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 ~~April 2,~~October 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.

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 ~~April 29,~~November 4, 2022, there were ~~348,775,722~~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 AOctober ~~pril~~ ~~2, 202~~1 , 2022 and October 2 ~~and~~ ~~April~~3 , 20 212021	2
	Condensed Consolidated Statements of Comprehensive Income for the quarters ~~ended April~~and nine 2,months ended October 1 , 2022 and ~~April 3, 20~~21October 2 , 2021	3
	Condensed Consolidated Balance Sheets at ~~April~~October 1 , 2022, January 1, 2022 and October 2 ~~2022~~, ~~January 1, 202~~2 ~~and April 3, 20~~212021	4
	Condensed Consolidated Statements of Stockholders’ Equity for the quarters and nine months ended ~~April~~October 1 , 2022 and October 2 ~~2022 and April 3, 20~~21, 2021	5
	Condensed Consolidated Statements of Cash Flows for the ~~quarters~~n ine months ended ~~April~~ 2,October 1 , 2022 and ~~April 3, 20~~21October 2 , 2021	67
	Notes to Condensed Consolidated Financial Statements	78
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2327
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3140
Item 4.	Controls and Procedures	3140

PART II
Item 1.	Legal Proceedings	3141
Item 1A.	Risk Factors	3141
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3141
Item 3.	Defaults Upon Senior Securities	3241
Item 4.	Mine Safety Disclosures	3241
Item 5.	Other Information	3241
Item 6.	Exhibits	3343
Signatures		3444

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 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” 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 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				Quarters Ended				Nine Months Ended
		April 2, 2022		April 3, 2021				October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Net sales	Net sales	$	1,576,156	$	1,508,029		Net sales	$	1,670,741	$	1,789,551	$	4,760,364	$	5,048,891
Cost of sales	Cost of sales	991,978		905,348			Cost of sales	1,107,889		1,089,890		3,041,233		3,064,920
Gross profit	Gross profit	584,178		602,681			Gross profit	562,852		699,661		1,719,131		1,983,971
Selling, general and administrative expenses	Selling, general and administrative expenses	413,666		412,559			Selling, general and administrative expenses	421,408		465,015		1,259,921		1,341,809
Operating profit	Operating profit	170,512		190,122			Operating profit	141,444		234,646		459,210		642,162
Other expenses	Other expenses	987		2,561			Other expenses	3,212		1,811		6,088		6,227
Interest expense, net	Interest expense, net	31,963		44,460			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	137,562		143,101			Income from continuing operations before income tax expense	96,511		191,975		345,714		508,175
Income tax expense	Income tax expense	23,385		14,697			Income tax expense	16,410		15,228		58,775		55,161
Income from continuing operations	Income from continuing operations	114,177		128,404			Income from continuing operations	80,101		176,747		286,939		453,014
Income (loss) from discontinued operations, net of tax	Income (loss) from discontinued operations, net of tax	4,525		(391,666)			Income (loss) from discontinued operations, net of tax	—		(24,970)		3,965		(435,823)
Net income (loss)		$	118,702	$	(263,262)
Net income							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	$	0.33	$	0.37		Continuing operations	$	0.23	$	0.50	$	0.82	$	1.29
Discontinued operations	Discontinued operations	0.01		(1.12)			Discontinued operations	0.00		(0.07)		0.01		(1.24)
Net income (loss)		$	0.34	$	(0.75)
Net income							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	$	0.32	$	0.37		Continuing operations	$	0.23	$	0.50	$	0.82	$	1.29
Discontinued operations	Discontinued operations	0.01		(1.11)			Discontinued operations	0.00		(0.07)		0.01		(1.24)
Net income (loss)		$	0.34	$	(0.75)
Net income							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
April 2,
2022 April 3,
2021
Net income (loss) $ 118,702 $ (263,262)
Other comprehensive income (loss):
Translation adjustments 27,297 (25,201)
Unrealized gain on qualifying cash flow hedges, net of tax of $969 and $(5,176), respectively 3,354 8,540
Unrecognized income from pension and postretirement plans, net of tax of $(1,317) and $(2,049), respectively 4,261 6,735
Total other comprehensive income (loss) 34,912 (9,926)
Comprehensive income (loss) $ 153,614 $ (273,188)


	Quarters Ended				Nine Months Ended
	October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Net income	$	80,101	$	151,777	$	290,904	$	17,191
Other comprehensive income (loss):
Translation adjustments	(76,756)		(42,330)		(171,581)		(78,762)
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	4,022		4,806		12,278		15,873
Total other comprehensive loss	(70,161)		(30,400)		(148,320)		(44,369)
Comprehensive income (loss)	$	9,940	$	121,377	$	142,584	$	(27,178)

See accompanying notes to Condensed Consolidated Financial Statements.

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HANESBRANDS INC.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)


		April 2, 2022		January 1, 2022		April 3, 2021			October 1, 2022		January 1, 2022		October 2, 2021
Assets	Assets							Assets
Cash and cash equivalents	Cash and cash equivalents	$	369,210	$	536,277	$	530,403	Cash and cash equivalents	$	253,131	$	536,277	$	873,628
Trade accounts receivable, net	Trade accounts receivable, net	898,420		894,151		807,738		Trade accounts receivable, net	926,666		894,151		928,039
Inventories	Inventories	1,819,974		1,584,015		1,489,565		Inventories	2,136,314		1,584,015		1,629,506
Other current assets	Other current assets	202,015		186,503		153,358		Other current assets	223,741		186,503		172,617
Current assets held for sale	Current assets held for sale	7,959		327,157		303,045		Current assets held for sale	14,906		327,157		304,124
Total current assets	Total current assets	3,297,578		3,528,103		3,284,109		Total current assets	3,554,758		3,528,103		3,907,914
Property, net	Property, net	443,817		441,401		458,434		Property, net	443,166		441,401		440,804
Right-of-use assets	Right-of-use assets	350,174		363,854		416,136		Right-of-use assets	335,473		363,854		372,212
Trademarks and other identifiable intangibles, net	Trademarks and other identifiable intangibles, net	1,235,276		1,220,170		1,269,932		Trademarks and other identifiable intangibles, net	1,210,581		1,220,170		1,227,457
Goodwill	Goodwill	1,138,667		1,133,095		1,150,138		Goodwill	1,084,581		1,133,095		1,136,173
Deferred tax assets	Deferred tax assets	326,677		327,804		355,826		Deferred tax assets	328,778		327,804		327,196
Other noncurrent assets	Other noncurrent assets	67,520		57,009		54,678		Other noncurrent assets	141,944		57,009		51,049
Total assets	Total assets	$	6,859,709	$	7,071,436	$	6,989,253	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	$	1,204,196	$	1,214,847	$	976,887	Accounts payable	$	1,130,649	$	1,214,847	$	1,239,960
Accrued liabilities	Accrued liabilities	575,911		660,778		571,410		Accrued liabilities	594,333		660,778		718,545
Lease liabilities	Lease liabilities	117,465		109,526		132,127		Lease liabilities	99,405		109,526		122,545

Accounts Receivable Securitization Facility	Accounts Receivable Securitization Facility	135,500		—		—		Accounts Receivable Securitization Facility	211,500		—		—
Current portion of long-term debt	Current portion of long-term debt	25,000		25,000		34,375		Current portion of long-term debt	31,250		25,000		37,500
Current liabilities held for sale	Current liabilities held for sale	7,959		316,902		288,936		Current liabilities held for sale	14,906		316,902		299,498
Total current liabilities	Total current liabilities	2,066,031		2,327,053		2,003,735		Total current liabilities	2,082,043		2,327,053		2,418,048
Long-term debt	Long-term debt	3,325,042		3,326,091		3,649,631		Long-term debt	3,655,889		3,326,091		3,626,547
Lease liabilities - noncurrent	Lease liabilities - noncurrent	258,663		281,852		315,382		Lease liabilities - noncurrent	260,349		281,852		276,595
Pension and postretirement benefits	Pension and postretirement benefits	242,690		248,518		333,460		Pension and postretirement benefits	230,087		248,518		321,323
Other noncurrent liabilities	Other noncurrent liabilities	187,867		185,429		202,564		Other noncurrent liabilities	196,029		185,429		183,723
Total liabilities	Total liabilities	6,080,293		6,368,943		6,504,772		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 — 348,775,722, 349,903,253 and 349,090,472, respectively		3,488		3,499		3,491
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	315,675		315,337		304,090		Additional paid-in capital	328,072		315,337		316,112
Retained earnings	Retained earnings	976,944		935,260		753,785		Retained earnings	1,043,246		935,260		928,293
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(516,691)		(551,603)		(576,885)		Accumulated other comprehensive loss	(699,923)		(551,603)		(611,328)
Total stockholders’ equity	Total stockholders’ equity	779,416		702,493		484,481		Total stockholders’ equity	674,884		702,493		636,569
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	6,859,709	$	7,071,436	$	6,989,253	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 January 1, 2022		349,903	$	3,499	$	315,337	$	935,260	$	(551,603)	$	702,493
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	—	—		—		118,702		—		118,702		Net income	—	—		—		80,101		—		80,101
Dividends ($0.15 per common share)	Dividends ($0.15 per common share)	—	—		—		(53,443)		—		(53,443)		Dividends ($0.15 per common share)	—	—		—		(52,995)		—		(52,995)
Other comprehensive income		—	—		—		—		34,912		34,912
Other comprehensive loss													Other comprehensive loss	—	—		—		—		(70,161)		(70,161)
Stock-based compensation	Stock-based compensation	—	—		5,329		—		—		5,329		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	450	5		(3,564)		—		—		(3,559)		Net exercise of stock options, vesting of restricted stock units and other	123	1		174		—		—		175
Share repurchases		(1,577)	(16)		(1,427)		(23,575)		—		(25,018)
Balances at April 2, 2022		348,776	$	3,488	$	315,675	$	976,944	$	(516,691)	$	779,416
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 loss — — — (263,262) — (263,262)
Dividends ($0.15 per common share) — — — (52,499) — (52,499)
Other comprehensive loss — — — — (9,926) (9,926)
Stock-based compensation — — (1,534) — — (1,534)
Net exercise of stock options, vesting of restricted stock units and other 288 3 (2,259) — — (2,256)
Balances at April 3, 2021 349,090 $ 3,491 $ 304,090 $ 753,785 $ (576,885) $ 484,481


	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.

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


	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
	Shares	Amount
Balances at 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.

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HANESBRANDS INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


		Quarters Ended					Nine Months Ended
		April 2, 2022(1)		April 3, 2021(1)			October 1, 2022(1)		October 2, 2021(1)
Operating activities:	Operating activities:					Operating activities:
Net income (loss)		$	118,702	$	(263,262)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Net income						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:
Depreciation	Depreciation	18,931		24,142		Depreciation	56,140		63,183
Amortization of acquisition intangibles	Amortization of acquisition intangibles	4,847		6,179		Amortization of acquisition intangibles	14,045		15,696
Other amortization	Other amortization	2,508		3,020		Other amortization	8,121		8,610
Impairment of intangible assets and goodwill	Impairment of intangible assets and goodwill	—		163,047		Impairment of intangible assets and goodwill	—		163,047
(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	(6,715)		226,352		(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	1,887		4,580		Amortization of debt issuance costs	5,483		10,250
Other	Other	6,940		(5,835)		Other	11,717		(1,888)
Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Accounts receivable	Accounts receivable	(6,090)		(63,955)		Accounts receivable	(63,003)		(201,925)
Inventories	Inventories	(247,567)		(122,781)		Inventories	(612,544)		(292,465)
Other assets	Other assets	(489)		9,606		Other assets	(71,613)		7,042
Accounts payable	Accounts payable	(310)		109,197		Accounts payable	(22,289)		391,034
Accrued pension and postretirement benefits	Accrued pension and postretirement benefits	24		(38,757)		Accrued pension and postretirement benefits	(1,066)		(40,468)
Accrued liabilities and other	Accrued liabilities and other	(123,857)		(34,587)		Accrued liabilities and other	(101,392)		121,327
Net cash from operating activities	Net cash from operating activities	(231,189)		16,946		Net cash from operating activities	(491,682)		527,376
Investing activities:	Investing activities:					Investing activities:
Capital expenditures	Capital expenditures	(19,337)		(17,804)		Capital expenditures	(70,955)		(55,320)
Purchase of trademarks						Purchase of trademarks	(103,000)		—
Proceeds from sales of assets	Proceeds from sales of assets	19		2,406		Proceeds from sales of assets	259		2,479

Other	Other	(10,272)		1,794		Other	(5,640)		8,437
Net cash from investing activities	Net cash from investing activities	(29,590)		(13,604)		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	(6,250)		(300,000)		Repayments on Term Loan Facilities	(18,750)		(315,625)
Borrowings on Accounts Receivable Securitization Facility	Borrowings on Accounts Receivable Securitization Facility	290,000		—		Borrowings on Accounts Receivable Securitization Facility	1,303,589		—
Repayments on Accounts Receivable Securitization Facility	Repayments on Accounts Receivable Securitization Facility	(154,500)		—		Repayments on Accounts Receivable Securitization Facility	(1,092,089)		—
Borrowings on Revolving Loan Facilities	Borrowings on Revolving Loan Facilities	129,000		—		Borrowings on Revolving Loan Facilities	1,337,500		—
Repayments on Revolving Loan Facilities	Repayments on Revolving Loan Facilities	(109,000)		—		Repayments on Revolving Loan Facilities	(908,500)		—

Borrowings on notes payable	Borrowings on notes payable	21,454		21,106		Borrowings on notes payable	21,454		109,397
Repayments on notes payable	Repayments on notes payable	(21,713)		(20,276)		Repayments on notes payable	(21,713)		(109,597)
Share repurchases	Share repurchases	(25,018)		—		Share repurchases	(25,018)		—
Cash dividends paid	Cash dividends paid	(52,297)		(52,351)		Cash dividends paid	(156,962)		(157,099)

Other	Other	(4,109)		(2,902)		Other	(4,263)		(3,000)
Net cash from financing activities	Net cash from financing activities	67,567		(354,423)		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	1,793		(17,662)		Effect of changes in foreign exchange rates on cash	(71,728)		(27,207)
Change in cash, cash equivalents and restricted cash		(191,419)		(368,743)
Cash, cash equivalents and restricted cash at beginning of year		560,629		910,603
Cash, cash equivalents and restricted cash at end of period		369,210		541,860
Less restricted cash at end of period		—		1,153
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	$	369,210	$	540,707	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	$	369,210	$	530,403	Cash and cash equivalents	$	253,131	$	873,628
Cash and cash equivalents included in current assets held for sale	Cash and cash equivalents included in current assets held for sale	—		10,304		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	$	369,210	$	540,707	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 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 ~~April 2,~~October 1, 2022 and January 1, 2022 were ~~$27,960~~$31,895 and $24,164, respectively. For the ~~quarters~~nine months ended ~~April 2,~~October 1, 2022 and ~~April 3,~~October 2, 2021, right-of-use assets obtained in exchange for lease obligations were ~~$16,035~~$67,588 and ~~$4,755,~~$46,039, respectively.

See accompanying notes to Condensed Consolidated Financial Statements.

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HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements

(amounts in thousands, except per share data)

(unaudited)

(1) Basis of Presentation

These statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and, in accordance with those rules and regulations, do not include all information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Management believes that the disclosures made are adequate for a fair statement of the results of operations, financial condition and cash flows of Hanesbrands Inc. and its consolidated subsidiaries (the “Company” or “Hanesbrands”). In the opinion of management, the condensed consolidated interim financial statements reflect all adjustments, which consist only of normal recurring adjustments, necessary to state fairly the results of operations, financial condition and cash flows for the interim periods presented herein. The preparation of condensed consolidated interim financial statements in conformity with GAAP requires management to make use of estimates and assumptions that affect the reported amounts and disclosures. 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 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.~~year or any future period.

Key Business Strategies

In the first quarter of 2021, the Company announced that it reached the decision to exit its European Innerwear business as part of its strategy to streamline its portfolio under its Full Potential plan and determined that this business met held-for-sale and discontinued operations accounting 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. On November 4, 2021, the Company announced that it reached an agreement to 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 “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 ~~April 2,~~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 ~~of this business during 2022.~~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

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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

Reference Rate Reform

In March 2020, the Financial Accounting Standards Board (“FASB”) issued 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 exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform. The new accounting rules ~~can~~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 and does not currently intend to early adopt the new rules.~~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 ~~Topic 606~~“Revenue from Contracts with Customers (Topic 606)” to

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~~HANESBRANDS INC.~~

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

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

~~(unaudited)~~

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.

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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 isdoes not currently inhave any fair value hedging programs that leverage the ~~process of evaluating~~portfolio layer method, therefore, the ~~impact of adoption of~~Company does not expect the new accounting rules to have an impact on ~~the Company’s~~our near term financial condition, results of operations, cash flows ~~and~~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.

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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 ~~April 2,~~October 1, 2022, January 1, 2022 and ~~April 3,~~October 2, 2021 consist of the following:


		April 2, 2022		January 1, 2022		April 3, 2021			October 1, 2022		January 1, 2022		October 2, 2021
U.S. Sheer Hosiery business - continuing operations	U.S. Sheer Hosiery business - continuing operations	$	7,959	$	5,426	$	—	U.S. Sheer Hosiery business - continuing operations	$	14,906	$	5,426	$	—
European Innerwear business - discontinued operations	European Innerwear business - discontinued operations	—		321,731		303,045		European Innerwear business - discontinued operations	—		321,731		304,124
Total current assets held for sale	Total current assets held for sale	$	7,959	$	327,157	$	303,045	Total current assets held for sale	$	14,906	$	327,157	$	304,124

U.S. Sheer Hosiery business - continuing operations	U.S. Sheer Hosiery business - continuing operations	$	7,959	$	5,426	$	—	U.S. Sheer Hosiery business - continuing operations	$	14,906	$	5,426	$	—
European Innerwear business - discontinued operations	European Innerwear business - discontinued operations	—		311,476		288,936		European Innerwear business - discontinued operations	—		311,476		299,498
Total current liabilities held for sale	Total current liabilities held for sale	$	7,959	$	316,902	$	288,936	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 ~~April 2,~~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. InThe 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 ~~April 2,~~October 1, 2022. In the nine months ended October 1, 2022, the Company ~~recorded~~recognized a non-cash gain of ~~$6,528~~$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 ~~of this business during 2022.~~within the next 12 months.

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~~HANESBRANDS INC.~~

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

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

~~(unaudited)~~

European Innerwear Business - Discontinued Operations

In the first quarter of 2021, the Company announced that it reached the decision to exit its European Innerwear business as part of its strategy to streamline its portfolio under its Full Potential plan and determined that this business met held-for-sale and discontinued operations accounting 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. On November 4, 2021, the Company announced that it had reached an agreement to sell its European Innerwear business to an affiliate of Regent, L.P. and completed the sale on March 5, 2022. Under the agreement, the purchaser received all the assets and operating liabilities of the European Innerwear business. The operations of the European Innerwear business were previously reported primarily in the International segment.

Upon meeting the criteria for held-for-sale classification in the first quarter of ~~2021which~~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 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 ~~quarter~~nine months ended ~~April 3,~~October 2, 2021. In addition, the Company recorded 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, resulting in a non-cash ~~charge~~charges of ~~$226,352~~$30,562 and $266,742 for the quarter and nine months ended ~~April 3,~~October 2, 2021, respectively, as ~~"(Gain) loss~~"Loss on sale of business and classification of assets held for sale" in the summarized discontinued operations financial information. In the ~~quarter~~nine months ended ~~April 2,~~October 1, 2022, the Company recorded the final ~~gain~~loss on the sale of the European Innerwear business of ~~$187~~$373 primarily resulting from changes in working capital balances and foreign exchange rates.

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HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in 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 ~~quarter~~nine months ended ~~April 3,~~October 2, 2021 which is reflected in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statements of Income. This charge 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 and that the Company intends to exit.~~sale.

The Company has continued certain sales from its supply chain to the European Innerwear business on a transitional basis after the sale of the business. 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 “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 are included in “Trade accounts receivable, net” in the Condensed Consolidated Balance Sheets for all periods presented.

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~~HANESBRANDS INC.~~

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

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

~~(unaudited)~~

The operating results of the discontinued operations only reflect revenues and expenses that are directly attributable to the European Innerwear ~~business that are 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				Quarters Ended				Nine Months Ended
		April 2, 2022		April 3, 2021				October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Net sales	Net sales	$	101,314	$	135,845		Net sales	$	—	$	147,529	$	101,314	$	400,880
Cost of sales	Cost of sales	60,415		75,523			Cost of sales	—		75,171		60,415		213,831
Gross profit	Gross profit	40,899		60,322			Gross profit	—		72,358		40,899		187,049
Selling, general and administrative expenses	Selling, general and administrative expenses	54,689		83,392			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			Impairment of intangible assets and goodwill	—		—		—		155,745
(Gain) loss on sale of business and classification of assets held for sale		(187)		226,352
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	(13,603)		(405,167)			Operating loss	—		(23,145)		(14,163)		(444,905)
Other expenses	Other expenses	283		334			Other expenses	—		271		283		885
Interest expense, net	Interest expense, net	10		90			Interest expense, net	—		110		10		269
Loss from discontinued operations before income tax expense		(13,896)		(405,591)
Income tax benefit		(18,421)		(13,925)
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		(18,421)		(10,236)
Net income (loss) from discontinued operations, net of tax	Net income (loss) from discontinued operations, net of tax	$	4,525	$	(391,666)		Net income (loss) from discontinued operations, net of tax	$	—	$	(24,970)	$	3,965	$	(435,823)

1012

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HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

Assets and liabilities of discontinued operations classified as held for sale in the Condensed Consolidated Balance Sheets as of ~~April 2,~~October 1, 2022, January 1, 2022 and ~~April 3,~~October 2, 2021 consist of the following:


		April 2, 2022		January 1, 2022		April 3, 2021			October 1, 2022		January 1, 2022		October 2, 2021
Cash and cash equivalents	Cash and cash equivalents	$	—	$	24,352	$	10,304	Cash and cash equivalents	$	—	$	24,352	$	16,816
Trade accounts receivable, net	Trade accounts receivable, net	—		87,353		80,458		Trade accounts receivable, net	—		87,353		88,684
Inventories	Inventories	—		141,653		106,192		Inventories	—		141,653		127,209
Other current assets	Other current assets	—		21,926		11,190		Other current assets	—		21,926		16,066
Property, net	Property, net	—		62,659		61,763		Property, net	—		62,659		61,898
Right-of-use assets	Right-of-use assets	—		32,603		34,779		Right-of-use assets	—		32,603		33,680
Trademarks and other identifiable intangibles, net	Trademarks and other identifiable intangibles, net	—		205,204		208,601		Trademarks and other identifiable intangibles, net	—		205,204		208,108
Deferred tax assets	Deferred tax assets	—		4,174		8,505		Deferred tax assets	—		4,174		7,990
Other noncurrent assets	Other noncurrent assets	—		4,127		4,860		Other noncurrent assets	—		4,127		4,360
Allowance to adjust assets to estimated fair value, less costs of disposal	Allowance to adjust assets to estimated fair value, less costs of disposal	—		(262,320)		(223,607)		Allowance to adjust assets to estimated fair value, less costs of disposal	—		(262,320)		(260,687)
Total assets of discontinued operations	Total assets of discontinued operations	$	—	$	321,731	$	303,045	Total assets of discontinued operations	$	—	$	321,731	$	304,124

Accounts payable	Accounts payable	$	—	$	84,327	$	62,199	Accounts payable	$	—	$	84,327	$	69,122
Accrued liabilities	Accrued liabilities	—		122,620		120,475		Accrued liabilities	—		122,620		118,076
Lease liabilities	Lease liabilities	—		6,562		9,159		Lease liabilities	—		6,562		8,544
Notes payable	Notes payable	—		329		1,574		Notes payable	—		329		595
Lease liabilities - noncurrent	Lease liabilities - noncurrent	—		27,426		27,038		Lease liabilities - noncurrent	—		27,426		26,536
Pension and postretirement benefits	Pension and postretirement benefits	—		38,325		44,428		Pension and postretirement benefits	—		38,325		42,076
Other noncurrent liabilities	Other noncurrent liabilities	—		31,887		24,063		Other noncurrent liabilities	—		31,887		34,549
Total liabilities of discontinued operations	Total liabilities of discontinued operations	$	—	$	311,476	$	288,936	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				Quarters Ended				Nine Months Ended
		April 2, 2022		April 3, 2021				October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Depreciation	Depreciation	$	—	$	2,608		Depreciation	$	—	$	—	$	—	$	2,608
Amortization	Amortization	$	—	$	1,460		Amortization	$	—	$	—	$	—	$	1,460
Capital expenditures	Capital expenditures	$	715	$	3,335		Capital expenditures	$	—	$	2,085	$	715	$	6,155
Impairment of intangible assets and goodwill	Impairment of intangible assets and goodwill	$	—	$	155,745		Impairment of intangible assets and goodwill	$	—	$	—	$	—	$	155,745
(Gain) loss on sale of business and classification of assets held for sale		$	(187)	$	226,352
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	$	—	$	52		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	$	461	$	1,495		Right-of-use assets obtained in exchange for lease obligations	$	—	$	1,454	$	—	$	4,591

1113

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HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

(4) Revenue Recognition

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


		Quarters Ended				Quarters Ended				Nine Months Ended
		April 2, 2022		April 3, 2021				October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Third-party brick-and-mortar wholesale	Third-party brick-and-mortar wholesale	$	1,126,266	$	1,024,739		Third-party brick-and-mortar wholesale	$	1,200,636	$	1,312,440	$	3,356,547	$	3,570,710
Consumer-directed	Consumer-directed	449,890		483,290			Consumer-directed	470,105		477,111		1,403,817		1,478,181
Total net sales	Total net sales	$	1,576,156	$	1,508,029		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. Third-party brick-and-mortar wholesale revenue also 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.

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		Quarters Ended			Nine Months Ended
		April 2, 2022	April 3, 2021			October 1, 2022	October 2, 2021	October 1, 2022	October 2, 2021
Basic weighted average shares outstanding	Basic weighted average shares outstanding	350,251	351,003		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	7	9		Stock options	—	20	2	17
Restricted stock units	Restricted stock units	1,190	671		Restricted stock units	420	1,157	712	956
Employee stock purchase plan and other	Employee stock purchase plan and other	5	3		Employee stock purchase plan and other	12	3	8	3
Diluted weighted average shares outstanding	Diluted weighted average shares outstanding	351,453	351,686		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		Quarters Ended			Nine Months Ended
		April 2, 2022	April 3, 2021			October 1, 2022	October 2, 2021	October 1, 2022	October 2, 2021
Stock options	Stock options	167	167		Stock options	250	83	250	167
Restricted stock units	Restricted stock units	647	592		Restricted stock units	1,646	48	1,252	40

On ~~April 26,~~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 ~~May 31,~~December 13, 2022 to stockholders of record at the close of business on ~~May 10,~~November 22, 2022.

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HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

On February 2, 2022, the Company’s Board of Directors approved a new share repurchase program for up to $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 a trading 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. The new program replaced the Company’s previous share repurchase program for up to 40,000 shares that was originally approved on February 6, 2020. For the quarter ended ~~April 2,~~October 1, 2022, the Company did not enter into any transactions to repurchase shares under the new program. For the nine months ended October 1, 2022, the Company entered into transactions to repurchase 1,577 shares at a weighted average repurchase price of $15.84 per share under the new program. The shares were repurchased at a total cost of $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 ~~quarter ended April~~expiration of the program on February 2, 2022 or ~~April 3,~~during the quarter or nine months ended October 2, 2021. At ~~April 2,~~October 1, 2022, the remaining repurchase authorization under the current share repurchase program totaled $575,013.

(6) Inventories

Inventories consisted of the following:


		April 2, 2022		January 1, 2022		April 3, 2021			October 1, 2022		January 1, 2022		October 2, 2021
Raw materials	Raw materials	$	84,734	$	68,683	$	74,123	Raw materials	$	90,411	$	68,683	$	71,893
Work in process	Work in process	121,095		110,246		99,619		Work in process	118,573		110,246		103,927
Finished goods	Finished goods	1,614,145		1,405,086		1,315,823		Finished goods	1,927,330		1,405,086		1,453,686
		$	1,819,974	$	1,584,015	$	1,489,565		$	2,136,314	$	1,584,015	$	1,629,506

(7) Debt

Debt consisted of the following:


		Interest Rate as of April 2, 2022	Principal Amount				Maturity Date		Interest Rate as of October 1, 2022	Principal Amount				Maturity Date
			April 2, 2022		January 1, 2022					October 1, 2022		January 1, 2022
Senior Secured Credit Facility:	Senior Secured Credit Facility:							Senior Secured Credit Facility:
Revolving Loan Facility	Revolving Loan Facility	1.69%	$	20,000	$	—	November 2026	Revolving Loan Facility	4.01%	$	429,000	$	—	November 2026
Term Loan A	Term Loan A	1.75%	993,750		1,000,000		November 2026	Term Loan A	4.38%	981,250		1,000,000		November 2026
4.875% Senior Notes	4.875% Senior Notes	4.88%	900,000		900,000		May 2026	4.875% Senior Notes	4.88%	900,000		900,000		May 2026
4.625% Senior Notes	4.625% Senior Notes	4.63%	900,000		900,000		May 2024	4.625% Senior Notes	4.63%	900,000		900,000		May 2024
3.5% Senior Notes	3.5% Senior Notes	3.50%	552,425		568,634		June 2024	3.5% Senior Notes	3.50%	490,100		568,634		June 2024
Accounts Receivable Securitization Facility	Accounts Receivable Securitization Facility	1.25%	135,500		—		June 2022	Accounts Receivable Securitization Facility	3.57%	211,500		—		June 2023
			3,501,675		3,368,634					3,911,850		3,368,634
Less long-term debt issuance costs	Less long-term debt issuance costs		16,133		17,543			Less long-term debt issuance costs		13,211		17,543
Less current maturities	Less current maturities		160,500		25,000			Less current maturities		242,750		25,000
			$	3,325,042	$	3,326,091				$	3,655,889	$	3,326,091

As of ~~April 2,~~October 1, 2022, the Company had ~~$975,824~~$560,028 of borrowing availability under the $1,000,000 Revolving Loan Facility after taking into account ~~$20,000~~$429,000 of USD revolver loans and ~~$4,176~~$10,972 of standby and trade letters of credit issued and outstanding under this facility.

~~Borrowings under the~~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

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HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

Company’s ARS 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 ARS Facility was ~~$150,000~~$225,000 as of ~~April 2,~~October 1, 2022. The Company had ~~$14,500~~$13,500 of borrowing availability under the ARS Facility at ~~April 2,~~October 1, 2022.

The Company had ~~$56,056~~$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 ~~April 2,~~October 1, 2022.

~~Table of Contents~~

~~HANESBRANDS INC.~~

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

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

~~(unaudited)~~

As of ~~April 2,~~October 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, each of which is defined 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 issuance of these financial statements based on its current expectations and forecasts. If economic conditions worsen and the Company’s earnings and operating cash flows do not 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’s effective income tax rate was 17.0% and ~~10.3%~~7.9% for the quarters ended ~~April 2,~~October 1, 2022 and ~~April 3,~~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 ~~April 2,~~ended October 1, 2022 was primarily due to a non-recurring discrete tax ~~benefit~~charges totaling $3,174 for adjustments related to prior period tax returns during the third quarter of 2022 versus discrete tax benefits of $3,814 for the release of uncertain tax benefits and $4,851 for adjustments related to prior period tax returns and approval of certain filings by taxing authorities during the third 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 of reserves for unrecognized tax benefits ~~totaling $7,034,~~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 ~~$3,672~~$4,636 during the ~~quarter ended April 3,~~nine months of 2021.

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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.

(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 January 1, 2022 $ (134,001) $ 5,244 $ (569,161) $ 146,315 $ (551,603)
Amounts reclassified from accumulated other comprehensive loss (13,473) 9,789 5,618 (2,778) (844)
Current-period other comprehensive income (loss) activity 40,770 (7,404) (40) 2,430 35,756
Total other comprehensive income (loss) 27,297 2,385 5,578 (348) 34,912
Balance at April 2, 2022 $ (106,704) $ 7,629 $ (563,583) $ 145,967 $ (516,691)
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 — 5,242 7,085 (3,004) 9,323
Current-period other comprehensive income (loss) activity (25,201) 8,474 1,699 (4,221) (19,249)
Total other comprehensive income (loss) (25,201) 13,716 8,784 (7,225) (9,926)
Balance at April 3, 2021 $ (78,021) $ (12,822) $ (659,946) $ 173,904 $ (576,885)


	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.

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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.

Table of Contents

HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

The Company had the following reclassifications out of AOCI:


Component of AOCI	Component of AOCI	Location of Reclassification into Income	Amount of Reclassification from AOCI				Component of AOCI	Location of Reclassification into Income	Amount of Reclassification from AOCI
			Quarters Ended						Location of Reclassification into Income		Quarters Ended			Nine Months Ended
			April 2, 2022		April 3, 2021						Location of Reclassification into Income	October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Write-off of cumulative translation associated with sale of business	Write-off of cumulative translation associated with sale of business	Income (loss) from discontinued operations, net of tax	$	13,473	$	—						$	—	$	—	$	13,473	$	—

Gain (loss) on forward foreign exchange contracts designated as cash flow hedges	Gain (loss) on forward foreign exchange contracts designated as cash flow hedges	Cost of sales	$	1,612	$	(4,377)				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	(508)		1,208						Income tax	(730)		1,203		(2,008)		3,855
		Income (loss) from discontinued operations, net of tax	(232)		(244)						Income (loss) from discontinued operations, net of tax	—		(876)		(232)		(2,398)
		Net of tax	872		(3,413)						Net of tax	1,786		(4,179)		4,550		(12,704)

Gain (loss) on cross-currency swap contracts designated as cash flow hedges	Gain (loss) on cross-currency swap contracts designated as cash flow hedges	Selling, general and administrative expenses	(9,733)		(557)					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	(1,361)		—						Interest expense, net	(1,669)		(1,187)		(4,710)		(2,205)
		Income tax	1,886		89						Income tax	3,474		996		8,811		773
		Net of tax	(9,208)		(468)						Net of tax	(16,959)		(8,325)		(43,017)		(6,955)

Amortization of deferred actuarial loss and prior service cost	Amortization of deferred actuarial loss and prior service cost	Other expenses	(5,203)		(7,707)					Amortization of deferred actuarial loss and prior service cost	Other expenses	(5,202)		(6,026)		(15,608)		(19,814)
		Income tax	1,370		1,746						Income tax	1,365		1,580		4,102		4,922
		Income (loss) from discontinued operations, net of tax	—		519						Income (loss) from discontinued operations, net of tax	—		(154)		—		424
Pension activity associated with sale of business	Pension activity associated with sale of business	Income (loss) from discontinued operations, net of tax	(460)		—					Pension activity associated with sale of business	Income (loss) from discontinued operations, net of tax	—		—		(460)		—
		Net of tax	(4,293)		(5,442)						Net of tax	(3,837)		(4,600)		(11,966)		(14,468)

Total reclassifications	Total reclassifications		$	844	$	(9,323)				Total reclassifications		$	(19,010)	$	(17,104)	$	(36,960)	$	(34,127)

(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 and Canadian dollar.~~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 its European subsidiaries.


		Hedge Type	April 2, 2022		January 2, 2021			Hedge Type	October 1, 2022		January 1, 2022
U.S. dollar equivalent notional amount of derivative 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	Cash Flow and Mark to Market	$	326,800	$	308,071	Forward foreign exchange contracts	Cash Flow and Mark to Market	$	256,748	$	308,071
Cross-currency swap contracts	Cross-currency swap contracts	Cash Flow	$	352,920	$	352,920	Cross-currency swap contracts	Cash Flow	$	352,920	$	352,920
Cross-currency swap contracts	Cross-currency swap contracts	Net Investment	$	335,940	$	335,940	Cross-currency swap contracts	Net Investment	$	335,940	$	335,940

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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					Balance Sheet Location	Fair Value
			April 2, 2022		January 1, 2022				October 1, 2022		January 1, 2022
Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:						Derivatives designated as hedging instruments:
Forward foreign exchange contracts	Forward foreign exchange contracts	Other current assets	$	1,037	$	2,898	Forward foreign exchange contracts	Other current assets	$	7,337	$	2,898
Cross-currency swap contracts	Cross-currency swap contracts	Other current assets	2,986		974		Cross-currency swap contracts	Other current assets	3,291		974
Forward foreign exchange contracts	Forward foreign exchange contracts	Other noncurrent assets	92		83		Forward foreign exchange contracts	Other noncurrent assets	—		83
Cross-currency swap contracts	Cross-currency swap contracts	Other noncurrent assets	4,585		1,979		Cross-currency swap contracts	Other noncurrent assets	41,709		1,979
Derivatives not designated as hedging instruments:	Derivatives not designated as hedging instruments:						Derivatives not designated as hedging instruments:
Forward foreign exchange contracts	Forward foreign exchange contracts	Other current assets	4,942		5,439		Forward foreign exchange contracts	Other current assets	15,444		5,439
Total derivative assets	Total derivative assets		13,642		11,373		Total derivative assets		67,781		11,373

Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:						Derivatives designated as hedging instruments:
Forward foreign exchange contracts	Forward foreign exchange contracts	Accrued liabilities	(3,381)		(349)		Forward foreign exchange contracts	Accrued liabilities	(164)		(349)
Cross-currency swap contracts	Cross-currency swap contracts	Accrued liabilities	(1,583)		(222)		Cross-currency swap contracts	Accrued liabilities	(1,952)		(222)
Forward foreign exchange contracts	Forward foreign exchange contracts	Other noncurrent liabilities	(329)		(14)		Forward foreign exchange contracts	Other noncurrent liabilities	—		(14)
Cross-currency swap contracts	Cross-currency swap contracts	Other noncurrent liabilities	(14,244)		(11,387)		Cross-currency swap contracts	Other noncurrent liabilities	(51,658)		(11,387)
Derivatives not designated as hedging instruments:	Derivatives not designated as hedging instruments:						Derivatives not designated as hedging instruments:
Forward foreign exchange contracts	Forward foreign exchange contracts	Accrued liabilities	(1,862)		(331)		Forward foreign exchange contracts	Accrued liabilities	(677)		(331)
Total derivative liabilities	Total derivative liabilities		(21,399)		(12,303)		Total derivative liabilities		(54,451)		(12,303)

Net derivative liability			$	(7,757)	$	(930)
Net derivative asset/(liability)							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 ~~April 2,~~October 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 ~~$4,975.~~$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 2721 months.

The effect of derivative instruments designated as cash flow 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					Quarters Ended				Nine Months Ended
		April 2, 2022		April 3, 2021					October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021

Forward foreign exchange contracts	Forward foreign exchange contracts	$	(3,186)	$	8,486			Forward foreign exchange contracts	$	4,828	$	4,827	$	14,321	$	11,921
Cross-currency swap contracts	Cross-currency swap contracts	(4,218)		(12)				Cross-currency swap contracts	(19,159)		(9,971)		(44,981)		(9,266)

Total	Total	$	(7,404)	$	8,474			Total	$	(14,331)	$	(5,144)	$	(30,660)	$	2,655

1620

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								Location of Gain (Loss) Reclassified from AOCI into Income		Amount of Gain (Loss) Reclassified from AOCI into Income
			Quarters Ended										Location of Gain (Loss) Reclassified from AOCI into Income			Quarters Ended										Nine Months Ended
			April 2, 2022			April 3, 2021									Location of Gain (Loss) Reclassified from AOCI into Income					October 1, 2022					October 2, 2021						October 1, 2022						October 2, 2021

Forward foreign exchange contracts(1)	Forward foreign exchange contracts(1)		Cost of sales			$	1,612			$	(4,377)									Forward foreign exchange contracts(1)		Cost of sales					$	2,516					$	(4,506)					$	6,790				$	(14,161)
Forward foreign exchange contracts(1)	Forward foreign exchange contracts(1)		Income (loss) from discontinued operations, net of tax			(307)				(308)									Forward foreign exchange contracts(1)		Income (loss) from discontinued operations, net of tax					—						(1,078)						(307)					(2,929)
Cross-currency swap contracts(1)	Cross-currency swap contracts(1)	Selling, general and administrative expenses		(9,733)				(557)										Cross-currency swap contracts(1)	Selling, general and administrative expenses					(18,764)						(8,134)						(47,118)						(5,523)
Cross-currency swap contracts(1)	Cross-currency swap contracts(1)	Interest expense, net		(1,361)				—										Cross-currency swap contracts(1)	Interest expense, net					(1,669)						(1,187)						(4,710)						(2,205)

Total	Total			$	(9,789)			$	(5,242)								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.

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


		Quarters Ended					Quarters Ended			Nine Months Ended
		April 2, 2022		April 3, 2021				October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Cost of sales	Cost of sales	$	991,978	$	905,348	Cost of sales		$	1,107,889	$	1,089,890	$	3,041,233	$	3,064,920
Selling, general and administrative expenses	Selling, general and administrative expenses	$	413,666	$	412,559	Selling, general and administrative expenses		$	421,408	$	465,015	$	1,259,921	$	1,341,809
Interest expense, net	Interest expense, net	$	31,963	$	44,460	Interest expense, net		$	41,721	$	40,860	$	107,408	$	127,760
Income (loss) from discontinued operations, net of tax	Income (loss) from discontinued operations, net of tax	$	4,525	$	(391,666)	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 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 ~~April 2,~~October 1, 2022 and January 1, 2022, the U.S. dollar equivalent carrying value of Euro-denominated long-term debt designated as a partial European net investment hedge was ~~$220,970~~$196,040 and $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 are as follows:


		Amount of Gain (Loss) Recognized in AOCI				Amount of Gain (Loss) Recognized in AOCI
		Quarters Ended						Quarters Ended			Nine Months Ended
		April 2, 2022		April 3, 2021					October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Euro-denominated long-term debt	Euro-denominated long-term debt	$	4,721	$	19,300		Euro-denominated long-term debt		$	9,109	$	3,966	$	22,872	$	21,722
Cross-currency swap contracts	Cross-currency swap contracts	1,932		7,373			Cross-currency swap contracts		13,383		5,650		29,460		10,957
Total	Total	$	6,653	$	26,673		Total		$	22,492	$	9,616	$	52,332	$	32,679

1721

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								Location of Gain (Loss) Reclassified from AOCI into Income		Amount of Gain (Loss) Reclassified from AOCI into Income
			Quarters Ended										Location of Gain (Loss) Reclassified from AOCI into Income			Quarters Ended									Nine Months Ended
			April 2, 2022			April 3, 2021									Location of Gain (Loss) Reclassified from AOCI into Income				October 1, 2022					October 2, 2021						October 1, 2022					October 2, 2021
Euro-denominated long-term debt	Euro-denominated long-term debt		Income (loss) from discontinued operations, net of tax			$	(13,348)			$	—						Euro-denominated long-term debt			$	—					$	—				$	(13,348)				$	—
Cross-currency swap contracts	Cross-currency swap contracts		Income (loss) from discontinued operations, net of tax			(2,505)				—								Cross-currency swap contracts				—						—					(2,505)					—
Cross-currency swap contracts (amounts excluded from effectiveness testing)	Cross-currency swap contracts (amounts excluded from effectiveness testing)	Interest expense, net		2,012				1,899									Cross-currency swap contracts (amounts excluded from effectiveness testing)	Interest expense, net					2,209						1,870					6,449					5,484
Total	Total			$	(13,841)			$	1,899								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		Quarters Ended				Nine Months Ended
		April 2, 2022	April 3, 2021			October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Income (loss) from discontinued operations, net of tax	Income (loss) from discontinued operations, net of tax	4,525	(391,666)		Income (loss) from discontinued operations, net of tax	$	—	$	(24,970)	$	3,965	$	(435,823)
Interest expense, net (amounts excluded from effectiveness testing)	Interest expense, net (amounts excluded from effectiveness testing)	31,963	44,460		Interest expense, net (amounts excluded from effectiveness testing)	$	41,721	$	40,860	$	107,408	$	127,760

Mark to Market Hedges

Derivatives used in mark to market 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. 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 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					Location of Gain (Loss) Recognized in Income on Derivatives		Quarters Ended			Nine Months Ended
			April 2, 2022		April 3, 2021					Location of Gain (Loss) Recognized in Income on Derivatives	October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Forward foreign exchange contracts	Forward foreign exchange contracts	Cost of sales	$	(4,202)	$	12,995					$	(1,602)	$	6,087	$	1,037	$	24,711
Forward foreign exchange contracts	Forward foreign exchange contracts	Selling, general and administrative expenses	292		2,211				Forward foreign exchange contracts		41		(597)		(145)		2,494
Forward foreign exchange contracts	Forward foreign exchange contracts	Income (loss) from discontinued operations, net of tax	—		2,639				Forward foreign exchange contracts	Income (loss) from discontinued operations, net of tax	—		859		—		4,812
Total	Total		$	(3,910)	$	17,845			Total		$	(1,561)	$	6,349	$	892	$	32,017

1822

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 ~~April 2,~~October 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 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 ~~April 2,~~October 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 ~~April 2,~~October 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 April 2, 2022									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)			Total		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Forward foreign exchange contracts - assets	Forward foreign exchange contracts - assets	$	6,071	$	—	$	6,071	$	—	Forward foreign exchange contracts - assets	$	22,781	$	—	$	22,781	$	—
Cross-currency swap contracts - assets	Cross-currency swap contracts - assets	7,571		—		7,571		—		Cross-currency swap contracts - assets	45,000		—		45,000		—
Forward foreign exchange contracts - liabilities	Forward foreign exchange contracts - liabilities	(5,572)		—		(5,572)		—		Forward foreign exchange contracts - liabilities	(841)		—		(841)		—
Cross-currency swap contracts - liabilities	Cross-currency swap contracts - liabilities	(15,827)		—		(15,827)		—		Cross-currency swap contracts - liabilities	(53,610)		—		(53,610)		—
Total derivative contracts	Total derivative contracts	(7,757)		—		(7,757)		—		Total derivative contracts	13,330		—		13,330		—
Deferred compensation plan liability	Deferred compensation plan liability	(18,030)		—		(18,030)		—		Deferred compensation plan liability	(15,226)		—		(15,226)		—
Total	Total	$	(25,787)	$	—	$	(25,787)	$	—	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)	$	—

1923

Table of Contents

HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, trade accounts receivable and accounts payable approximated fair value as of ~~April 2,~~October 1, 2022 and January 1, 2022. The carrying amount of trade accounts receivable included allowance for doubtful accounts, chargebacks and other deductions of ~~$66,142~~$68,180 and $61,948 as of ~~April 2,~~October 1, 2022 and January 1, 2022, respectively. The fair value of debt, which is classified as a Level 2 liability, was ~~$3,487,963~~$3,690,064 and $3,504,412 as of ~~April 2,~~October 1, 2022 and January 1, 2022, respectively. Debt had a carrying value of ~~$3,501,675~~$3,911,850 and $3,368,634 as of ~~April 2,~~October 1, 2022 and January 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.

(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. Sheer Hosiery business and certain sales from its supply chain and transitional services with the European Innerwear 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.

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

•International primarily includes sales of the Company’s innerwear and activewear products outside the United States, primarily in Australasia, Europe, Asia, Latin America and 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 1, 2022.


		Quarters Ended				Quarters Ended					Nine Months Ended
		April 2, 2022		April 3, 2021			October 1, 2022			October 2, 2021			October 1, 2022			October 2, 2021
Net sales:	Net sales:
Innerwear	Innerwear	$	578,947	$	570,435		Innerwear	$	625,082		$	702,617		$	1,889,807		$	2,053,702
Activewear	Activewear	386,937		364,003			Activewear	461,043			462,499			1,178,380			1,230,691
International	International	510,129		506,261			International	502,066			536,483			1,436,384			1,521,667
Other	Other	100,143		67,330			Other	82,550			87,952			255,793			242,831
Total net sales	Total net sales	$	1,576,156	$	1,508,029		Total net sales	$	1,670,741		$	1,789,551		$	4,760,364		$	5,048,891

2024

Table of Contents

HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)


		Quarters Ended				Quarters Ended				Nine Months Ended
		April 2, 2022		April 3, 2021				October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Segment operating profit:	Segment operating profit:						Segment operating profit:
Innerwear	Innerwear	$	102,146	$	127,417		Innerwear	$	99,797	$	147,651	$	343,602	$	461,237
Activewear	Activewear	48,984		60,594			Activewear	53,491		76,172		125,332		177,813
International	International	89,438		87,180			International	69,890		86,371		215,281		235,451
Other	Other	(671)		1,886			Other	4,839		11,288		9,501		22,394
Total segment operating profit	Total segment operating profit	239,897		277,077			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	(57,228)		(59,823)			General corporate expenses	(52,639)		(50,226)		(174,707)		(164,734)
Restructuring and other action-related charges	Restructuring and other action-related charges	(4,802)		(19,393)			Restructuring and other action-related charges	(26,451)		(29,096)		(37,633)		(67,153)
Amortization of intangibles	Amortization of intangibles	(7,355)		(7,739)			Amortization of intangibles	(7,483)		(7,514)		(22,166)		(22,846)
Total operating profit	Total operating profit	170,512		190,122			Total operating profit	141,444		234,646		459,210		642,162
Other expenses	Other expenses	(987)		(2,561)			Other expenses	(3,212)		(1,811)		(6,088)		(6,227)
Interest expense, net	Interest expense, net	(31,963)		(44,460)			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	$	137,562	$	143,101		Income from continuing operations before income tax expense	$	96,511	$	191,975	$	345,714	$	508,175

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


		Quarters Ended				Quarters Ended							Nine Months Ended
		April 2, 2022		April 3, 2021			October 1, 2022				October 2, 2021				October 1, 2022				October 2, 2021
Cost of sales	Cost of sales	$	499	$	2,807		$	13,102			$	(108)			$	14,133			$	4,599
Selling, general and administrative expenses	Selling, general and administrative expenses	4,303		16,586			Selling, general and administrative expenses		13,349				29,204				23,500				62,554
Total included in operating profit	Total included in operating profit	4,802		19,393			Total included in operating profit		26,451				29,096				37,633				67,153
Income tax expense	Income tax expense	816		11,302			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	$	3,986	$	8,091		Total restructuring and other action-related charges		$	21,958			$	11,163			$	31,239			$	36,015

The components of restructuring and other action-related charges were as follows:


		Quarters Ended				Quarters Ended				Nine Months Ended
		April 2, 2022		April 3, 2021				October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Full Potential Plan:	Full Potential Plan:						Full Potential Plan:
Professional services	Professional services	$	7,908	$	11,706		Professional services	$	6,020	$	11,283	$	21,014	$	36,793
Gain on classification of assets held for sale		(6,528)		—
Operating model		(1,919)		—
Supply chain segmentation	Supply chain segmentation	1,020		—			Supply chain segmentation	13,298		—		14,587		—
Technology	Technology	4,459		—			Technology	2,622		—		9,052		—
Impairment of intangible assets	Impairment of intangible assets	—		7,302			Impairment of intangible assets	—		—		—		7,302
Operating model							Operating model	(18)		16,000		(1,112)		17,600
(Gain) loss on classification of assets held for sale							(Gain) loss on classification of assets held for sale	4,310		—		(6,558)		—
Other	Other	(138)		385			Other	219		1,813		650		5,458
Total included in operating profit	Total included in operating profit	4,802		19,393			Total included in operating profit	26,451		29,096		37,633		67,153
Discrete tax benefits	Discrete tax benefits	—		7,295			Discrete tax benefits	—		11,802		—		19,097
Tax effect on actions		816		4,007
Tax benefit effect on actions							Tax benefit effect on actions	4,493		6,131		6,394		12,041
Total benefit included in income tax expense	Total benefit included in income tax expense	816		11,302			Total benefit included in 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	$	3,986	$	8,091		Total restructuring and other action-related charges	$	21,958	$	11,163	$	31,239	$	36,015

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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 ~~$4,802~~$26,451 and ~~$19,393~~$29,096 of charges related to the implementation of the Company’s Full Potential plan in the quarters ended ~~April 2,~~October 1, 2022 and ~~April 3,~~October 2, 2021, respectively. Full Potential plan charges in the quarter ended ~~April~~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 ~~$6,528,~~$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 ~~quarter~~nine months ended ~~April 3,~~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,

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~~HANESBRANDS INC.~~

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

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

~~(unaudited)~~

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 and that the Company intends to exit.~~sale.

In the third quarter and nine months of 2021, the Company 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 which was ~~included~~reflected in the “Selling, general and administrative expenses” line of the Condensed Consolidated Statements of Income and in the “Operating model” line of the restructuring and other action-related ~~charges.~~charges table above. At January 1, 2022, the accrual for employee termination and other benefits related to the Company’s 2021 voluntary retirement program was $15,688. ~~The~~During the quarter and nine months ended October 1, 2022, the Company ~~made~~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 1, 2022, benefit payments and other adjustments of ~~$3,066 during the quarter ended April 2, 2022,~~$12,070, have been made, resulting in an ending accrual for the actions noted above of ~~$12,622~~$10,788 which is included in the “Accrued liabilities” line of the Condensed Consolidated Balance Sheets at ~~April 2,~~October 1, 2022.

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

This management’s discussion and analysis of financial condition and results of operations, or MD&A, contains forward-looking statements that involve risks and uncertainties. Please see “Forward-Looking Statements” in this Quarterly Report on Form 10-Q for a discussion of the uncertainties, risks and assumptions associated with these statements. This discussion should be read in conjunction with our historical financial statements and related notes thereto and the other disclosures contained elsewhere in this Quarterly Report on Form 10-Q. The unaudited condensed consolidated interim financial statements and notes included herein should be read in conjunction with our audited consolidated financial statements and notes for the year ended January 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, 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 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, Australasia, Europe and Asia under some of the world’s strongest apparel brands, including Hanes, Champion, Bonds, Bali, Maidenform, Playtex, Bras N Things, JMS/Just My Size, Alternative, Berlei, Wonderbra, Gear for Sports and Comfortwash. We design, manufacture, source and sell a broad range of basic apparel such as T-shirts, bras, panties, shapewear, underwear, socks 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, U.S. Sheer Hosiery business and certain sales from our supply chain to the European Innerwear business which was sold on March 5, 2022. ~~In the fourth quarter of 2021, we 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. 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.

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. Our ~~multi-year growth strategy (“~~Full Potential ~~plan”)~~plan 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, 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 first quarter of 2021, we announced that we reached the decision to exit our European Innerwear business as part of our strategy to streamline our portfolio under our Full Potential plan and determined that this business met held-for-sale and discontinued operations accounting 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 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 “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.

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In addition, in the fourth quarter of 2021, we 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 ~~April 2,~~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 ~~of this business during 2022.~~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 had become subject to a ransomware attack and activated our incident response and business continuity plans designed to 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 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 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. 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 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.

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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, as described in more detail under “Condensed Consolidated Results of Operations - ~~First~~Third Quarter Ended ~~April 2,~~October 1, 2022 Compared with ~~First~~Third Quarter Ended ~~April 3,~~October 2, 2021” and “Condensed Consolidated Results of Operations - Nine Months Ended October 1, 2022 Compared with Nine Months Ended October 2, 2021” below, primarily through reduced traffic and closures of Company-operated and third-party retail locations ~~for portions of the first quarter of 2021~~ in certain markets, ~~and~~ global supply chain disruptions and higher levels of inflation ~~in both periods~~ due to factory disruptions, port congestion, transportation delays as well as labor and container shortages which resulted in higher operating ~~costs and higher levels of inflation.~~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~~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 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, 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 of 2022

We estimate our 2022 guidance as follows:

•Net sales of approximately ~~$7.00~~$6.16 billion to ~~$7.15~~$6.21 billion, net of approximately ~~$125~~$196 million of unfavorable foreign currency exchange impact;

•Operating profit of approximately ~~$780~~$512 million to ~~$850~~$542 million, net of approximately ~~$17~~$26 million of unfavorable foreign currency exchange impact;

•Full Potential plan-related charges of approximately ~~$60~~$55 million included in operating profit;

•Interest expense and other expenses of approximately ~~$148~~$167 million combined;

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

•Diluted earnings per share from continuing operations of approximately ~~$1.50~~$0.82 to ~~$1.67;~~$0.89;

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

•Capital investments of approximately $140 million, including capital expenditures of ~~approximately $150~~$90 million ~~to $175 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.

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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, transportation delays as well as labor and container shortages may negatively impact product availability, revenue growth and gross margins. We ~~would~~will work to mitigate the impact of the global supply chain disruptions 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.

~~Highlights~~Key Financial Results from the ~~First~~Third Quarter Ended ~~April 2,~~October 1, 2022

Key financial ~~highlights~~results are as follows:

•Total net sales in the ~~first~~third quarter of 2022 were ~~$1.58~~$1.67 billion, compared with ~~$1.51~~$1.79 billion in the same period of 2021, representing a ~~5% increase.~~7% decrease.

•Operating profit decreased ~~10.3%~~40% to ~~$170.5~~$141 million in the ~~first~~third quarter of 2022, compared with ~~$190.1~~$235 million in the same period of 2021. As a percentage of sales, operating profit was ~~10.8%~~8.5% in the ~~first~~third quarter of 2022 compared to ~~12.6%~~13.1% in the same period of 2021.

•Diluted earnings per share from continuing operations was ~~$0.32~~$0.23 and ~~$0.37~~$0.50 in the ~~first~~third quarters of 2022 and 2021, respectively.

•~~As part of our strategy to streamline our portfolio under our Full Potential plan, we sold our European Innerwear business on March 5, 2022.~~

•~~We repurchased approximately 1.6 million shares at a weighted average repurchase price of $15.84 per share. The shares were repurchased at a total cost of $25 million including broker’s commissions.~~

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Condensed Consolidated Results of Operations — ~~First~~Third Quarter Ended ~~April 2,~~October 1, 2022 Compared with ~~First~~Third Quarter Ended ~~April 3,~~October 2, 2021


		Quarters Ended									Quarters Ended
		April 2, 2022		April 3, 2021		Higher (Lower)		Percent Change			October 1, 2022		October 2, 2021		Higher (Lower)		Percent Change
		(dollars in thousands)									(dollars in thousands)
Net sales	Net sales	$	1,576,156	$	1,508,029	$	68,127	4.5	%	Net sales	$	1,670,741	$	1,789,551	$	(118,810)	(6.6)	%
Cost of sales	Cost of sales	991,978		905,348		86,630		9.6		Cost of sales	1,107,889		1,089,890		17,999		1.7
Gross profit	Gross profit	584,178		602,681		(18,503)		(3.1)		Gross profit	562,852		699,661		(136,809)		(19.6)
Selling, general and administrative expenses	Selling, general and administrative expenses	413,666		412,559		1,107		0.3		Selling, general and administrative expenses	421,408		465,015		(43,607)		(9.4)
Operating profit	Operating profit	170,512		190,122		(19,610)		(10.3)		Operating profit	141,444		234,646		(93,202)		(39.7)
Other expenses	Other expenses	987		2,561		(1,574)		(61.5)		Other expenses	3,212		1,811		1,401		77.4
Interest expense, net	Interest expense, net	31,963		44,460		(12,497)		(28.1)		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	137,562		143,101		(5,539)		(3.9)		Income from continuing operations before income tax expense	96,511		191,975		(95,464)		(49.7)
Income tax expense	Income tax expense	23,385		14,697		8,688		59.1		Income tax expense	16,410		15,228		1,182		7.8
Income from continuing operations	Income from continuing operations	114,177		128,404		(14,227)		(11.1)		Income from continuing operations	80,101		176,747		(96,646)		(54.7)
Income (loss) from discontinued operations, net of tax		4,525		(391,666)		396,191		(101.2)
Net income (loss)		$	118,702	$	(263,262)	$	381,964	(145.1)	%
Loss from discontinued operations, net of tax										Loss from discontinued operations, net of tax	—		(24,970)		24,970		(100.0)
Net income										Net income	$	80,101	$	151,777	$	(71,676)	(47.2)	%

Net Sales

Net sales ~~increased 5%~~decreased 7% during the ~~first~~third quarter of 2022 versus the ~~first~~third quarter of 2021 primarily due to the following:

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

~~Partially offset by:~~

•~~Global supply chain disruptions resulting in product delays;~~macroeconomic pressures;

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

•The unfavorable impact from foreign currency exchange rates in our International business of approximately ~~$30~~$59 million.

Partially offset by:

•Pricing actions taken throughout 2022.

Operating Profit

Operating profit as a percentage of net sales was ~~10.8%~~8.5% during the ~~first~~third quarter of 2022, representing a decrease from ~~12.6%~~13.1% in the prior year. Operating margin decreased as a result of ~~inflationary pressures,~~input cost inflation, lower sales volume, manufacturing time-out costs associated with our inventory reduction actions and higher transportation ~~and distribution~~ costs ~~and increased Full Potential-related investments in brand marketing and technology~~ partially offset by ~~cost reductions,~~ pricing actions and ~~favorable sales mix.~~cost reductions. Included in operating profit in the ~~first~~third quarter of 2022 and 2021 were charges of $5$26 million and ~~$19~~$29 million, respectively, related to the implementation of our Full Potential plan.

Other Highlights

Other Expenses – Other expenses ~~decreased $2~~increased $1 million in the ~~first~~third quarter of 2022 compared to the ~~first~~third quarter of 2021 due to higher funding fees for sales of accounts receivable to financial institutions in 2022 offset by lower pension expense in 2022.

Interest Expense – Interest expense was ~~lower~~higher by ~~$12~~$1 million in the ~~first~~third quarter of 2022 compared to the ~~first~~third quarter of 2021 primarily due to ~~lower~~higher weighted average outstanding debt balances ~~and~~partially offset by a lower weighted average interest rate on our borrowings during the ~~first~~third quarter of 2022 compared to the ~~first~~third quarter of 2021. Our weighted average interest rate on our outstanding debt was ~~3.53%~~4.08% for the ~~first~~third quarter of 2022 compared to ~~4.07%~~4.12% for the ~~first~~third quarter of 2021.

Income Tax Expense – Our effective income tax rate was 17.0% and ~~10.3%~~7.9% for the ~~first~~third quarters of 2022 and 2021, respectively. The higher effective tax rate for the ~~first~~third quarter of 2022 was primarily due to a non-recurring discrete tax ~~benefit~~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 ~~reserves for unrecognized~~uncertain tax benefits and $5 million for adjustments related to prior period tax returns and approval of ~~$7 million, partially offset~~certain filings by ~~a discrete charge for changes in valuation allowances of $4 million~~taxing authorities during the ~~first~~third quarter of 2021.

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corporations, and several tax incentives to promote clean energy. We are continuing to evaluate the 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 “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.

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Operating Results by Business Segment — ~~First~~Third Quarter Ended ~~April 2,~~October 1, 2022 Compared with ~~First~~Third Quarter Ended ~~April 3,~~October 2, 2021


		Net Sales									Net Sales
		Quarters Ended									Quarters Ended
		April 2, 2022		April 3, 2021		Higher (Lower)		Percent Change			October 1, 2022		October 2, 2021		Higher (Lower)		Percent Change
		(dollars in thousands)									(dollars in thousands)
Innerwear	Innerwear	$	578,947	$	570,435	$	8,512	1.5	%	Innerwear	$	625,082	$	702,617	$	(77,535)	(11.0)	%
Activewear	Activewear	386,937		364,003		22,934		6.3		Activewear	461,043		462,499		(1,456)		(0.3)
International	International	510,129		506,261		3,868		0.8		International	502,066		536,483		(34,417)		(6.4)
Other	Other	100,143		67,330		32,813		48.7		Other	82,550		87,952		(5,402)		(6.1)
Total	Total	$	1,576,156	$	1,508,029	$	68,127	4.5	%	Total	$	1,670,741	$	1,789,551	$	(118,810)	(6.6)	%


		Operating Profit and Margin													Operating Profit and Margin
		Quarters Ended													Quarters Ended
		April 2, 2022				April 3, 2021				Higher (Lower)		Percent Change			October 1, 2022				October 2, 2021				Higher (Lower)		Percent Change
		(dollars in thousands)													(dollars in thousands)
Innerwear	Innerwear	$	102,146	17.6	%	$	127,417	22.3	%	$	(25,271)	(19.8)	%	Innerwear	$	99,797	16.0	%	$	147,651	21.0	%	$	(47,854)	(32.4)	%
Activewear	Activewear	48,984		12.7		60,594		16.6		(11,610)		(19.2)		Activewear	53,491		11.6		76,172		16.5		(22,681)		(29.8)
International	International	89,438		17.5		87,180		17.2		2,258		2.6		International	69,890		13.9		86,371		16.1		(16,481)		(19.1)
Other	Other	(671)		(0.7)		1,886		2.8		(2,557)		(135.6)		Other	4,839		5.9		11,288		12.8		(6,449)		(57.1)
Corporate	Corporate	(69,385)		NM		(86,955)		NM		17,570		(20.2)		Corporate	(86,573)		NM		(86,836)		NM		263		(0.3)
Total	Total	$	170,512	10.8	%	$	190,122	12.6	%	$	(19,610)	(10.3)	%	Total	$	141,444	8.5	%	$	234,646	13.1	%	$	(93,202)	(39.7)	%

Innerwear

Innerwear net sales ~~increased more than 1%~~decreased 11% compared to the ~~first~~third quarter of 2021 primarily due to softer point-of-sale trends and retailer inventory reductions as a result of the macroeconomic pressures partially offset by pricing actions taken and retail space gains ~~a positive mix and~~in the ~~partial-quarter benefit~~first quarter of a price increase partially offset by last year’s one-time sales benefits from retailer restocking and government stimulus. This increase includes sales growth in our women’s, men’s and socks product categories.2022.

Innerwear operating margin was ~~17.6%~~16.0%, a decrease from ~~22.3%~~21.0% in the same period a year ago. The operating margin decline resulted from ~~inflationary pressures, increased investments in brand marketing~~input cost inflation, lower sales volume, manufacturing time-out costs associated with our inventory reduction actions and ~~increased distribution costs resulting from expedited freight to service new retail space gains~~unfavorable product mix partially offset by ~~increased sales volume, price increases~~pricing actions and ~~business mix.~~cost reductions.

Activewear

Activewear net sales ~~increased 6%~~decreased 0.3% compared to the ~~first~~third quarter of 2021 due to softer point-of-sale trends and higher inventory levels at retail as a result of the macroeconomic pressures primarily ~~driven~~related to the Champion brand. The net sales decrease was partially offset by growth in the collegiate ~~channel. Net sales~~and printwear channels and pricing actions primarily taken in the ~~Champion~~ brand within the Activewear segment were consistent with the same period a year ago despite being negatively impacted by global supply chain disruptions resulting in product delays and unfulfilled customer orders.third quarter of 2022.

Activewear operating margin was ~~12.7%~~11.6%, a decrease from ~~16.6%~~16.5% in the same period a year ago. The operating margin decline resulted from higher levels of inflation, ~~merchandise~~manufacturing time-out costs associated with our inventory reduction actions and unfavorable product mix ~~and increased brand marketing investments~~ partially offset by ~~improvement in our fixed~~pricing actions and cost ~~leverage from higher sales.~~reductions.

International

Net sales in the International segment ~~increased 1% driven by growth in Europe,~~decreased 6% compared to the Americas and certain markets in Asia, including China, partially offset by global supply chain disruptions resulting in product delays in Australia, ongoing COVID-related pressures on consumer traffic in certain markets in Asia, particularly Japan, andthird quarter of 2021 due to unfavorable foreign currency exchange rates. The unfavorable impact of foreign currency exchange rates decreased net sales approximately ~~$30~~$59 million in the ~~first~~third quarter of 2022. International net sales on a constant currency basis, defined as net sales excluding the

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impact of foreign currency, increased ~~6.8%~~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 increase in net sales was partially offset by Champion declines in certain Asian markets.

International operating margin was ~~17.5%~~13.9%, ~~an increase~~a decrease from ~~17.2%~~16.1% in the same period a year ago. The ~~increase~~decrease in operating margin primarily resulted from ~~fixed cost leverage from~~ higher ~~sales in Europe,~~levels of inflation and input costs, which was partially offset by disciplined expense management during the ~~Americas and certain markets in Asia.~~

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quarter.

Other

Other net sales ~~increased~~decreased primarily ~~due to increased sales from our supply chain to the European Innerwear business partially offset by lower sales~~as a result of decreased traffic at our retail outlets ~~during~~in the ~~first~~third quarter of 2022 compared to the ~~first~~third quarter of 2021. Operating margin decreased due to the decrease in sales volume primarily in our retail outlets.

We have continued certain sales from our supply chain to the European Innerwear business on a transitional basis after the sale of the business. 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.

Corporate

Corporate expenses were slightly lower in the third quarter of 2022 compared to the third quarter of 2021 primarily due to lower variable compensation costs and lower restructuring and other action-related 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 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.


	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

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Condensed Consolidated Results of Operations — Nine Months Ended October 1, 2022 Compared with Nine Months Ended October 2, 2021


	Nine Months Ended
	October 1, 2022		October 2, 2021		Higher (Lower)		Percent Change
	(dollars in thousands)
Net sales	$	4,760,364	$	5,048,891	$	(288,527)	(5.7)	%
Cost of sales	3,041,233		3,064,920		(23,687)		(0.8)
Gross profit	1,719,131		1,983,971		(264,840)		(13.3)
Selling, general and administrative expenses	1,259,921		1,341,809		(81,888)		(6.1)
Operating profit	459,210		642,162		(182,952)		(28.5)
Other expenses	6,088		6,227		(139)		(2.2)
Interest expense, net	107,408		127,760		(20,352)		(15.9)
Income from continuing operations before income tax expense	345,714		508,175		(162,461)		(32.0)
Income tax expense	58,775		55,161		3,614		6.6
Income from continuing operations	286,939		453,014		(166,075)		(36.7)
Income (loss) from discontinued operations, net of tax	3,965		(435,823)		439,788		(100.9)
Net income	$	290,904	$	17,191	$	273,713	1,592.2	%

Net Sales

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

•The impact of the ransomware attack to the business;

•Softer point-of-sale trends and higher retailer inventory levels as a result of the macroeconomic pressures;

•Global supply chain disruptions resulting in product delays;

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

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

Partially offset by:

•Pricing actions taken throughout 2022; and

•Strong consumer demand in the Americas.

Operating Profit

Operating profit as a percentage of net sales was 9.6% for the nine months of 2022, representing a decrease from 12.7% in the prior year. Operating margin decreased as a result of lower sales volume, input cost inflation, impact from 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 technology partially offset by pricing actions and cost 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.

Other Highlights

Other Expenses – Other expenses decreased slightly in the nine months of 2022 compared to the same period in 2021 due to lower pension expense partially offset by higher funding fees for sales of accounts receivable to financial institutions in 2022.

Interest Expense – Interest expense was lower by $20 million in the nine months of 2022 compared to the same period in 2021, primarily due to a lower weighted average interest rate on our borrowings partially offset by higher weighted average outstanding debt balances during the nine months of 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.

Income Tax Expense – Our effective income tax rate was 17.0% and 10.9% for the nine months of 2022 and 2021, respectively. The higher effective tax rate for the nine months of 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

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benefits and $4 million 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 $5 million during the nine months of 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 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.

DiscontinuedOperations – The results of our discontinued operations include the operations of our European Innerwear business which we reached the decision to exit at the end of the first quarter of 2021 in connection with our Full Potential plan. On March 5, 2022, we completed the sale of the European Innerwear business. 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 Results by Business Segment — Nine Months Ended October 1, 2022 Compared with Nine Months Ended October 2, 2021


	Net Sales
	Nine Months Ended
	October 1, 2022		October 2, 2021		Higher (Lower)		Percent Change
	(dollars in thousands)
Innerwear	$	1,889,807	$	2,053,702	$	(163,895)	(8.0)	%
Activewear	1,178,380		1,230,691		(52,311)		(4.3)
International	1,436,384		1,521,667		(85,283)		(5.6)
Other	255,793		242,831		12,962		5.3
Total	$	4,760,364	$	5,048,891	$	(288,527)	(5.7)	%


	Operating Profit and Margin
	Nine Months Ended
	October 1, 2022				October 2, 2021				Higher (Lower)		Percent Change
	(dollars in thousands)
Innerwear	$	343,602	18.2	%	$	461,237	22.5	%	$	(117,635)	(25.5)	%
Activewear	125,332		10.6		177,813		14.4		(52,481)		(29.5)
International	215,281		15.0		235,451		15.5		(20,170)		(8.6)
Other	9,501		3.7		22,394		9.2		(12,893)		(57.6)
Corporate	(234,506)		NM		(254,733)		NM		20,227		(7.9)
Total	$	459,210	9.6	%	$	642,162	12.7	%	$	(182,952)	(28.5)	%

Innerwear

Innerwear net sales decreased 8% compared to the nine months of 2021 primarily due to business disruption as a result of the 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 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 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

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

International

Net sales in the International segment decreased 6% compared to the nine months of 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 growth in the Americas. The unfavorable impact of foreign currency exchange rates decreased net sales approximately $127 million in the nine months of 2022. International net sales on a constant currency basis, defined as net sales excluding the impact of foreign currency, increased 3%. The impact of foreign currency exchange rates is calculated by applying prior period exchange rates to the current year financial results.

International operating margin was 15.0%, a decrease from 15.5% in the same period a year ago. The decrease in operating margin primarily resulted from higher levels of inflation and input costs, which was partially offset by disciplined expense management during the 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 2022 compared to the nine months of 2021. We have continued certain sales from our supply chain to the European Innerwear business on a transitional basis after the sale of the 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 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 and U.S. Sheer Hosiery business.~~outlets.

Corporate

Corporate expenses were lower in the ~~first quarter~~nine months of 2022 compared to the ~~first quarter~~nine months of 2021 primarily due to lower restructuring and other action-related ~~charges.~~ charges and 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 ~~first quarter~~nine months of 2022 and 2021 were $5$38 million and ~~$19~~$67 million, respectively, of charges related to the implementation of our Full Potential plan. Full Potential plan charges in the ~~first quarter~~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 ~~first quarter~~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 and that we intend to exit.~~group.

Quarters Ended
April 2,
2022 April 3,
2021
(dollars in thousands)
Restructuring and other action-related charges:
Full Potential Plan:
Professional services $ 7,908 $ 11,706
Gain on classification of assets held for sale (6,528) —
Operating model (1,919) —
Supply chain segmentation 1,020 —
Technology 4,459 —
Impairment of intangible assets — 7,302
Other (138) 385
Total included in operating profit $ 4,802 $ 19,393
Discrete tax benefits — 7,295
Tax effect on actions 816 4,007
Total benefit included in income tax expense 816 11,302
Total restructuring and other action-related charges $ 3,986 $ 8,091

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	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, ~~repurchases of our stock,~~ 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.

In November 2022, given the uncertain economic environment 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. 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, we will transition the Senior Secured Credit Facility from the London Interbank Offered Rate to the Secured Overnight Financing Rate with a 10 basis points credit spread adjustment already included in the Senior Secured Credit Facility. After obtaining the debt amendment, 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. If economic conditions worsen and our earnings and operating cash flows do not 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.

Our sources of liquidity are cash generated from global operations and cash available under our Revolving Loan Facility, our ~~Accounts Receivable Securitization Facility~~accounts receivable securitization facility (the “ARS Facility”) and our other international credit facilities.

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We had the following borrowing capacity and available liquidity under our credit facilities as of ~~April 2,~~October 1, 2022:


		As of April 2, 2022					As of October 1, 2022
		Borrowing Capacity		Available Liquidity			Borrowing Capacity		Available Liquidity
		(dollars in thousands)					(dollars in thousands)
Senior Secured Credit Facility:	Senior Secured Credit Facility:					Senior Secured Credit Facility:
Revolving Loan Facility(1)	Revolving Loan Facility(1)	$	1,000,000	$	975,824	Revolving Loan Facility(1)	$	1,000,000	$	560,028
Accounts Receivable Securitization Facility(2)	Accounts Receivable Securitization Facility(2)	150,000		14,500		Accounts Receivable Securitization Facility(2)	225,000		13,500
Other international credit facilities	Other international credit facilities	75,803		56,056		Other international credit facilities	61,310		36,121
Total liquidity from credit facilities	Total liquidity from credit facilities	$	1,225,803	$	1,046,380	Total liquidity from credit facilities	$	1,286,310	$	609,649
Cash and cash equivalents	Cash and cash equivalents			369,210		Cash and cash equivalents			253,131
Total liquidity	Total liquidity			$	1,415,590	Total liquidity			$	862,780

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

(2)Borrowing availability under the ~~Accounts Receivable Securitization~~ARS Facility is subject to a quarterly fluctuating facility limit, not to exceed ~~$175~~$225 million, and 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.

The 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 ~~quarter~~nine months ended ~~April 2,~~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 ~~April 2,~~October 1, 2022, the remaining repurchase authorization under our current share repurchase program announced on February 2, 2022 totaled approximately $575 million.

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

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

•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 ~~$150 million to $175~~$140 million in ~~2022.~~2022, including capital expenditures of $90 million within investing cash flow activities and 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.

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Sources and Uses of Our Cash

The information presented below regarding the sources and uses of our cash flows for the ~~quarters~~nine months ended ~~April 2,~~October 1, 2022 and ~~April 3,~~October 2, 2021 was derived from our condensed consolidated interim financial statements.


		Quarters Ended					Nine Months Ended
		April 2, 2022		April 3, 2021			October 1, 2022		October 2, 2021
		(dollars in thousands)					(dollars in thousands)
Operating activities	Operating activities	$	(231,189)	$	16,946	Operating activities	$	(491,682)	$	527,376
Investing activities	Investing activities	(29,590)		(13,604)		Investing activities	(179,336)		(44,404)
Financing activities	Financing activities	67,567		(354,423)		Financing activities	435,248		(475,924)
Effect of changes in foreign exchange rates on cash	Effect of changes in foreign exchange rates on cash	1,793		(17,662)		Effect of changes in foreign exchange rates on cash	(71,728)		(27,207)
Change in cash, cash equivalents and restricted cash		(191,419)		(368,743)
Cash, cash equivalents and restricted cash at beginning of year		560,629		910,603
Cash, cash equivalents and restricted cash at end of period		369,210		541,860
Less restricted cash at end of period		—		1,153
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	$	369,210	$	540,707	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:
Cash and cash equivalents						Cash and cash equivalents	$	253,131	$	873,628
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	$	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 working capital. As compared to the prior year, higher net cash used by operating activities was due to changes in working capital primarily accounts payable, accruals, ~~and~~ inventory due to inflationary increases, softer point-of-sale trends and supply chain disruptions, and ~~inflationary increases,~~increased capital investments in our cloud computing assets partially offset by improvement in accounts receivable and lower pension plan contributions in the ~~first quarter~~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.

Investing Activities

The increase in cash used by investing activities in the ~~first quarter~~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 ~~first quarter~~nine months of 2022 primarily as a result of increased borrowings on our ~~Accounts Receivable Securitization~~ARS Facility and our Revolving Loan Facility coupled with the repayment of the outstanding balance of Term Loan B in the ~~first quarter~~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 ~~first quarter~~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 believe our financing structure provides a secure base to support our operations and key business strategies. As of ~~April 2,~~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 potential covenant violation in order to modify the financial covenants and to provide operating flexibility as described in Note “Debt” to our

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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 ~~date~~ of these financial statements based on our current expectations and forecasts, however economic conditions or the occurrence of events discussed under “Risk Factors” in our Annual Report on Form 10-K for the year ended January 1, 2022 and our Quarterly Report on Form 10-Q for the quarter ended July 2, 2022 or other SEC 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 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

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consistent manner. Our significant accounting policies are discussed in Note “Summary of Significant Accounting Policies” to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended January 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 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 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 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 ~~April 2,~~October 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.

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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.


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, 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

~~Issuer Repurchases of Equity Securities~~

The following table sets forth information in connection with purchases made by, or on behalf of, the Company or any affiliate purchaser of the Company, of shares of the Company’s common stock during the quarter ended April 2, 2022.

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Total Number of Shares Purchased
Average
Price Paid
Per Share (1)
Total Number of Shares Purchased as Part of Publicly Announced Program
Maximum Value of Shares that May Yet Be Purchased under the Program (2)
January 2, 2022 to February 5, 2022 — $ — — $ 600,000,000
February 6, 2022 to March 5, 2022 1,577,386 $ 15.84 1,577,386 $ 575,013,357
March 6, 2022 to April 2, 2022 — $ — — $ 575,013,357
Total 1,577,386 1,577,386

~~(1)Average price paid per share for shares purchased excluding any broker commissions as part of our publicly-announced program.~~

~~(2)~~On February 2, 2022, our Board of Directors approved a new share repurchase program for up to $600 million of shares to be repurchased in open market transactions or privately negotiated transactions, subject to market conditions, legal requirements and other factors. Unless terminated earlier by our Board of Directors, the new program will expire on December 28, 2024. The new program replaced our previous share repurchase program for up to 40 million shares that was originally approved on February 6, 2020. We did not repurchase any shares under the previous program during the quarter ended April 2, 2022 or ~~April 3, 2021.~~

We net settle our employee stock option exercises and restricted stock unit and performance stock unit vestings, which result in the withholding of shares to cover the option exercise price and the minimum statutory withholding tax obligations that we are required to pay in cash to the applicable taxing authorities on behalf of our employees. We do not consider these transactions to be common stock repurchases.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.

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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.

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Item 6.			Exhibits


Exhibit Number						Description

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

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

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

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

3.5						Amended and Restated Bylaws of Hanesbrands Inc., 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 ).

10.1						First Amendment, dated October 31, 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.

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.

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SIGNATURES

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


HANESBRANDS INC.

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

Date: ~~May 5,~~November 9, 2022

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	Total Number of Shares Purchased	Average Price Paid Per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Program	Maximum Value of Shares that May Yet Be Purchased under the Program (2)
January 2, 2022 to February 5, 2022	—	$	—	—	$	600,000,000
February 6, 2022 to March 5, 2022	1,577,386	$	15.84	1,577,386	$	575,013,357
March 6, 2022 to April 2, 2022	—	$	—	—	$	575,013,357
Total	1,577,386			1,577,386