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 October ~~2, 2021~~1, 2022


☐			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 ☒

As of ~~October 29, 2021,~~November 4, 2022, there were ~~349,204,513~~348,948,690 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 October 1 , 2022 and October 2 , 2021 ~~and~~ ~~September 26, 2020~~	2
	Condensed Consolidated Statements of Comprehensive Income for the quarters and nine months ended October ~~2, 2021~~1 , 2022 and ~~September 26, 2020~~October 2 , 2021	3
	Condensed Consolidated Balance Sheets at October 1 , 2022, January 1, 2022 and October 2 , 2021 ~~January 2, 2021 and~~ ~~September 26, 2020~~	4
	Condensed Consolidated Statements of Stockholders’ Equity for the quarters and nine months ended October ~~2, 2021~~1 , 2022 and ~~September 26, 2020~~October 2 , 2021	5
	Condensed Consolidated Statements of Cash Flows for the ~~nine~~n ine months ended October ~~2, 2021~~1 , 2022 and ~~September 26, 2020~~October 2 , 2021	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2527
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3640
Item 4.	Controls and Procedures	3640

PART II
Item 1.	Legal Proceedings	3641
Item 1A.	Risk Factors	3741
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3741
Item 3.	Defaults Upon Senior Securities	3741
Item 4.	Mine Safety Disclosures	3741
Item 5.	Other Information	3741
Item 6.	Exhibits	3843
Signatures		3944

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,” “could,” “will,” “expect,” “outlook,” “potential,” “project,” “estimate,” “future,” “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.~~statements, including statements with respect to trends associated with our business, our multi-year growth strategy (“Full Potential plan”), the impacts of the ransomware attack announced on May 31, 2022 and our future financial performance included in this Quarterly Report on Form 10-Q specifically appearing under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. 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 coronavirus (“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 our Quarterly Report on Form 10-Q for the quarter ended July 2, 2022 and our Annual Report on Form 10-K for the year ended January ~~2, 2021,~~1, 2022, 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 data)

(unaudited)


		Quarters Ended				Nine Months Ended					Quarters Ended				Nine Months Ended
		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020			October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Net sales	Net sales	$	1,789,551	$	1,691,863	$	5,048,891	$	4,438,016	Net sales	$	1,670,741	$	1,789,551	$	4,760,364	$	5,048,891
Cost of sales	Cost of sales	1,089,890		1,120,392		3,064,920		2,934,515		Cost of sales	1,107,889		1,089,890		3,041,233		3,064,920
Gross profit	Gross profit	699,661		571,471		1,983,971		1,503,501		Gross profit	562,852		699,661		1,719,131		1,983,971
Selling, general and administrative expenses	Selling, general and administrative expenses	465,015		382,384		1,341,809		1,064,328		Selling, general and administrative expenses	421,408		465,015		1,259,921		1,341,809
Operating profit	Operating profit	234,646		189,087		642,162		439,173		Operating profit	141,444		234,646		459,210		642,162
Other expenses	Other expenses	1,811		4,898		6,227		15,652		Other expenses	3,212		1,811		6,088		6,227
Interest expense, net	Interest expense, net	40,860		43,500		127,760		120,602		Interest expense, net	41,721		40,860		107,408		127,760
Income from continuing operations before income tax expense	Income from continuing operations before income tax expense	191,975		140,689		508,175		302,919		Income from continuing operations before income tax expense	96,511		191,975		345,714		508,175
Income tax expense	Income tax expense	15,228		22,464		55,161		43,008		Income tax expense	16,410		15,228		58,775		55,161
Income from continuing operations	Income from continuing operations	176,747		118,225		453,014		259,911		Income from continuing operations	80,101		176,747		286,939		453,014
Loss from discontinued operations, net of tax		(24,970)		(14,947)		(435,823)		(3,326)
Income (loss) from discontinued operations, net of tax										Income (loss) from discontinued operations, net of tax	—		(24,970)		3,965		(435,823)
Net income	Net income	$	151,777	$	103,278	$	17,191	$	256,585	Net income	$	80,101	$	151,777	$	290,904	$	17,191

Earnings (loss) per share - basic:	Earnings (loss) per share - basic:									Earnings (loss) per share - basic:
Continuing operations	Continuing operations	$	0.50	$	0.34	$	1.29	$	0.74	Continuing operations	$	0.23	$	0.50	$	0.82	$	1.29
Discontinued operations	Discontinued operations	(0.07)		(0.04)		(1.24)		(0.01)		Discontinued operations	0.00		(0.07)		0.01		(1.24)
Net income	Net income	$	0.43	$	0.29	$	0.05	$	0.73	Net income	$	0.23	$	0.43	$	0.83	$	0.05

Earnings (loss) per share - diluted:	Earnings (loss) per share - diluted:									Earnings (loss) per share - diluted:
Continuing operations	Continuing operations	$	0.50	$	0.34	$	1.29	$	0.73	Continuing operations	$	0.23	$	0.50	$	0.82	$	1.29
Discontinued operations	Discontinued operations	(0.07)		(0.04)		(1.24)		(0.01)		Discontinued operations	0.00		(0.07)		0.01		(1.24)
Net income	Net income	$	0.43	$	0.29	$	0.05	$	0.72	Net income	$	0.23	$	0.43	$	0.83	$	0.05

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					Quarters Ended				Nine Months Ended
		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020			October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Net income	Net income	$	151,777	$	103,278	$	17,191	$	256,585	Net income	$	80,101	$	151,777	$	290,904	$	17,191
Other comprehensive income (loss):	Other comprehensive income (loss):									Other comprehensive income (loss):
Translation adjustments	Translation adjustments	(42,330)		23,678		(78,762)		1,557		Translation adjustments	(76,756)		(42,330)		(171,581)		(78,762)
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
Unrealized gain on qualifying cash flow hedges, net of tax of $(1,013), $(2,637), $(3,702) and $(8,953), respectively										Unrealized gain on qualifying cash flow hedges, net of tax of $(1,013), $(2,637), $(3,702) and $(8,953), respectively	2,573		7,124		10,983		18,520
Unrecognized income from pension and postretirement plans, net of tax of $(1,438), $(1,647), $(4,190) and $(5,262), respectively										Unrecognized income from pension and postretirement plans, net of tax of $(1,438), $(1,647), $(4,190) and $(5,262), respectively	4,022		4,806		12,278		15,873
Total other comprehensive loss										Total other comprehensive loss	(70,161)		(30,400)		(148,320)		(44,369)
Comprehensive income (loss)	Comprehensive income (loss)	$	121,377	$	119,504	$	(27,178)	$	259,450	Comprehensive income (loss)	$	9,940	$	121,377	$	142,584	$	(27,178)

See accompanying notes to Condensed Consolidated Financial Statements.

Table of Contents

HANESBRANDS INC.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)


		October 2, 2021		January 2, 2021		September 26, 2020			October 1, 2022		January 1, 2022		October 2, 2021
Assets	Assets							Assets
Cash and cash equivalents	Cash and cash equivalents	$	873,628	$	900,615	$	716,921	Cash and cash equivalents	$	253,131	$	536,277	$	873,628
Trade accounts receivable, net	Trade accounts receivable, net	928,039		768,221		921,434		Trade accounts receivable, net	926,666		894,151		928,039
Inventories	Inventories	1,629,506		1,367,758		1,996,851		Inventories	2,136,314		1,584,015		1,629,506
Other current assets	Other current assets	172,617		158,700		191,541		Other current assets	223,741		186,503		172,617
Current assets of discontinued operations		304,124		234,086		279,331
Current assets held for sale								Current assets held for sale	14,906		327,157		304,124
Total current assets	Total current assets	3,907,914		3,429,380		4,106,078		Total current assets	3,554,758		3,528,103		3,907,914
Property, net	Property, net	440,804		477,821		484,939		Property, net	443,166		441,401		440,804
Right-of-use assets	Right-of-use assets	372,212		432,631		422,543		Right-of-use assets	335,473		363,854		372,212
Trademarks and other identifiable intangibles, net	Trademarks and other identifiable intangibles, net	1,227,457		1,293,847		1,230,757		Trademarks and other identifiable intangibles, net	1,210,581		1,220,170		1,227,457
Goodwill	Goodwill	1,136,173		1,158,938		1,154,449		Goodwill	1,084,581		1,133,095		1,136,173
Deferred tax assets	Deferred tax assets	327,196		367,976		193,015		Deferred tax assets	328,778		327,804		327,196
Other noncurrent assets	Other noncurrent assets	51,049		64,773		93,849		Other noncurrent assets	141,944		57,009		51,049
Noncurrent assets of discontinued operations		—		494,501		482,911
Total assets	Total assets	$	7,462,805	$	7,719,867	$	8,168,541	Total assets	$	7,099,281	$	7,071,436	$	7,462,805

Liabilities and Stockholders’ Equity	Liabilities and Stockholders’ Equity							Liabilities and Stockholders’ Equity
Accounts payable	Accounts payable	$	1,239,960	$	891,868	$	1,088,556	Accounts payable	$	1,130,649	$	1,214,847	$	1,239,960
Accrued liabilities	Accrued liabilities	718,545		609,864		590,778		Accrued liabilities	594,333		660,778		718,545
Lease liabilities	Lease liabilities	122,545		136,510		143,753		Lease liabilities	99,405		109,526		122,545
Notes payable		—		—		11

Accounts Receivable Securitization Facility								Accounts Receivable Securitization Facility	211,500		—		—
Current portion of long-term debt	Current portion of long-term debt	37,500		263,936		—		Current portion of long-term debt	31,250		25,000		37,500
Current liabilities of discontinued operations		299,498		222,183		208,506
Current liabilities held for sale								Current liabilities held for sale	14,906		316,902		299,498
Total current liabilities	Total current liabilities	2,418,048		2,124,361		2,031,604		Total current liabilities	2,082,043		2,327,053		2,418,048
Long-term debt	Long-term debt	3,626,547		3,739,434		3,972,212		Long-term debt	3,655,889		3,326,091		3,626,547
Lease liabilities - noncurrent	Lease liabilities - noncurrent	276,595		331,577		317,834		Lease liabilities - noncurrent	260,349		281,852		276,595
Pension and postretirement benefits	Pension and postretirement benefits	321,323		381,457		324,683		Pension and postretirement benefits	230,087		248,518		321,323
Other noncurrent liabilities	Other noncurrent liabilities	183,723		216,091		256,238		Other noncurrent liabilities	196,029		185,429		183,723
Noncurrent liabilities of discontinued operations		—		112,989		116,437
Total liabilities	Total liabilities	6,826,236		6,905,909		7,019,008		Total liabilities	6,424,397		6,368,943		6,826,236

Stockholders’ equity:	Stockholders’ equity:							Stockholders’ equity:
Preferred stock (50,000,000 authorized shares; $.01 par value)	Preferred stock (50,000,000 authorized shares; $.01 par value)							Preferred stock (50,000,000 authorized shares; $.01 par value)
Issued and outstanding — None	Issued and outstanding — None	—		—		—		Issued and outstanding — None	—		—		—
Common stock (2,000,000,000 authorized shares; $.01 par value)	Common stock (2,000,000,000 authorized shares; $.01 par value)							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
Issued and outstanding — 348,948,690, 349,903,253 and 349,204,407, respectively								Issued and outstanding — 348,948,690, 349,903,253 and 349,204,407, respectively	3,489		3,499		3,492
Additional paid-in capital	Additional paid-in capital	316,112		307,883		306,157		Additional paid-in capital	328,072		315,337		316,112
Retained earnings	Retained earnings	928,293		1,069,546		1,454,676		Retained earnings	1,043,246		935,260		928,293
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(611,328)		(566,959)		(614,783)		Accumulated other comprehensive loss	(699,923)		(551,603)		(611,328)
Total stockholders’ equity	Total stockholders’ equity	636,569		813,958		1,149,533		Total stockholders’ equity	674,884		702,493		636,569
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	7,462,805	$	7,719,867	$	8,168,541	Total liabilities and stockholders’ equity	$	7,099,281	$	7,071,436	$	7,462,805

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			Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
		Shares	Amount											Shares	Amount
Balances at July 3, 2021		349,115	$	3,491	$	310,148	$	829,479	$	(580,928)	$	562,190
Balances at July 2, 2022													Balances at July 2, 2022	348,826	$	3,488	$	322,305	$	1,016,140	$	(629,762)	$	712,171
Net income	Net income	—	—		—		151,777		—		151,777		Net income	—	—		—		80,101		—		80,101
Dividends ($0.15 per common share)	Dividends ($0.15 per common share)	—	—		—		(52,963)		—		(52,963)		Dividends ($0.15 per common share)	—	—		—		(52,995)		—		(52,995)
Other comprehensive loss	Other comprehensive loss	—	—		—		—		(30,400)		(30,400)		Other comprehensive loss	—	—		—		—		(70,161)		(70,161)
Stock-based compensation	Stock-based compensation	—	—		6,079		—		—		6,079		Stock-based compensation	—	—		5,593		—		—		5,593
Net exercise of stock options, vesting of restricted stock units and other	Net exercise of stock options, vesting of restricted stock units and other	89	1		(115)		—		—		(114)		Net exercise of stock options, vesting of restricted stock units and other	123	1		174		—		—		175
Balances at October 2, 2021		349,204	$	3,492	$	316,112	$	928,293	$	(611,328)	$	636,569
Balances at October 1, 2022													Balances at October 1, 2022	348,949	$	3,489	$	328,072	$	1,043,246	$	(699,923)	$	674,884

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


	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
	Shares	Amount
Balances at January 1, 2022	349,903	$	3,499	$	315,337	$	935,260	$	(551,603)	$	702,493
Net income	—	—		—		290,904		—		290,904
Dividends ($0.45 per common share)	—	—		—		(159,343)		—		(159,343)
Other comprehensive loss	—	—		—		—		(148,320)		(148,320)
Stock-based compensation	—	—		16,949		—		—		16,949
Net exercise of stock options, vesting of restricted stock units and other	623	6		(2,787)		—		—		(2,781)
Share repurchases	(1,577)	(16)		(1,427)		(23,575)		—		(25,018)
Balances at October 1, 2022	348,949	$	3,489	$	328,072	$	1,043,246	$	(699,923)	$	674,884

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 27, 2020		348,093	$	3,481	$	302,522	$	1,404,326	$	(631,009)	$	1,079,320
Balances at July 3, 2021													Balances at July 3, 2021	349,115	$	3,491	$	310,148	$	829,479	$	(580,928)	$	562,190
Net income	Net income	—	—		—		103,278		—		103,278		Net income	—	—		—		151,777		—		151,777
Dividends ($0.15 per common share)	Dividends ($0.15 per common share)	—	—		—		(52,928)		—		(52,928)		Dividends ($0.15 per common share)	—	—		—		(52,963)		—		(52,963)
Other comprehensive income		—	—		—		—		16,226		16,226
Other comprehensive loss													Other comprehensive loss	—	—		—		—		(30,400)		(30,400)
Stock-based compensation	Stock-based compensation	—	—		4,538		—		—		4,538		Stock-based compensation	—	—		6,079		—		—		6,079
Net exercise of stock options, vesting of restricted stock units and other	Net exercise of stock options, vesting of restricted stock units and other	195	2		(903)		—		—		(901)		Net exercise of stock options, vesting of restricted stock units and other	89	1		(115)		—		—		(114)
Balances at September 26, 2020		348,288	$	3,483	$	306,157	$	1,454,676	$	(614,783)	$	1,149,533
Balances at October 2, 2021													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 Cash Flows

(in thousands)

(unaudited)


		Nine Months Ended					Nine Months Ended
		October 2, 2021(1)		September 26, 2020(1)			October 1, 2022(1)		October 2, 2021(1)
Operating activities:	Operating activities:					Operating activities:
Net income	Net income	$	17,191	$	256,585	Net income	$	290,904	$	17,191
Adjustments to reconcile net income to net cash from operating activities:	Adjustments to reconcile net income to net cash from operating activities:					Adjustments to reconcile net income to net cash from operating activities:
Depreciation	Depreciation	63,183		67,676		Depreciation	56,140		63,183
Amortization of acquisition intangibles	Amortization of acquisition intangibles	15,696		18,503		Amortization of acquisition intangibles	14,045		15,696
Other amortization	Other amortization	8,610		8,091		Other amortization	8,121		8,610
Impairment of intangible assets and goodwill	Impairment of intangible assets and goodwill	163,047		20,319		Impairment of intangible assets and goodwill	—		163,047
Loss on classification of assets held for sale		266,742		—
(Gain) loss on sale of business and classification of assets held for sale						(Gain) loss on sale of business and classification of assets held for sale	(6,185)		266,742
Amortization of debt issuance costs	Amortization of debt issuance costs	10,250		8,303		Amortization of debt issuance costs	5,483		10,250
Other	Other	(1,888)		25,658		Other	11,717		(1,888)
Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Accounts receivable	Accounts receivable	(201,925)		(175,879)		Accounts receivable	(63,003)		(201,925)
Inventories	Inventories	(292,465)		(259,367)		Inventories	(612,544)		(292,465)
Other assets	Other assets	7,042		(43,359)		Other assets	(71,613)		7,042
Accounts payable	Accounts payable	391,034		189,566		Accounts payable	(22,289)		391,034
Accrued pension and postretirement benefits	Accrued pension and postretirement benefits	(40,468)		(18,965)		Accrued pension and postretirement benefits	(1,066)		(40,468)
Accrued liabilities and other	Accrued liabilities and other	121,327		134,091		Accrued liabilities and other	(101,392)		121,327
Net cash from operating activities	Net cash from operating activities	527,376		231,222		Net cash from operating activities	(491,682)		527,376
Investing activities:	Investing activities:					Investing activities:
Capital expenditures	Capital expenditures	(55,320)		(49,033)		Capital expenditures	(70,955)		(55,320)
Purchase of trademarks						Purchase of trademarks	(103,000)		—
Proceeds from sales of assets	Proceeds from sales of assets	2,479		331		Proceeds from sales of assets	259		2,479

Other	Other	8,437		7,618		Other	(5,640)		8,437
Net cash from investing activities	Net cash from investing activities	(44,404)		(41,084)		Net cash from investing activities	(179,336)		(44,404)
Financing activities:	Financing activities:					Financing activities:
Repayments on Term Loan Facilities	Repayments on Term Loan Facilities	(315,625)		—		Repayments on Term Loan Facilities	(18,750)		(315,625)
Borrowings on Accounts Receivable Securitization Facility	Borrowings on Accounts Receivable Securitization Facility	—		227,061		Borrowings on Accounts Receivable Securitization Facility	1,303,589		—
Repayments on Accounts Receivable Securitization Facility	Repayments on Accounts Receivable Securitization Facility	—		(227,061)		Repayments on Accounts Receivable Securitization Facility	(1,092,089)		—
Borrowings on Revolving Loan Facilities	Borrowings on Revolving Loan Facilities	—		1,638,000		Borrowings on Revolving Loan Facilities	1,337,500		—
Repayments on Revolving Loan Facilities	Repayments on Revolving Loan Facilities	—		(1,756,189)		Repayments on Revolving Loan Facilities	(908,500)		—
Borrowings on Senior Notes		—		700,000
Borrowings on International Debt		—		31,222
Repayments on International Debt		—		(36,383)

Borrowings on notes payable	Borrowings on notes payable	109,397		166,558		Borrowings on notes payable	21,454		109,397
Repayments on notes payable	Repayments on notes payable	(109,597)		(166,108)		Repayments on notes payable	(21,713)		(109,597)
Share repurchases	Share repurchases	—		(200,269)		Share repurchases	(25,018)		—
Cash dividends paid	Cash dividends paid	(157,099)		(158,132)		Cash dividends paid	(156,962)		(157,099)

Other	Other	(3,000)		(15,258)		Other	(4,263)		(3,000)
Net cash from financing activities	Net cash from financing activities	(475,924)		203,441		Net cash from financing activities	435,248		(475,924)
Effect of changes in foreign exchange rates on cash	Effect of changes in foreign exchange rates on cash	(27,207)		9,052		Effect of changes in foreign exchange rates on cash	(71,728)		(27,207)
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
Change in cash and cash equivalents						Change in cash and cash equivalents	(307,498)		(20,159)
Cash and cash equivalents at beginning of year						Cash and cash equivalents at beginning of year	560,629		910,603
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	890,444	$	731,481	Cash and cash equivalents at end of period	$	253,131	$	890,444

Balances included in the Condensed Consolidated Balance Sheets:	Balances included in the Condensed Consolidated Balance Sheets:					Balances included in the Condensed Consolidated Balance Sheets:
Cash and cash equivalents	Cash and cash equivalents	$	873,628	$	716,921	Cash and cash equivalents	$	253,131	$	873,628
Cash and cash equivalents included in current assets of discontinued operations		16,816		14,560
Cash and cash equivalents included in current assets held for sale						Cash and cash equivalents included in current assets held for sale	—		16,816
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	890,444	$	731,481	Cash and cash equivalents at end of period	$	253,131	$	890,444

(1)The cash flows related to discontinued operations have not been segregated and remain included in the major classes of assets and ~~liabilities.~~liabilities in the periods prior the sale of the European Innerwear business on March 5, 2022. Accordingly, the Condensed Consolidated Statements of Cash Flows include the results of continuing and discontinued operations.

Capital expenditures included in accounts payable at October ~~2, 2021~~1, 2022 and January ~~2, 2021~~1, 2022 were ~~$4,569~~$31,895 and ~~$17,931,~~$24,164, respectively. For the nine months ended October 1, 2022 and October 2, 2021, ~~and September 26, 2020,~~ right-of-use assets obtained in exchange for lease obligations were ~~$46,039~~$67,588 and ~~$39,532,~~$46,039, respectively.

See accompanying notes to Condensed Consolidated Financial Statements.

Table of Contents

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. 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 Annual Report on Form 10-K for the year ended January ~~2, 2021.~~1, 2022. The year-end condensed consolidated balance sheet data was derived from audited consolidated financial statements, but does not include all disclosures required by GAAP. The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the full year. The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the full year or any future period.

Key Business Strategies

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~~its European Innerwear business as part of its strategy to streamline its portfolio under its Full Potential plan and determined that ~~its European Innerwear~~this business met held-for-sale and discontinued operations accounting ~~criteria at the end of the first quarter of 2021.~~criteria. 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~~On November 4, 2021, the Company announced that it reached an agreement to ~~all periods presented.~~sell its European Innerwear business to an affiliate of Regent, L.P. and completed the sale on March 5, 2022. Unless otherwise noted, discussion within these notes to the condensed consolidated interim financial statements relates to continuing operations. See ~~note “Discontinued Operations”~~Note “Assets and Liabilities Held for Sale” for additional information.

In addition, in the fourth quarter of 2021, the Company reached the decision to divest its U.S. Sheer Hosiery business, including the L’eggs brand, as part of its strategy to streamline its portfolio under its Full Potential plan and determined that this business met held-for-sale accounting criteria. The related assets and liabilities are presented as held for sale in the Condensed Consolidated Balance Sheets at October 1, 2022 and January 1, 2022. The operations of the U.S. Sheer Hosiery business are reported in “Other” for all periods presented in Note “Business Segment Information”. The Company is currently exploring potential purchasers for this business and expects to complete the sale within the next 12 months. See Note “Assets and Liabilities Held for Sale” for additional information.

In June of 2022, the Company purchased the Champion trademark for footwear in the United States, Puerto Rico and Canada from Keds, LLC (“KEDS”) for $102,500. The trademark was recorded in “Trademarks and other identifiable intangibles, net” line in the Condensed Consolidated Balance Sheets and has an indefinite life. The Company previously licensed the Champion trademark for footwear in these locations. The purchase of the trademark was part of an agreement with KEDS settling litigation between the two parties and is another step forward in the Company’s Full Potential plan of growing the global Champion brand.

Ransomware Attack

As previously disclosed, on May 24, 2022, the Company identified that it had become subject to a ransomware attack and activated its incident response and business continuity plans designed to contain the incident. As part of the Company’s forensic investigation and assessment of the impact, the Company determined that certain of its information technology systems were affected by the ransomware attack.

Upon discovering the incident, the Company took a series of measures to further safeguard the integrity of its information technology systems, including working with cybersecurity experts to contain the incident and implementing business continuity

Table of Contents

HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

plans to restore and support continued operations. These measures also included resecuring data, remediation of the malware across infected machines, rebuilding critical systems, global password reset and enhanced security monitoring. The Company notified appropriate law enforcement authorities as well as certain data protection regulators, and in, addition to the Company’s public announcements of the incident, the Company began a process to provide breach notifications and regulatory filings as may be required by applicable law starting in August 2022. While the notification process continues, at this time, the Company believes the incident has been contained, the Company has restored its critical information technology systems, and manufacturing, retail and other internal operations continue. There is no ongoing operational impact on the Company’s ability to provide its products and services. The Company maintains insurance, including coverage for cyber-attacks, subject to certain deductibles and policy limitations, in an amount that the Company believes appropriate.

The Company is named in two lawsuits in connection with the ransomware incident. On October 7, 2022, a putative class action was filed against “Hanes Brands [sic], Inc.” alleging, among other things, negligence, negligence per se, breach of implied contract, unjust enrichment, breach of implied covenant of good faith and fair dealing, unfair business practices under the California Business and Professions Code, and violations of the California Confidentiality of Medical Information Act in connection with the ransomware incident. The litigation is entitled, Ramon v. Hanes Brands, Inc., and is pending in the United States District Court for the Central District of California. On October 13, 2022, another putative class action was filed against HanesBrands, Inc. alleging, among other things, negligence, negligence per se, breach of implied contract, invasion of privacy, and unjust enrichment in connection with the ransomware incident. The litigation is entitled, Toussaint v. HanesBrands, Inc. and is pending in the United States District Court for the Middle District of North Carolina. The lawsuits seek, among other things, monetary and injunctive relief. The Company is vigorously defending these matters and believes the cases are without merit. However, at this early stage in the proceedings, the Company is not able to determine the probability of the outcome of these matters or a range of reasonably expected losses, if any.

During the quarter and nine months ended October 1, 2022, the Company incurred costs of $921 and $16,430, net of expected insurance recoveries, respectively, related to the ransomware attack. The costs, net of expected insurance recoveries, incurred during the quarter ended October 1, 2022 related primarily to information technology and legal fees and are reflected in the “Selling, general and administrative expenses” line of the Condensed Consolidated Statements of Income. The costs for the nine months ended October 1, 2022 included $14,168 related primarily to supply chain disruptions, which are reflected in the “Cost of sales” line of the Condensed Consolidated Statements of Income and $2,262, net of expected insurance recoveries, related primarily to information technology, legal and consulting fees, which are reflected in the “Selling, general and administrative expenses” line of the Condensed Consolidated Statements of Income. The Company continues to assess the security event and cannot determine, at this time, the full extent of the impact from such event on its business, results of operations or financial condition or whether such impact will ultimately have a material adverse effect.

(2) Recent Accounting Pronouncements

~~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 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.

~~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~~Financial Accounting Standards Board (“FASB”) issued ~~ASU~~Accounting Standards Update (“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

~~Table of Contents~~

~~HANESBRANDS INC.~~

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

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

~~(unaudited)~~

exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform. The ~~amendments in this standard can~~new accounting rules must be adopted ~~any time before~~by 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.

Business Combinations

In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” The new accounting rules require entities to apply “Revenue from Contracts with Customers (Topic 606)” to recognize and measure contract assets and contract liabilities in a business combination. The new accounting rules will be effective for the Company in the first quarter of 2023, including interim periods.

Table of Contents

HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

Early adoption is permitted. The adoption impact of the new accounting rules will depend on the magnitude of future acquisitions.

Derivatives and Hedging

In March 2022, the FASB issued ASU 2022-01, “Derivatives and Hedging (Topic 815): Fair Value Hedging - Portfolio Layer Method.” The new accounting rules allow entities to expand the use of the portfolio layer method to all financial assets and designate multiple hedged layers within a single closed portfolio. The new accounting rules also clarify guidance related to hedge basis adjustments and the related disclosures for these adjustments. The new accounting rules will be effective for the Company in the first quarter of 2023, including interim periods. Early adoption is permitted. The Company does not currently have any fair value hedging programs that leverage the portfolio layer method, therefore, the Company does not expect the new accounting rules to have an impact on our near term financial condition, results of operations, cash flows or disclosures.

Supplier Finance Program Obligations

In September 2022, the FASB issued ASU 2022-04, “Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations.” The new accounting rules create certain disclosure requirements for a buyer in a supplier finance program. The new accounting rules require qualitative and quantitative disclosures including key terms of the program, balance sheet presentation of related amounts, and the obligation amount the buyer has confirmed as valid to the finance provider, including a rollforward of the obligation. Only the amount of the obligation outstanding is required to be disclosed in interim periods. The accounting rules do not impact the recognition, measurement, or financial statement presentation of supplier finance program obligations. The new accounting rules will be effective for the Company in the first quarter of 2023, including interim periods. Early adoption is permitted. While the new accounting rules will not have an impact on our financial condition, results of operations or cash flows, the Company is currently evaluating the impact the new accounting rules will have on the disclosures included in the notes to the consolidated financial statements beginning with the first quarter of 2023.

Table of Contents

HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

(3) Assets and Liabilities Held for Sale

Assets and liabilities classified as held for sale in the Condensed Consolidated Balance Sheets as of October 1, 2022, January 1, 2022 and October 2, 2021 consist of the following:


	October 1, 2022		January 1, 2022		October 2, 2021
U.S. Sheer Hosiery business - continuing operations	$	14,906	$	5,426	$	—
European Innerwear business - discontinued operations	—		321,731		304,124
Total current assets held for sale	$	14,906	$	327,157	$	304,124

U.S. Sheer Hosiery business - continuing operations	$	14,906	$	5,426	$	—
European Innerwear business - discontinued operations	—		311,476		299,498
Total current liabilities held for sale	$	14,906	$	316,902	$	299,498

U.S. Sheer Hosiery Business - Continuing Operations

In the fourth quarter of 2021, the Company reached the decision to divest its U.S. Sheer Hosiery business, including the L’eggs brand, as part of its strategy to streamline its portfolio under its Full Potential plan and determined that this business met held-for-sale accounting criteria. The related assets and liabilities are presented as held for sale in the Condensed Consolidated Balance Sheets at October 1, 2022 and January 1, 2022. The Company recorded a non-cash charge of $38,364 in the fourth quarter of 2021, 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 Company recognized a non-cash loss of $4,310 to adjust the valuation allowance resulting from an increase in carrying value due to changes in working capital in the quarter ended October 1, 2022. In the nine months ended October 1, 2022, the Company recognized a non-cash gain of $6,558 to adjust the valuation allowance resulting from a decrease in carrying value due to changes in working capital. The operations of the U.S. Sheer Hosiery business are reported in “Other” for all periods presented in Note “Business Segment Information”. The Company is currently exploring potential purchasers for this business and expects to complete the sale within the next 12 months.

European Innerwear Business - 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~~its European Innerwear business as part of its strategy to streamline its portfolio under its Full Potential plan and determined that ~~its European Innerwear~~this business met held-for-sale and discontinued operations accounting ~~criteria at the end of the first quarter of 2021.~~criteria. 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~~had reached an agreement to sell its European Innerwear business to an affiliate of Regent, L.P.~~, pending~~ and completed the ~~completion of consultation with the European and French works councils representing employees of the European Innerwear business and customary closing conditions.~~sale on March 5, 2022. Under the agreement, the purchaser ~~will receive~~received 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~~held-for-sale classification in the first quarter of 2021 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~~disposal, resulting in non-cash ~~charge recorded in~~charges of $30,562 and $266,742 for the quarter and nine months ended October 2, 2021, respectively, as "Loss on sale of business and classification of assets held for sale" in the summarized discontinued operations financial information. In the nine months ended October 1, 2022, the Company recorded the final loss on the sale of the European Innerwear business of $373 primarily ~~resulted~~resulting from changes in working capital balances and foreign exchange rates. ~~The Company will continue~~

Table of Contents

HANESBRANDS INC.

Notes to ~~assess the valuation allowance~~Condensed Consolidated Financial Statements — (Continued)

(amounts in ~~each interim period until the European Innerwear business is sold.~~ thousands, except per share data)

(unaudited)

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~~Statements of Income. This charge ~~relates~~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 iswas 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.

~~Table of Contents~~

~~HANESBRANDS INC.~~

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

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

~~(unaudited)~~

The Company ~~expects to continue~~has continued certain sales from its supply chain to the European Innerwear business on a transitional basis after the sale of the business. ~~Those~~Under the terms of the Manufacturing and Supply Agreement that was signed as part of closing the transaction, the Company will provide these services for periods up to 34 months from the closing date of the transaction. Additionally, the Company entered into a Transitional Services Agreement pursuant to which the Company will provide transitional services including information technology, human resources, facilities management, and limited finance and accounting services for periods up to 12 months from the closing date of the transaction. The sales and the related profit are included in continuing operations in the Condensed Consolidated Statements of Income and in “Other” in ~~note~~Note “Business Segment Information” in all periods presented and have not been eliminated as intercompany transactions in ~~consolidation.~~consolidation for the period when the European Innerwear business was owned by the Company. The related receivables from the European Innerwear business ~~have been reclassified to~~are included in “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.~~business. Discontinued operations does not include any allocation of corporate overhead expense or interest expense. The key components from discontinued operations related to the European Innerwear business are as follows:


		Quarters Ended				Nine Months Ended					Quarters Ended				Nine Months Ended
		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020			October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Net sales	Net sales	$	147,529	$	125,913	$	400,880	$	459,175	Net sales	$	—	$	147,529	$	101,314	$	400,880
Cost of sales	Cost of sales	75,171		80,671		213,831		239,219		Cost of sales	—		75,171		60,415		213,831
Gross profit	Gross profit	72,358		45,242		187,049		219,956		Gross profit	—		72,358		40,899		187,049
Selling, general and administrative expenses	Selling, general and administrative expenses	64,941		59,758		209,467		188,573		Selling, general and administrative expenses	—		64,941		54,689		209,467
Impairment of intangible assets and goodwill	Impairment of intangible assets and goodwill	—		—		155,745		20,319		Impairment of intangible assets and goodwill	—		—		—		155,745
Loss on classification of assets held for sale		30,562		—		266,742		—
Operating income (loss)		(23,145)		(14,516)		(444,905)		11,064
Loss on sale of business and classification of assets held for sale										Loss on sale of business and classification of assets held for sale	—		30,562		373		266,742
Operating loss										Operating loss	—		(23,145)		(14,163)		(444,905)
Other expenses	Other expenses	271		411		885		1,197		Other expenses	—		271		283		885
Interest expense, net	Interest expense, net	110		368		269		1,774		Interest expense, net	—		110		10		269
Income (loss) from discontinued operations before income tax expense		(23,526)		(15,295)		(446,059)		8,093
Loss from discontinued operations before income tax expense (benefit)										Loss from discontinued operations before income tax expense (benefit)	—		(23,526)		(14,456)		(446,059)
Income tax expense (benefit)	Income tax expense (benefit)	1,444		(348)		(10,236)		11,419		Income tax expense (benefit)	—		1,444		(18,421)		(10,236)
Net loss from discontinued operations, net of tax		$	(24,970)	$	(14,947)	$	(435,823)	$	(3,326)
Net income (loss) from discontinued operations, net of tax										Net income (loss) from discontinued operations, net of tax	$	—	$	(24,970)	$	3,965	$	(435,823)

1012

Table of Contents

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 1, 2022, January 1, 2022 and 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.~~


	October 1, 2022		January 1, 2022		October 2, 2021
Cash and cash equivalents	$	—	$	24,352	$	16,816
Trade accounts receivable, net	—		87,353		88,684
Inventories	—		141,653		127,209
Other current assets	—		21,926		16,066
Property, net	—		62,659		61,898
Right-of-use assets	—		32,603		33,680
Trademarks and other identifiable intangibles, net	—		205,204		208,108
Deferred tax assets	—		4,174		7,990
Other noncurrent assets	—		4,127		4,360
Allowance to adjust assets to estimated fair value, less costs of disposal	—		(262,320)		(260,687)
Total assets of discontinued operations	$	—	$	321,731	$	304,124

Accounts payable	$	—	$	84,327	$	69,122
Accrued liabilities	—		122,620		118,076
Lease liabilities	—		6,562		8,544
Notes payable	—		329		595
Lease liabilities - noncurrent	—		27,426		26,536
Pension and postretirement benefits	—		38,325		42,076
Other noncurrent liabilities	—		31,887		34,549
Total liabilities of discontinued operations	$	—	$	311,476	$	299,498

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					Quarters Ended				Nine Months Ended
		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020			October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Depreciation	Depreciation	$	—	$	2,803	$	2,608	$	8,150	Depreciation	$	—	$	—	$	—	$	2,608
Amortization	Amortization	$	—	$	1,333	$	1,460	$	3,877	Amortization	$	—	$	—	$	—	$	1,460
Capital expenditures	Capital expenditures	$	2,085	$	724	$	6,155	$	6,124	Capital expenditures	$	—	$	2,085	$	715	$	6,155
Impairment of intangible assets and goodwill	Impairment of intangible assets and goodwill	$	—	$	—	$	155,745	$	20,319	Impairment of intangible assets and goodwill	$	—	$	—	$	—	$	155,745
Loss on classification of assets held for sale		$	30,562	$	—	$	266,742	$	—
Other investing activities		$	1,501	$	1,795	$	4,875	$	3,626
Loss on sale of business and classification of assets held for sale										Loss on sale of business and classification of assets held for sale	$	—	$	30,562	$	373	$	266,742
Capital expenditures included in accounts payable at end of period	Capital expenditures included in accounts payable at end of period	$	70	$	35	$	70	$	35	Capital expenditures included in accounts payable at end of period	$	—	$	70	$	—	$	70
Right-of-use assets obtained in exchange for lease obligations	Right-of-use assets obtained in exchange for lease obligations	$	1,454	$	197	$	4,591	$	398	Right-of-use assets obtained in exchange for lease obligations	$	—	$	1,454	$	—	$	4,591

1113

Table of Contents

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
		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020			October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Third-party brick-and-mortar wholesale	Third-party brick-and-mortar wholesale	$	1,312,440	$	1,192,959	$	3,570,710	$	3,243,572	Third-party brick-and-mortar wholesale	$	1,200,636	$	1,312,440	$	3,356,547	$	3,570,710
Consumer-directed	Consumer-directed	477,111		498,904		1,478,181		1,194,444		Consumer-directed	470,105		477,111		1,403,817		1,478,181
Total net sales	Total net sales	$	1,789,551	$	1,691,863	$	5,048,891	$	4,438,016	Total net sales	$	1,670,741	$	1,789,551	$	4,760,364	$	5,048,891

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~~Third-party brick-and-mortar wholesale revenue isalso includes 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 included $4,053 and $518,309, respectively, of revenue from contracts with governments generated from the sale of both cloth face coverings and gowns for use during the COVID-19 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.

(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
		October 2, 2021	September 26, 2020	October 2, 2021	September 26, 2020		October 1, 2022	October 2, 2021	October 1, 2022	October 2, 2021
Basic weighted average shares outstanding	Basic weighted average shares outstanding	351,071	350,703	351,020	353,419	Basic weighted average shares outstanding	349,884	351,071	349,969	351,020
Effect of potentially dilutive securities:	Effect of potentially dilutive securities:					Effect of potentially dilutive securities:
Stock options	Stock options	20	90	17	151	Stock options	—	20	2	17
Restricted stock units	Restricted stock units	1,157	809	956	380	Restricted stock units	420	1,157	712	956
Employee stock purchase plan and other	Employee stock purchase plan and other	3	2	3	6	Employee stock purchase plan and other	12	3	8	3
Diluted weighted average shares outstanding	Diluted weighted average shares outstanding	352,251	351,604	351,996	353,956	Diluted weighted average shares outstanding	350,316	352,251	350,691	351,996

The following securities were excluded from the diluted earnings per share calculation because their effect would be anti-dilutive:


	Quarters Ended		Nine Months Ended
	October 1, 2022	October 2, 2021	October 1, 2022	October 2, 2021
Stock options	250	83	250	167
Restricted stock units	1,646	48	1,252	40

On November 8, 2022, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.15 per share of the Company’s outstanding common stock to be paid on December 13, 2022 to stockholders of record at the close of business on November 22, 2022.

1214

Table of Contents

HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

~~The following securities were excluded from the diluted earnings per share calculation because their effect would be 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 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 November 30, 2021 to stockholders of record at the close of business on November 9, 2021.

On February ~~6, 2020,~~2, 2022, the Company’s Board of Directors approved a new share repurchase program for up to ~~40,000~~$600,000 of shares to be repurchased in open market transactions or privately negotiated transactions, subject to market conditions, legal requirements and other factors. Additionally, management has been granted authority to establish ~~one or more~~a trading ~~plans~~plan 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.~~on February 6, 2020. For the ~~quarters~~quarter ended October ~~2, 2021 and September 26, 2020 and the nine months ended October 2, 2021,~~1, 2022, the Company did not enter into any transactions to repurchase shares under the new program. For the nine months ended ~~September 26, 2020,~~October 1, 2022, the Company entered into transactions to repurchase ~~14,464~~1,577 shares at a weighted average repurchase price of ~~$13.83~~$15.84 per share under the new program. The shares were repurchased at a total cost of ~~$200,269.~~$25,018 including broker’s commissions of $31. The Company did not repurchase any shares under the previous share repurchase program during 2022 through the expiration of the program on February 2, 2022 or during the quarter or nine months ended October 2, 2021. At October ~~2, 2021,~~1, 2022, 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 were previously prohibited under the Senior Secured Credit 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.$575,013.

(6) Inventories

Inventories consisted of the following:


		October 2, 2021		January 2, 2021		September 26, 2020			October 1, 2022		January 1, 2022		October 2, 2021
Raw materials	Raw materials	$	71,893	$	67,111	$	74,791	Raw materials	$	90,411	$	68,683	$	71,893
Work in process	Work in process	103,927		108,844		115,189		Work in process	118,573		110,246		103,927
Finished goods	Finished goods	1,453,686		1,191,803		1,806,871		Finished goods	1,927,330		1,405,086		1,453,686
		$	1,629,506	$	1,367,758	$	1,996,851		$	2,136,314	$	1,584,015	$	1,629,506

(7) Debt

Debt consisted of the following:


	Interest Rate as of October 1, 2022	Principal Amount				Maturity Date
		October 1, 2022		January 1, 2022
Senior Secured Credit Facility:
Revolving Loan Facility	4.01%	$	429,000	$	—	November 2026
Term Loan A	4.38%	981,250		1,000,000		November 2026
4.875% Senior Notes	4.88%	900,000		900,000		May 2026
4.625% Senior Notes	4.63%	900,000		900,000		May 2024
3.5% Senior Notes	3.50%	490,100		568,634		June 2024
Accounts Receivable Securitization Facility	3.57%	211,500		—		June 2023
		3,911,850		3,368,634
Less long-term debt issuance costs		13,211		17,543
Less current maturities		242,750		25,000
		$	3,655,889	$	3,326,091

As of October 1, 2022, the Company had $560,028 of borrowing availability under the $1,000,000 Revolving Loan Facility after taking into account $429,000 of USD revolver loans and $10,972 of standby and trade letters of credit issued and outstanding under this facility.

The Company’s accounts receivable securitization facility (the “ARS Facility”) entered into in November 2007 was amended in June 2022. The latest amendment increased the fluctuating facility limit to $225,000 (previously $175,000) and extended the maturity date to June 2023. Additionally, the amendment changed the Company’s interest rate option as defined in the ARS Facility from the rate announced from time to time by PNC Bank, N.A. as its prime rate or the London Interbank Offered Rate (“LIBOR”) to the rate announced from time to time by PNC Bank, N.A. as its prime rate or the Secured Overnight Financing Rate (“SOFR”) and increased certain receivables to the pledged collateral pool for the facility. Borrowings under the

1315

Table of Contents

HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

~~(7) Debt~~

~~Debt consisted of the following:~~

Interest Rate as of October 2,
2021 Principal Amount Maturity Date
October 2,
2021 January 2,
2021
Senior Secured Credit Facility:
Revolving Loan Facility — $ — $ — December 2022
Term Loan A 1.33% 609,375 625,000 December 2022
Term Loan B — — 300,000 December 2024
Australian Revolving Loan Facility — — — July 2022
5.375% Senior Notes 5.38% 700,000 700,000 May 2025
4.875% Senior Notes 4.88% 900,000 900,000 May 2026
4.625% Senior Notes 4.63% 900,000 900,000 May 2024
3.5% Senior Notes 3.50% 579,643 610,724 June 2024
Accounts Receivable Securitization Facility — — — June 2022
Total debt 3,689,018 4,035,724
Less long-term debt issuance costs 24,971 32,354
Less current maturities 37,500 263,936
Total long-term debt $ 3,626,547 $ 3,739,434

As of October 2, 2021, the Company had $995,824 of borrowing availability under the $1,000,000 Revolving Loan Facility after taking into account $4,176 of standby and trade letters of credit issued and outstanding under this facility. In March 2021, the Company repaid the outstanding balance of Term Loan B which consisted of a required excess cash flow prepayment of $238,936 and a voluntary prepayment of $61,064.

~~The~~ Company’s accounts receivable securitization facility (the “Accounts Receivable Securitization Facility”) entered into in November 2007 was amended in March 2021. The 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 base calculations, raised pricing and added certain receivables to the pledged collateral pool for the facility. Borrowings under the Accounts Receivable SecuritizationARS Facility are permitted only to the extent that the face of the receivables in the collateral pool, net of applicable concentrations, reserves and other deductions, exceeds the outstanding loans and also subject to a quarterly fluctuating facility limit, which is not to exceed ~~$175,000.~~$225,000. The Company’s maximum borrowing capacity as per the fluctuating limit under the ~~Accounts Receivable Securitization~~ARS Facility was ~~$175,000~~$225,000 as of October ~~2, 2021.~~1, 2022. The Company had ~~$166,214~~$13,500 of borrowing availability under the ~~Accounts Receivable Securitization~~ARS Facility at October ~~2, 2021.~~1, 2022.

The Company had ~~$43,051 of borrowing availability under the Australian Revolving Loan Facility and $13,856~~$36,121 of borrowing availability under other international credit facilities after taking into account outstanding borrowings and letters of credit outstanding under the applicable facilities at October 2, 2021. The Australian Revolving Loan Facility, originally entered into in July 2016, was amended in July 2021 to extend the maturity date to 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, 2021.1, 2022.

As of October ~~2, 2021,~~1, 2022, the Company was in compliance with all financial covenants under its credit facilities and other outstanding indebtedness. 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~~each 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

~~Table of Contents~~

~~HANESBRANDS INC.~~

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

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

~~(unaudited)~~

~~four fiscal quarters. EBITDA~~which is defined ~~as earnings before interest, income taxes, depreciation expense and amortization, as computed pursuant to~~in the Senior Secured Credit Facility. The method of calculating all the components used in the covenants is included in the Senior Secured Credit Facility.

In November 2022, given the uncertain economic environment and the associated impact on future earnings, the Company amended the credit agreement governing its Senior Secured Credit Facility prior to any potential covenant violation in order to modify the financial covenants and to provide operating flexibility. The amendment effects changes to certain provisions and covenants under the Senior Secured Credit Facility during the period beginning with the fiscal quarter ending December 31, 2022 and continuing through the fiscal quarter ending December 30, 2023 (such period of time, the “Covenant Relief Period”), including: (a) an increase in the maximum leverage ratio from 4.50 to 1.00 to 5.25 to 1.00 for the quarter ended December 31, 2022, 5.75 to 1.00 for the quarters ending April 1, 2023 through September 30, 2023 and 5.25 to 1.00 for the quarter ending December 30, 2023 reverting back to 4.50 to 1.00 for each quarter after the Covenant Relief Period; (b) a reduction of the minimum interest coverage ratio from 3.00 to 1.00 to 2.60 to 1.00 for the quarters ending December 31, 2022 through December 30, 2023 with an increase to 2.75 to 1.00 for each quarter after the Covenant Relief Period; (c) a cap on dividend payments of $250,000 which will revert back to the current amounts after the Covenant Relief Period; (d) the addition of two new tiers to the top of the pricing grid if the maximum leverage ratio exceeds 5.00 to 1.00 and 5.50 to 1.00; and (e) the 0.50 increase in the maximum leverage ratio resulting from a material permitted acquisition is suspended through the Covenant Relief Period. In conjunction with this amendment, the Company will transition the Senior Secured Credit Facility from LIBOR to SOFR with a 10 basis points credit spread adjustment already included in the Senior Secured Credit Facility. After obtaining the debt amendment, the Company expects to maintain compliance with its covenants for at least one year from the ~~date~~issuance 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 ~~continue~~start to recover as currently estimated by management, this could impact the Company’s ability to maintain compliance with its amended 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.

(8) Income Taxes

The ~~Company intends~~Company’s effective income tax rate was 17.0% and 7.9% for the quarters ended October 1, 2022 and October 2, 2021, respectively. The Company’s effective income tax rate was 17.0% and 10.9% for the nine months ended October 1, 2022 and October 2, 2021, respectively. The higher effective tax rate for the quarter ended October 1, 2022 was primarily due to ~~refinance its Senior Secured Credit Facility in~~non-recurring discrete tax charges totaling $3,174 for adjustments related to prior period tax returns during the ~~fourth~~third quarter of ~~2021, subject~~2022 versus discrete tax benefits of $3,814 for the release of uncertain tax benefits and $4,851 for adjustments related to ~~market conditions. In conjunction with~~prior period tax returns and approval of certain filings by taxing authorities during 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 fourththird quarter of 2021. The higher effective tax rate for the nine months ended October 1, 2022 was primarily due to non-recurring discrete tax charges of $9,217 for assessments and adjustments for prior period tax returns and measurement of deferred tax liabilities during the nine months of 2022 versus non-recurring discrete tax benefits of $11,360 for the release ofreserves for unrecognized tax benefits and $4,392 for adjustments related to prior period tax returns and approval of certain filings by taxing authorities, partially offset by a discrete charge for changes in valuation allowances of $4,636 during the nine months of 2021.

Table of Contents

HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

In August 2022, the U.S. enacted the Inflation Reduction Act of 2022 (“IR Act”), which, among other things, introduces a 15% minimum tax based on adjusted financial statement income of certain large corporations with a three year average adjusted financial statement income in excess of $1,000,000, a 1% excise tax on the fair market stock repurchases by covered corporations and several tax incentives to promote clean energy. The Company is continuing to evaluate the IR Act and its potential impact on future periods, and at this time the Company does not expect the IR Act to have a material impact on its consolidated financial statements.

~~(8)~~(9) 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 July 2, 2022	$	(228,826)	$	16,343	$	(558,153)	$	140,874	$	(629,762)
Amounts reclassified from accumulated other comprehensive loss	—		17,917		5,202		(4,109)		19,010
Current-period other comprehensive income (loss) activity	(76,756)		(14,331)		258		1,658		(89,171)
Total other comprehensive income (loss)	(76,756)		3,586		5,460		(2,451)		(70,161)

Balance at October 1, 2022	$	(305,582)	$	19,929	$	(552,693)	$	138,423	$	(699,923)


	Cumulative Translation Adjustment(1)		Cash Flow Hedges		Defined Benefit Plans		Income Taxes		Accumulated Other Comprehensive Loss
Balance at January 1, 2022	$	(134,001)	$	5,244	$	(569,161)	$	146,315	$	(551,603)
Amounts reclassified from accumulated other comprehensive loss	(13,473)		45,345		16,023		(10,935)		36,960
Current-period other comprehensive income (loss) activity	(158,108)		(30,660)		445		3,043		(185,280)
Total other comprehensive income (loss)	(171,581)		14,685		16,468		(7,892)		(148,320)

Balance at October 1, 2022	$	(305,582)	$	19,929	$	(552,693)	$	138,423	$	(699,923)

(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 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.

1518

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)

~~(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.

The Company had the following reclassifications out of AOCI:

Component of AOCI Location of Reclassification into Income Amount of Reclassification from AOCI
Quarters Ended Nine Months Ended
October 2,
2021 September 26,
2020 October 2,
2021 September 26,
2020
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 Selling, general and administrative expenses (8,134) — (5,523) —
Interest expense, net (1,187) — (2,205) —
Income tax 996 — 773 —
Net of tax (8,325) — (6,955) —
Amortization of deferred actuarial loss and prior service cost Other expenses (6,026) (5,430) (19,814) (13,658)
Income tax 1,580 1,425 4,922 3,919
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 $ (17,104) $ 1,193 $ (34,127) $ (506)


Component of AOCI	Location of Reclassification into Income	Amount of Reclassification from AOCI
		Quarters Ended				Nine Months Ended
		October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Write-off of cumulative translation associated with sale of business	Income (loss) from discontinued operations, net of tax	$	—	$	—	$	13,473	$	—

Gain (loss) on forward foreign exchange contracts designated as cash flow hedges	Cost of sales	2,516		(4,506)		6,790		(14,161)
	Income tax	(730)		1,203		(2,008)		3,855
	Income (loss) from discontinued operations, net of tax	—		(876)		(232)		(2,398)
	Net of tax	1,786		(4,179)		4,550		(12,704)

Gain (loss) on cross-currency swap contracts designated as cash flow hedges	Selling, general and administrative expenses	(18,764)		(8,134)		(47,118)		(5,523)
	Interest expense, net	(1,669)		(1,187)		(4,710)		(2,205)
	Income tax	3,474		996		8,811		773
	Net of tax	(16,959)		(8,325)		(43,017)		(6,955)

Amortization of deferred actuarial loss and prior service cost	Other expenses	(5,202)		(6,026)		(15,608)		(19,814)
	Income tax	1,365		1,580		4,102		4,922
	Income (loss) from discontinued operations, net of tax	—		(154)		—		424
Pension activity associated with sale of business	Income (loss) from discontinued operations, net of tax	—		—		(460)		—
	Net of tax	(3,837)		(4,600)		(11,966)		(14,468)

Total reclassifications		$	(19,010)	$	(17,104)	$	(36,960)	$	(34,127)

~~Table of Contents~~

~~HANESBRANDS INC.~~

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

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

~~(unaudited)~~

~~(9)~~(10) 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 primarily related to the Australian dollar, Euro, Canadian dollar and Mexican peso. The Company also uses a combination of cross-currency swap contracts and long-term debt to manage its exposure to foreign currency risk associated with the Company’s net investment in ~~certain~~its European subsidiaries.

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					Hedge Type	October 1, 2022		January 1, 2022
			October 2, 2021		January 2, 2021
Derivatives designated as hedging instruments:
U.S. dollar equivalent notional amount of derivative instruments:							U.S. dollar equivalent notional amount of derivative instruments:
Forward foreign exchange contracts	Forward foreign exchange contracts	Other current assets	$	4,588	$	1	Forward foreign exchange contracts	Cash Flow and Mark to Market	$	256,748	$	308,071
Cross-currency swap contracts	Cross-currency swap contracts	Other current assets	2,839		918		Cross-currency swap contracts	Cash Flow	$	352,920	$	352,920
Forward foreign exchange contracts		Current assets of discontinued operations	—		40
Forward foreign exchange contracts		Other noncurrent assets	232		—

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

Derivatives designated as hedging instruments:
Forward foreign exchange contracts		Accrued liabilities	(55)		(12,898)
Cross-currency swap contracts	Cross-currency swap contracts	Accrued liabilities	(1,410)		—		Cross-currency swap contracts	Net Investment	$	335,940	$	335,940
Forward foreign exchange contracts		Current liabilities of discontinued operations	(4)		(4,747)
Forward foreign exchange contracts		Other noncurrent liabilities	(1)		(2,190)
Cross-currency swap contracts		Other noncurrent liabilities	(8,741)		(16,526)
Derivatives not designated as hedging instruments:
Forward foreign exchange contracts		Accrued liabilities	(820)		(16,488)
Forward foreign exchange contracts		Current liabilities of discontinued operations	(73)		(2,195)
Total derivative liabilities			(11,104)		(55,044)

Net derivative asset (liability)			$	586	$	(51,428)

1719

Table of Contents

HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

Fair Values of Derivative Instruments

The fair values of derivative 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
		October 1, 2022		January 1, 2022
Derivatives designated as hedging instruments:
Forward foreign exchange contracts	Other current assets	$	7,337	$	2,898
Cross-currency swap contracts	Other current assets	3,291		974
Forward foreign exchange contracts	Other noncurrent assets	—		83
Cross-currency swap contracts	Other noncurrent assets	41,709		1,979
Derivatives not designated as hedging instruments:
Forward foreign exchange contracts	Other current assets	15,444		5,439
Total derivative assets		67,781		11,373

Derivatives designated as hedging instruments:
Forward foreign exchange contracts	Accrued liabilities	(164)		(349)
Cross-currency swap contracts	Accrued liabilities	(1,952)		(222)
Forward foreign exchange contracts	Other noncurrent liabilities	—		(14)
Cross-currency swap contracts	Other noncurrent liabilities	(51,658)		(11,387)
Derivatives not designated as hedging instruments:
Forward foreign exchange contracts	Accrued liabilities	(677)		(331)
Total derivative liabilities		(54,451)		(12,303)

Net derivative asset/(liability)		$	13,330	$	(930)

Cash Flow Hedges

The Company uses forward foreign exchange contracts and cross-currency swap contracts to reduce the effect of fluctuating foreign currencies on 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 3three 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.~~1, 2022. 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~~gain from AOCI of approximately ~~$2,474.~~$5,391. The Company is hedging exposure to the variability in future foreign currency-denominated cash flows for forecasted transactions over the next 1712 months and for long-term debt over the next 3321 months.

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


		Amount of Gain (Loss) Recognized in AOCI on Derivative Instruments									Amount of Gain (Loss) Recognized in AOCI on Derivative Instruments
		Quarters Ended				Nine Months Ended					Quarters Ended				Nine Months Ended
		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020			October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021

Forward foreign exchange contracts	Forward foreign exchange contracts	$	4,827	$	(7,007)	$	11,921	$	6,022	Forward foreign exchange contracts	$	4,828	$	4,827	$	14,321	$	11,921
Cross-currency swap contracts	Cross-currency swap contracts	(9,971)		—		(9,266)		—		Cross-currency swap contracts	(19,159)		(9,971)		(44,981)		(9,266)

Total	Total	$	(5,144)	$	(7,007)	$	2,655	$	6,022	Total	$	(14,331)	$	(5,144)	$	(30,660)	$	2,655

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

Table of Contents

HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)


	Location of Gain (Loss) Reclassified from AOCI into Income	Amount of Gain (Loss) Reclassified from AOCI into Income
		Quarters Ended				Nine Months Ended
		October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021


Forward foreign exchange contracts(1)	Cost of sales	$	2,516	$	(4,506)	$	6,790	$	(14,161)
Forward foreign exchange contracts(1)	Income (loss) from discontinued operations, net of tax	—		(1,078)		(307)		(2,929)
Cross-currency swap contracts(1)	Selling, general and administrative expenses	(18,764)		(8,134)		(47,118)		(5,523)
Cross-currency swap contracts(1)	Interest expense, net	(1,669)		(1,187)		(4,710)		(2,205)

Total		$	(17,917)	$	(14,905)	$	(45,345)	$	(24,818)

(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.

~~Table of Contents~~

~~HANESBRANDS INC.~~

~~Notes to~~The following table presents the amounts in the Condensed Consolidated ~~Financial~~ Statements ~~— (Continued)~~of Income in which the effects of cash flow hedges are recorded:

~~(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)


	Quarters Ended				Nine Months Ended
	October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Cost of sales	$	1,107,889	$	1,089,890	$	3,041,233	$	3,064,920
Selling, general and administrative expenses	$	421,408	$	465,015	$	1,259,921	$	1,341,809
Interest expense, net	$	41,721	$	40,860	$	107,408	$	127,760
Income (loss) from discontinued operations, net of tax	$	—	$	(24,970)	$	3,965	$	(435,823)

Net Investment Hedges

In July 2019, the Company entered into 2two 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 ~~certain~~its 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~~1, 2022 and January ~~2, 2021,~~1, 2022, the U.S. dollar equivalent carrying value of Euro-denominated long-term debt designated as a partial European net investment hedge was ~~$231,857~~$196,040 and ~~$610,724,~~$227,454, 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
Quarters Ended Nine Months Ended
October 2,
2021 September 26,
2020 October 2,
2021 September 26,
2020
Euro-denominated long-term debt $ 3,966 $ (13,815) $ 21,722 $ (15,353)
Cross-currency swap contracts 5,650 (10,611) 10,957 117
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)																		Amount of Gain (Loss) Recognized in AOCI
			Quarters Ended							Nine Months Ended											Quarters Ended						Nine Months Ended
			October 2, 2021			September 26, 2020				October 2, 2021				September 26, 2020							October 1, 2022			October 2, 2021			October 1, 2022			October 2, 2021
Euro-denominated long-term debt																		Euro-denominated long-term debt				$	9,109		$	3,966		$	22,872		$	21,722
Cross-currency swap contracts	Cross-currency swap contracts		Interest expense, net			$	1,870			$	1,805			$	5,484			$	5,772	Cross-currency swap contracts				13,383			5,650			29,460			10,957

				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
Total																		Total				$	22,492		$	9,616		$	52,332		$	32,679

1921

Table of Contents

HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

The effect of derivative and non-derivative instruments designated as net investment hedges on the Condensed Consolidated Statements of Income are as follows:


	Location of Gain (Loss) Reclassified from AOCI into Income	Amount of Gain (Loss) Reclassified from AOCI into Income
		Quarters Ended				Nine Months Ended
		October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Euro-denominated long-term debt	Income (loss) from discontinued operations, net of tax	$	—	$	—	$	(13,348)	$	—
Cross-currency swap contracts	Income (loss) from discontinued operations, net of tax	—		—		(2,505)		—
Cross-currency swap contracts (amounts excluded from effectiveness testing)	Interest expense, net	2,209		1,870		6,449		5,484
Total		$	2,209	$	1,870	$	(9,404)	$	5,484

The following table presents the amounts in the Condensed Consolidated Statements of Income in which the effects of net investment hedges are recorded:


	Quarters Ended				Nine Months Ended
	October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Income (loss) from discontinued operations, net of tax	$	—	$	(24,970)	$	3,965	$	(435,823)
Interest expense, net (amounts excluded from effectiveness testing)	$	41,721	$	40,860	$	107,408	$	127,760

Mark to Market Hedges

~~A derivative~~Derivatives 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.~~hedges are not designated as hedges under the accounting standards. 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. 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~~instruments 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									Location of Gain (Loss) Recognized in Income on Derivatives	Amount of Gain (Loss) Recognized in Income
			Quarters Ended				Nine Months Ended						Quarters Ended				Nine Months Ended
			October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020				October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Forward foreign exchange contracts	Forward foreign exchange contracts	Cost of sales	$	6,087	$	(1,472)	$	24,711	$	(11,004)	Forward foreign exchange contracts	Cost of sales	$	(1,602)	$	6,087	$	1,037	$	24,711
Forward foreign exchange contracts	Forward foreign exchange contracts	Selling, general and administrative expenses	(597)		3,718		2,494		4,646		Forward foreign exchange contracts	Selling, general and administrative expenses	41		(597)		(145)		2,494
Forward foreign exchange contracts	Forward foreign exchange contracts	Loss from discontinued operations, net of tax	859		(139)		4,812		(3,590)		Forward foreign exchange contracts	Income (loss) from discontinued operations, net of tax	—		859		—		4,812
Total	Total		$	6,349	$	2,107	$	32,017	$	(9,948)	Total		$	(1,561)	$	6,349	$	892	$	32,017

~~(10)~~

Table of Contents

HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

(11) Fair Value of Assets and Liabilities

As of October ~~2, 2021,~~1, 2022 and January 1, 2022, 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~~plan liabilities 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 or disclosed on a quarterly recurring basis.

There were no changes during the quarter and the nine months ended October ~~2, 2021~~1, 2022 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 the nine months ended October ~~2, 2021,~~1, 2022, the Company did not have any non-financial assets or liabilities that were required to be measured at fair value on a recurring basis or non-recurring basis.

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


	Assets (Liabilities) at Fair Value as of October 1, 2022
	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	$	22,781	$	—	$	22,781	$	—
Cross-currency swap contracts - assets	45,000		—		45,000		—
Forward foreign exchange contracts - liabilities	(841)		—		(841)		—
Cross-currency swap contracts - liabilities	(53,610)		—		(53,610)		—
Total derivative contracts	13,330		—		13,330		—
Deferred compensation plan liability	(15,226)		—		(15,226)		—
Total	$	(1,896)	$	—	$	(1,896)	$	—


	Assets (Liabilities) at Fair Value as of January 1, 2022
	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	$	8,420	$	—	$	8,420	$	—
Cross-currency swap contracts - assets	2,953		—		2,953		—
Forward foreign exchange contracts - liabilities	(694)		—		(694)		—
Cross-currency swap contracts - liabilities	(11,609)		—		(11,609)		—
Total derivative contracts	(930)		—		(930)		—
Deferred compensation plan liability	(20,916)		—		(20,916)		—
Total	$	(21,846)	$	—	$	(21,846)	$	—

Table of Contents

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 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)
Forward foreign exchange contracts - assets $ 8,666 $ — $ 8,666 $ —
Cross-currency swap contracts - assets 2,839 — 2,839 —
Forward foreign exchange contracts - liabilities (876) — (876) —
Cross-currency swap contracts - liabilities (10,151) — (10,151) —
478 — 478 —
Deferred compensation plan liability (19,916) — (19,916) —
Total $ (19,438) $ — $ (19,438) $ —

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)
Forward foreign exchange contracts - assets $ 2,460 $ — $ 2,460 $ —
Cross-currency swap contracts - assets 918 — 918 —
Forward foreign exchange contracts - liabilities (31,576) — (31,576) —
Cross-currency swap contracts - liabilities (16,526) — (16,526) —
(44,724) — (44,724) —
Deferred compensation plan liability (21,878) — (21,878) —
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 October ~~2, 2021~~1, 2022 and January ~~2, 2021.~~1, 2022. The carrying amount of trade accounts receivable included allowance for doubtful accounts, chargebacks and other deductions of ~~$63,193~~$68,180 and ~~$48,745~~$61,948 as of October ~~2, 2021~~1, 2022 and January ~~2, 2021,~~1, 2022, respectively. The fair value of debt, which is classified as a Level 2 liability, was ~~$3,885,395~~$3,690,064 and ~~$4,230,985~~$3,504,412 as of October ~~2, 2021~~1, 2022 and January ~~2, 2021,~~1, 2022, respectively. Debt had a carrying value of ~~$3,689,018~~$3,911,850 and ~~$4,035,724~~$3,368,634 as of October ~~2, 2021~~1, 2022 and January ~~2, 2021,~~1, 2022, 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 primarily due to the short-term nature of these instruments.~~

~~(11) Income Taxes~~

The Company’s effective income tax rate was 7.9% and 16.0% for the quarters ended October 2, 2021 and September 26, 2020, respectively. The Company’s effective income tax rate was 10.9% and 14.2% for the nine months ended October 2, 2021 and September 26, 2020, respectively. The lower effective tax rate for the quarter and nine months ended 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.

The Company is or could be subject to examinations in the 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 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.

~~Table of Contents~~

~~HANESBRANDS INC.~~

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

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

~~(unaudited)~~

(12) Business Segment Information

The Company’s operations are managed and reported in 3three 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, U.S. ~~hosiery~~Sheer Hosiery business and certain sales from its supply chain toand transitional services with the European Innerwear ~~business.~~business which was sold on March 5, 2022. In the fourth quarter of 2021, the Company reached the decision to divest its U.S. Sheer Hosiery business, including the L’eggs brand, as part of its strategy to streamline its portfolio under its Full Potential plan. See Note “Assets and Liabilities Held for Sale” for additional information.

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. ~~Innerwear also includes sales of personal protective equipment including products such as cloth face coverings and 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.~~apparel.

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

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 January ~~2, 2021.~~1, 2022.


		Quarters Ended				Nine Months Ended					Quarters Ended				Nine Months Ended
		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020			October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Net sales:	Net sales:									Net sales:
Innerwear	Innerwear	$	702,617	$	792,600	$	2,053,702	$	2,309,816	Innerwear	$	625,082	$	702,617	$	1,889,807	$	2,053,702
Activewear	Activewear	462,499		324,921		1,230,691		781,300		Activewear	461,043		462,499		1,178,380		1,230,691
International	International	536,483		506,203		1,521,667		1,185,718		International	502,066		536,483		1,436,384		1,521,667
Other	Other	87,952		68,139		242,831		161,182		Other	82,550		87,952		255,793		242,831
Total net sales	Total net sales	$	1,789,551	$	1,691,863	$	5,048,891	$	4,438,016	Total net sales	$	1,670,741	$	1,789,551	$	4,760,364	$	5,048,891

2224

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					Quarters Ended				Nine Months Ended
		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020			October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Segment operating profit:	Segment operating profit:									Segment operating profit:
Innerwear	Innerwear	$	147,651	$	172,000	$	461,237	$	558,075	Innerwear	$	99,797	$	147,651	$	343,602	$	461,237
Activewear	Activewear	76,172		29,568		177,813		31,925		Activewear	53,491		76,172		125,332		177,813
International	International	86,371		101,029		235,451		156,936		International	69,890		86,371		215,281		235,451
Other	Other	11,288		3,059		22,394		(12,263)		Other	4,839		11,288		9,501		22,394
Total segment operating profit	Total segment operating profit	321,482		305,656		896,895		734,673		Total segment operating profit	228,017		321,482		693,716		896,895
Items not included in segment operating profit:	Items not included in segment operating profit:									Items not included in segment operating profit:
General corporate expenses	General corporate expenses	(50,226)		(56,357)		(164,734)		(163,923)		General corporate expenses	(52,639)		(50,226)		(174,707)		(164,734)
Restructuring and other action-related charges	Restructuring and other action-related charges	(29,096)		(52,257)		(67,153)		(108,860)		Restructuring and other action-related charges	(26,451)		(29,096)		(37,633)		(67,153)
Amortization of intangibles	Amortization of intangibles	(7,514)		(7,955)		(22,846)		(22,717)		Amortization of intangibles	(7,483)		(7,514)		(22,166)		(22,846)
Total operating profit	Total operating profit	234,646		189,087		642,162		439,173		Total operating profit	141,444		234,646		459,210		642,162
Other expenses	Other expenses	(1,811)		(4,898)		(6,227)		(15,652)		Other expenses	(3,212)		(1,811)		(6,088)		(6,227)
Interest expense, net	Interest expense, net	(40,860)		(43,500)		(127,760)		(120,602)		Interest expense, net	(41,721)		(40,860)		(107,408)		(127,760)
Income from continuing operations before income tax expense	Income from continuing operations before income tax expense	$	191,975	$	140,689	$	508,175	$	302,919	Income from continuing operations before income tax expense	$	96,511	$	191,975	$	345,714	$	508,175

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:


		Quarters Ended				Nine Months Ended					Quarters Ended				Nine Months Ended
		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020			October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Cost of sales	Cost of sales	$	(108)	$	47,599	$	4,599	$	87,828	Cost of sales	$	13,102	$	(108)	$	14,133	$	4,599
Selling, general and administrative expenses	Selling, general and administrative expenses	29,204		4,658		62,554		21,032		Selling, general and administrative expenses	13,349		29,204		23,500		62,554
Total restructuring and other action-related charges included in operating profit		$	29,096	$	52,257	$	67,153	$	108,860
Total included in operating profit										Total included in operating profit	26,451		29,096		37,633		67,153
Income tax expense										Income tax expense	4,493		17,933		6,394		31,138
Total restructuring and other action-related charges										Total restructuring and other action-related charges	$	21,958	$	11,163	$	31,239	$	36,015

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

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


	Quarters Ended				Nine Months Ended
	October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Full Potential Plan:
Professional services	$	6,020	$	11,283	$	21,014	$	36,793
Supply chain segmentation	13,298		—		14,587		—
Technology	2,622		—		9,052		—
Impairment of intangible assets	—		—		—		7,302
Operating model	(18)		16,000		(1,112)		17,600
(Gain) loss on classification of assets held for sale	4,310		—		(6,558)		—
Other	219		1,813		650		5,458
Total included in operating profit	26,451		29,096		37,633		67,153
Discrete tax benefits	—		11,802		—		19,097
Tax benefit effect on actions	4,493		6,131		6,394		12,041
Total benefit included in income tax expense	4,493		17,933		6,394		31,138
Total restructuring and other action-related charges	$	21,958	$	11,163	$	31,239	$	36,015

2325

Table of Contents

HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

Restructuring and other action-related charges within operating profit included $26,451 and $29,096 of charges related to the implementation of the Company’s Full Potential plan in the quarters ended October 1, 2022 and October 2, 2021, respectively. Full Potential plan charges in the quarter ended October 1, 2022 included charges related to supply chain segmentation of $13,298 to position the Company’s manufacturing network to align with revenue growth opportunities of its Full Potential plan demand trends which is reflected in the “Cost of sales” line of the Condensed Consolidated Statements of Income and a non-cash loss of $4,310, which is reflected in the “Selling, general and administrative expenses” line of the Condensed Consolidated Statements of Income, to adjust the valuation allowance related to the U.S. Sheer Hosiery business resulting from an increase in carrying value due to changes in working capital.

Restructuring and other action-related charges within operating profit included $37,633 and $67,153 of charges related to the implementation of the Company’s Full Potential plan in the nine months ended October 1, 2022 and October 2, 2021, respectively. Full Potential plan charges in the nine months ended October 1, 2022 included charges related to supply chain segmentation of $14,587 to position the Company’s manufacturing network to align with revenue growth opportunities of its Full Potential plan demand trends which is reflected in the “Cost of sales” line of the Condensed Consolidated Statements of Income and a non-cash gain of $6,558, which is reflected in the “Selling, general and administrative expenses” line of the Condensed Consolidated Statements of Income, to adjust the valuation allowance related to the U.S. Sheer Hosiery business resulting from a decrease in carrying value due to changes in working capital. Additionally, Full Potential plan charges in the nine months ended October 2, 2021 included impairment charges of $7,302, which are reflected in the “Selling, general and administrative expenses” line of the Condensed Consolidated Statements of Income, 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 was not marketed for sale.

In the third quarter and nine months of 2021, the Company ~~approved~~recorded a Full Potential plan charge of $16,000 for 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~~program which was reflected in the “Selling, general and administrative expenses” line of the Condensed Consolidated Statements of Income and in the ~~pre-tax~~“Operating model” line of the restructuring and other action-related charges table above. AsAt January 1, 2022, the accrual for employee termination and other benefits related to the Company’s 2021 voluntary retirement program was $15,688. During the quarter and nine months ended October 1, 2022, the Company approved actions to position the Company’s manufacturing network to align with revenue growth opportunities of its Full Potential plan demand trends and incurred charges of $7,170 for employee termination and other benefits for employees affected by the actions which are reflected in the “Cost of sales” line in the Condensed Consolidated Statement of Income and in the Supply chain segmentation line in the restructuring and other action-related charges table above. During the nine months ended October ~~2, 2021, no~~1, 2022, benefit payments ~~had~~and other adjustments of $12,070, have been ~~made. The~~made, resulting in an ending accrual for the actions noted above of $10,788 which is included in the “Accrued liabilities” line of the Condensed Consolidated Balance ~~Sheet.~~Sheets at October 1, 2022.

2426

Table of Contents


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 consolidated 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 January ~~2, 2021,~~1, 2022, 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 the full year or future periods, and our actual results may differ materially from those ~~discussed~~expressed in or implied by the forward-looking statements as a result of various factors, including but not limited to those included 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 January 1, 2022 and in our Quarterly Report on Form 10-Q for the quarter ended July 2, ~~2021.~~2022. In particular, statements with respect to trends associated with our business, our multi-year growth strategy (“Full Potential ~~plan,~~plan”), the impacts of the ransomware attack announced on May 31, 2022 and our future financial performance ~~and the potential effects of the ongoing global coronavirus (“COVID-19”) pandemic~~ included in this MD&A include forward-looking statements.

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,~~Australasia, Europe and ~~Asia/Pacific~~Asia under some of the world’s strongest apparel brands, including Hanes, Champion, Bonds, Bali, Maidenform, Playtex, Bras N Things, JMS/Just My Size, ~~Wonderbra,~~ Alternative, Berlei, ~~L’eggs~~Wonderbra, Gear for Sports and ~~Gear for Sports.~~Comfortwash. 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, ~~our~~ U.S. ~~hosiery~~Sheer Hosiery business and certain sales from our supply chain to the European Innerwear ~~business.~~business which was sold on March 5, 2022.

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~~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 the 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,~~build e-commerce excellence across channels 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~~first quarter of ~~2020,~~2021, we ~~began~~announced that we reached the ~~implementation of~~decision to exit our ~~Full Potential plan and~~European Innerwear business as part of our strategy to streamline our portfolio weunder our Full Potential plan and 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.~~criteria. 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

~~Table of Contents~~

Consolidated Balance Sheets. On November 4, 2021, we announced that we reached an agreement to sell our European Innerwear business to an affiliate of Regent, L.P. and completed the sale on March 5, 2022. See ~~note “Discontinued Operations”~~Note “Assets and Liabilities Held for Sale” to our condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q for additional information. ~~On November 4,~~

Table of Contents

In addition, in the fourth quarter of 2021, we ~~announced~~reached the decision to divest our U.S. Sheer Hosiery business, including the L’eggs brand, as part of our strategy to streamline our portfolio under our Full Potential plan and determined that this business met held-for-sale accounting criteria. The related assets and liabilities are presented as held for sale in the Condensed Consolidated Balance Sheets at October 1, 2022 and January 1, 2022. The operations of our U.S. Sheer Hosiery business are reported in “Other” for all periods presented in Note “Business Segment Information” to our condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q. We are currently exploring potential purchasers for this business and expect to complete the sale within the next 12 months. See Note “Assets and Liabilities Held for Sale” to our condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q for additional information.

In June of 2022, we purchased the Champion trademark for footwear in the United States, Puerto Rico and Canada from Keds, LLC (“KEDS”) for $103 million. The trademark was recorded in “Trademarks and other identifiable intangibles, net” line in the Condensed Consolidated Balance Sheets and has an indefinite life. We previously licensed the Champion trademark for footwear in these locations. The purchase of the trademark was part of an agreement with KEDS settling litigation between the two parties and is another step forward in our Full Potential plan of growing the global Champion brand.

Ransomware Attack

As previously disclosed, on May 24, 2022, we identified 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,had become subject to a ~~post-closing adjustment~~ransomware attack and activated our incident response and business continuity plans designed to ~~reflect any deviation~~contain the incident. As part of our forensic investigation and assessment of the impact, we determined that certain of our information technology systems were affected by the ransomware attack.

Upon discovering the incident, we took a series of measures to further safeguard the integrity of our information technology systems, including working with cybersecurity experts to contain the incident and implementing business continuity plans to restore and support continued operations. These measures also included resecuring data, remediation of the malware across infected machines, rebuilding critical systems, global password reset and enhanced security monitoring. We notified appropriate law enforcement authorities as well as certain data protection regulators, and in addition to our public announcements of the incident, we began a process to provide breach notifications and regulatory filings as may be required by applicable law starting in August 2022. While the notification process continues, at ~~closing from~~this time, we believe the incident has been contained, we have restored our critical information technology systems, and manufacturing, retail and other internal operations continue. There is no ongoing operational impact on our ability to provide our products and services. We maintain insurance, including coverage for cyber-attacks, subject to certain deductibles and policy limitations, in an amount that we believe appropriate.

We are named in two lawsuits in connection with the ransomware incident. On October 7, 2022, a ~~normalized level~~putative class action was filed against “Hanes Brands [sic], Inc.” alleging, among other things, negligence, negligence per se, breach of ~~working capital. Under~~implied contract, unjust enrichment, breach of implied covenant of good faith and fair dealing, unfair business practices under the ~~agreement, there~~California Business and Professions Code, and violations of the California Confidentiality of Medical Information Act in connection with the ransomware incident. The litigation is ~~also a potential earnout due to us based on future performance. The transaction~~entitled, Ramon v. Hanes Brands, Inc., and is ~~expected to close~~pending in the ~~first~~United States District Court for the Central District of California. On October 13, 2022, another putative class action was filed against HanesBrands, Inc. alleging, among other things, negligence, negligence per se, breach of implied contract, invasion of privacy, and unjust enrichment in connection with the ransomware incident. The litigation is entitled, Toussaint v. HanesBrands, Inc. and is pending in the United States District Court for the Middle District of North Carolina. The lawsuits seek, among other things, monetary and injunctive relief. We are vigorously defending these matters and believes the cases are without merit. However, at this early stage in the proceedings, we are not able to determine the probability of the outcome of these matters or a range of reasonably expected losses, if any.

During the quarter and nine months ended October 1, 2022, we incurred costs of ~~2022.~~approximately $1 million and $16 million, net of expected insurance recoveries, respectively, related to the ransomware attack. The costs, net of expected insurance recoveries, incurred during the quarter ended October 1, 2022 related primarily to information technology and legal fees and are reflected in the “Selling, general and administrative expenses” line of the Condensed Consolidated Statements of Income. The costs incurred during the nine months ended October 1, 2022 included $14 million related primarily to supply chain disruptions, which are reflected in the “Cost of sales” line of the Condensed Consolidated Statements of Income and $2 million, net of expected insurance recoveries, related primarily to information technology, legal and consulting fees, which are reflected in the “Selling, general and administrative expenses” line of the Condensed Consolidated Statements of Income. The ransomware attack also negatively impacted our ability to order materials, make and ship orders, and process payments during the second quarter ended July 2, 2022, resulting in estimated lost sales of approximately $100 million. We continue to assess the security event and cannot determine, at this time, the full extent of the impact from such event on our business, results of operations or financial condition or whether such impact will ultimately have a material adverse effect.

Table of Contents

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 ended 2021 and 2020~~ as described in more detail under “Condensed Consolidated Results of Operations - Third Quarter Ended October ~~2, 2021~~1, 2022 Compared with Third Quarter Ended ~~September 26, 2020”~~October 2, 2021” and “Condensed Consolidated Results of Operations - Nine Months Ended October ~~2, 2021~~1, 2022 Compared with Nine Months Ended ~~September 26, 2020”~~October 2, 2021” below, primarily through reduced traffic and closures of ~~company-operated~~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~~and higher levels of inflation due to factory disruptions, port congestion, transportation delays as well as labor and container shortages ~~have~~which resulted in higher operating costs. These global supply chain disruptions have delayed and are expected to continue to delay inventory orders and, in turn, deliveries to our wholesale customers and availability in our Company-operated stores and e-commerce sites. Supply chain disruptions resulted in the inability to fulfill certain customer orders which negatively impacted our net revenues. We anticipate these supply chain disruptions could impact our sales volumes in future periods. We have also incurred higher distribution costs including freight and ~~higher levels of inflation.~~labor costs to mitigate these delays. We continue to monitor these delays and other potential disruptions in our supply chain and will implement mitigation plans as needed. The future impact of the COVID-19 pandemic, ~~remains~~supply chain disruptions and inflation remain highly uncertain, and our business and results of operations, including our net revenues, earnings and cash flows, could continue to be adversely impacted.

Outlook for ~~the fourth quarter of 2021~~2022

We estimate our ~~fourth quarter 2021~~2022 guidance as follows:

•Net sales of approximately ~~$1.71~~$6.16 billion to ~~$1.78 billion;~~$6.21 billion, net of approximately $196 million of unfavorable foreign currency exchange impact;

•Operating profit of approximately ~~$182~~$512 million to ~~$202 million;~~$542 million, net of approximately $26 million of unfavorable foreign currency exchange impact;

•Full Potential plan-related charges of approximately ~~$18~~$55 million included in operating profit;

•Interest expense and other expenses of approximately ~~$85~~$167 million ~~combined, including a one-time charge of $45 million for a make-whole premium and transaction fees related to our anticipated debt refinancing;~~combined;

•An effective tax rate from continuing operations of approximately ~~12%~~17%;

•Diluted earnings per share from continuing operations of approximately ~~$0.24~~$0.82 to ~~$0.29;~~$0.89;

•Cash flow from operating activities to be a use of approximately ~~$23 million to $73 million;~~$400; and

•Capital investments of approximately $140 million, including capital expenditures of ~~approximately $20~~$90 million ~~to $30 million.~~within investing cash flow activities and cloud computing assets of $50 million within operating cash flow activities.

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. Our diverse range of product offerings, however, typically mitigates some of the impact of seasonal changes in demand for certain items. Sales levels in any period are also impacted by 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.

2629

Table of 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. 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.

Inflation can have a long-term impact on us because increasing costs of materials and labor may impact our ability to maintain satisfactory margins. For example, the cost of the materials that are used in our manufacturing process, such as oil-related commodity prices and other raw materials, including cotton, dyes and chemicals, and other costs, such as fuel, energy and utility costs, can fluctuate as a result of inflation and other factors. Disruptions to the global supply chain due to factory closures, port congestion, ~~container shortages, trucking capacity shortages,~~ transportation delays as well as labor and ~~labor~~container shortages may negatively impact product availability, revenue growth and gross margins. ~~Global~~We will work to mitigate the impact of the 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. Costs incurred for materials and labor are capitalized into inventory and impact our results as the inventory is sold. In addition, a significant portion of our products are manufactured in countries other than the United States and declines in the value of the U.S. dollar may result in higher manufacturing costs. Increases in inflation may not be matched by growth in consumer income, which also could have a negative impact on spending.

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.

Key Financial Results from the Third Quarter Ended October 1, 2022

Key financial results are as follows:

•Total net sales in the third quarter of 2022 were $1.67 billion, compared with $1.79 billion in the same period of 2021, representing a 7% decrease.

•Operating profit decreased 40% to $141 million in the third quarter of 2022, compared with $235 million in the same period of 2021. As a percentage of sales, operating profit was 8.5% in the third quarter of 2022 compared to 13.1% in the same period of 2021.

•Diluted earnings per share from continuing operations was $0.23 and $0.50 in the third quarters of 2022 and 2021, respectively.

Table of Contents

Condensed Consolidated Results of Operations — Third Quarter Ended October ~~2, 2021~~1, 2022 Compared with Third Quarter Ended ~~September 26, 2020~~October 2, 2021


		Quarters Ended									Quarters Ended
		October 2, 2021		September 26, 2020		Higher (Lower)		Percent Change			October 1, 2022		October 2, 2021		Higher (Lower)		Percent Change
		(dollars in thousands)									(dollars in thousands)
Net sales	Net sales	$	1,789,551	$	1,691,863	$	97,688	5.8	%	Net sales	$	1,670,741	$	1,789,551	$	(118,810)	(6.6)	%
Cost of sales	Cost of sales	1,089,890		1,120,392		(30,502)		(2.7)		Cost of sales	1,107,889		1,089,890		17,999		1.7
Gross profit	Gross profit	699,661		571,471		128,190		22.4		Gross profit	562,852		699,661		(136,809)		(19.6)
Selling, general and administrative expenses	Selling, general and administrative expenses	465,015		382,384		82,631		21.6		Selling, general and administrative expenses	421,408		465,015		(43,607)		(9.4)
Operating profit	Operating profit	234,646		189,087		45,559		24.1		Operating profit	141,444		234,646		(93,202)		(39.7)
Other expenses	Other expenses	1,811		4,898		(3,087)		(63.0)		Other expenses	3,212		1,811		1,401		77.4
Interest expense, net	Interest expense, net	40,860		43,500		(2,640)		(6.1)		Interest expense, net	41,721		40,860		861		2.1
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 from continuing operations before income tax expense	96,511		191,975		(95,464)		(49.7)
Income tax expense	Income tax expense	15,228		22,464		(7,236)		(32.2)		Income tax expense	16,410		15,228		1,182		7.8
Income from continuing operations	Income from continuing operations	176,747		118,225		58,522		49.5		Income from continuing operations	80,101		176,747		(96,646)		(54.7)
Loss from discontinued operations, net of tax	Loss from discontinued operations, net of tax	(24,970)		(14,947)		(10,023)		67.1		Loss from discontinued operations, net of tax	—		(24,970)		24,970		(100.0)
Net income	Net income	$	151,777	$	103,278	$	48,499	47.0	%	Net income	$	80,101	$	151,777	$	(71,676)	(47.2)	%

Net Sales

Net sales ~~increased 6%~~decreased 7% during the third quarter of ~~2021~~2022 versus the third quarter of ~~2020~~2021 primarily due to the following:

•~~Strong consumer demand and~~Softer point-of-sale trends inand higher retailer inventory levels as a result of the ~~U.S., Europe, the Americas, and~~macroeconomic pressures;

•Ongoing COVID-related pressures on consumer traffic in certain markets in Asia; and

•The ~~favorable~~unfavorable impact from foreign currency exchange rates in our International business of approximately $8$59 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~~Pricing actions taken throughout 2022.

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

~~Table of Contents~~

Operating Profit

Operating profit as a percentage of net sales was ~~13.1%~~8.5% during the third quarter of ~~2021,~~2022, representing ~~an increase~~a decrease from ~~11.2%~~13.1% in the prior year. Operating margin ~~benefited from fixed~~decreased as a result of input cost ~~leverage from higher~~inflation, lower sales ~~favorable sales mix~~volume, manufacturing time-out costs associated with our inventory reduction actions and ~~the favorable impact from foreign exchange rates, which more than offset~~ higher transportation costs ~~increased investments in brand marketing~~partially offset by pricing actions and ~~higher levels of inflation. Selling, general and administrative expenses 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.~~

reductions. Included in operating profit in the third quarter of 2022 and 2021 were charges of $26 million and $29 million, respectively, related to the implementation of our Full Potential plan. Included in operating profit in the third quarter of 2020 were charges of $52 million primarily related to 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 $3~~increased $1 million in the third quarter of ~~2021~~2022 compared to the third quarter of ~~2020 primarily~~2021 due to higher funding fees for sales of accounts receivable to financial institutions in 2022 offset by lower pension expense in ~~2021.~~2022.

Interest Expense – Interest expense was ~~lower~~higher by $3$1 million in the third quarter of ~~2021~~2022 compared to the third quarter of ~~2020~~2021 primarily due to ~~lower~~higher weighted average outstanding debt balances partially offset by a lower weighted average interest rate on our borrowings during the third quarter of ~~2021~~2022 compared to the third quarter of ~~2020.~~2021. Our weighted average interest rate on our outstanding debt was 4.08% for the third quarter of 2022 compared to 4.12% for the third quarter of ~~2021, compared to 4.07% for the third quarter of 2020.~~2021.

Income Tax Expense – Our effective income tax rate was ~~7.9%~~17.0% and ~~16.0%~~7.9% for the third quarters of ~~2021~~2022 and ~~2020,~~2021, respectively. The ~~lower~~higher effective tax rate for the third quarter of ~~2021~~2022 was primarily due to non-recurring discrete tax charges totaling $3 million for adjustments related to prior period tax returns during the third quarter of 2022 versus discrete tax benefits of $4 million for the release of uncertain tax benefits and $5 million for adjustments related to ~~the adjustments of~~ prior ~~year~~period tax returns and approval of certain filings by taxing authorities during the third quarter of ~~2021~~2021.

Table of Contents

corporations, and several tax incentives to promote clean energy. We are continuing to evaluate the ~~change in jurisdictional mix of income.~~IR Act and its potential impact on future periods and at this time we do not expect the IR Act to have a material impact on our consolidated financial statements.

Discontinued Operations – 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. On March 5, 2022, we completed the sale of the European Innerwear business. See ~~note “Discontinued Operations”~~Note “Assets and Liabilities Held for Sale” to our condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q for ~~a discussion of a non-cash charge to record a valuation allowance against the net assets held for sale to write down the carrying value to the estimated fair value less costs of disposal.~~additional information.

Operating Results by Business Segment — Third Quarter Ended October ~~2, 2021~~1, 2022 Compared with Third Quarter Ended ~~September 26, 2020~~October 2, 2021


		Net Sales									Net Sales
		Quarters Ended									Quarters Ended
		October 2, 2021		September 26, 2020		Higher (Lower)		Percent Change			October 1, 2022		October 2, 2021		Higher (Lower)		Percent Change
		(dollars in thousands)									(dollars in thousands)
Innerwear	Innerwear	$	702,617	$	792,600	$	(89,983)	(11.4)	%	Innerwear	$	625,082	$	702,617	$	(77,535)	(11.0)	%
Activewear	Activewear	462,499		324,921		137,578		42.3		Activewear	461,043		462,499		(1,456)		(0.3)
International	International	536,483		506,203		30,280		6.0		International	502,066		536,483		(34,417)		(6.4)
Other	Other	87,952		68,139		19,813		29.1		Other	82,550		87,952		(5,402)		(6.1)
Total	Total	$	1,789,551	$	1,691,863	$	97,688	5.8	%	Total	$	1,670,741	$	1,789,551	$	(118,810)	(6.6)	%

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 %

~~Table of Contents~~


	Operating Profit and Margin
	Quarters Ended
	October 1, 2022				October 2, 2021				Higher (Lower)		Percent Change
	(dollars in thousands)
Innerwear	$	99,797	16.0	%	$	147,651	21.0	%	$	(47,854)	(32.4)	%
Activewear	53,491		11.6		76,172		16.5		(22,681)		(29.8)
International	69,890		13.9		86,371		16.1		(16,481)		(19.1)
Other	4,839		5.9		11,288		12.8		(6,449)		(57.1)
Corporate	(86,573)		NM		(86,836)		NM		263		(0.3)
Total	$	141,444	8.5	%	$	234,646	13.1	%	$	(93,202)	(39.7)	%

Innerwear

Innerwear net sales decreased 11% compared to the third quarter of ~~2020~~2021 primarily due to ~~our exit of the PPE business in 2021~~softer point-of-sale trends and retailer inventory reductions 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~~macroeconomic pressures partially offset by ~~increases in all of our core apparel categories. Net sales in our Men’s, Kids~~pricing actions taken 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~~retail space gains in the ~~third~~first quarter of ~~2021.~~2022.

Innerwear operating margin was ~~21.0%~~16.0%, a decrease from ~~21.7%~~21.0% in the same period a year ~~ago due to fixed~~ago. The operating margin decline resulted from input cost ~~deleverage from~~inflation, lower sales ~~higher transportation~~volume, manufacturing time-out costs ~~increased investments in brand marketing~~associated with our inventory reduction actions and ~~higher levels of inflation. The third quarter of 2020 also included operating profit related to the PPE business that was exited.~~unfavorable product mix partially offset by pricing actions and cost reductions.

Activewear

Activewear net sales ~~increased 42%~~decreased 0.3% compared to the third quarter ~~last year driven~~of 2021 due to softer point-of-sale trends and higher inventory levels at retail as a result of the macroeconomic pressures primarily related to the Champion brand. The net sales decrease was partially offset by ~~lower comparable sales~~growth in the collegiate and printwear channels and pricing actions primarily taken 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.~~2022.

Activewear operating margin was ~~16.5%~~11.6%, ~~an increase~~a decrease from ~~9.1%~~16.5% in the same period a year ago. ~~Operating~~The operating margin ~~improvement primarily~~decline resulted from ~~fixed~~higher levels of inflation, manufacturing time-out costs associated with our inventory reduction actions and unfavorable product mix partially offset by pricing actions and cost ~~leverage from higher sales and favorable sales mix, which more than offset increased investments in brand marketing.~~reductions.

International

Net sales in the International segment ~~increased~~decreased 6% ~~as a result of lower sales in~~compared to the third quarter of ~~2020~~2021 due to the negative impact of the COVID-19 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.unfavorable foreign currency exchange rates. The ~~favorable~~unfavorable impact of foreign currency exchange rates ~~increased~~decreased net sales approximately $8$59 million in the third quarter of ~~2021.~~2022. International net sales on a constant currency basis, defined as net sales excluding the

Table of Contents

impact of foreign currency, increased 4%5%. The impact of foreign currency exchange rates is calculated by applying prior period exchange rates to the current year financial results. Net sales on a constant currency basis increased as a result of Champion growth in Europe as well as innerwear growth in Australia and the Americas. The ~~third quarter of 2020 included~~increase in net sales ~~of PPE of $13 million.~~was partially offset by Champion declines in certain Asian markets.

International operating margin was ~~16.1%~~13.9%, a decrease from ~~20.0%~~16.1% in the same period a year ago. The decrease in operating margin primarily resulted from ~~fixed cost deleverage due to COVID-19 related shutdowns in Australia~~higher levels of inflation and ~~Japan~~input costs, which was partially offset by disciplined expense management during the quarter.

Other

Other net sales decreased primarily as a result of decreased traffic at our retail outlets in the third quarter of 2021 and increased investments in brand marketing partially offset by fixed cost leverage from higher sales in the Americas, Europe and certain markets in Asia and the favorable impact from foreign exchange rates.

~~Other~~

~~Other net sales increased primarily due~~2022 compared to ~~increased sales at our retail outlets during~~ the third quarter of ~~2021 as a result of stores reopening after temporary store closures during the third quarter of 2020~~2021. Operating margin decreased due to the ~~COVID-19 pandemic. Operating margin increased due to the increase~~decrease in sales ~~volume.~~volume primarily in our retail outlets.

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

~~Corporate~~consolidation for the period when the European Innerwear business was owned by us. See Note “Assets and Liabilities Held for Sale” to our condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q for additional information.

Corporate

Corporate expenses were slightly lower in the third quarter of ~~2021~~2022 compared to the third quarter of ~~2020~~2021 primarily due to lower variable compensation costs and lower restructuring and other action-related ~~charges.~~charges partially offset by increased information technology costs. Included in restructuring and other action-related charges within operating profit in the third quarter of 2022 and 2021 were $26 million and $29 million, respectively, of charges related to the implementation of our Full Potential plan. Full Potential plan ~~including~~charges in the third quarter of 2022 included charges related to supply chain segmentation of $13 million to position our manufacturing network to align with revenue growth opportunities of our Full Potential plan demand trends and a non-cash loss of $4 million to adjust the valuation allowance related to the U.S. Sheer Hosiery business resulting from an increase in carrying value due to changes in working capital. Full Potential plan charges in the third quarter of 2021 included 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 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-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. 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 C9program.


	Quarters Ended
	October 1, 2022		October 2, 2021
	(dollars in thousands)
Restructuring and other action-related charges:
Full Potential Plan:
Professional services	$	6,020	$	11,283
Supply chain segmentation	13,298		—
Loss on classification of assets held for sale	4,310		—
Technology	2,622		—
Operating model	(18)		16,000
Other	219		1,813
Total included in operating profit	26,451		29,096
Discrete tax benefits	—		11,802
Tax benefit effect on actions	4,493		6,131
Total benefit included in income tax expense	4,493		17,933
Total restructuring and other action-related charges	$	21,958	$	11,163

2933

Table of Contents

~~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~~1, 2022 Compared with Nine Months Ended ~~September 26, 2020~~October 2, 2021


		Nine Months Ended									Nine Months Ended
		October 2, 2021		September 26, 2020		Higher (Lower)		Percent Change			October 1, 2022		October 2, 2021		Higher (Lower)		Percent Change
		(dollars in thousands)									(dollars in thousands)
Net sales	Net sales	$	5,048,891	$	4,438,016	$	610,875	13.8	%	Net sales	$	4,760,364	$	5,048,891	$	(288,527)	(5.7)	%
Cost of sales	Cost of sales	3,064,920		2,934,515		130,405		4.4		Cost of sales	3,041,233		3,064,920		(23,687)		(0.8)
Gross profit	Gross profit	1,983,971		1,503,501		480,470		32.0		Gross profit	1,719,131		1,983,971		(264,840)		(13.3)
Selling, general and administrative expenses	Selling, general and administrative expenses	1,341,809		1,064,328		277,481		26.1		Selling, general and administrative expenses	1,259,921		1,341,809		(81,888)		(6.1)
Operating profit	Operating profit	642,162		439,173		202,989		46.2		Operating profit	459,210		642,162		(182,952)		(28.5)
Other expenses	Other expenses	6,227		15,652		(9,425)		(60.2)		Other expenses	6,088		6,227		(139)		(2.2)
Interest expense, net	Interest expense, net	127,760		120,602		7,158		5.9		Interest expense, net	107,408		127,760		(20,352)		(15.9)
Income from continuing operations before income tax expense	Income from continuing operations before income tax expense	508,175		302,919		205,256		67.8		Income from continuing operations before income tax expense	345,714		508,175		(162,461)		(32.0)
Income tax expense	Income tax expense	55,161		43,008		12,153		28.3		Income tax expense	58,775		55,161		3,614		6.6
Income from continuing operations	Income from continuing operations	453,014		259,911		193,103		74.3		Income from continuing operations	286,939		453,014		(166,075)		(36.7)
Loss from discontinued operations, net of tax		(435,823)		(3,326)		(432,497)		13,003.5
Income (loss) from discontinued operations, net of tax										Income (loss) from discontinued operations, net of tax	3,965		(435,823)		439,788		(100.9)
Net income	Net income	$	17,191	$	256,585	$	(239,394)	(93.3)	%	Net income	$	290,904	$	17,191	$	273,713	1,592.2	%

Net Sales

Net sales ~~increased 14%~~decreased 6% during the nine months of ~~2021~~2022 versus the nine months of ~~2020~~2021 primarily due to the following:

•~~Retailers continuing~~The impact of the ransomware attack to ~~replenish inventory levels as well as strong consumer demand and~~the business;

•Softer point-of-sale trends ~~as stores reopened after temporary closures due to the COVID-19 pandemic~~ and ~~incremental sales partially~~higher retailer inventory levels as a result of ~~higher U.S. government stimulus spending;~~the macroeconomic pressures;

•~~A lower sales comparison~~Global supply chain disruptions resulting in ~~the nine months of 2020 due to COVID-19 pandemic-related shutdowns;~~product delays;

•Ongoing COVID-related pressures on consumer traffic in certain markets in Asia; and

•The ~~favorable~~unfavorable impact from foreign currency exchange rates in our International business of approximately ~~$102~~$127 million.

Partially offset by:

•~~The exit of the PPE business as part of our Full Potential plan, which contributed net sales of $792 million~~Pricing actions taken throughout 2022; and

•Strong consumer demand in the ~~nine months of 2020.~~Americas.

Operating Profit

Operating profit as a percentage of net sales was ~~12.7%~~9.6% for the nine months of ~~2021,~~2022, representing ~~an increase~~a decrease from ~~9.9%~~12.7% in the prior year. Operating margin ~~benefited from fixed~~decreased as a result of lower sales volume, input cost ~~leverage from higher sales and the favorable~~inflation, impact from ~~foreign exchange rates, which more than offset~~the ransomware attack, costs associated with our manufacturing time-out inventory reduction actions, higher transportation and distribution costs and increased Full Potential plan-related investments in brand marketing and ~~higher levels~~

~~Table of Contents~~

~~of inflation. Selling, general~~technology partially offset by pricing actions 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.~~

reductions. Included in operating profit in the nine months of 2022 and 2021 were charges of $38 million and $67 million, respectively, 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 ~~$9 million~~slightly in the nine months of ~~2021~~2022 compared to the same period in ~~2020~~2021 due to lower pension expense ~~and lower~~partially offset by higher funding fees for sales of accounts receivable to financial institutions in ~~2021.~~2022.

Interest Expense – Interest expense was ~~higher~~lower by $7$20 million in the nine months of ~~2021~~2022 compared to the same period in ~~2020, driven by~~2021, primarily due to a ~~higher~~lower weighted average interest rate on our borrowings partially offset by higher weighted average 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.~~2022. Our weighted average interest rate on our outstanding debt was 3.45% for the nine months of 2022, compared to 4.12% for the nine months of ~~2021, compared to 3.90% for the nine months of 2020.~~2021.

Income Tax Expense – Our effective income tax rate was ~~10.9%~~17.0% and ~~14.2%~~10.9% for the nine months of ~~2021~~2022 and ~~2020,~~2021, respectively. The ~~lower~~higher effective tax rate for the nine months of ~~2021~~2022 was primarily due to non-recurring discrete tax charges of $9 million for assessments and adjustments for prior period tax returns and measurement of deferred tax liabilities during the nine months of 2022 versus non-recurring discrete tax benefits of $11 million for the release of reserves for unrecognized tax

Table of Contents

benefits and $4 million for adjustments related to ~~the adjustments of~~ prior ~~year~~period tax returns and approval of certain filings by taxing authorities, partially offset by a discrete charge for changes in valuation allowances of $5 million during the nine months of ~~2021~~2021.

In August 2022, the U.S. enacted the Inflation Reduction Act of 2022 (“IR Act”), which, among other things, introduces a 15% minimum tax based on adjusted financial statement income of certain large corporations with a three year average adjusted financial statement income in excess of $1 billion, a 1% excise tax on the fair market stock repurchases by covered corporations, and several tax incentives to promote clean energy. We are continuing to evaluate the ~~change in jurisdictional mix of income.~~IR Act and its potential impact on future periods and at this time we do not expect the IR Act to have a material impact on our consolidated financial statements.

Discontinued Operations – 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. On March 5, 2022, we completed the sale of the European Innerwear business. See ~~note “Discontinued Operations”~~Note “Assets and Liabilities Held for Sale” 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 estimated fair value less costs of disposal.additional information.

Operating Results by Business Segment — Nine Months Ended October ~~2, 2021~~1, 2022 Compared with Nine Months Ended ~~September 26, 2020~~October 2, 2021


		Net Sales									Net Sales
		Nine Months Ended									Nine Months Ended
		October 2, 2021		September 26, 2020		Higher (Lower)		Percent Change			October 1, 2022		October 2, 2021		Higher (Lower)		Percent Change
		(dollars in thousands)									(dollars in thousands)
Innerwear	Innerwear	$	2,053,702	$	2,309,816	$	(256,114)	(11.1)	%	Innerwear	$	1,889,807	$	2,053,702	$	(163,895)	(8.0)	%
Activewear	Activewear	1,230,691		781,300		449,391		57.5		Activewear	1,178,380		1,230,691		(52,311)		(4.3)
International	International	1,521,667		1,185,718		335,949		28.3		International	1,436,384		1,521,667		(85,283)		(5.6)
Other	Other	242,831		161,182		81,649		50.7		Other	255,793		242,831		12,962		5.3
Total	Total	$	5,048,891	$	4,438,016	$	610,875	13.8	%	Total	$	4,760,364	$	5,048,891	$	(288,527)	(5.7)	%


		Operating Profit and Margin													Operating Profit and Margin
		Nine Months Ended													Nine Months Ended
		October 2, 2021				September 26, 2020				Higher (Lower)		Percent Change			October 1, 2022				October 2, 2021				Higher (Lower)		Percent Change
		(dollars in thousands)													(dollars in thousands)
Innerwear	Innerwear	$	461,237	22.5	%	$	558,075	24.2	%	$	(96,838)	(17.4)	%	Innerwear	$	343,602	18.2	%	$	461,237	22.5	%	$	(117,635)	(25.5)	%
Activewear	Activewear	177,813		14.4		31,925		4.1		145,888		457.0		Activewear	125,332		10.6		177,813		14.4		(52,481)		(29.5)
International	International	235,451		15.5		156,936		13.2		78,515		50.0		International	215,281		15.0		235,451		15.5		(20,170)		(8.6)
Other	Other	22,394		9.2		(12,263)		(7.6)		34,657		NM		Other	9,501		3.7		22,394		9.2		(12,893)		(57.6)
Corporate	Corporate	(254,733)		NM		(295,500)		NM		40,767		(13.8)		Corporate	(234,506)		NM		(254,733)		NM		20,227		(7.9)
Total	Total	$	642,162	12.7	%	$	439,173	9.9	%	$	202,989	46.2	%	Total	$	459,210	9.6	%	$	642,162	12.7	%	$	(182,952)	(28.5)	%

Innerwear

Innerwear net sales decreased ~~11%~~8% compared to the nine months of ~~2020~~2021 primarily due to ~~our exit of the PPE~~ business ~~in 2021~~disruption as a result of the ~~implementation~~ransomware attack in the second quarter of 2022, softer point-of-sale trends, retailer inventory reductions and last year’s one-time sales benefits from retailer restocking and government-stimulus spending partially offset by pricing actions taken and retail space gains in the first quarter of 2022.

Innerwear operating margin was 18.2%, a decrease from 22.5% in the same period a year ago. The operating margin decline resulted from input cost inflation, lower sales volume, manufacturing time-out costs associated with our ~~Full Potential plan. Net~~inventory reduction actions, unfavorable product and channel mix and increased distribution costs resulting from expedited freight to service new retail space gains partially offset by pricing actions and cost reductions.

Activewear

Activewear net sales decreased 4% compared to the nine months of ~~PPE represented $779 million~~2021 primarily due to softer point-of-sale trends primarily related to the Champion brand, retailer inventory levels and business disruption as a result of the ransomware attack in the second quarter of 2022. The net sales decrease was partially offset by growth in the collegiate and printwear channels and pricing actions primarily taken in the third quarter of 2022.

Activewear operating margin was 10.6%, a decrease from 14.4% in the same period a year ago. The operating margin decline resulted from lower sales volume, manufacturing time-out costs associated with our inventory reduction actions, higher

3135

Table of Contents

levels of inflation, unfavorable product mix and increased brand marketing investments partially offset by pricing actions and cost reductions.

International

Net sales in the ~~nine months of 2021~~International segment decreased 6% compared to the nine months of ~~2020. This decrease was~~2021 due to unfavorable foreign currency exchange rates, operational challenges experienced from the ransomware attack during the second quarter of 2022, global supply chain disruptions resulting in product delays in Australia and ongoing COVID-related pressures on consumer traffic in certain markets in Asia partially offset by ~~increases in all of our core apparel categories primarily as a result of a lower sales comparison~~growth in the 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 and incremental sales partially as a result of 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.Americas. 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 4.1% 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 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 favorable~~unfavorable impact of foreign currency exchange rates ofdecreased net sales approximately ~~$102~~$127 million in the nine months of ~~2021.~~2022. International net sales on a constant currency basis, defined as net sales excluding the impact of foreign currency, increased ~~20%~~3%. The impact of foreign currency exchange rates is calculated by applying prior period exchange rates to the current year financial results. ~~The nine months of 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 ~~15.5%~~15.0%, ~~an increase~~a decrease from ~~13.2%~~15.5% in the same period a year ago. ~~Operating~~The decrease in operating margin ~~improvement~~ primarily resulted from ~~fixed cost leverage from~~ higher ~~sales, favorable sales mix~~levels of inflation and input costs, which was partially offset by disciplined expense management during the ~~favorable impact from foreign exchange rates, which more than offset increased investments in brand marketing.~~nine months of 2022.

Other

Other net sales increased primarily due to increased sales from our supply chain to the European Innerwear business partially offset by lower sales at our retail outlets during the nine months of ~~2021 as a result of stores reopening after temporary store closures during~~2022 compared to the nine months of ~~2020 due to the COVID-19 pandemic. Operating margin increased due to the increase in sales volume.~~

2021. We ~~expect to continue~~have continued certain sales from our supply chain to the European Innerwear business on a transitional basis after the sale of the ~~business. Those~~business in the first quarter of 2022. These sales and the related profit are included in Other in all periods presented and have not been eliminated as intercompany transactions in ~~consolidation.~~consolidation for the period when the European Innerwear business was owned by us. See Note “Assets and Liabilities Held for Sale” to our condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q for additional information. Operating margin decreased due to the decrease in sales volume primarily in our retail outlets.

Corporate

Corporate expenses in the nine months of 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~~2022 compared to the ~~same period~~nine months of ~~2020~~2021 primarily due to lower restructuring and other action-related charges and ~~bad debt expense.~~ lower variable compensation costs partially offset by increased information technology costs coupled with expenses, net of expected insurance recoveries, related to the ransomware attack which occurred during the second quarter of 2022. During the nine months ended October 1, 2022, we incurred costs of approximately $16 million, net of expected insurance recoveries, related to the ransomware attack which included $14 million related primarily to supply chain disruptions, which are reflected in the “Cost of sales” line of the Condensed Consolidated Statements of Income and $2 million, net of expected insurance recoveries, related primarily to information technology, legal and consulting fees, which are reflected in the “Selling, general and administrative expenses” line of the Condensed Consolidated Statements of Income. Included in restructuring and other action-related charges within operating profit in the nine months of 2022 and 2021 were $38 million and $67 million, respectively, of charges related to the implementation of our Full Potential plan. Full Potential plan ~~including~~charges in the nine months of 2022 included charges related to supply chain segmentation of $15 million to position our manufacturing network to align with revenue growth opportunities of our Full Potential plan demand trends and a non-cash gain of $7 million to adjust the valuation allowance related to the U.S. Sheer Hosiery business resulting from a decrease in carrying value due to changes in working capital. Full Potential plan charges in the nine months of 2021 included 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 $49 million of supply chain 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 group.

~~C9 Champion~~ ~~mass program and the DKNY intimate apparel license at the end of 2019. Other charges in the nine months of 2020 include action-related costs such as workforce reductions.~~

3236

Table of Contents

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


	Nine Months Ended
	October 1, 2022		October 2, 2021
	(dollars in thousands)
Restructuring and other action-related charges:
Full Potential Plan:
Professional services	$	21,014	$	36,793
Supply chain segmentation	14,587		—
Technology	9,052		—
Impairment of intangible assets	—		7,302
Operating model	(1,112)		17,600
Gain on classification of assets held for sale	(6,558)		—
Other	650		5,458
Total included in operating profit	37,633		67,153
Discrete tax benefits	—		19,097
Tax benefit effect on actions	6,394		12,041
Total benefit included in income tax expense	6,394		31,138
Total restructuring and other action-related charges	$	31,239	$	36,015

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.~~payments and repurchases of our stock.

Based on our current estimate of future earnings and cash flows, we believe we have sufficient cash and available borrowings to support our operations and key business strategies 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 had a negative impact on our business.~~

•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.

~~Table of Contents~~

•~~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

~~Table of Contents~~

~~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 JulyNovember 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~~uncertain economic environment ~~and level of uncertainty created by the COVID-19 pandemic~~ and the associated impact on future earnings, we amended the credit agreement governing 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.~~flexibility. The amendment ~~changed~~effects changes to certain provisions and covenants under the Senior Secured Credit Facility during the period beginning with the fiscal quarter ending December 31, 2022 and continuing through the fiscal quarter ~~ended July 3, 2021, after which our covenants were~~ending December 30, 2023 (such period of time, the “Covenant Relief Period”), including: (a) an increase in the maximum leverage ratio from 4.50 to ~~revert~~1.00 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~~5.25 to ~~their original, pre-amendment levels~~1.00 for the ~~fiscal~~ quarter ended ~~July 3, 2021.~~

~~We believe our financing structure provides~~December 31, 2022, 5.75 to 1.00 for the quarters ending April 1, 2023 through September 30, 2023 and 5.25 to 1.00 for the quarter ending December 30, 2023 reverting back to 4.50 to 1.00 for each quarter after the Covenant Relief Period; (b) a ~~secure base~~reduction of the minimum interest coverage ratio from 3.00 to ~~support our operations~~1.00 to 2.60 to 1.00 for the quarters ending December 31, 2022 through December 30, 2023 with an increase to 2.75 to 1.00 for each quarter after the Covenant Relief Period; (c) a cap on dividend payments of $250,000 which will revert back to the current amounts after the Covenant Relief Period; (d) the addition of two new tiers to the top of the pricing grid if the maximum leverage ratio exceeds 5.00 to 1.00 and ~~key business strategies. As of October 2, 2021,~~5.50 to 1.00; and (e) the 0.50 increase in the maximum leverage ratio resulting from a material permitted acquisition is suspended through the Covenant Relief Period. In conjunction with this amendment, 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~~will transition the ~~terms of our~~ Senior Secured Credit Facility ~~among other financial and non-financial covenants, we are required~~from the London Interbank Offered Rate to ~~maintain~~the Secured Overnight Financing Rate with a minimum interest coverage ratio and a maximum leverage ratio. The interest coverage ratio covenant is the ratio of our EBITDA for the preceding four fiscal quarters to our consolidated total interest expense and the maximum leverage ratio covenant is the ratio 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 to10 basis points credit spread adjustment already included in the Senior Secured Credit Facility.

We After obtaining the debt amendment, we expect to maintain compliance with our covenants for at least one year from the ~~date~~issuance 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 January 2, 2021 or other SEC filings could cause noncompliance.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 our earnings and operating cash flows do not ~~continue~~start to recover as currently estimated by management, this could impact our ability to maintain compliance with our amended 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.

~~We intend to refinance our Senior Secured Credit Facility in the fourth quarter~~Our sources of ~~2021, subject to market conditions. In conjunction with the refinancing, we intend to redeem our 5.375% Senior Notes using proceeds~~liquidity are cash generated from ~~the transaction~~global operations 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 million in the fourth quarter of 2021. Weavailable under our Revolving Loan Facility, our accounts receivable securitization facility (the “ARS Facility”) and our other international credit facilities.

3537

Table of Contents

~~estimate this transaction will result~~We had the following borrowing capacity and available liquidity under our credit facilities as of October 1, 2022:


	As of October 1, 2022
	Borrowing Capacity		Available Liquidity
	(dollars in thousands)
Senior Secured Credit Facility:
Revolving Loan Facility(1)	$	1,000,000	$	560,028
Accounts Receivable Securitization Facility(2)	225,000		13,500
Other international credit facilities	61,310		36,121
Total liquidity from credit facilities	$	1,286,310	$	609,649
Cash and cash equivalents			253,131
Total liquidity			$	862,780

(1)A portion of the Revolving Loan Facility is available to be borrowed in ~~approximately $35~~Euros or Australian dollars.

(2)Borrowing availability under the ARS Facility is subject to a quarterly fluctuating facility limit, not to exceed $225 million, and permitted only to the extent that the face of ~~annual savings in interest expense, with approximately $4 million recognized~~the receivables in the ~~fourth quarter~~collateral pool, net of ~~2021.~~ applicable concentrations, reserves and other deductions, exceeds the outstanding loans.

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

•The COVID-19 pandemic which resulted in supply chain disruptions and inflationary pressures has had, and may continue to have, a negative impact on our business.

•For the nine months ended October 1, 2022, we entered into transactions to repurchase approximately 1.6 million shares of our common stock at a total cost of $25 million including broker’s commissions. At October 1, 2022, the remaining repurchase authorization under our current share repurchase program announced on February 2, 2022 totaled approximately $575 million.

•We have principal and interest ~~expense~~obligations under our debt and ongoing financial covenants under those debt facilities.

•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 $140 million in 2022, including capital expenditures of $90 million within investing cash flow activities and ~~one-time charge are reflected~~cloud computing assets of $50 million within operating cash flow activities. For the nine months ended October 1, 2022, we invested approximately $71 million and $33 million in capital expenditures and cloud computing assets, respectively.

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

•We expect to have no required cash contributions to our U.S. pension plan in 2022 based on a preliminary calculation by our actuary but we may elect to make 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. We have not changed our reinvestment strategy from the prior year with regards to our unremitted foreign earnings and intend to remit foreign earnings totaling $579 million.

Table of Contents

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 1, 2022 and October 2, 2021 was derived from our condensed consolidated interim financial statements.


	Nine Months Ended
	October 1, 2022		October 2, 2021
	(dollars in thousands)
Operating activities	$	(491,682)	$	527,376
Investing activities	(179,336)		(44,404)
Financing activities	435,248		(475,924)
Effect of changes in foreign exchange rates on cash	(71,728)		(27,207)
Change in cash and cash equivalents	(307,498)		(20,159)
Cash and cash equivalents at beginning of year	560,629		910,603
Cash and cash equivalents at end of period	$	253,131	$	890,444

Balances included in the Condensed Consolidated Balance Sheets:
Cash and cash equivalents	$	253,131	$	873,628
Cash and cash equivalents included in current assets held for sale	—		16,816
Cash and cash equivalents at end of period	$	253,131	$	890,444

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 ~~Outlook for~~working capital. As compared to the ~~fourth~~prior year, higher net cash used by operating activities was due to changes in working capital primarily accounts payable, accruals, inventory due to inflationary increases, softer point-of-sale trends and supply chain disruptions, and increased capital investments in our cloud computing assets partially offset by improvement in accounts receivable and lower pension plan contributions in the nine months of 2022. Net cash from operating activities includes a $40 million contribution to our U.S. pension plan made in the first quarter of 2021.

~~Off-Balance Sheet~~Investing Activities

The increase in cash used by investing activities in the nine months of 2022 compared to the nine months of 2021 was primarily the result of the purchase of the Champion trademark for footwear in the United States, Puerto Rico and Canada from Keds, LLC for $103 million, the sale of the European Innerwear business which resulted in an $11 million cash outflow and an increase in capital investments into our business.

Financing Activities

Net cash from financing activities increased in the nine months of 2022 primarily as a result of increased borrowings on our ARS Facility and our Revolving Loan Facility coupled with the repayment of the outstanding balance of Term Loan B in the nine months of 2021, which consisted of a required excess cash flow prepayment of $239 million and a voluntary prepayment of $61 million. Net cash from financing activities in the nine months of 2022 also included shares repurchased at a total cost of $25 million and Term Loan A scheduled payments of $19 million.

Financing Arrangements

In June 2022, we amended the ARS Facility. This amendment primarily increased the fluctuating facility limit to $225 million (previously $175 million) and extended the maturity date to June 2023. Additionally, the amendment changed our interest rate option as defined in the ARS Facility from the rate announced from time to time by PNC Bank, N.A. as its prime rate or the London Interbank Offered Rate to the rate announced from time to time by PNC Bank, N.A. as its prime rate or the Secured Overnight Financing Rate and increased certain receivables to the pledged collateral pool for the facility.

We ~~do not have~~believe our financing structure provides a secure base to support our operations and key business strategies. As of October 1, 2022, we were in compliance with all financial covenants under our credit facilities and other outstanding indebtedness. Under the terms of our Senior Secured Credit Facility, among other financial and non-financial covenants, we are required to maintain a minimum interest coverage ratio and a maximum total debt to EBITDA (earnings before interest, income taxes, depreciation expense and amortization, as computed pursuant to the Senior Secured Credit Facility), or leverage ratio, each of which is defined in the Senior Secured Credit Facility. The method of calculating all of the components used in the covenants is included in the Senior Secured Credit Facility. In November 2022, given the uncertain economic environment and the associated impact on future earnings, we amended our Senior Secured Credit Facility prior to any ~~off-balance sheet arrangements within~~potential covenant violation in order to modify the ~~meaning~~financial covenants and to provide operating flexibility as described in Note “Debt” to our

Table of ~~Item 303(a)(4)~~Contents

condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q. We expect to maintain compliance with our covenants for at least one year from the issuance 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 January 1, 2022 and our Quarterly Report on Form 10-Q for the quarter ended July 2, 2022 or other SEC ~~Regulation S-K.~~filings could cause noncompliance.

For further details regarding our liquidity from our available cash balances and credit facilities see “Cash Requirements and Trends and Uncertainties Affecting Liquidity” above.

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,”~~Policies” to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended January ~~2, 2021.~~1, 2022.

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 consolidated 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 January ~~2, 2021.~~1, 2022. There have been no material changes in these policies from those described in our Annual Report on Form 10-K for the year ended January ~~2, 2021.~~1, 2022.

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 January ~~2, 2021.~~1, 2022.


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 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 Chief Financial Officer concluded that our disclosure controls and procedures were effective as of October ~~2, 2021.~~1, 2022.

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 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.

As previously disclosed, on May 24, 2022, we identified that we had become subject to a ransomware attack impacting certain of our information technology systems and activated our incident response and business continuity plans designed to contain the incident. See Note “Basis of Presentation – Ransomware Attack” to our condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q for additional information. As a result of the ransomware attack, we performed additional tests of controls and manual compensating controls.

PART II

Table of Contents


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.

~~Table of Contents~~


Item 1A.			Risk Factors

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 January 1, 2022 and in Part II, Item 1A, of our Quarterly Report on Form 10-Q for the quarter ended July 2, ~~2021.~~2022. 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 are no material changes to the risk factors previously disclosed, nor have we identified any previously undisclosed risks that could materially adversely affect our business and financial results. Additional risks and uncertainties not presently known to us or that we currently deem to be immaterial also may affect us. The occurrence of any of these known or unknown risks could have a material adverse ultimate impact on our business, financial condition, liquidity or results of operations.


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.~~As previously disclosed on November 23, 2021, Hanesbrands Inc. (the “Company”), along with each of MFB International Holdings S.à r.l. (the “Lux Borrower”) and HBI Australia Acquisition Co. Pty Ltd (the “Australian Borrower” and, together with the Company and the Lux Borrower, the “Borrowers”), entered into the Fifth Amended and Restated Credit Agreement, dated as of November 19, 2021 (as amended from time to time, the “Credit Agreement”), with the various financial institutions and other persons from time to time party to the Credit Agreement as lenders, JPMorgan Chase Bank, N.A., as the administrative agent and the collateral agent.

On November 4, 2022, the Company, along with the other Borrowers, entered into a Second Amendment (the “Second Amendment”) to the Credit Agreement. The Second Amendment effects changes to certain provisions and covenants under the Credit Agreement during the period beginning with the fiscal quarter ending December 31, 2022 and continuing through the fiscal quarter ending December 31, 2023 (such period of time, the “Covenant Relief Period”), including: (a) increases in the maximum consolidated net total leverage ratio to (i) 5.25:1.00 through December 31, 2022, (ii) 5.75:1.00 from January 1, 2023 through September 30, 2023, and (iii) 5.25:1.00 from October 1, 2023 through December 31, 2023 and (b) reduction of the minimum consolidated net interest coverage ratio from 3.00 to 1.00 to 2.60 to 1.00. Following the Covenant Relief Period, (i) the maximum consolidated net total leverage ratio will revert to previous levels and (ii) the minimum consolidated net interest coverage ratio will be reduced from 3:00 to 1.00 to 2.75 to 1.00. In addition, during the Covenant Relief Period, the (i) applicable margin calculated based on the consolidated net total leverage ratio will be up to a maximum of (a) 2.25% for term benchmark loans, daily simple Secured Overnight Financing Rate (“SOFR”) loans and Central Bank rate loans and (b) 1.25% for alternative base rate loans; and (ii) the applicable commitment fee margin will be calculated based on consolidated net total leverage ratio will be up to a maximum of 0.35%. The Second Amendment also contains certain amendments related to the transition of the benchmark rate from London Interbank Offered Rate to SOFR.

From time to time, the financial institutions party to the Credit Agreement or their affiliates have performed, and may in the future perform, various commercial banking, investment banking and other financial advisory services for the Company and its affiliates for which they have received, and will receive, customary fees and expenses. For example, certain lenders under the Credit Agreement and/or their affiliates are parties to the Company’s accounts receivable securitization facility.

3741

Table of Contents

The foregoing description of the Second Amendment is only a summary, does not purport to be complete and is qualified in its entirety by reference to the full text of the Second Amendment, which is filed as Exhibit 10.2 to this Quarterly Report on Form 10-Q, and is incorporated herein by reference. Capitalized terms used herein but not otherwise defined shall have the meanings ascribed to such terms in the Second Amendment or the Credit Agreement, as applicable.

Table of Contents


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., as amended on September 29, 2022 (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)~~September 30, 2022 ).

~~4.1~~						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 U.S. Bank Trustees Limited.

~~4.2~~						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 U.S. Bank Trustees Limited.

~~4.3~~						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 US Bank, National Association.

~~4.4~~						First Supplemental Indenture (to Indenture dated 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.

10.1						~~Australian Revolving Facility~~First Amendment, dated October 31, 2022, to the Fifth Amended and Restated Credit Agreement ~~– First Amending Agreement dated July 13, 2021,~~ among Hanesbrands Inc., MFB International Holdings S.à r.l., HBI ~~Holdings Australasia~~Australia Acquisition Co. Pty Ltd, the ~~Borrowers~~lenders party thereto ~~Westpac Banking Corporation~~from time to time and ~~Westpac New Zealand Limited.~~JPMorgan Chase Bank N.A., as the administrative agent and the collateral agent.

10.2						Second Amendment, dated November 4, 2022, to the Fifth Amended and Restated Credit Agreement among Hanesbrands Inc., MFB International Holdings S.à r.l., HBI Australia Acquisition Co. Pty Ltd, the lenders party thereto from time to time and JPMorgan Chase Bank N.A., as the administrative agent and the collateral agent.

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

31.2						Certification of Michael P. Dastugue, Chief Financial Officer.

32.1						Section 1350 Certification of Stephen B. Bratspies, Chief Executive Officer.

32.2						Section 1350 Certification of Michael P. Dastugue, Chief Financial Officer.

101.INS XBRL						Inline 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						Inline Taxonomy Extension Schema Document

101.CAL XBRL						Inline Taxonomy Extension Calculation Linkbase Document

101.LAB XBRL						Inline Taxonomy Extension Label Linkbase Document

101.PRE XBRL						Inline Taxonomy Extension Presentation Linkbase Document

101.DEF XBRL						Inline 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.

3843

Table of Contents

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/ Michael P. Dastugue
						Michael P. Dastugue Chief Financial Officer (Duly authorized officer and principal financial officer)

Date: November ~~4, 2021~~9, 2022

3944


	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


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

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

Australian Revolving Loan Facility	—	—		—		July 2022
5.375% Senior Notes	5.38%	700,000		700,000		May 2025
4.875% Senior Notes	4.88%	900,000		900,000		May 2026
4.625% Senior Notes	4.63%	900,000		900,000		May 2024
3.5% Senior Notes	3.50%	579,643		610,724		June 2024
Accounts Receivable Securitization Facility	—	—		—		June 2022
Total debt		3,689,018		4,035,724
Less long-term debt issuance costs		24,971		32,354
Less current maturities		37,500		263,936
Total long-term debt		$	3,626,547	$	3,739,434


	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