter and nine months ended ~~September 26, 2020~~October 2, 2021 to the Company’s valuation techniques used to measure asset and liability fair values on a recurring basis. As of and during the quarter and nine months ended ~~September 26, 2020,~~October 2, 2021, the Company did not have any non-financial assets or liabilities that were required to be measured at fair value on a recurring or non-recurring basis.

1820

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HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

The following tables set forth by level within the fair value hierarchy the Company’s financial assets and liabilities within continuing operations accounted for at fair value on a recurring basis.


		Assets (Liabilities) at Fair Value as of September 26, 2020									Assets (Liabilities) at Fair Value as of October 2, 2021
		Total		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Total		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Forward foreign exchange contracts - assets	Forward foreign exchange contracts - assets	$	7,537	$	0	$	7,537	$	0	Forward foreign exchange contracts - assets	$	8,666	$	—	$	8,666	$	—
Cross-currency swap contracts - assets	Cross-currency swap contracts - assets	5,845		0		5,845		0		Cross-currency swap contracts - assets	2,839		—		2,839		—
Forward foreign exchange contracts - liabilities	Forward foreign exchange contracts - liabilities	(9,389)		0		(9,389)		0		Forward foreign exchange contracts - liabilities	(876)		—		(876)		—
Cross-currency swap contracts - liabilities										Cross-currency swap contracts - liabilities	(10,151)		—		(10,151)		—
		3,993		0		3,993		0			478		—		478		—
Deferred compensation plan liability	Deferred compensation plan liability	(19,890)		0		(19,890)		0		Deferred compensation plan liability	(19,916)		—		(19,916)		—
Total	Total	$	(15,897)	$	0	$	(15,897)	$	0	Total	$	(19,438)	$	—	$	(19,438)	$	—


		Assets (Liabilities) at Fair Value as of December 28, 2019									Assets (Liabilities) at Fair Value as of January 2, 2021
		Total		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Total		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Forward foreign exchange contracts - assets	Forward foreign exchange contracts - assets	$	8,030	$	0	$	8,030	$	0	Forward foreign exchange contracts - assets	$	2,460	$	—	$	2,460	$	—
Cross-currency swap contracts - assets	Cross-currency swap contracts - assets	3,901		0		3,901		0		Cross-currency swap contracts - assets	918		—		918		—
Forward foreign exchange contracts - liabilities	Forward foreign exchange contracts - liabilities	(3,393)		0		(3,393)		0		Forward foreign exchange contracts - liabilities	(31,576)		—		(31,576)		—
Cross-currency swap contracts - liabilities										Cross-currency swap contracts - liabilities	(16,526)		—		(16,526)		—
		8,538		0		8,538		0			(44,724)		—		(44,724)		—
Deferred compensation plan liability	Deferred compensation plan liability	(31,221)		0		(31,221)		0		Deferred compensation plan liability	(21,878)		—		(21,878)		—
Total	Total	$	(22,683)	$	0	$	(22,683)	$	0	Total	$	(66,602)	$	—	$	(66,602)	$	—

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, trade accounts receivable, notes receivable and accounts payable approximated fair value as of ~~September 26, 2020~~October 2, 2021 and ~~December 28, 2019.~~January 2, 2021. The carrying amount of trade accounts receivable included allowance for doubtful accounts, chargebacks and other deductions of ~~$55,786~~$63,193 and ~~$33,228~~$48,745 as of ~~September 26, 2020~~October 2, 2021 and ~~December 28, 2019,~~January 2, 2021, respectively. The fair value of debt, which is classified as a Level 2 liability, was ~~$4,151,986~~$3,885,395 and ~~$3,560,623~~$4,230,985 as of ~~September 26, 2020~~October 2, 2021 and ~~December 28, 2019,~~January 2, 2021, respectively. Debt had a carrying value of ~~$4,006,531~~$3,689,018 and ~~$3,394,761~~$4,035,724 as of ~~September 26, 2020~~October 2, 2021 and ~~December 28, 2019,~~January 2, 2021, respectively. The fair values were estimated using quoted market prices as provided in secondary markets, which consider the Company’s credit risk and market related conditions. The carrying amount of the Company’s notes payable, which is classified as a Level 2 liability, approximated fair value ~~as of September 26, 2020 and December 28, 2019,~~ primarily due to the short-term nature of these instruments.

(11) Income Taxes

The Company’s effective income tax rate was ~~17.6%~~7.9% and ~~14.3%~~16.0% for the quarters ended October 2, 2021 and September 26, 2020, ~~and September 28, 2019,~~ respectively. The Company’s effective income tax rate was ~~17.5%~~10.9% and ~~14.3%~~14.2% for the nine months ended October 2, 2021 and September 26, 2020, ~~and September 28, 2019,~~ respectively. The ~~higher~~lower effective tax rate for the quarter and nine months ended ~~September 26, 2020~~October 2, 2021 was primarily due to tax benefits related to the adjustments of prior year tax returns and approval of certain filings by taxing authorities during the quarter ended October 2, 2021 and the change in jurisdictional mix of ~~income attributable to the economic impacts of COVID-19.~~income.

The Company is subject to taxation in the U.S., as well as in various U.S. state and foreign jurisdictions. During the nine months ended September 26, 2020, the Internal Revenue Service closed its examination of the Company’s U.S. federal income tax returns for the years ended January 2, 2016 and December 31, 2016. The examination resulted in an immaterial adjustment which had been previously accrued for as an unrecognized tax benefit in a prior period. The Company remainsor could be subject to examinations in the U.S., ~~U.S.~~various state and foreign jurisdictions and believes that it maintains appropriate accruals for unrecognized tax benefits related to uncertain tax positions, which are evaluated each quarter. During the ~~quarter~~nine months ended October 2, 2021, the Company’s liability for unrecognized tax benefits, including interest and penalties, decreased by $8,435, of which $8,938 was a discrete reduction of the effective income tax rate. The decrease was related to expirations of statutes of limitations and approvals of certain filings with income tax authorities.

1921

Table of Contents

HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

September 26, 2020, the Company’s liability for unrecognized tax benefits, including interest and penalties, decreased by $18,731, of which $4,295 impacted the effective income tax rate. The decrease was related to expirations of statutes of limitations and certain filings with income tax authorities. Management believes it is reasonably possible that the amount of unrecognized tax benefits may decrease by $28,352 in the next 12 months based on approvals of certain filings by income tax authorities and expirations of statutes of limitations, of which $27,505 of the reduction may impact the Company’s effective income tax rate.

The Company continually reviews its assessments as to the realizability of its deferred tax assets on a more-likely-than-not basis and maintains valuation allowances against deferred tax assets that are not realizable. It is reasonably possible, that a portion of the Company’s valuation allowance may decrease in future periods due to sufficient positive evidence, including future profitability.

As a result of the COVID-19 pandemic, governments are offering various relief mechanisms to taxpayers to assist with the business disruption. The measures vary by jurisdiction, but often include the ability to delay certain income tax payments. The Company intends to use these provisions where eligible. As of September 26, 2020, the Company does not expect the COVID-19 relief measures to have a material impact on its financial results, including on its annual estimated effective tax rate or on liquidity.

(12) Business Segment Information

The Company’s operations are managed and reported in 3 operating segments, each of which is a reportable segment for financial reporting purposes: Innerwear, Activewear and International. These segments are organized principally by product category and geographic location. Each segment has its own management team that is responsible for the operations of the segment’s businesses, but the segments share a common supply chain and media and marketing platforms. Other consists of the Company’s U.S.-based outlet stores, ~~and~~ U.S. hosiery business and certain sales from its supply chain to the European Innerwear business.

The types of products and services from which each reportable segment derives its revenues are as follows:

•Innerwear includes sales in the United States of basic branded apparel products that are replenishment in nature under the product categories of men’s underwear, women’s panties, children’s underwear and socks, and intimate apparel, which includes bras and shapewear. ~~Beginning in 2020,~~ Innerwear also includes sales of ~~PPE~~personal protective equipment including products such as cloth face coverings and ~~gowns.~~gowns in 2020.

•Activewear includes sales in the United States of basic branded products that are primarily seasonal in nature to both retailers and wholesalers, as well as licensed sports apparel and licensed logo apparel in collegiate bookstores, mass retailers and other channels.

•International includes sales of products in all of the Company’s categories ~~including PPE in 2020,~~ outside the United States, primarily in Australasia, Europe, ~~Australia,~~ Asia, Canada and Latin ~~America and Canada.~~America.

The Company evaluates the operating performance of its segments based upon segment operating profit, which is defined as operating profit before general corporate expenses, restructuring and other action-related charges and amortization of intangibles. The accounting policies of the segments are consistent with those described in Note, “Summary of Significant Accounting Policies” to the Company’s consolidated financial statements included in its Annual Report on Form 10-K for the year ended ~~December 28, 2019.~~January 2, 2021.

Quarters Ended Nine Months Ended
September 26,
2020 September 28,
2019 September 26,
2020 September 28,
2019
Net sales:
Innerwear $ 792,600 $ 578,453 $ 2,309,816 $ 1,733,002
Activewear 324,921 548,117 781,300 1,401,734
International 632,117 663,525 1,644,893 1,878,568
Other 58,628 76,872 127,498 202,614
Total net sales $ 1,808,266 $ 1,866,967 $ 4,863,507 $ 5,215,918

~~Table of Contents~~

~~HANESBRANDS INC.~~

~~Notes to Condensed Consolidated Financial Statements — (Continued)~~

~~(amounts in thousands, except per share data)~~

~~(unaudited)~~

Quarters Ended Nine Months Ended
September 26,
2020 September 28,
2019 September 26,
2020 September 28,
2019
Segment operating profit:
Innerwear $ 172,000 $ 121,467 $ 558,075 $ 375,623
Activewear 29,568 97,314 31,925 209,686
International 96,076 107,168 227,218 288,019
Other 1,006 9,643 (17,389) 16,429
Total segment operating profit 298,650 335,592 799,829 889,757
Items not included in segment operating profit:
General corporate expenses (62,222) (49,954) (177,934) (173,293)
Restructuring and other action-related charges (52,569) (9,937) (145,064) (43,919)
Amortization of intangibles (9,288) (8,630) (26,594) (26,230)
Total operating profit 174,571 267,071 450,237 646,315
Other expenses (5,309) (8,066) (16,849) (23,766)
Interest expense, net (43,868) (43,091) (122,376) (137,672)
Income before income tax expense $ 125,394 $ 215,914 $ 311,012 $ 484,877

For the quarter ended September 26, 2020, the Company incurred pre-tax restructuring and other action-related charges of $52,569, of which $47,636 is reported in the “Cost of sales” line and $4,933 is reported in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statement of Income. For the quarter ended September 28, 2019, the Company incurred pre-tax restructuring and other action-related charges of $9,937, of which $9,424 is reported in the “Cost of sales” line and $513 is reported in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statement of Income.

For the nine months ended September 26, 2020, the Company incurred pre-tax restructuring and other action-related charges of $145,064, of which $95,983 is reported in the “Cost of sales” line and $49,081 is reported in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statement of Income. For the nine months ended September 28, 2019, the Company incurred pre-tax restructuring and other action-related charges of $43,919, of which $39,714 is reported in the “Cost of sales” line and $4,205 is reported in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statement of Income.

As of December 28, 2019, the Company had an accrual of $7,120 for expected benefit payments related to actions taken in prior years. During the nine months ended September 26, 2020, the Company approved actions related to workforce reductions and incurred charges of $9,420 for employee termination and other benefits for employees affected by separation programs with $2,500 and $6,920 of charges reflected in the “Cost of sales” and “Selling, general and administrative expenses” lines, respectively, in the Consolidated Statement of Income. During the nine months ended September 26, 2020, benefit payments, other accrual adjustments and foreign currency adjustments of $7,128 have been made, resulting in an ending accrual of $9,412, of which $8,979 and $433 is included in the “Accrued liabilities” and “Other noncurrent liabilities” lines of the Condensed Consolidated Balance Sheet, respectively.

~~Table of Contents~~

~~HANESBRANDS INC.~~

~~Notes to Condensed Consolidated Financial Statements — (Continued)~~

~~(amounts in thousands, except per share data)~~

~~(unaudited)~~

~~(13) Revisions of Previously Issued Condensed Consolidated Interim Financial Statements~~

As described in Note, "Basis of Presentation," the following tables set forth the impact of error corrections on the Company’s condensed consolidated interim financial statements as of and for the quarter and nine months ended September 28, 2019 by financial statement line item.

Quarter Ended September 28, 2019
Condensed Consolidated Statement of Income Line Item As Previously Reported Adjustments As Revised
Cost of sales $ 1,154,629 $ (4,695) $ 1,149,934
Gross profit 712,338 4,695 717,033
Selling, general and administrative expenses 442,582 7,380 449,962
Operating profit 269,756 (2,685) 267,071
Income before income tax expense 218,599 (2,685) 215,914
Net income 187,776 (2,685) 185,091
Earnings per share:
Basic $ 0.51 $ (0.01) $ 0.51
Diluted $ 0.51 $ (0.01) $ 0.51


	Quarters Ended				Nine Months Ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Net sales:
Innerwear	$	702,617	$	792,600	$	2,053,702	$	2,309,816
Activewear	462,499		324,921		1,230,691		781,300
International	536,483		506,203		1,521,667		1,185,718
Other	87,952		68,139		242,831		161,182
Total net sales	$	1,789,551	$	1,691,863	$	5,048,891	$	4,438,016

Nine Months Ended September 28, 2019
Condensed Consolidated Statement of Income Line Item As Previously Reported Adjustments As Revised
Cost of sales $ 3,208,025 $ (4,694) $ 3,203,331
Gross profit 2,007,893 4,694 2,012,587
Selling, general and administrative expenses 1,356,082 10,190 1,366,272
Operating profit 651,811 (5,496) 646,315
Income before income tax expense 490,373 (5,496) 484,877
Net income 421,230 (5,496) 415,734
Earnings per share:
Basic $ 1.16 $ (0.02) $ 1.14
Diluted $ 1.15 $ (0.02) $ 1.14

Quarter Ended September 28, 2019
Condensed Consolidated Statement of Comprehensive Income Line Item As Previously Reported Adjustments As Revised
Net income $ 187,776 $ (2,685) $ 185,091
Comprehensive income 148,443 (2,685) 145,758

Nine Months Ended September 28, 2019
Condensed Consolidated Statement of Comprehensive Income Line Item As Previously Reported Adjustments As Revised
Net income $ 421,230 $ (5,496) $ 415,734
Translation adjustments (33,738) (7,075) (40,813)
Total other comprehensive loss (30,201) (7,075) (37,276)
Comprehensive income 391,029 (12,571) 378,458

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HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

September 28, 2019
Condensed Consolidated Balance Sheet Line Item As Previously Reported Adjustments As Revised
Inventories $ 2,108,281 $ (13,246) $ 2,095,035
Other current assets 166,727 7,445 174,172
Total current assets 3,625,970 (5,801) 3,620,169
Deferred tax assets 257,314 (43,665) 213,649
Total assets 7,773,298 (49,466) 7,723,832
Accrued liabilities 589,992 (2,060) 587,932
Total current liabilities 2,096,904 (2,060) 2,094,844
Other noncurrent liabilities 265,804 64,743 330,547
Total liabilities 6,543,056 62,683 6,605,739
Retained earnings 1,528,258 (112,149) 1,416,109
Total stockholders’ equity 1,230,242 (112,149) 1,118,093
Total liabilities and stockholders’ equity 7,773,298 (49,466) 7,723,832


	Quarters Ended				Nine Months Ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Segment operating profit:
Innerwear	$	147,651	$	172,000	$	461,237	$	558,075
Activewear	76,172		29,568		177,813		31,925
International	86,371		101,029		235,451		156,936
Other	11,288		3,059		22,394		(12,263)
Total segment operating profit	321,482		305,656		896,895		734,673
Items not included in segment operating profit:
General corporate expenses	(50,226)		(56,357)		(164,734)		(163,923)
Restructuring and other action-related charges	(29,096)		(52,257)		(67,153)		(108,860)
Amortization of intangibles	(7,514)		(7,955)		(22,846)		(22,717)
Total operating profit	234,646		189,087		642,162		439,173
Other expenses	(1,811)		(4,898)		(6,227)		(15,652)
Interest expense, net	(40,860)		(43,500)		(127,760)		(120,602)
Income from continuing operations before income tax expense	$	191,975	$	140,689	$	508,175	$	302,919

The Company incurred pre-tax restructuring and other action-related charges included in operating profit that were reported in the following lines in the Condensed Consolidated Statements of Income:

Quarter Ended September 28, 2019
Condensed Consolidated Statement of Stockholders’ Equity Line Item As Previously Reported Adjustments As Revised
Balance at June 29, 2019 $ 1,134,850 $ (109,464) $ 1,025,386
Net income 187,776 (2,685) 185,091
Balance at September 28, 2019 1,230,242 (112,149) 1,118,093


	Quarters Ended				Nine Months Ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Cost of sales	$	(108)	$	47,599	$	4,599	$	87,828
Selling, general and administrative expenses	29,204		4,658		62,554		21,032
Total restructuring and other action-related charges included in operating profit	$	29,096	$	52,257	$	67,153	$	108,860

The components of restructuring and other action-related charges included in operating profit were as follows:

Nine Months Ended September 28, 2019
Condensed Consolidated Statement of Stockholders’ Equity Line Item As Previously Reported Adjustments As Revised
Balance at December 29, 2018 $ 970,283 $ (98,157) $ 872,126
Net income 421,230 (5,496) 415,734
Other comprehensive loss (30,201) (7,075) (37,276)
Cumulative effect of change in adoption of leases standard 7,977 (1,421) 6,556
Balance at September 28, 2019 1,230,242 (112,149) 1,118,093

Nine Months Ended September 28, 2019
Condensed Consolidated Statement of Cash Flows Line Item As Previously Reported Adjustments As Revised
Operating activities:
Net income $ 421,230 $ (5,496) $ 415,734
Adjustments to reconcile net income to net cash from operating activities:
Other 8,737 (7,075) 1,662
Changes in assets and liabilities:
Inventories (72,096) 15,626 (56,470)
Other assets (40,732) 14,701 (26,031)
Accrued liabilities and other 14,243 (17,756) (3,513)
Net cash from operating activities 244,700 0 244,700


	Quarters Ended				Nine Months Ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Full Potential Plan:
Professional services	$	11,283	$	—	$	36,793	$	—
Operating model	16,000		—		17,600		—
Impairment of intangible assets	—		—		7,302		—
Other	1,813		—		5,458		—
2020 actions:
Supply chain actions	—		2,098		—		18,800
Program exit costs	—		356		—		9,854
Other	—		1,195		—		7,311
COVID-19 related charges:
Supply chain re-startup	—		48,608		—		48,608
Bad debt	—		—		—		9,418
Inventory	—		—		—		14,869
Total restructuring and other action-related charges included in operating profit	$	29,096	$	52,257	$	67,153	$	108,860

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HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

In the third quarter of 2021, the Company approved an action to resize its U.S. corporate office workforce through a voluntary retirement program. As of October 2, 2021, the Company accrued $16,000 for employee termination and other benefits in accordance with expected benefit payments, with the charges reflected in the “Selling, general and administrative expenses” line of the Condensed Consolidated Statements of Income and in the pre-tax restructuring and other action-related charges table above. As of October 2, 2021, no benefit payments had been made. The accrual is included in the “Accrued liabilities” line of the Condensed Consolidated Balance Sheet.

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Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations

This management’s discussion and analysis of financial condition and results of operations, or MD&A, contains forward-looking statements that involve risks and uncertainties. Please see “Forward-Looking Statements” in this Quarterly Report on Form 10-Q for a discussion of the uncertainties, risks and assumptions associated with these statements. This discussion should be read in conjunction with our historical financial statements and related notes thereto and the other disclosures contained elsewhere in this Quarterly Report on Form 10-Q. The unaudited condensed interim consolidated financial statements and notes included herein should be read in conjunction with our audited consolidated financial statements and notes for the year ended ~~December 28, 2019,~~January 2, 2021, which were included in our Annual Report on Form 10-K filed with the SEC. The results of operations for the periods reflected herein are not necessarily indicative of results that may be expected for future periods, and our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including but not limited to those included ~~in the “Risk Factors” section and~~ elsewhere in this Quarterly Report on Form 10-Q and those included in the “Risk Factors” section and elsewhere in our Annual Report on Form 10-K for the year ended ~~December 28, 2019 and in our Quarterly Report on Form 10-Q for the quarter ended March 28, 2020.~~January 2, 2021. In particular, statements with respect to trends associated with our business, our Full Potential plan, our future financial performance and the potential effects of the ongoing global ~~novel~~ coronavirus ~~("COVID-19"~~(“COVID-19”) pandemic included in this ~~Quarterly Report on Form 10-Q specifically appearing under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”~~MD&A include forward-looking statements. The unaudited condensed consolidated interim financial statements for the quarter and nine months ended September 28, 2019 have been revised to correct prior period errors as discussed in Note, “Basis of Presentation” and Note, “Revisions of Previously Issued Condensed Consolidated Interim Financial Statements” to our unaudited condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q. Accordingly, this MD&A reflects the impact of those revisions.

Overview

Hanesbrands Inc. (collectively with its subsidiaries, “we,” “us,” “our,” or the “Company”) is a socially responsible leading marketer of everyday basic innerwear and activewear apparel in the Americas, Australia, Europe ~~Australia~~ and Asia/Pacific under some of the world’s strongest apparel brands, including Hanes, Champion, Bonds, ~~DIM,~~Bali, Maidenform, ~~Bali,~~ Playtex, ~~Lovable,~~ Bras N Things, ~~Nur Die/Nur Der, Alternative, L’eggs,~~ JMS/Just My Size, Wonderbra, Alternative, Berlei, L’eggs and Gear for Sports. We ~~design, manufacture, source and~~ sell ~~a broad range of basic apparel such as~~ T-shirts, bras, panties, shapewear, underwear, socks, hosiery and activewear produced in our low-cost global supply chain. Our products are marketed to consumers shopping in mass merchants, mid-tier and department stores, specialty stores and the consumer-directed channel, which includes our owned retail locations, as well as e-commerce sites. Our brands hold either the number one or number two market position by units sold in many of the product categories and geographies in which we compete.

Our operations are managed and reported in three operating segments, each of which is a reportable segment for financial reporting purposes: Innerwear, Activewear and International. These segments are organized principally by product category and geographic location. Each segment has its own management team that is responsible for the operations of the segment’s businesses, but the segments share a common supply chain and media and marketing platforms. Other consists of our U.S.-based outlet stores, ~~and~~our U.S. hosiery business and certain sales from our supply chain to the European Innerwear business.

Our Key Business Strategies

Our business strategy integrates our brand superiority, industry-leading innovation and low-cost global supply chain to provide higher value products while lowering production costs. We operate in the global innerwear and global activewear apparel categories. These are stable, heavily branded categories where we have a strong consumer franchise based on a global portfolio of industry-leading brands that we have built over multiple decades, through hundreds of millions of direct interactions with consumers. In 2020, we undertook a comprehensive global business review focused on building consumer-centric growth. The review resulted in our Full Potential plan, which is our multi-year growth strategy that focuses on four pillars to drive growth and enhance long-term profitability and identifies initiatives to unlock growth. Our four pillars of growth are to grow the Champion brand globally, drive growth in Innerwear with brands and products that appeal to younger consumers, drive consumer-centricity by delivering innovative products and improving awareness through investments in brand marketing and digital capabilities, and streamline our global portfolio. In order to deliver this growth and create a more efficient and productive business model, we have launched a multi-year cost savings program intended to self-fund the investments necessary to achieve the Full Potential plan’s objectives. We remain highly confident that our strong brand portfolio, world-class supply chain and diverse category and geographic footprint will help us unlock our full potential, deliver long-term growth and create stockholder value.

In the fourth quarter of 2020, we began the implementation of our Full Potential plan and as part of our strategy to streamline our portfolio, we determined that our personal protective equipment (“PPE”) business was no longer a growth opportunity for us and recorded a charge to write down our entire PPE inventory balance to its estimated net realizable value. Additionally, we commenced an initiative to reduce 20% of our SKUs in inventory in order to streamline product offerings while also implementing a formal lifecycle management process.

In the first quarter of 2021, we announced that as part of our strategic plan, we were exploring alternatives for our European Innerwear business and subsequently reached the decision to exit this business. We determined that our European Innerwear business met held-for-sale and discontinued operations accounting criteria during the first quarter of 2021. Accordingly, we began to separately report the results of our European Innerwear business as discontinued operations in our Condensed Consolidated Statements of Income, and to present the related assets and liabilities as held for sale in the Condensed

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Consolidated Balance Sheets. See note “Discontinued Operations” to our condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q for additional information. On November 4, 2021, we announced that we have reached an agreement to sell our European Innerwear business to an affiliate of Regent, L.P., pending the completion of consultation with the European and French works councils representing employees of the European Innerwear business and customary closing conditions. Under the agreement, the purchaser will receive all the assets and operating liabilities of the European Innerwear business for a purchase price of one Euro, subject to a post-closing adjustment to reflect any deviation at closing from a normalized level of working capital. Under the agreement, there is also a potential earnout due to us based on future performance. The transaction is expected to close in the first quarter of 2022.

Impact of COVID-19 on Our Business

As the global impact of COVID-19 continues, our priority has been to protect the health and safety of our employees and customers around the world. To help mitigate the spread of the COVID-19 virus and in response to health advisories and governmental actions and regulations, we have modified our business practices and have implemented health and safety measures that are designed to protect employees in our corporate, retail, distribution and manufacturing facilities around the world.

The COVID-19 pandemic ~~has~~ impacted our business operations and financial results for the third quarter and nine months ofended 2021 and 2020 as described in more detail under “Condensed Consolidated Results of Operations - Third Quarter Ended ~~September 26, 2020~~October 2, 2021 Compared with Third Quarter Ended September ~~28, 2019”~~26, 2020” and “Condensed Consolidated Results of Operations - Nine Months Ended ~~September 26, 2020~~October 2, 2021 Compared with Nine Months Ended September ~~28, 2019”~~26, 2020” below, primarily through reduced traffic and closures of company-operated and third-party retail locations for portions of each of the periods in certain markets and global supply chain disruptions. Global supply chain disruptions primarily due to ~~decreased customer traffic~~port congestion, transportation delays as well as labor and ~~temporary retail store closures worldwide. While most~~container shortages have resulted in higher operating costs and higher levels of our retail stores were temporarily closed for varying periods of time throughout the second quarter, most reopened by the end of the second quarter but have experienced, and are expected to continue to experience, reductions in customer traffic and therefore, net sales. In addition, many of our wholesale customers have also experienced business disruptions, including lower traffic and consumer demand, resulting in decreased shipments to these customers. Sales of personal protective equipment (“PPE”), used to help mitigate the spread of the COVID-19 virus, partially offset the negative impact of the decline in net sales and earnings due to the COVID-19 pandemic on our financial results. Our e-commerce sites have remained open in all regions and online sales have grown as consumer spending continued to shift towards online shopping experiences due to the changing retail landscape as a result of the COVID-19 pandemic. While many retail stores have reopened and government restrictions have been removed or lightened, the ultimateinflation. The future impact of the COVID-19 pandemic remains highly uncertain, and ~~could continue to have a material adverse impact on~~

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our business and results of operations, ~~and financial results,~~ including our net ~~sales,~~revenues, earnings and cash flows, ~~for the remainder of 2020, and beyond, as a result of:~~

•~~quarantines, facility closures, event cancellations and other restrictions;~~

•~~risk of future additional temporary closures of our retail stores and retail stores in which our products are sold;~~

•~~decreased customer traffic in our retail stores and retail stores in which our products are sold;~~

•changes in consumer confidence and consumer spending habits, including spending for the merchandise that we sell and negative trends in consumer purchasing patterns due to changes in consumers’ disposable income, credit availability and debt levels;

•~~decreased wholesale channel sales and increased likelihood of wholesale customer bankruptcy or financial distress, including requests for extended payment terms or potential payment defaults;~~

•~~disruption to our global supply chain including the manufacturing, supply, distribution, transportation and delivery of our products; and~~

•~~a slowdown in the U.S. and global economies, and an uncertain global economic outlook or a potential credit crisis.~~

In the nine months ended September 26, 2020, we recorded $11 million of bad debt charges for customer bankruptcies, $20 million of charges to reserve for increased excess and obsolete inventory related primarily to canceled orders of seasonal inventory and $20 million of charges for the impairment of intangible assets primarily as a result of the COVID-19 pandemic. In the quarter ended September 26, 2020, we recorded $49 million of supply chain re-start up charges primarily related to incremental costs incurred, such as freight and sourcing premiums, to expedite product to meet customer demand following the extended shut-down of parts of our manufacturing network as a result of the COVID-19 pandemic.

In connection with the annual goodwill impairment testing performed in the third quarter of 2020, we performed a quantitative assessment utilizing an income approach to estimate the fair value of each reporting unit. The most significant assumptions include the weighted average cost of capital, revenue growth rate, terminal growth rate and operating profit margin, all of which are used to estimate the fair value of the reporting units and indefinite-lived intangible assets. The tests indicated the reporting units had fair values that exceeded their carrying values. Certain reporting units, including Hanes Europe Innerwear and U.S. Hosiery, are consideredcould continue to be at a higher risk for future impairment if any assumptions used in the estimate of the reporting units’ fair values change in the future given their respective fair values exceeded their carrying values by less than 20% and trends in the associated businesses indicate a declining fair value. In particular, as of September 26, 2020, the fair value of the Hanes Europe Innerwear reporting unit is slightly higher than its carrying value. The combined goodwill associated with these reporting units was approximately $120 million. Additionally, in connection with the annual impairment testing, we performed a quantitative assessment, utilizing an income approach to estimate the fair value of each indefinite-lived intangible asset. The tests indicated the indefinite-lived intangible assets have fair values that exceeded their carrying values. Certain indefinite-lived trademarks are considered to be at a higher risk for future impairment if any assumptions used in the estimate of the trademarks’ fair value change in the future given their respective fair values exceeded their carrying values by less than 20% and trends in the associated businesses indicate a declining fair value. As of September 26, 2020, we considered four trademarks within the Hanes Europe Innerwear business to be at a higher risk for future impairment. The carrying value of these four indefinite-lived trademarks was approximately $80 million. Although we determined that no impairment exists for our goodwill or indefinite-lived intangible assets, these assets could be at risk for future impairment should global economic conditions continue to deteriorate beyond current expectations as a result of the COVID-19 pandemic.

We have been taking steps to mitigate the potential risks to us posed by the spread and related circumstances and impacts of COVID-19. We are focused on addressing these recent challenges by preserving our liquidity and managing our cash flow with preemptive actions designed to enhance our ability to meet our short-term liquidity needs. Such actions have included, but are not limited to, focusing on channels that continue to generate sales, including mass retail and online; selling PPE, such as cloth face coverings and gowns; operating our manufacturing and distribution facilities on a demand-adjusted basis; reducing our discretionary spending such as certain media and marketing expenses; focused working capital management; reducing capital expenditures; suspending our share repurchase program until further notice which is currently prohibited under the Senior Secured Credit Facility; reducing payroll costs through temporary employee furloughs and pay cuts; working globally to maximize our participation in all eligible government or other initiatives available to businesses or employees impacted by the COVID-19 pandemic; engaging with landlords to negotiate rent deferrals or other rent concessions; issuing new debt and amending certain existing debt facilities. These efforts may not be enough to offset anticipated declines in net sales and earnings and we may not be able to access sufficient additional working capital to meet our liquidity needs. See “~~The novel~~

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~~coronavirus disease (COVID-19) global pandemic has had and is expected to continue to have an adverse impact on our business.”~~ ~~in Part II, Item 1A. Risk Factors of this Quarterly Report on Form 10-Q.~~adversely impacted.

Outlook for ~~2020~~

Our outlook reflects the continued uncertainty due to the COVID-19 pandemic. Our outlook is based on the current business environment, which among other items, reflects the lockdowns and curfews recently put in place in Europe. Our outlook does not reflect any potential impact to the consumer or operating environments should governments or businesses institute additional lockdowns and store closings. Our fiscal year ending January 2, 2021, includes a 53rd week in the fourth ~~quarter.~~ quarter of 2021

We estimate our fourth quarter ~~2020~~2021 guidance as follows:

•Net sales of ~~$1.60~~approximately $1.71 billion to ~~$1.66 billion including approximately $50 million of PPE sales, approximately $10 million of foreign exchange benefit and an approximately $40 million contribution from the 53rd week;~~$1.78 billion;

•~~Unfavorable manufacturing variances and higher selling, general and administrative expenses are expected to cause year-over-year operating margin pressure and we expect operating~~Operating profit of ~~$154~~approximately $182 million to ~~$174~~$202 million;

•~~Pre-tax restructuring and other action-related~~Full Potential plan-related charges of approximately $6$18 million ~~reflected~~included in operating profit;

•Interest expense and other expenses of approximately ~~$50~~$85 million ~~combined;~~combined, including a one-time charge of $45 million for a make-whole premium and transaction fees related to our anticipated debt refinancing;

•An ~~annual~~ effective tax rate from continuing operations of approximately ~~17.5%~~12%;

•~~Earnings~~Diluted earnings per share from continuing operations of approximately $0.24 to $0.29; ~~and~~

•Cash flow from operating activities of ~~$70~~approximately $23 million to ~~$170~~$73 million; and

•Capital expenditures of approximately $20 million ~~which includes the impact from higher-than-anticipated PPE inventory.~~to $30 million.

Seasonality and Other Factors

Absent the effects of the COVID-19 pandemic, our operating results are typically subject to some variability due to seasonality and other factors. For instance, we have historically generated higher sales during the back-to-school and holiday shopping seasons and during periods of cooler weather, which benefits certain product categories such as fleece. Sales levels in any period are also impacted by ~~customer~~our customers’ decisions to increase or decrease their inventory levels in response to anticipated consumer demand. Our customers may cancel orders, change delivery schedules or change the mix of products ordered with minimal notice to us. Media, advertising and promotion expenses may vary from period to period during a fiscal year depending on the timing of our advertising campaigns for retail selling seasons and product introductions. ~~We expect the duration and scope~~

Table of ~~the COVID-19 pandemic to alter these patterns at least through the remainder of 2020.~~Contents

Although the majority of our products are replenishment in nature and tend to be purchased by consumers on a planned, rather than on an impulse basis, our sales are impacted by discretionary consumer spending trends. Discretionary spending is affected by many factors that are outside our control, including, among others, general business conditions, interest rates, inflation, consumer debt levels, the availability of consumer credit, currency exchange rates, taxation, energy prices, unemployment trends and other matters that influence consumer confidence and spending. Consumers’ purchases of discretionary items, including our products, could decline during periods when disposable income is lower, when prices increase in response to rising costs, or in periods of actual or perceived unfavorable economic conditions. ~~In addition, the COVID-19 pandemic may continue to result in decreased consumer confidence and lower consumer spending.~~ As a result, consumers may choose to purchase fewer of our products, to purchase lower-priced products of our competitors in response to higher prices for our products, or may choose not to purchase our products at prices that reflect our price increases that become effective from time to time.

Disruptions to the global supply chain due to factory closures, port congestion, container shortages, trucking capacity shortages, transportation delays and labor shortages may negatively impact product availability, revenue growth and gross margins. Global supply chain disruptions could also cause our business to be affected by inflation which we would work to mitigate through a combination of cost savings and operating efficiencies, as well as pricing actions, which could have an adverse impact on demand.

Changes in product sales mix can impact our gross profit as the percentage of our sales attributable to higher margin products, such as intimate apparel and men’s underwear, and lower margin products, such as seasonal and replenishable activewear, fluctuate from time to time. In addition, sales attributable to higher and lower margin products within the same product category fluctuate from time to time. Our customers may change the mix of products ordered with minimal notice to us, which makes trends in product sales mix difficult to predict. However, certain changes in product sales mix are seasonal in nature, as sales of socks, hosiery and fleece products generally have higher sales during the last two quarters (July to December) of each fiscal year as a result of cooler weather, back-to-school shopping and holidays, while other changes in product mix may be attributable to consumers’ preferences and discretionary spending.

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Condensed Consolidated Results of Operations — Third Quarter Ended ~~September 26, 2020~~October 2, 2021 Compared with Third Quarter Ended September ~~28, 2019~~26, 2020


		Quarters Ended									Quarters Ended
		September 26, 2020		September 28, 2019		Higher (Lower)		Percent Change			October 2, 2021		September 26, 2020		Higher (Lower)		Percent Change
		(dollars in thousands)									(dollars in thousands)
Net sales	Net sales	$	1,808,266	$	1,866,967	$	(58,701)	(3.1)	%	Net sales	$	1,789,551	$	1,691,863	$	97,688	5.8	%
Cost of sales	Cost of sales	1,191,553		1,149,934		41,619		3.6		Cost of sales	1,089,890		1,120,392		(30,502)		(2.7)
Gross profit	Gross profit	616,713		717,033		(100,320)		(14.0)		Gross profit	699,661		571,471		128,190		22.4
Selling, general and administrative expenses	Selling, general and administrative expenses	442,142		449,962		(7,820)		(1.7)		Selling, general and administrative expenses	465,015		382,384		82,631		21.6
Operating profit	Operating profit	174,571		267,071		(92,500)		(34.6)		Operating profit	234,646		189,087		45,559		24.1
Other expenses	Other expenses	5,309		8,066		(2,757)		(34.2)		Other expenses	1,811		4,898		(3,087)		(63.0)
Interest expense, net	Interest expense, net	43,868		43,091		777		1.8		Interest expense, net	40,860		43,500		(2,640)		(6.1)
Income before income tax expense		125,394		215,914		(90,520)		(41.9)
Income from continuing operations before income tax expense										Income from continuing operations before income tax expense	191,975		140,689		51,286		36.5
Income tax expense	Income tax expense	22,116		30,823		(8,707)		(28.2)		Income tax expense	15,228		22,464		(7,236)		(32.2)
Income from continuing operations										Income from continuing operations	176,747		118,225		58,522		49.5
Loss from discontinued operations, net of tax										Loss from discontinued operations, net of tax	(24,970)		(14,947)		(10,023)		67.1
Net income	Net income	$	103,278	$	185,091	$	(81,813)	(44.2)	%	Net income	$	151,777	$	103,278	$	48,499	47.0	%

Net Sales

Net sales and profit trends across certain of our apparel businesses continue to be adversely affected by the COVID-19 pandemic. Most of our retail stores were reopened by the end of the second quarter but have experienced and are expected to continue to experience reductions in traffic and therefore, net sales. Our online sales increased in6% during the third quarter of 2020 as consumer spending continued to shift towards online shopping experiences due to the changing retail landscape as a result of the COVID-19 pandemic. During the third quarter of 2020, we sold PPE globally to governments, large organizations, business-to-business customers and consumers for use to help mitigate the spread of the COVID-19 virus.

~~Net sales decreased 3% during~~2021 versus the third quarter of 2020 primarily due to the following:

•~~The disruption of certain of our U.S.~~Strong consumer demand and ~~International apparel businesses related to the negative effects of the COVID-19 pandemic; and~~

•~~The exit of our~~ ~~C9 Champion~~ ~~mass program and the DKNY intimate apparel license in 2019 which, together, represented approximately $119 million of net sales~~point-of-sale trends in the ~~third quarter of 2019;~~

~~Partially offset by:~~

•~~Net sales of PPE of $179 million~~U.S., Europe, the Americas, and certain markets in ~~the third quarter of 2020;~~

•~~Increased net sales in certain of our apparel businesses resulting from retailers replenishing inventory levels as stores re-opened after temporary closures due to the COVID-19 pandemic;~~Asia; and

•The favorable impact from foreign exchange rates in our International business of approximately ~~$14~~$8 million.

Partially offset by:

•The exit of the PPE business as part of our Full Potential plan, which contributed net sales of $179 million in the third quarter of 2020; and

•Net sales in Australia and Japan were negatively impacted due to extended government COVID-19 related lockdowns in the third quarter of 2021.

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Operating Profit

Operating profit as a percentage of net sales was ~~9.7%,~~13.1% during the third quarter of 2021, representing ~~a decrease~~an increase from ~~14.3%~~11.2% in the prior year. ~~Decreased operating profit was~~Operating margin benefited from fixed cost leverage from higher sales, favorable sales mix and the ~~result~~favorable impact from foreign exchange rates, which more than offset higher transportation costs, increased investments in brand marketing and higher levels of ~~lower sales, increased inventory reserves and unfavorable manufacturing variances, partially offset by lower selling,~~inflation. Selling, general and administrative expenses ~~driven by ongoing cost controls and~~in the third quarter of 2020 benefited from temporary cost savings initiatives implemented in response to the COVID-19 pandemic. The third quarter of 2020 also included operating profit related to the PPE business that was exited.

Included in operating profit in the third quarter of 2021 were charges of $29 million related to the implementation of our Full Potential plan. Included in operating profit in the third quarter of 2020 ~~and 2019~~ were ~~restructuring and other action-related~~ charges of ~~$53~~$52 million ~~and $10 million, respectively, including~~primarily related to supply chain ~~re-start up~~re-startup charges ~~primarily~~ related to incremental costs incurred, such as freight and sourcing premiums, to expedite product delivery to meet customer demand following the extended shut-down of parts of our manufacturing network as a result of the COVID-19 pandemic in 2020.

Other Highlights

Other Expenses – Other expenses decreased $3 million in the third quarter of ~~2020~~2021 compared to the third quarter of ~~2019~~2020 primarily due to lower pension expense ~~and lower funding fees for sales of accounts receivable to financial institutions~~ in ~~2020.~~2021.

Interest Expense – Interest expense was ~~higher~~lower by $1$3 million in the third quarter of ~~2020~~2021 compared to the third quarter of ~~2019 driven by higher~~2020 primarily due to lower outstanding debt balances ~~and higher amortization of debt issuance costs, partially offset by a lower weighted average interest rate on our borrowings~~ during the ~~quarter.~~third quarter of 2021 compared to the third quarter of 2020. Our weighted average interest rate on our outstanding debt was ~~4.04%~~4.12% for the third quarter of ~~2020,~~2021, compared to ~~4.10%~~4.07% for the third quarter of ~~2019.~~2020.

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Income Tax Expense – Our effective income tax rate was ~~17.6%~~7.9% and ~~14.3%~~16.0% for the third quarters of ~~2020~~2021 and ~~2019,~~2020, respectively. The ~~higher~~lower effective tax rate for the third quarter ~~ended September 26, 2020~~of 2021 was primarily due to tax benefits related to the adjustments of prior year tax returns and approval of certain filings by taxing authorities during the third quarter of 2021 and the change in jurisdictional mix of ~~income attributable~~income.

Operating Results by Business Segment — Third Quarter Ended ~~September 26, 2020~~October 2, 2021 Compared with Third Quarter Ended September ~~28, 2019~~26, 2020


		Net Sales									Net Sales
		Quarters Ended									Quarters Ended
		September 26, 2020		September 28, 2019		Higher (Lower)		Percent Change			October 2, 2021		September 26, 2020		Higher (Lower)		Percent Change
		(dollars in thousands)									(dollars in thousands)
Innerwear	Innerwear	$	792,600	$	578,453	$	214,147	37.0	%	Innerwear	$	702,617	$	792,600	$	(89,983)	(11.4)	%
Activewear	Activewear	324,921		548,117		(223,196)		(40.7)		Activewear	462,499		324,921		137,578		42.3
International	International	632,117		663,525		(31,408)		(4.7)		International	536,483		506,203		30,280		6.0
Other	Other	58,628		76,872		(18,244)		(23.7)		Other	87,952		68,139		19,813		29.1
Total	Total	$	1,808,266	$	1,866,967	$	(58,701)	(3.1)	%	Total	$	1,789,551	$	1,691,863	$	97,688	5.8	%

Operating Profit and Margin
Quarters Ended
September 26,
2020 September 28,
2019 Higher
(Lower) Percent
Change
(dollars in thousands)
Innerwear $ 172,000 21.7 % $ 121,467 21.0 % $ 50,533 41.6 %
Activewear 29,568 9.1 97,314 17.8 (67,746) (69.6)
International 96,076 15.2 107,168 16.2 (11,092) (10.4)
Other 1,006 1.7 9,643 12.5 (8,637) (89.6)
Corporate (124,079) NM (68,521) NM (55,558) (81.1)
Total $ 174,571 9.7 % $ 267,071 14.3 % $ (92,500) (34.6) %

~~Innerwear~~

Innerwear net sales increased 37% compared to the third quarter of 2019 driven by $166 million of net sales of PPE and by an 11% and a 5% increase in net sales in our basics and intimate apparel businesses, respectively, primarily as a result of retailers replenishing inventory levels as stores re-opened after temporary closures due to the COVID-19 pandemic. In our basics business, we experienced growth in each product category. In our intimate apparel business, the increase in bra sales more than offset the decline in shapewear sales, which is a category that continues to be negatively impacted by the COVID-19 pandemic. Excluding $13 million and $3 million of net sales in the third quarter of 2019 from the exited ~~C9 Champion~~ ~~mass program and the DKNY intimate apparel license, net sales in our basics and intimate apparel business increased 15% and 7%, respectively.~~

Innerwear operating margin was 21.7%, an increase from 21.0% in the same period a year ago. Operating margin enhancement resulted primarily from fixed cost leverage from higher sales and temporary cost reduction initiatives.

~~Activewear~~

Activewear net sales decreased 41% compared to the third quarter last year primarily as a result of the negative impact of the COVID-19 pandemic on our sports apparel business due to school closures and event cancellations and COVID-19 related service issues in our ~~Champion~~ ~~business. In addition, the exit of the~~ ~~C9 Champion~~ ~~massprogram in 2019 represented approximately $103 million of the net sales decrease in the third quarter of 2020 compared to the third quarter of 2019.~~

~~Activewear operating margin decreased as a result of lower sales, including the exit of the~~ ~~C9 Champion~~ ~~mass program, unfavorable manufacturing variances, increased inventory reserves on non-Champion~~ brands and higher selling, general and administrative expenses as a percentage of net sales. Lower variable costs as a result of decreased net sales and temporary cost savings initiatives implemented in response to the COVID-19 pandemic reduced selling, general and administrative costs, but not at the same rate as the decline in sales.


	Operating Profit and Margin
	Quarters Ended
	October 2, 2021				September 26, 2020				Higher (Lower)		Percent Change
	(dollars in thousands)
Innerwear	$	147,651	21.0	%	$	172,000	21.7	%	$	(24,349)	(14.2)	%
Activewear	76,172		16.5		29,568		9.1		46,604		157.6
International	86,371		16.1		101,029		20.0		(14,658)		(14.5)
Other	11,288		12.8		3,059		4.5		8,229		269.0
Corporate	(86,836)		NM		(116,569)		NM		29,733		(25.5)
Total	$	234,646	13.1	%	$	189,087	11.2	%	$	45,559	24.1	%

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Innerwear

Innerwear net sales decreased 11% compared to the third quarter of 2020 primarily due to our exit of the PPE business in 2021 as a result of the implementation of our Full Potential plan. Net sales of PPE represented $166 million of the decrease in the third quarter of 2021 compared to the third quarter of 2020. This decrease was partially offset by increases in all of our core apparel categories. Net sales in our Men’s, Kids and Socks businesses increased mid-to-high single digits and net sales in our Women’s business increased approximately 20%, driven by strong point-of-sale growth across channels in the third quarter of 2021.

Innerwear operating margin was 21.0%, a decrease from 21.7% in the same period a year ago due to fixed cost deleverage from lower sales, higher transportation costs, increased investments in brand marketing and higher levels of inflation. The third quarter of 2020 also included operating profit related to the PPE business that was exited.

Activewear

Activewear net sales increased 42% compared to the third quarter last year driven by lower comparable sales in the third quarter of 2020 due to COVID-19 pandemic-related shutdowns. We experienced growth in all product categories, including double-digit growth in both the Champion and Hanes brands. We experienced strong point-of-sale trends across several channels in the third quarter of 2021.

Activewear operating margin was 16.5%, an increase from 9.1% in the same period a year ago. Operating margin improvement primarily resulted from fixed cost leverage from higher sales and favorable sales mix, which more than offset increased investments in brand marketing.

International

Net sales in the International segment ~~decreased 5%~~increased 6% as a result of lower sales in the third quarter of 2020 due to the negative impact of the COVID-19 ~~pandemic partially offset~~pandemic. Net sales grew in the Americas, Europe and certain markets in Asia driven by strong consumer demand for our brands while net sales in Australia and Japan were negatively impacted due to extended government COVID-19 related lockdowns in the third quarter of 2021. The favorable impact of foreign currency exchange rates increased net sales approximately $8 million in the third quarter of ~~approximately $14 million.~~2021. International net sales on a constant currency basis, defined as net sales excluding the impact of foreign currency, ~~decreased 7%~~increased 4%. The impact of foreign exchange rates is calculated by applying prior period exchange rates to the current year financial results. Excluding the impact from foreign exchange rates, we experienced growth in our Americas and Champion Europe businesses. This growth was more than offset by declines in our European innerwear, Asia and Australia businesses, where COVID-19 related challenges have slowed the retail recovery. Sales of PPE increased International segment net sales by $13 million in theThe third quarter of ~~2020.~~2020 included net sales of PPE of $13 million.

International operating margin was ~~15.2%~~16.1%, a decrease from ~~16.2%~~20.0% in the same period a year ~~ago, resulting~~ago. The decrease in operating margin primarily resulted from ~~lower sales volume, which was~~fixed cost deleverage due to COVID-19 related shutdowns in Australia and Japan in the third quarter of 2021 and increased investments in brand marketing partially offset by ~~continued selling, general~~fixed cost leverage from higher sales in the Americas, Europe and ~~administrative cost management.~~certain markets in Asia and the favorable impact from foreign exchange rates.

Other

Other net sales ~~decreased as a result of continued declines in hosiery~~increased primarily due to increased sales ~~in the United States and decreased traffic~~ at our retail outlets during the third quarter of ~~2020~~2021 as a result of stores reopening after temporary store closures during the third quarter of 2020 due to the COVID-19 pandemic. Operating margin ~~decreased~~increased due to the ~~decrease~~increase in sales volume.

We expect to continue certain sales from our supply chain to the European Innerwear business after the sale of the business. Those sales and the related profit are included in Other in all periods presented and have not been eliminated as intercompany transactions in consolidation.

Corporate

Corporate expenses ~~included certain administrative costs including restructuring and other action-related charges. Corporate expenses~~ were ~~higher~~lower in the third quarter of ~~2020~~2021 compared to the third quarter of ~~2019~~2020 due to ~~higher~~lower restructuring and other action-related charges. Included in restructuring and other action-related charges ~~higher bad debt expense~~in the third quarter of 2021 were $29 million of charges related to the implementation of our Full Potential plan including a charge of $16 million for an action to resize our U.S. corporate office workforce through a voluntary retirement program which is expected to be paid within one year and ~~higher variable compensation costs.~~is reflected in the “Selling, general and administrative expenses” line of the Condensed Consolidated Statements of Income. Included in restructuring and other action-related charges in the third quarter of 2020 were $49 million of supply chain ~~re-start up~~re-startup charges primarily related to incremental costs incurred, such as freight and sourcing premiums, to expedite product to meet customer demand following the extended shut-down of parts of our manufacturing network as a result of the COVID-19 pandemic. Supply chain actions include actions to reduce overhead costs. Program exit charges are costs associated with exiting the ~~C9 Champion~~ mass program and the DKNY intimate apparel license. Other restructuring costs include action-related costs such as workforce reductions, as well as acquisition and integration charges for smaller acquisitions in 2019.

Quarters Ended
September 26,
2020 September 28,
2019
(dollars in thousands)
Restructuring and other action-related charges included in operating profit:
Supply chain actions - 2019 $ 934 $ 9,424
Supply chain actions - 2020 1,201 —
Program exit costs 356 —
Other restructuring costs 1,185 513
COVID-19 related charges:
Supply chain re-startup 48,893 —
Total restructuring and other action-related charges included in operating profit $ 52,569 $ 9,937

~~Condensed Consolidated Results of Operations — Nine Months Ended September 26, 2020 Compared with Nine Months Ended September 28, 2019~~

Nine Months Ended
September 26,
2020 September 28,
2019 Higher
(Lower) Percent
Change
(dollars in thousands)
Net sales $ 4,863,507 $ 5,215,918 $ (352,411) (6.8) %
Cost of sales 3,140,050 3,203,331 (63,281) (2.0)
Gross profit 1,723,457 2,012,587 (289,130) (14.4)
Selling, general and administrative expenses 1,273,220 1,366,272 (93,052) (6.8)
Operating profit 450,237 646,315 (196,078) (30.3)
Other expenses 16,849 23,766 (6,917) (29.1)
Interest expense, net 122,376 137,672 (15,296) (11.1)
Income before income tax expense 311,012 484,877 (173,865) (35.9)
Income tax expense 54,427 69,143 (14,716) (21.3)
Net income $ 256,585 $ 415,734 $ (159,149) (38.3) %

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~~Net Sales~~

~~Net sales decreased 7% during the nine months of 2020 primarily due to the following:~~

•The disruption of our U.S. and International apparel businesses related to the negative effects of the COVID-19 pandemic, including temporary closures of retail stores owned and operated by us, as well as canceled orders from our wholesale brick-and-mortar customers;

•~~The exit of our~~ ~~C9 Champion~~ ~~mass program and the DKNY intimate apparel license in 2019 which, together, represented approximately $332 million of net sales in the nine months of 2019; and~~

•~~The unfavorable impact from foreign exchange rates in our International business of approximately $20 million.~~

~~Partially offset by:~~

•~~Net sales of PPE of $931 million in the nine months of 2020.~~

~~Operating Profit~~

Operating profit as a percentage of net sales was 9.3%, representing a decrease from 12.4% in the prior year. Decreased operating profit was the result of lower sales volume in our apparel businesses including the exit of our ~~C9 Champion~~ mass program in 2019, higher manufacturing variances as a result of decreases in manufacturing facility production levels in our global supply chain due to the business disruption caused by the COVID-19 pandemic, increased inventory reserves and higher bad debt expense. These decreases were partially offset by lower selling, general and administrative expenses driven by ongoing cost controls and temporary cost savings initiatives implemented in response to the COVID-19 pandemic. Included in operating profit in the nine months of 2020 and 2019 were restructuring and other action-related charges of $145 million and $44 million, respectively, including supply chain restructuring charges, asset write-down charges recorded as a result of the on-going effects of the COVID-19 pandemic and supply chain re-start up charges primarily related to incremental costs incurred, such as freight and sourcing premiums, to expedite productdelivery to meet customer demand following the extended shut-down of parts of our manufacturing network as a result of the COVID-19 pandemic in 2020. Supply chain actions in the third quarter of 2020 include actions to reduce overhead costs. Program exit charges are costs incurred during the third quarter of 2020 associated with exiting the C9

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Champion mass program and the DKNY intimate apparel license at the end of 2019. Other charges in the third quarter of 2020 include action-related costs such as workforce reductions.


	Quarters Ended
	October 2, 2021		September 26, 2020
	(dollars in thousands)
Restructuring and other action-related charges included in operating profit:
Full Potential Plan:
Professional services	$	11,283	$	—

Operating model	16,000		—
Other	1,813		—
2020 actions:
Supply chain actions	—		2,098
Program exit costs	—		356
Other	—		1,195
COVID-19 related charges:
Supply chain re-startup	—		48,608


Total restructuring and other action-related charges included in operating profit	$	29,096	$	52,257

Condensed Consolidated Results of Operations — Nine Months Ended October 2, 2021 Compared with Nine Months Ended September 26, 2020


	Nine Months Ended
	October 2, 2021		September 26, 2020		Higher (Lower)		Percent Change
	(dollars in thousands)
Net sales	$	5,048,891	$	4,438,016	$	610,875	13.8	%
Cost of sales	3,064,920		2,934,515		130,405		4.4
Gross profit	1,983,971		1,503,501		480,470		32.0
Selling, general and administrative expenses	1,341,809		1,064,328		277,481		26.1
Operating profit	642,162		439,173		202,989		46.2
Other expenses	6,227		15,652		(9,425)		(60.2)
Interest expense, net	127,760		120,602		7,158		5.9
Income from continuing operations before income tax expense	508,175		302,919		205,256		67.8
Income tax expense	55,161		43,008		12,153		28.3
Income from continuing operations	453,014		259,911		193,103		74.3
Loss from discontinued operations, net of tax	(435,823)		(3,326)		(432,497)		13,003.5
Net income	$	17,191	$	256,585	$	(239,394)	(93.3)	%

Net Sales

Net sales increased 14% during the nine months of 2021 versus the nine months of 2020 primarily due to the following:

•Retailers continuing to replenish inventory levels as well as strong consumer demand and point-of-sale trends as stores reopened after temporary closures due to the COVID-19 pandemic and incremental sales partially as a result of higher U.S. government stimulus spending;

•A lower sales comparison in the nine months of 2020 due to COVID-19 pandemic-related shutdowns; and

•The favorable impact from foreign exchange rates in our International business of approximately $102 million.

Partially offset by:

•The exit of the PPE business as part of our Full Potential plan, which contributed net sales of $792 million in the nine months of 2020.

Operating Profit

Operating profit as a percentage of net sales was 12.7% for the nine months of 2021, representing an increase from 9.9% in the prior year. Operating margin benefited from fixed cost leverage from higher sales and the favorable impact from foreign exchange rates, which more than offset higher transportation costs, increased investments in brand marketing and higher levels

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of inflation. Selling, general and administrative expenses in the nine months of 2020 benefited from temporary cost savings initiatives implemented in response to the COVID-19 pandemic. The nine months of 2020 also included operating profit related to the PPE business that was exited.

Included in operating profit in the nine months of 2021 were charges of $67 million related to the implementation of our Full Potential plan. Included in operating profit in the nine months of 2020 were charges of $109 million primarily related to supply chain actions, program exits, asset write-down charges recorded as a result of the effects of the COVID-19 pandemic and supply chain re-startup charges related to incremental costs incurred, such as freight and sourcing premiums, to expedite product delivery to meet customer demand following the extended shut-down of parts of our manufacturing network as a result of the COVID-19 pandemic in 2020.

Other Highlights

Other Expenses – Other expenses decreased $7$9 million in the nine months of ~~2020~~2021 compared to the same period in ~~2019~~2020 due to lower pension expense and lower funding fees for sales of accounts receivable to financial institutions in ~~2020.~~2021.

Interest Expense – Interest expense was ~~lower~~higher by ~~$15~~$7 million in the nine months of ~~2020~~2021 compared to the same period in ~~2019, primarily~~2020, driven by ~~the impact of the cross-currency swap contracts entered into in July 2019 and~~ a ~~lower~~higher weighted average interest rate on our borrowings ~~partially offset by higher outstanding debt balances.~~during the nine months of 2021 and interest expense on cross-currency swap contracts entered into on April 1, 2021 that are being used to hedge foreign currency cash flows. Our weighted average interest rate on our outstanding debt was ~~3.71%~~4.12% for the nine months of ~~2020,~~2021, compared to ~~4.13%~~3.90% for the nine months of ~~2019.~~2020.

Income Tax Expense – Our effective income tax rate was ~~17.5%~~10.9% and ~~14.3%~~14.2% for the nine months of ~~2020~~2021 and ~~2019,~~2020, respectively. The ~~higher~~lower effective tax rate for the nine months ~~ended September 26, 2020~~of 2021 was primarily due to tax benefits related to the adjustments of prior year tax returns and approval of certain filings by taxing authorities during the nine months of 2021 and the change in jurisdictional mix of ~~income attributable~~income.

DiscontinuedOperations – The results of our discontinued operations include the operations of our European Innerwear business which we reached the decision to exit at the end of the first quarter of 2021 in connection with our Full Potential plan. See note “Discontinued Operations” to our condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q for a discussion of non-cash asset impairment charges and non-cash charges to record a valuation allowance against the net assets held for sale to write down the carrying value to the ~~economic impacts~~estimated fair value less costs of COVID-19. During the nine months ended September 26, 2020, the Internal Revenue Service closed the examination of the income tax years ended January 2, 2016 and December 31, 2016. The examination resulted in an immaterial adjustment which had been accrued as an uncertain tax benefit in a prior period.disposal.

Operating Results by Business Segment — Nine Months Ended ~~September 26, 2020~~October 2, 2021 Compared with Nine Months Ended September ~~28, 2019~~26, 2020


		Net Sales									Net Sales
		Nine Months Ended									Nine Months Ended
		September 26, 2020		September 28, 2019		Higher (Lower)		Percent Change			October 2, 2021		September 26, 2020		Higher (Lower)		Percent Change
		(dollars in thousands)									(dollars in thousands)
Innerwear	Innerwear	$	2,309,816	$	1,733,002	$	576,814	33.3	%	Innerwear	$	2,053,702	$	2,309,816	$	(256,114)	(11.1)	%
Activewear	Activewear	781,300		1,401,734		(620,434)		(44.3)		Activewear	1,230,691		781,300		449,391		57.5
International	International	1,644,893		1,878,568		(233,675)		(12.4)		International	1,521,667		1,185,718		335,949		28.3
Other	Other	127,498		202,614		(75,116)		(37.1)		Other	242,831		161,182		81,649		50.7
Total	Total	$	4,863,507	$	5,215,918	$	(352,411)	(6.8)	%	Total	$	5,048,891	$	4,438,016	$	610,875	13.8	%


	Operating Profit and Margin
	Nine Months Ended
	October 2, 2021				September 26, 2020				Higher (Lower)		Percent Change
	(dollars in thousands)
Innerwear	$	461,237	22.5	%	$	558,075	24.2	%	$	(96,838)	(17.4)	%
Activewear	177,813		14.4		31,925		4.1		145,888		457.0
International	235,451		15.5		156,936		13.2		78,515		50.0
Other	22,394		9.2		(12,263)		(7.6)		34,657		NM
Corporate	(254,733)		NM		(295,500)		NM		40,767		(13.8)
Total	$	642,162	12.7	%	$	439,173	9.9	%	$	202,989	46.2	%

Innerwear

Innerwear net sales decreased 11% compared to the nine months of 2020 primarily due to our exit of the PPE business in 2021 as a result of the implementation of our Full Potential plan. Net sales of PPE represented $779 million of the decrease in

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Operating Profit and Margin
Nine Months Ended
September 26,
2020 September 28,
2019 Higher
(Lower) Percent
Change
(dollars in thousands)
Innerwear $ 558,075 24.2 % $ 375,623 21.7 % $ 182,452 48.6 %
Activewear 31,925 4.1 209,686 15.0 (177,761) (84.8)
International 227,218 13.8 288,019 15.3 (60,801) (21.1)
Other (17,389) (13.6) 16,429 8.1 (33,818) (205.8)
Corporate (349,592) NM (243,442) NM (106,150) (43.6)
Total $ 450,237 9.3 % $ 646,315 12.4 % $ (196,078) (30.3) %

~~Innerwear~~

~~Innerwear net sales increased 33%~~the nine months of 2021 compared to the nine months of ~~2019 driven by $779 million of net sales of PPE.~~2020. This ~~increase~~decrease was partially offset by ~~a 7% and a 23% decline~~increases in ~~net sales in~~all of our ~~basics and intimate~~core apparel ~~businesses, respectively,~~categories primarily as a result of a lower sales comparison in the ~~negative impact~~nine months of 2020 due to COVID-19 pandemic-related shutdowns, retailers continuing to replenish inventory levels and strong consumer demand and point-of-sale trends as stores reopened after temporary closures due to the COVID-19 ~~pandemic. In addition, net~~pandemic and incremental sales ~~in our Innerwear segment decreased~~partially as a result of ~~the exit of the~~ ~~C9 Champion~~ ~~mass program and the DKNY intimate apparel license in 2019.~~higher U.S. government stimulus spending.

Innerwear operating margin was 22.5%, a decrease from 24.2% in the same period a year ago due to fixed cost deleverage from lower sales, higher transportation costs, increased investments in brand marketing and higher levels of inflation. The nine months of 2020 also included operating profit related to the PPE business that was exited.

Activewear

Activewear net sales increased 58% compared to the nine months of 2020 driven by lower comparable sales in the nine months of 2020 due to COVID-19 pandemic-related shutdowns and incremental sales partially as a result of higher U.S. government stimulus spending in the nine months of 2021. We experienced growth in all product categories.

Activewear operating margin was 14.4%, an increase from ~~21.7%~~4.1% in the same period a year ago. Operating margin ~~enhancement~~improvement primarily resulted ~~primarily~~ from fixed cost leverage from higher sales and ~~temporary cost reduction initiatives.~~

~~Activewear~~

~~Activewear net~~favorable sales ~~decreased 44% compared to the nine months last year primarily as a result of the negative impact of the COVID-19 pandemic. In addition, the exit of the~~ ~~C9 Champion~~ ~~mass program~~mix, which more than offset increased investments in ~~2019 represented approximately $285 million of the net sales decrease in the nine months of 2020 compared to the nine months of 2019.~~

~~Activewear operating margin was 4.1%, representing a decrease from 15.0% in the same period a year ago. The decrease was a result of lower sales, including the exit of the~~ ~~C9 Champion~~ mass program, unfavorable manufacturing variances, increased inventory reserves and higher selling, general and administrative expenses as a percentage of net sales. Lower variable costs as a result of decreased net sales and temporary cost savings initiatives implemented in response to the COVID-19 pandemic reduced selling, general and administrative costs, but not at the same rate as the decline in sales.brand marketing.

International

Net sales in the International segment ~~decreased 12%~~increased 28% as a result of lower sales in the nine months of 2020 due to the negative impact of the COVID-19 pandemic and the ~~unfavorable~~favorable impact of foreign currency exchange rates of approximately ~~$20 million.~~$102 million in the nine months of 2021. International net sales on a constant currency basis, defined as net sales excluding the impact of foreign currency, ~~decreased 11%~~increased 20%. The impact of foreign exchange rates is calculated by applying prior period exchange rates to the current year financial results. ~~Sales of PPE increased International segment net sales by $152 million in the~~The nine months of ~~2020.~~2020 included net sales of PPE of $13 million. Net sales in certain of our international markets continue to be negatively impacted by COVID-19 related shutdowns.

International operating margin was ~~13.8%~~15.5%, ~~a decrease~~an increase from ~~15.3%~~13.2% in the same period a year ~~ago,~~ago. Operating margin improvement primarily ~~due to decreased~~resulted from fixed cost leverage from higher sales, ~~partially~~favorable sales mix and the favorable impact from foreign exchange rates, which more than offset ~~by various temporary cost reduction initiatives and selling, general and administrative cost management.~~increased investments in brand marketing.

Other

Other net sales ~~decreased as a result decreased traffic~~increased primarily due to increased sales at our retail outlets ~~due to~~during the nine months of 2021 as a result of stores reopening after temporary store closures during the nine months of 2020 ~~as a result of the COVID-19 pandemic and continued declines in hosiery sales in the United States. Operating margin decreased~~ due to the ~~decrease~~COVID-19 pandemic. Operating margin increased due to the increase in sales volume.

~~Table~~We expect to continue certain sales from our supply chain to the European Innerwear business after the sale of ~~Contents~~

the business. Those sales and the related profit are included in Other in all periods presented and have not been eliminated as intercompany transactions in consolidation.

Corporate

Corporate expenses ~~included certain administrative costs including restructuring and other action-related charges. Corporate expenses were higher~~ in the nine months of ~~2020~~2021 included incremental recurring COVID-19 related costs such as cleaning and health-related supplies to protect our employees and customers, as well as higher compensation expense compared to the nine months of 2020. Corporate expenses were lower in the nine months of 2021 compared to the same period of ~~2019~~2020 due to ~~higher~~lower restructuring and other action-related charges and ~~higher~~ bad debt ~~expense as a result of charges for bankruptcies partially offset by cost savings initiatives implemented in response to the COVID-19 pandemic.~~expense. Included in restructuring and other action-related charges in the nine months ~~ended September 26,~~of 2021 were $67 million of charges related to the implementation of our Full Potential plan including a charge of $16 million for an action to resize our U.S. corporate office workforce through a voluntary retirement program and impairment charges of $7 million related to the full impairment of an indefinite-lived trademark related to a specific brand within the European Innerwear business that was excluded from the disposal group as it is not being marketed for sale. Included in restructuring and other action-related charges in the nine months of 2020 were ~~$52 million of asset write-down charges recorded as a result of the ongoing effects of the COVID-19 pandemic and~~ $49 million of supply chain ~~re-start up~~re-startup charges primarily related to incremental costs incurred, such as freight and sourcing premiums, to expedite product delivery to meet customer demand following the extended shut-down of parts of our manufacturing network as a result of the COVID-19 pandemic in 2020 and $24 million of asset write-down charges recorded as a result of the effects of the COVID-19 pandemic. Supply chain actions in the nine months of 2020 include actions to reduce overhead costs. Program exit charges are costs incurred during the nine months of 2020 associated with exiting the C9 Champion mass program and the DKNY intimate apparel ~~license.~~license at the end of 2019. Other ~~restructuring costs~~charges in the nine months of 2020 include action-related costs such as workforce ~~reductions, as well as acquisition and integration charges for smaller acquisitions in 2019.~~reductions.

Nine Months Ended
September 26,
2020 September 28,
2019
(dollars in thousands)
Restructuring and other action-related charges included in operating profit:
Supply chain actions - 2019 $ 6,632 $ 39,714
Supply chain actions - 2020 14,705 —
Program exit costs 9,856 —
Other restructuring costs 12,799 4,205
COVID-19 related charges:
Supply chain re-startup 48,893 —
Bad debt 11,375 —
Inventory 20,485 —
Intangible assets 20,319 —
Total restructuring and other action-related charges included in operating profit $ 145,064 $ 43,919

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	Nine Months Ended
	October 2, 2021		September 26, 2020
	(dollars in thousands)
Restructuring and other action-related charges included in operating profit:
Full Potential Plan:
Professional services	$	36,793	$	—
Operating model	17,600		—
Impairment of intangible assets	7,302		—
Other	5,458		—
2020 actions:
Supply chain actions	—		18,800
Program exit costs	—		9,854
Other	—		7,311
COVID-19 related charges:
Supply chain re-startup	—		48,608
Bad debt	—		9,418
Inventory	—		14,869
Total restructuring and other action-related charges included in operating profit	$	67,153	$	108,860

Liquidity and Capital Resources

Cash Requirements and Trends and Uncertainties Affecting Liquidity

We rely on our cash flows generated from operations and the borrowing capacity under our credit facilities to meet the cash requirements of our business. Our primary uses of cash are payments to our employees and vendors in the normal course of business, capital expenditures, maturities of debt and related interest payments, contributions to our pension plans, regular quarterly dividend payments and income tax payments. ~~The rapid expansion~~

Based on our current estimate of future earnings and cash flows, we believe we have sufficient cash and available borrowings for at least one year from the issuance of these financial statements based on our current expectations and forecasts.

Our primary sources of liquidity are cash generated from global operations and cash available under our Revolving Loan Facility, our Australian Revolving Loan Facility, our Accounts Receivable Securitization Facility and our international credit facilities.

We had the following borrowing capacity and available liquidity under our credit facilities as of October 2, 2021:


	As of October 2, 2021
	Borrowing Capacity		Available Liquidity
	(dollars in thousands)
Senior Secured Credit Facility:
Revolving Loan Facility	$	1,000,000	$	995,824


Australian Revolving Loan Facility	43,051		43,051

Accounts Receivable Securitization Facility(1)	166,214		166,214
Other international credit facilities	60,105		13,856
Total liquidity from credit facilities	$	1,269,370	$	1,218,945
Cash and cash equivalents			873,628
Total liquidity			$	2,092,573

(1)Borrowing availability under the Accounts Receivable Securitization Facility is subject to a quarterly fluctuating facility limit, not to exceed $175 million, and permitted only to the extent that the face of the receivables in the collateral pool, net of applicable reserves and other deductions, exceeds the outstanding loans.

The following have impacted or may impact our liquidity:

•The COVID-19 pandemic has ~~resulted in~~had a ~~decline in net sales and earnings in the nine months of 2020, which has a corresponding~~negative impact on our ~~liquidity.~~ business.

•We ~~are focused on preserving~~have historically paid a regular quarterly dividend. The declaration of any future dividends and, if declared, the amount of any such dividends, will be subject to our ~~liquidity~~actual future earnings, capital requirements, regulatory restrictions, debt covenants, other contractual restrictions and ~~managing~~to the discretion of our cash flow during these unprecedented conditions with preemptive actions to enhance our ability to meet our short-term liquidity needs. Such actions have included, but are not limited to: selling PPE, such as cloth face coverings and gowns; operating manufacturing and distribution facilities on a demand-adjusted basis; reducing our discretionary spending such as certain media and marketing expenses; focused working capital management; reducing capital expenditures; suspending our share repurchase program until further notice which is currently prohibited under the Senior Secured Credit Facility; reducing payroll costs through temporary employee furloughs and pay cuts; working globally to maximize our participation in all eligible government or other initiatives available to businesses or employees impacted by the COVID-19 pandemic; engaging with landlords to negotiate rent deferrals or other rent concessions; issuing new debt and amending certain existing debt facilities.Board of Directors.

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•We have principal and interest obligations under our debt and ongoing financial covenants under those debt facilities. In March 2021, we repaid the outstanding balance of Term Loan B which consisted of a required excess cash flow prepayment of $239 million and a voluntary prepayment of $61 million. We intend to refinance our Senior Secured Credit Facility in the fourth quarter of 2021, subject to market conditions, and redeem our 5.375% Senior Notes using proceeds from the transaction and cash on hand.

•We have invested in efforts to accelerate worldwide omnichannel and global growth initiatives, as well as marketing and brand building.

•We have launched a multi-year cost savings program intended to self-fund the investments necessary to achieve our Full Potential plan’s objectives.

•We expect capital investments of approximately $185 million per year through 2024 as part of our Full Potential plan.

•In the future, we may pursue strategic business acquisitions or divestitures.

•We made a contribution of $40 million to our U.S. pension plan in the nine months ended October 2, 2021. We may also elect to make additional voluntary contributions.

•We may increase or decrease the portion of the current-year income of our foreign subsidiaries that we remit to the United States, which could impact our effective income tax rate. Consistent with our investment strategy as it pertains to our historical foreign earnings as of January 2, 2021, we intend to remit foreign earnings totaling $668 million.

•We are obligated to make installment payments over an eight-year period related to our transition tax liability resulting from the implementation of the Tax Cuts and Jobs Act, which began in 2018, in addition to any estimated income taxes due based on current year taxable income. In the nine months ended October 2, 2021, we made an installment payment of $10 million on our transition tax liability. We currently have a remaining balance due of approximately $41 million to be paid in installment payments through 2025.

Sources and Uses of Our Cash

The information presented below regarding the sources and uses of our cash flows for the nine months ended October 2, 2021 and September 26, 2020 was derived from our condensed consolidated interim financial statements.


	Nine Months Ended
	October 2, 2021		September 26, 2020
	(dollars in thousands)
Operating activities	$	527,376	$	231,222
Investing activities	(44,404)		(41,084)
Financing activities	(475,924)		203,441
Effect of changes in foreign exchange rates on cash	(27,207)		9,052
Change in cash, cash equivalents and restricted cash	(20,159)		402,631
Cash, cash equivalents and restricted cash at beginning of year	910,603		329,923
Cash, cash equivalents and restricted cash at end of period	890,444		732,554
Less restricted cash at end of period	—		1,073
Cash and cash equivalents at end of period	$	890,444	$	731,481

Balances included in the Condensed Consolidated Balance Sheets:
Cash and cash equivalents	$	873,628	$	716,921
Cash and cash equivalents included in current assets of discontinued operations	16,816		14,560
Cash and cash equivalents at end of period	$	890,444	$	731,481

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Operating Activities

Our overall liquidity has historically been driven by our cash flow provided by operating activities, which is dependent on net income and changes in our working capital. As compared to the prior year, higher net cash provided by operating activities was due to changes in working capital primarily accounts payable, partially offset by accounts receivable and inventory. Higher profitability also drove improved year over year cash flow. Net cash from operating activities includes a $40 million and a $25 million contribution to our U.S. pension plan made in the first quarter of 2021 and 2020, respectively.

Investing Activities

Investing activities in the nine months of 2021 and 2020 primarily include capital investments into our business. The increase in cash used by investing activities in the nine months of 2021 compared to 2020 was primarily the result of an increase in capital investments into our business as we manage our spending on our focused strategic goals.

Financing Activities

Net cash from financing activities decreased primarily as a result of lower borrowings as compared to the same period of 2020. We increased our borrowings in the nine months of 2020 primarily to strengthen our cash position and to provide us with additional financial flexibility to manage our business during the COVID-19 pandemic. In the nine months of 2021, we repaid the outstanding balance of Term Loan B which consisted of a required excess cash flow prepayment of $239 million and a voluntary prepayment of $61 million. We repurchased shares at a total cost of $200 million in the nine months of 2020.

Financing Arrangements

In March 2021, we amended the Accounts Receivable Securitization Facility. This amendment primarily decreased the fluctuating facility limit to $175 million (previously $225 million) and extended the maturity date to June 2022. Additionally, the amendment changed certain ratios and borrowing base calculations, raised pricing and added certain receivables to the pledged collateral pool for the facility. In July 2021, the Australian Revolving Loan Facility, originally entered into in July 2016, was amended to extend the maturity date to July 2022 and to reduce the bilateral cash advance limit from A$50 million to A$46 million with an offsetting increase in the bank overdraft limit from A$10 million to A$14 million.

In April 2020, given the rapidly changing business environment and level of uncertainty ~~being~~ created by the COVID-19 pandemic and the associated impact on future earnings, we amended our Senior Secured Credit Facility prior to any potential covenant violation in order to modify the financial covenants and to provide operating flexibility during the COVID-19 crisis. The amendment ~~effects changes to~~changed certain provisions and covenants under the Senior Secured Credit Facility ~~during the period beginning with the fiscal quarter ending June 27, 2020 and continuing~~ through the fiscal quarter ~~ending~~ended July 3, 2021, ~~(such period~~after which our covenants were to revert to their original, pre-amendment levels. We voluntarily terminated the covenant relief amendment when we submitted our April 3, 2021 compliance certificate. After termination, the covenants reverted to their original, pre-amendment levels for the fiscal quarter ended July 3, 2021.

We believe our financing structure provides a secure base to support our operations and key business strategies. As of ~~time, the “Covenant Relief Period”), including: (a) suspension of~~October 2, 2021, we were in compliance with all financial covenants under our credit facilities and other outstanding indebtedness. We continue to monitor our covenant compliance carefully. Under the ~~maximum leverage ratio; (b) reduction~~terms of ~~the~~our Senior Secured Credit Facility, among other financial and non-financial covenants, we are required to maintain a minimum interest coverage ratio ~~from 3.00 to 1.00 to (i) 2.00 to 1.00~~and a maximum leverage ratio. The interest coverage ratio covenant is the ratio of our EBITDA for the preceding four fiscal quarters ~~ending June 27, 2020 through April 3, 2021~~to our consolidated total interest expense and ~~(ii) 2.25~~the maximum leverage ratio covenant is the ratio of our net debt to ~~1.00~~EBITDA for the preceding four fiscal ~~quarter ending July 3, 2021; (c) a minimum last twelve months~~quarters. EBITDA ~~covenant of $625 million~~is defined as ~~of June 27, 2020, $505 million~~earnings before interest, income taxes, depreciation expense and amortization, as ~~of September 26, 2020, $445 million as of January 2, 2021, $435 million as of April 3, 2021 and $505 million as of July 3, 2021; (d) a minimum liquidity covenant of $300 million, increasing~~computed pursuant to ~~$400 million upon certain conditions; (e) increased limitations on investments, acquisitions, restricted payments and~~ the incurrence of indebtedness; and (f) anti-cash hoarding provisions. During the Covenant Relief Period, the applicable margin and applicable commitment fee margin will be calculated assuming the leverage ratio is greater than or equal to 4.50 to 1.00. The amendment also permanently amends the definition of “leverage ratio” for purposes of the financial covenant calculation to remove the maximum amount of cash allowed to be netted from the definition of “indebtedness” and to allow for the netting of cash from certain foreign subsidiaries. Senior Secured Credit Facility.

We expect to maintain compliance with our covenants for at least one year from the ~~issuance~~date of these financial statements based on our current expectations and ~~forecasts.~~forecasts, however economic conditions or the occurrence of events discussed under “Risk Factors” in our Annual Report on Form 10-K for the year ended January 2, 2021 or other SEC filings could cause noncompliance. If economic conditions caused by the COVID-19 pandemic do not continue to improve or otherwise worsen, including as a result of any new virus variants or vaccine distribution or efficacy, and our earnings and operating cash flows do not ~~start~~continue to recover as currently estimated by ~~us,~~management, this could impact our ability to maintain compliance with our financial covenants and require us to seek additional amendments to our Senior Secured Credit Facility. If we are not able to obtain such necessary additional amendments, this would lead to an event of default and, if not cured timely, our lenders could require us to repay our outstanding debt. In that situation, we may not be able to raise sufficient debt or equity capital, or divest assets, to refinance or repay the lenders.

~~In May 2020, we issued $700 million aggregate principal amount of 5.375% Senior Notes which will mature on May 15, 2025. The net proceeds from the issuance of $691 million were used~~We intend to ~~repay all outstanding borrowings under our Revolving Loan Facility, pay related fees and expenses, and for general corporate purposes.~~

~~In September 2020, we amended the European Revolving Loan Facility primarily to extend the maturity date to December 2020.~~

We cannot assure you that our assumptions used to estimate our liquidity requirements will remain accurate due to the unprecedented nature of the disruption to our operations and the unpredictability of the COVID-19 pandemic. As a consequence, our estimates of the duration of the pandemic and the severity of the impact on our future earnings and cash flows could change and have a material impact on our results of operations and financial condition. We believe we have sufficient cash and available borrowings for at least one year from the issuance of these financial statements based on our current expectations and forecasts.

Our primary sources of liquidity are cash generated from global operations and cash available under our Revolving Loan Facility, our Accounts Receivable Securitization Facility and our international loan facilities, including our Australian Revolving Loan Facility and our European Revolving Loan Facility.

~~We had the following borrowing capacity and available liquidity under our credit facilities as of September 26, 2020:~~

As of September 26, 2020
Borrowing
Capacity Available Liquidity
(dollars in thousands)
Senior Secured Credit Facility:
Revolving Loan Facility $ 1,000,000 $ 989,097
Australian Revolving Loan Facility 42,433 42,433
European Revolving Loan Facility 116,604 116,604
Accounts Receivable Securitization Facility(1)
— —
Other international credit facilities 159,525 117,953
Total liquidity from credit facilities $ 1,318,562 $ 1,266,087
Cash and cash equivalents 731,481
Total liquidity $ 1,997,568

~~(1)~~Borrowing availability under the Accounts Receivable Securitization Facility is subject to a quarterly fluctuating facility limit, not to exceed $225 million, and permitted only to the extent that the face of the receivables in the collateral pool, net of applicable reserves and other deductions, exceeds the outstanding loans.

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~~The following have impacted or may impact our liquidity:~~

•~~The negative impact of the COVID-19 pandemic on our business as discussed above under “Impact of COVID-19 on Our Business.”~~

•For the nine months ended September 26, 2020 and prior to the expansion of COVID-19, we entered into transactions to repurchase approximately 14.5 million shares of our common stock at a total cost of $200 million. At September 26, 2020, the remaining repurchase authorization under our current share repurchase program totaled approximately 25.5 million shares. While we may repurchase additional shares of our common stock in the future, the program has been suspended in connection with the amendment to our Senior Secured Credit Facility described above.

•We have historically paid a regular quarterly dividend. The declaration of any future dividends and, if declared, the amount of any such dividends, will be subject to our actual future earnings, capital requirements, regulatory restrictions, debt covenants, other contractual restrictions and to the discretion of our Board of Directors.

•~~We have principal and interest obligations under our debt and ongoing financial covenants under those debt facilities, even after taking into account recent amendments.~~

•We have invested in efforts to accelerate worldwide omnichannel and global growth initiatives, as well as marketing and brand building. We anticipate capital expenditures to decrease for the remainder of 2020 compared to the prior year as we tightly manage spending to help mitigate the potential negative impact of the COVID-19 pandemic on our business and liquidity.

•~~We expect to continue to invest in efforts to improve operating efficiencies and lower costs.~~

•~~Although currently prohibited under~~refinance our Senior Secured Credit Facility in the ~~future, we may pursue strategic business acquisitions.~~

•~~We made a contribution~~fourth quarter of ~~$25 million~~2021, subject to ~~our U.S. pension plan in~~market conditions. In conjunction with the ~~nine months ended September 26, 2020. We may also elect to make additional voluntary contributions.~~

•We may increase or decrease the portion of the current-year income of our foreign subsidiaries that we remit to the United States, which could impact our effective income tax rate. Consistent with our investment strategy as it pertains to our historical foreign earnings as of December 28, 2019,refinancing, we intend to ~~remit historical foreign earnings totaling approximately $1.0 billion.~~

•~~We are obligated to make installment payments over an eight-year period related to~~redeem our transition tax liability resulting from the implementation of the Tax Act, which began in 2018, in addition to any estimated income taxes due based on current year taxable income. In the nine months ended September 26, 2020, we made an installment payment of $10 million on our transition tax liability. We currently have a remaining balance due of approximately $90 million to be paid in installment payments through 2025.

•~~In May 2020, we issued $700 million aggregate principal amount of~~ 5.375% Senior ~~Notes. The net~~Notes using proceeds from the ~~issuance were used to repay all outstanding borrowings under our Revolving Loan Facility, pay related fees~~transaction and ~~expenses, and for general corporate purposes.~~

•~~We have sold $931 million~~cash on hand. Redemption of ~~PPE globally to governments, large organizations, business-to-business customers and consumers for use to help mitigate~~ the ~~spread of the COVID-19 virus.~~

•~~Employee furloughs and pay cuts, as well as reductions in discretionary spending such as certain media and marketing expenses, have reduced selling, general and administrative costs.~~

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~~Sources and Uses of Our Cash~~

The information presented below regarding the sources and uses of our cash flows for the nine months ended September 26, 2020 and September 28, 2019 was derived from our condensed consolidated interim financial statements.

Nine Months Ended
September 26,
2020 September 28,
2019
(dollars in thousands)
Operating activities $ 231,222 $ 244,700
Investing activities (41,084) (97,780)
Financing activities 203,441 (285,616)
Effect of changes in foreign currency exchange rates on cash 9,052 1,008
Change in cash, cash equivalents and restricted cash 402,631 (137,688)
Cash, cash equivalents and restricted cash at beginning of year 329,923 455,732
Cash, cash equivalents and restricted cash at end of period 732,554 318,044
Less restricted cash at end of period 1,073 1,020
Cash and cash equivalents per balance sheet at end of period $ 731,481 $ 317,024

~~Operating Activities~~

Our overall liquidity has historically been driven by our cash flow provided by operating activities, which is dependent on net income and changes in our working capital, and is subject to certain risks related to the COVID-19 pandemic. We typically use cash during the first half of the year and generate most of our cash flow in the second half of the year. As compared to the prior year, the lower net cash provided by operating activities was primarily due to lower net income partially offset by improved working capital management. Cash used by operating activities includes a $25 million and a $26 million contribution to our U.S. pension plan made in the first quarter of 2020 and 2019, respectively.

~~Investing Activities~~

The decrease in cash used by investing activities in the nine months of 2020 compared to 2019 was primarily the result of a decrease in capital investments into our business to support our global growth initiatives in 2020 and the indemnification escrow payment of $21 million related to the Bras N Things acquisition made during the third quarter of 2019. We anticipate capital expenditures to decrease for the remainder of the year compared to the prior year as we tightly manage spending to help mitigate the potential negative impact of the COVID-19 pandemic on our business and liquidity.

~~Financing Activities~~

~~Net cash from financing activities increased primarily as a result of higher borrowings as compared to the same period of 2019 resulting from the issuance of $700 million aggregate principal amount of~~ 5.375% Senior Notes will require payment of a make-whole premium, which along with transaction fees is estimated to result in ~~May 2020. We increased our borrowings~~a one-time charge of approximately $45 million in the nine months of 2020 primarily to strengthen our cash position and to provide us with additional financial flexibility to manage our business with a safety-first emphasis during the unknown duration and impact of the COVID-19 pandemic. Additionally, in the firstfourth quarter of ~~2020, we repurchased shares at a total cost of $200 million.~~

~~Financing Arrangements~~

In March 2020, we amended the Accounts Receivable Securitization Facility. This amendment primarily decreased the fluctuating facility limit to $225 million (previously $300 million) and extended the maturity date to March 2021. As a result of the COVID-19 pandemic, in May 2020, we amended the Accounts Receivable Securitization Facility which changed certain ratios, inserted a floor and raised pricing, as well as removed certain receivables from being pledged as collateral for the facility, increased limits on other receivables pledged as collateral and required us to maintain the same minimum liquidity covenant contained in the Senior Secured Credit Facility.

In May 2020, we issued $700 million aggregate principal amount of 5.375% Senior Notes. The net proceeds of $691 million from the issuance were used to repay all outstanding borrowings under our Revolving Loan Facility, pay related fees and expenses, and for general corporate purposes.

~~In September 2020, we amended the European Revolving Loan Facility primarily to extend the maturity date to December 2020.~~

We believe our financing structure provides a secure base to support our operations and key business strategies. As of September 26, 2020, we were in compliance with all financial covenants under our credit facilities and other outstanding indebtedness. We continue to monitor our covenant compliance carefully. Under the terms of our Senior Secured Credit Facility, we are required to maintain a minimum interest coverage ratio and a maximum leverage ratio. The interest coverage

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~~ratio covenant is~~estimate this transaction will result in approximately $35 million of annual savings in interest expense, with approximately $4 million recognized in the ~~ratio~~fourth quarter of 2021. The expected interest expense savings and one-time charge are reflected in our ~~EBITDA~~Outlook for the ~~preceding four fiscal quarters to our consolidated total interest expense and the leverage ratio covenant is the ratio~~fourth quarter of our net debt to EBITDA for the preceding four fiscal quarters. EBITDA is defined as earnings before interest, income taxes, depreciation expense and amortization, as computed pursuant to the Senior Secured Credit Facility. In April 2020, given the rapidly changing environment and level of uncertainty being created by the COVID-19 pandemic and the associated impact on future earnings, we amended our Senior Secured Credit Facility prior to any potential covenant violation in order to modify the financial covenants and to provide operating flexibility during the COVID-19 crisis. We expect to maintain compliance with our covenants for at least one year from the date of these financial statements based on our current expectations and forecasts, however economic conditions or the occurrence of events discussed under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 28, 2019 and our Quarterly Report on Form 10-Q for the quarter ended March 28, 2020 or other SEC filings could cause noncompliance.2021.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements within the meaning of Item 303(a)(4) of SEC Regulation S-K.

Critical Accounting Policies and Estimates

We have chosen accounting policies that we believe are appropriate to accurately and fairly report our operating results and financial condition in conformity with accounting principles generally accepted in the United States. We apply these accounting policies in a consistent manner. Our significant accounting policies are discussed in Note, “Summary of Significant Accounting Policies,” to our financial statements included in our Annual Report on Form 10-K for the year ended ~~December 28, 2019.~~January 2, 2021.

The application of critical accounting policies requires that we make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures. These estimates and assumptions are based on historical and other factors believed to be reasonable under the circumstances. We evaluate these estimates and assumptions on an ongoing basis and may retain outside consultants to assist in our evaluation. If actual results ultimately differ from previous estimates, the revisions are included in results of operations in the period in which the actual amounts become known. The critical accounting policies that involve the most significant management judgments and estimates used in preparation of our financial statements, or are the most sensitive to change from outside factors, are discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended ~~December 28, 2019.~~January 2, 2021. There have been no material changes in these policies from those described in our Annual Report on Form 10-K for the year ended ~~December 28, 2019.~~January 2, 2021.

Recently Issued Accounting Pronouncements

For a summary of recently issued accounting pronouncements, see Note, “Recent Accounting Pronouncements” to our condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q.


Item 3.			Quantitative and Qualitative Disclosures about Market Risk

There have been no significant changes in our market risk exposures from those described in Item 7A of our Annual Report on Form 10-K for the year ended ~~December 28, 2019.~~January 2, 2021.


Item 4.			Controls and Procedures

Disclosure Controls and Procedures

As required by Exchange Act Rule 13a-15(b), our management, including our Chief Executive Officer and ~~Interim~~ Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and ~~Interim~~ Chief Financial Officer concluded that our disclosure controls and procedures were ~~not~~ effective as of September 26, 2020 due to a material weakness in internal control over financial reporting described in management’s annual report on internal control over financial reporting in our Annual Report on Form 10-K for the year ended December 28, 2019.

Notwithstanding the identified material weakness, management, including our principal executive officer and principal financial officer, have determined, based on the procedures we have performed, that the condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q fairly represent in all material respects our financial

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~~condition, results of operations and cash flows at September 26, 2020 and for the periods presented in accordance with U.S. GAAP.~~

~~Remediation Plan for Material Weakness~~

Management continues to enhance its internal control over financial reporting and to take steps to remediate the material weakness identified during the year ended December 28, 2019 related to income taxes. During the quarter ended June 27, 2020, we made progress in our remediation of the control deficiency noted above. In order to remediate the material weakness in our internal controls related to accounting for income taxes, management enhanced processes and internal controls related to deferred income taxes, effective income tax rate reconciliation and related disclosures. These enhanced controls include documentation evidencing the effective design and operation of annual and quarterly controls related to various aspects of deferred taxes and tax rate reconciliation.

We believe the measures described above will remediate the control deficiencies we have identified and strengthen our internal control over financial reporting. We are committed to continuing to improve our internal control processes and will continue to review, optimize and enhance our financial reporting controls and procedures. As we continue to evaluate and work to improve our internal control over financial reporting, we may take additional measures to address control deficiencies, or we may modify certain of the remediation measures described above. The material weakness will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.October 2, 2021.

Changes in Internal Control over Financial Reporting

In connection with the evaluation required by Exchange Act Rule 13a-15(d), our management, including our Chief Executive Officer and ~~Interim~~ Chief Financial Officer, concluded that no changes in our internal control over financial reporting occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II


Item 1.			Legal Proceedings

Although we are subject to various claims and legal actions that occur from time to time in the ordinary course of our business, we are not party to any pending legal proceedings that we believe could have a material adverse effect on our business, results of operations, financial condition or cash flows.

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Item 1A.			Risk Factors

~~In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the~~The risk factors that affect our business and financial results ~~that~~ are discussed in Part I, Item 1A, of our Annual Report on Form 10-K for the fiscal year ended December 28, 2019 and in Part II, Item 1A, of our Quarterly Report on Form 10-Q for the quarter ended March 28, 2020. These factors could materially adversely affect our business, financial condition, liquidity, results of operations and capital position, and could cause our actual results to differ materially from our historical results or the results contemplated by the forward-looking statements contained in this report. There have been no material changes to the risk factors set forth in our Form 10-K for the fiscal year ended December 28, 2019, except for the following risk factor which supplements and updates the risk factors previously disclosed in our Quarterly Report on Form 10-Q for the fiscal quarter ended March 28, 2020:

~~The novel coronavirus disease (COVID-19) global pandemic has had and is expected to continue to have an adverse impact on our business.~~

The COVID-19 global pandemic has negatively impacted the global economy, disrupted consumer spending and global supply chains, and created significant volatility and disruption of financial markets. We expect the COVID-19 global pandemic to have a material impact on our business, including our results of operations, financial condition and liquidity. The extent of the impact of the COVID-19 global pandemic on our business, including our ability to execute our near-term and long-term business strategies and initiatives in the expected time frame, will depend on future developments, including the duration and scope of the pandemic, which are uncertain and cannot be predicted, including the effect on our suppliers and disruptions to the global supply chain; our ability to sell and provide our products, including as a result of travel restrictions and people working from home; restrictions or disruptions to transportation, including reduced availability of ground or air transport; and the ability of our customers to pay for our services and products.

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The COVID-19 global pandemic has significantly impacted economic activity and markets throughout the world. In response, governmental authorities have implemented numerous measures in an attempt to contain the virus, such as travel bans and restrictions, quarantines, shelter-in-place orders and business shutdowns. These actions, as well as decisions we have made to protect the health and safety of our employees, consumers and communities, have adversely impacted our financial results and may continue to do so in the future. We may face additional store closure requirements and other operational restrictions with respect to some or all of our physical locations for prolonged periods of time due to, among other factors, evolving and increasingly stringent governmental restrictions including public health directives, quarantine policies or social distancing measures. In addition, many of our customers, including significant customers in our wholesale distribution channels, may close many of their stores, which will adversely impact our revenues from these customers. As a result, our financial results could be materially adversely impacted.

Consumer fears about becoming ill with the disease may continue, which will continue to adversely affect traffic to our and our customers' stores. Consumer spending generally may also be negatively impacted by general macroeconomic conditions and consumer confidence, including a significant economic downturn, resulting from the COVID-19 global pandemic. This may negatively impact sales in our stores and our e-commerce channel and may cause our wholesale customers to purchase fewer products from us. The continued significant reduction in consumer visits to, and spending at, our and our customers' stores, caused by COVID-19, and any decreased spending at retail stores or online caused by decreased consumer confidence and spending following the pandemic, would result in a loss of sales and profits and other material adverse effects, including customer bankruptcies which could reduce or eliminate our anticipated income and cash flows, which would negatively affect our results of operations and liquidity. Even if customers do not declare bankruptcy, they may seek to extend payment terms or be unable or unwilling to pay us amounts that we are entitled to on a timely basis or at all, which would adversely affect our sales and liquidity.

The COVID-19 global pandemic resulted in the temporary shut-down of many of our supply chain facilities, and we experienced significant costs associated with reopening those facilities. The pandemic continues to have the potential to significantly impact our supply chain if the factories that manufacture our products, the distribution centers where we manage our inventory, or the operations of our logistics and other service providers are disrupted, temporarily closed or experience worker shortages. We may also see disruptions or delays in shipments and negative impacts to pricing of certain components of our products.

In addition, the impact of COVID-19 on macroeconomic conditions may impact the proper functioning of financial and capital markets, foreign currency exchange rates, commodity prices, and interest rates. Even after the COVID-19 global pandemic has subsided, we may continue to experience adverse impacts to our business as a result of any economic recession or depression that has occurred or may occur in the future.

~~A disruption of global financial markets as a result of the COVID-19 global pandemic could have a negative impact on our ability to access capital in the future.~~

As a result of the COVID-19 global pandemic, including related guidance or requirements of governmental or other authorities, we also have implemented a work from home policy for many of our corporate employees. This policy may negatively impact productivity and cause other disruptions to our business.

The extent of the impact of the COVID-19 global pandemic on our business is highly uncertain and difficult to predict, as information is rapidly evolving with respect to the duration and severity of the pandemic.January 2, 2021.


Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds

None.


Item 3.			Defaults Upon Senior Securities

None.


Item 4.			Mine Safety Disclosures

Not applicable.


Item 5.			Other Information

None.

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Item 6.			Exhibits


Exhibit Number						Description

3.1						Articles of Amendment and Restatement of Hanesbrands Inc. (incorporated by reference from Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 5, 2006).

3.2						Articles Supplementary (Junior Participating Preferred Stock, Series A) (incorporated by reference from Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 5, 2006).

3.3						Articles of Amendment to Articles of Amendment and Restatement of Hanesbrands Inc. (incorporated by reference from Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 28, 2015).

3.4						Articles Supplementary (Reclassifying Junior Participating Preferred Stock, Series A) (incorporated by reference from Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 2, 2015).

3.5						Amended and Restated Bylaws of Hanesbrands Inc. (incorporated by reference from Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 26, 2017).

~~10.1~~4.1						~~Inducement Restricted Stock Unit Grant Notice~~Supplemental Indenture No. 11 (to Indenture dated June 3, 2016), dated as of July 14, 2021, among Hanesbrands Finance Luxembourg S.C.A., HBI IP Holdings Switzerland GmbH and Agreement with Stephen B. Bratspies (incorporated by reference to Exhibit 4.6 to the Registrant’s Registration Statement on Form S-8 (Commission file number 333-240312) filed with the Securities and Exchange Commission on August 3, 2020).*U.S. Bank Trustees Limited.

~~10.2~~4.2						~~Inducement Performance Stock Unit Grant Notice~~Supplemental Indenture No. 12 (to Indenture dated June 3, 2016), dated as of September 20, 2021, among Hanesbrands Finance Luxembourg S.C.A., Hanes Jiboa Holdings LLC, HBI WH Minority Holdings LLC and Agreement with Stephen B. Bratspies (incorporated by reference to Exhibit 4.7 to the Registrant’s Registration Statement on Form S-8 (Commission file number 333-240312) filed with the Securities and Exchange Commission on August 3, 2020).*U.S. Bank Trustees Limited.

~~10.3~~4.3						~~Inducement Stock Option Grant Notice~~Third Supplemental Indenture (to Indenture dated May 6, 2016), dated as of September 20, 2021, among Hanesbrands Inc., Hanes Jiboa Holdings LLC, HBI WH Minority Holdings LLC and Agreement with Stephen B. Bratspies (incorporated by reference to Exhibit 4.8 to the Registrant’s Registration Statement on Form S-8 (Commission file number 333-240312) filed with the Securities and Exchange Commission on August 3, 2020).*US Bank, National Association.

~~10.4~~4.4						~~Letter Agreement with Kristin Oliver~~First Supplemental Indenture (to Indenture dated August 15, 2020.*May 4, 2020), dated as of September 20, 2021, among Hanesbrands Inc., Hanes Jiboa Holdings LLC, HBI WH Minority Holdings LLC and US Bank, National Association.

~~10.5~~10.1						~~Inducement Sign-On Restricted Stock Unit Grant Notice~~Australian Revolving Facility Agreement – First Amending Agreement dated July 13, 2021, among HBI Holdings Australasia Pty Ltd, the Borrowers party thereto, Westpac Banking Corporation and Agreement with Kristin Oliver (incorporated by reference to Exhibit 4.6 to the Registrant’s Registration Statement on Form S-8 (Commission file number 333-248667) filed with the Securities and Exchange Commission on September 8, 2020).*

~~10.6~~						Inducement Long-Term Incentive Plan Restricted Stock Unit Grant Notice and Agreement with Kristin Oliver (incorporated by reference to Exhibit 4.7 to the Registrant’s Registration Statement on Form S-8 (Commission file number 333-248667) filed with the Securities and Exchange Commission on September 8, 2020).*

~~10.7~~						~~Inducement Long-Term Incentive Plan~~ ~~Performance~~ Stock Unit Grant Notice and Agreement with Kristin Oliver (incorporated by reference to Exhibit 4.8 to the Registrant’s Registration Statement on Form S-8 (Commission file number 333-248667) filed with the Securities and Exchange Commission on September 8, 2020).*Westpac New Zealand Limited.

31.1						Certification of Stephen B. Bratspies, Chief Executive Officer.

31.2						Certification of ~~M. Scott Lewis, Interim~~Michael P. Dastugue, Chief Financial Officer.

32.1						Section 1350 Certification of St e ~~phen~~Stephen B. Bratspies,, Chief Executive Officer.

32.2						Section 1350 Certification of ~~M. Scott Lewis, Interim~~Michael P. Dastugue, Chief Financial Officer.

101.INS XBRL						Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH XBRL						Taxonomy Extension Schema Document

101.CAL XBRL						Taxonomy Extension Calculation Linkbase Document

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101.LAB XBRL						Taxonomy Extension Label Linkbase Document

101.PRE XBRL						Taxonomy Extension Presentation Linkbase Document

101.DEF XBRL						Taxonomy Extension Definition Linkbase Document

104						Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document)

* Management contract or compensatory plans or arrangements.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


HANESBRANDS INC.

By:						/s/ ~~M. Scott Lewis~~Michael P. Dastugue
						~~M. Scott Lewis~~Michael P. Dastugue ~~Interim~~ Chief Financial Officer (Duly authorized officer and principal financial officer)

Date: November ~~5, 2020~~4, 2021

4139


	Location of Gain Reclassified from AOCI into Income	Amount of Gain Reclassified from AOCI into Income
		Quarters Ended				Nine Months Ended
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019


Foreign exchange contracts(1)	Cost of sales	$	7,278	$	6,991	$	15,452	$	21,355


	Quarter Ended September 28, 2019
Condensed Consolidated Statement of Income Line Item	As Previously Reported		Adjustments		As Revised

Cost of sales	$	1,154,629	$	(4,695)	$	1,149,934
Gross profit	712,338		4,695		717,033
Selling, general and administrative expenses	442,582		7,380		449,962
Operating profit	269,756		(2,685)		267,071


Income before income tax expense	218,599		(2,685)		215,914

Net income	187,776		(2,685)		185,091

Earnings per share:
Basic	$	0.51	$	(0.01)	$	0.51
Diluted	$	0.51	$	(0.01)	$	0.51


	Nine Months Ended September 28, 2019
Condensed Consolidated Statement of Income Line Item	As Previously Reported		Adjustments		As Revised

Cost of sales	$	3,208,025	$	(4,694)	$	3,203,331
Gross profit	2,007,893		4,694		2,012,587
Selling, general and administrative expenses	1,356,082		10,190		1,366,272
Operating profit	651,811		(5,496)		646,315


Income before income tax expense	490,373		(5,496)		484,877

Net income	421,230		(5,496)		415,734

Earnings per share:
Basic	$	1.16	$	(0.02)	$	1.14
Diluted	$	1.15	$	(0.02)	$	1.14


	Quarter Ended September 28, 2019
Condensed Consolidated Statement of Comprehensive Income Line Item	As Previously Reported		Adjustments		As Revised
Net income	$	187,776	$	(2,685)	$	185,091





Comprehensive income	148,443		(2,685)		145,758


	September 28, 2019
Condensed Consolidated Balance Sheet Line Item	As Previously Reported		Adjustments		As Revised



Inventories	$	2,108,281	$	(13,246)	$	2,095,035
Other current assets	166,727		7,445		174,172
Total current assets	3,625,970		(5,801)		3,620,169




Deferred tax assets	257,314		(43,665)		213,649

Total assets	7,773,298		(49,466)		7,723,832



Accrued liabilities	589,992		(2,060)		587,932




Total current liabilities	2,096,904		(2,060)		2,094,844



Other noncurrent liabilities	265,804		64,743		330,547
Total liabilities	6,543,056		62,683		6,605,739







Retained earnings	1,528,258		(112,149)		1,416,109

Total stockholders’ equity	1,230,242		(112,149)		1,118,093
Total liabilities and stockholders’ equity	7,773,298		(49,466)		7,723,832


	Quarter Ended September 28, 2019
Condensed Consolidated Statement of Stockholders’ Equity Line Item	As Previously Reported		Adjustments		As Revised
Balance at June 29, 2019	$	1,134,850	$	(109,464)	$	1,025,386
Net income	187,776		(2,685)		185,091




Balance at September 28, 2019	1,230,242		(112,149)		1,118,093


	Nine Months Ended September 28, 2019
Condensed Consolidated Statement of Cash Flows Line Item	As Previously Reported		Adjustments		As Revised
Operating activities:
Net income	$	421,230	$	(5,496)	$	415,734
Adjustments to reconcile net income to net cash from operating activities:






Other	8,737		(7,075)		1,662
Changes in assets and liabilities:

Inventories	(72,096)		15,626		(56,470)
Other assets	(40,732)		14,701		(26,031)


Accrued liabilities and other	14,243		(17,756)		(3,513)
Net cash from operating activities	244,700		0		244,700


	As of September 26, 2020
	Borrowing Capacity		Available Liquidity
	(dollars in thousands)
Senior Secured Credit Facility:
Revolving Loan Facility	$	1,000,000	$	989,097


Australian Revolving Loan Facility	42,433		42,433

European Revolving Loan Facility	116,604		116,604
Accounts Receivable Securitization Facility(1)	—		—
Other international credit facilities	159,525		117,953
Total liquidity from credit facilities	$	1,318,562	$	1,266,087
Cash and cash equivalents			731,481
Total liquidity			$	1,997,568