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1 Hanesbrands FAQs Updated August 2, 2016– New or updated information is in red Current Period – related FAQs Q: Given the challenging retail environment, why are you able to reiterate your full‐year guidance? A: We reiterated our full year guidance for sales, adjusted operating profit (excluding acquisition and integration charges), adjusted earnings per share and cash flow from operations based on three factors. One, the challenges in the overall retail environment were already reflected in our guidance when it was initially set back in February. Two, overall our year‐to‐date results are in‐line with our plan. And three, as we look to the back half of the year, we believe we are very well positioned to achieve our guidance as our key initiatives are unfolding as expected. Q: What gives you confidence in your ability to achieve your guidance for the second half? A: While there are many initiatives driving our confidence in delivering on the second half, here are four examples. First, our inventory reduction actions are complete and delivering their intended results. Adjusting for the $51 million from Champion Europe, our inventory declined from first quarter’s level, which in‐turn helped drive $156 million in cash flow from operations in the quarter, a record for any second quarter in our history. We expect our inventory, excluding Champion Europe and Pacific Brands, to continue to decline through the second half of the year and we are firmly on‐track to achieve our cash flow guidance. Second, the initiative that we laid out at the beginning of the year to drive volume growth in our core Innerwear business is gaining traction. For the quarter, we grew market share in Men’s Underwear, Women’s Panties and Socks. Moreover, our “focus on the core” initiative positions us well for the second half. We have targeted promotions in place for both back‐to‐school and holiday. We’re also set to begin advertising behind our new innovation, FreshIQ. Third, the integrations of Hanes Europe and Knights Apparel are tracking to plan, which puts us on‐schedule to deliver $40 million in synergies this year. And fourth, we closed our two most recent acquisitions, Champion Europe and Pacific Brands. Q: What macroeconomic expectations are factored into your 2016 guidance? A: From a macro perspective, we assume the overall consumer environment remains challenging, as has been the case over the past several years. The low‐end of our guidance assumes that the poor holiday traffic trends in the fourth quarter of 2015 repeat in 2016, while the high‐end of our guidance assumes a more normalized fourth quarter in 2016 as well as contributions from our various sales initiatives. Q: Can you provide any insights into your second half guidance? A: We reiterated our full‐year outlook, which at their mid‐points implies 8% growth in revenue, 11% growth in adjusted operating profit, 16% growth in adjusted EPS and $800 million in cash flow from operations. With respect to the acquisitions of Champion Europe and Pacific Brands, while we gave you their expected contributions for the full year in late May, the specific guidance for the quarters is very different then what one might expect due to the timing of when we closed Pacific Brands (mid‐July) and their seasonality. About $200 million, or approximately 55% of the estimated 2016 sales contribution from Champion Europe and Pacific Brands, are expected to be in the fourth quarter. For total HBI, that means third quarter sales should be slightly greater than the fourth quarter as the impact from these acquisitions tempers some of our normal sales cadence. However, from a profit perspective, virtually the entire $0.04 adjusted EPS increase from late May is expected in the fourth quarter. This leaves the total company’s estimate for Q3 GAAP EPS of $0.43 to $0.45 and Q3 adjusted EPS of $0.55 to $0.57, while Q4 GAAP EPS is estimated to be $0.47 to $0.55 and Q4 adjusted EPS of $0.57 to $0.61.
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2 Q: Why did your plan call for a decline in second quarter results from last year? A: We planned for a decline in our second quarter results from last year due to the anniversary of sizeable X‐Temp and Champion pipes, which drove mid‐single digit revenue growth in Basics and 42% growth in Champion in the sporting goods, mid‐tier and department stores channels in the second quarter last year. Q: Why did your gross margin decline in the second quarter and should we expect an improvement in the second half? A: The decline in our gross margin for both the second quarter and the first half was due to the expected inventory management costs of $12 million and $20 million, respectively. Absent these costs, which we do not have in the second half, our gross margin for both the second quarter and the first half would have been up over prior year. Q: Can you provide any insights into your FreshIQ innovation? A: Fresh IQ is an odor control technology that mechanically attacks bacteria. This is a great innovation that we believe has the potential to impact the overall apparel category. In fact, we’ve seen some of our highest advertising testing ever with this new product and the reception by our retailers has been strong. The benefits of FreshIQ span both Innerwear and Activewear and it’s now in the market in men’s underwear, socks and certain Champion products. Q: Why did your 2016 guidance for pretax acquisition and integration charges increase $20 million? A: The vast majority of the $20 million increase, which is all non‐cash, to our estimate for acquisition and integration charges was due to higher purchase accounting adjustments now that the acquisitions of Champion Europe and Pacific Brands have closed. Q: Can you provide any insights into the pretax acquisition and integration‐related charges in your 2016 guidance? A: Our estimate for pretax acquisition and integration‐related charges is approximately $180 million. This consists of approximately $80 million related to Hanes Europe (formerly DBApparel), Knights Apparel and Champion Japan; approximately $53 million related to Champion Europe and Pacific Brands, of which the vast majority are deal costs and the purchase accounting adjustments required under GAAP; and approximately $47 million related to refinancing actions. We estimate that roughly 60% of the approximately $180 million in acquisition and integration‐related charges in 2016 should be cash‐based and roughly 40% should be non‐cash charges. Q: What is your estimate for total pretax acquisition and integration‐related charges for Champion Europe and Pacific Brands? A: We expect the total acquisition and integration charges for the Champion Europe and Pacific Brands acquisitions, combined, to be less than $100 million, of which approximately $53 million are expected to be recognized this year. This is significantly lower than prior acquisitions due to three factors: (1) we have become more efficient at integrating acquired businesses; (2) the benefits from our prior foundational IT investments; and, (3) these two integrations are less complex. Q: You mentioned that your inventory at the end of the quarter declined from first quarter but your balance sheet indicates an increase, can you explain the difference? A: We closed the Champion Europe acquisition on June 30, 2016. Per GAAP accounting rules, our balance sheet is reflective of the last day of our quarter, which was July 2, 2016. Excluding the $51 million of inventory from Champion Europe, our inventory in the second quarter declined from first quarter’s level.
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3 Q: Given all of the work you did in the second quarter to optimize your capital structure, can you provide any insights into your ongoing interest and other expense? A: Given the current interest rate environment, the need to fund recent acquisitions and higher‐rate Notes that were callable, we proactively took the opportunity during the second quarter to optimize our capital structure. We lowered our overall interest rate and increased the amount of fixed rate debt on our balance sheet. Roughly two‐thirds of our debt is now fixed and we have a blended interest rate of approximately 3.6%. Our current run‐rate for Interest and Other Expense is approximately $160 million, annually, which includes debt amortization. Q: Can you provide any insights on the comments from the call regarding HBI’s performance over the past decade? A: Over the last ten years, the Company’s had three distinct phases: the first, to transform our supply chain and cost structure to make us competitive globally; the second, to drive Innovate‐to‐Elevate to expand our operating margins; and the third, grafting both of these strategies onto acquisitions. Over that time, we built a strong business model that creates value by nurturing world‐class brands, delivering innovation to a broad base of consumers, driving volume through our highly‐efficient global supply chain, and effectively deploying our cash flow. The result has been great for all of our stakeholders. Over this decade we have increased revenue from approximately $4 billion to nearly $7 billion, allowing us to expand our employment base from roughly fifty thousand to approximately seventy thousand people. We have completed eight acquisitions, many internationally, with international sales now close to a third of the business. But we paid attention to more than just expanding the business: we have won numerous awards for our community support, our environmental efforts, and have also been recognized as a “great place to work”. All of this great effort can be seen in our financial results: we increased operating profit from roughly $400 million to over $1 billion, grown earnings per share from $0.37 to over $2.00 – a 20% CAGR for the decade, and generated more than $4 billion in cash flow from operations. Q: What acquisition expectations are factored into your 2016 guidance? A: With respect to our acquisitions of DBApparel, Knights Apparel and Champion Japan, our 2016 guidance assumes approximately $50 million in revenue, approximately $40 million in synergy contributions and approximately $80 million in pretax acquisition and integration‐related charges (of which roughly $54 million were recognized in the first half). The revenue assumptions include roughly $20 million from the Knights Apparel wrap in the first quarter (recall we closed our acquisition of Knights Apparel on April 6, 2015) and approximately $30 million from the re‐ acquisition of the remainder of the Champion rights in Japan. The roughly $40 million in expected synergy contributions are from Hanes Europe Innerwear (formerly DBApparel), Knights Apparel as well as the remaining synergies from Maidenform. The bulk of these acquisition synergies are expected to be in SG&A in the second half of 2016. Of the approximately $80 million in pretax charges, we expect roughly 80% are attributable to Hanes Europe Innerwear, roughly 15% to Knights Apparel and the balance to Champion Japan. With respect to the partial year contributions from Champion Europe and Pacific Brands, our 2016 guidance includes approximately $350 million in revenue, approximately $20 to $25 million in adjusted operating profit, which excludes approximately $53 million in pretax acquisition and integration‐related charges. Q: Given the updated guidance reflects partial year contributions from recently announced acquisitions as well incremental interest expense, can you provide an annualized outlook of these factors? A: Due to the expected timing of the closing of Champion Europe and Pacific Brands as well as their seasonality, our updated 2016 guidance includes about one‐third of their annual operating profit, excluding approximately $53 million of acquisition and integration‐related charges, while it includes roughly three‐fourths of the associated annual interest expense. On an annual basis, excluding any potential synergies and pretax charges, we would expect Champion Europe and Pacific Brands to contribute approximately $800 million in sales and approximately $70 million in adjusted operating profit.
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4 Q: How big is the online channel for Hanesbrands and are you focused on driving growth in this channel? A: Our U.S. online sales represent roughly 8% of our total domestic sales across the online sites of traditional retailers, online pure‐plays as well as our own websites, and are growing faster than the overall online apparel category. We have focused and dedicated numerous people and resources to drive our online business both domestically and internationally, and we have seen great success. For example, one of the largest online pure‐plays is now our 7th largest domestic customer, representing over 1% of total sales. Q: Given comments in the press regarding inversions and earnings stripping can you comment on your tax rate? A: The recent comments in the press were centered around artificial tax structures, with a specific focus on inversions and earnings stripping. We do not use inversions. We do not do earnings stripping. We do not engage in artificial tax management. Our accounting and tax strategies are sound. In fact, we were recently audited by the IRS (see our third quarter 2015 Form 10Q) and the audit was closed with no adjustments. Our tax rate is the by‐product of our global business model, which we believe is sustainable for many years to come. Q: Have your thoughts on capital allocation changed? A: There is no change to our strategy. Our capital allocation strategy is to effectively deploy our significant, consistent cash flow to generate the best long‐term returns for our shareholders. Over time, our goal is for our net debt‐to‐ EBITDA to be in a range of 2 to 3 times. Our strategy is to use our cash flow to fund capital investments and our dividend, use debt for acquisitions and use excess free cash flow, which is defined as cash from operations less capital expenditures and dividends, to repurchase stock. Q: Will your capital expenditures increase significantly as a result of your acquisition strategy? A: With acquisitions, as the size of our business, profit and cash flows increases, so should the absolute level of our capital spending. Although our spending on capital expenditures has and is expected to continue to fluctuate year to year, we expect our capital expenditures to average around 1.75% of sales going forward, which is in‐line with our historical average, and over time should roughly equal depreciation. Spending at this level should allow our global supply chain to remain competitive while also handling the increased capacity needs for growth and our acquisition strategy. Q: How does a change in currency exchange rates impact your financial results? A: Changes in exchange rates between the U.S. Dollar and other currencies can impact our financial results in two ways; a translation impact and a transaction impact. The translation impact refers to the impact that changes in exchange rates can have on our published financial results. Similar to many multi‐national corporations that publish financial results in U.S. Dollars, our revenue and profit earned in local foreign currencies is translated back into U.S. Dollars using an average exchange rate over the representative period. A period of strengthening in the U.S. Dollar results in a negative impact to our published financial results (because it would take more units of a local currency to convert into a dollar). The opposite is true during a period of weakening in the U.S. Dollar. Our biggest foreign currency exposure is the euro. The transaction impact on financial results is common for apparel companies that source goods because these goods are purchased in U.S. Dollars. The transaction impact from a strengthening dollar would be negative to our financial results (because the U.S. Dollar‐based costs would convert into a higher amount of local currency units, which means a higher local‐currency cost of goods, and in turn, a lower local‐currency gross profit). The transaction impact from exchange rates is typically recovered over time with price increases. However, during periods of rapid change in exchange rates; pricing is unable to change quickly enough. In these situations, it could make sense to hedge the exchange rate exposure in sourcing costs.
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5 Pacific Brands‐related FAQs Q: Do you believe your acquisition strategy is creating strong returns for shareholders? A: Yes. The rationale for our acquisition strategy is to generate long‐term shareholder returns by applying our proven ‘Sell More’ and ‘Spend Less’ strategies to newly acquired businesses to create substantial multi‐year synergies. For example, our completed acquisitions have brought with them approximately $120 million in operating profit and we expect to add another approximately $170 million through synergies, of which slightly over $100 million have been recognized through the end of the first quarter 2016. Champion Europe and Pacific Brands are expected to add to these returns by contributing an additional approximately $125 million in combined operating profit, excluding acquisition and integration‐related charges(1) , once full synergies are achieved. With eight acquisitions in less than six years, our Innovate‐to‐Elevate and acquisition strategies have significantly remade our company since 2010. Back then, there were only 5 countries where we held the #1 or #2 market position. We had roughly $4 billion in sales, only 11% of which came from outside the U.S., roughly $381 million in operating profit, a 9% operating margin and roughly $133 million in cash flow from operations. Going forward, if you take our current 2016 guidance and layer in the full synergies from all of our acquisitions, including Champion Europe and Pacific Brands, we’ll be the largest basic apparel company in the world with the #1 or #2 market position in 12 countries. We’ll have more than 30% of our revenue in international markets. Annually we expect to have approximately $7 billion in sales, over $1.1 billion in operating profit, a mid‐teens operating margin and over a billion dollars in cash flow from operations. That’s a remarkable change. But the reality is, we’ve only begun to hit our stride. Given the scalability our business model and the potential of our acquisition pipeline, there is ample opportunity to continue to create value for many years to come. Q: What is driving the value creation for the Pacific Brands acquisition? A: Pacific Brands squarely hits on all four of our acquisition criteria. It’s in our core categories. It provides complementary revenue growth opportunities. It is justifiable based solely on cost synergies and it’s quickly accretive. The majority of the expected value creation is from supply chain synergies. Pacific Brands sources the vast majority of the products in its Underwear segment and we see a significant synergy opportunity by plugging their Underwear business into the Asian cluster of our company‐owned supply chain, especially in Vietnam. But this opportunity goes beyond the typical 15‐20% cost reduction we expect to achieve by in‐sourcing only their high volume styles. Their products are very similar to our Hanes Europe products, which means as we harmonize these products we’ll increase the total number of high volume styles that can be brought in‐house. In other words, this acquisition not only drives manufacturing synergies on its own, it also creates incremental synergy benefits for prior acquisitions, which underscores the power of our company‐owned supply chain. The other factor driving the expected value creation is revenue growth. Pacific Brands’ Underwear group has been executing a strategy to drive profitable revenue growth by investing behind its brands, growing its retail presence and expanding online. This strategy is working as its Underwear segment sales over the past three years have grown at a compound annual growth rate of roughly 7%. As management continues to drive its strategy and we layer on our innovation process, we see a long runway for mid‐to‐high single digit revenue growth. Q: How should investors think about Pacific Brands’ business on a go‐forward basis and what is the expected financial contribution of this acquisition within three years? A: Pacific Brands base business, which we define as their Underwear and Sheridan segments, generates approximately AUD800 million (US$600 million) in annual sales with a high‐single digit operating margin. As we complement their growth strategy, strong brands and Australian design with our Innovate‐to‐Elevate strategy and low‐cost global supply chain, we believe we can grow their base revenue at mid‐to‐high single digit rates while increasing operating margins to the mid‐teens. Over the next three years, once synergies are fully realized, we believe Pacific Brands can annually contribute over AUD930 million in revenue and approximately AUD140 million in operating profit, excluding acquisition and integration‐related charges(1). Assuming an exchange rate of AUD1:US$0.76, this would equate to over US$700 million in revenue and over US$100 million in operating profit, excluding acquisition and integration‐related charges(1. We expect this acquisition to deliver an after‐tax IRR in the mid‐teens.
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6 Q: Can you provide any insight into Pacific Brands? A: Pacific Brands is the leading underwear and intimate apparel company in Australia. Their products are distributed through the wholesale channel (roughly 60% of sales), in‐store retail (roughly one‐third of sales) and online retail (roughly 7% of sales). They have a strong management team that like us, nurtures its brands and uses a disciplined, consumer packaged goods approach to managing their business. Historically, Pacific Brands was much more diversified company. Several years ago management embarked on a significant restructuring to streamline the company down to its core Underwear and Sheridan business units. Its Tontine pillow and Dunlop flooring businesses, which account for roughly 12% of sales, fall well outside of Hanesbrands core categories and therefore, our intention is to divest these over time. These two business operations are excluded from our long‐term projections and will be reported as discontinued operations after the acquisition closes. Q: Can you provide any insight into Pacific Brands Underwear segment? A: The Underwear segment, which accounts for the majority of Pacific Brands’ revenue and operating profit, is very similar to us. They have big, strong, iconic brands, including Bonds, which has more than a century of history. With 90% brand awareness and the #1 share of the underwear and socks markets, the Bonds brand is akin to the Hanes of Australia. As a company, Pacific Brands holds the #1 share position in men’s, women’s and kid’s underwear, as well as in bras, sports bras, socks and hosiery. They also hold the #2 market position in babywear (i.e. infant apparel) and casual clothing. Their products are distributed across all channels with a growing presence in online and company‐owned retail. Q: What are your plans for the Sheridan business segment? A: The Sheridan brand has nearly 50 years of history and its products include premium linens, towels, loungewear and recently launched babywear. Sheridan holds the #1 market position in its main categories, its infrastructure is highly integrated with the Underwear group and its products are primarily distributed through high‐end department store concessions and branded stores. With Sheridan’s strong brand position and its entrance into loungewear and babywear, we believe this segment has attractive growth and profitability characteristics. Q: Does this acquisition preclude you from another acquisition in 2016? A: While we intend to turn our focus to developing the integration and growth plans for both the Champion Europe and the Pacific Brands acquisitions, there remain a variety of potential opportunities. We cannot predict the timing of any single acquisition, which is why we are always talking to people. As we have said many times before, we will not take on more integration and business risk than we believe the organization can handle and when we have the next signed deal, we’ll let you know. Q: Excluding the purchase price, what are the total costs associated with the Pacific Brands acquisition? And what portion will be cash‐based? A: We will provide more detail once the acquisition is closed and we have a detailed integration plan in place. Champion Europe‐related FAQs Q: What is the rationale and expected return for this acquisition? A: The rationale for all of our acquisitions is to generate long‐term shareholder returns by applying our proven ‘Sell More’ and ‘Spend Less’ strategies to newly acquired businesses to create substantial multi‐year synergies. Champion Europe squarely hits on all four of our acquisition criteria. It’s in our core categories. It provides complementary revenue growth opportunities. It is justifiable based solely on cost synergies and it’s quickly accretive. This acquisition is expected to deliver an after‐tax IRR in the low‐to‐mid teens.
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7 Q: What are some of the global growth initiatives for Champion? A: By unifying the Champion brand globally, we have significant opportunities to grow revenue by expanding our distribution across product lines, across channels and across geographies. In the U.S., we’ve developed a very broad product line under Champion that spans from mass price points all the way up to the higher‐priced sporting goods and department store channels. We can now take this broad product line and sell it into Europe, Japan, Australia, and other international markets. As we build scale by expanding Champion’s distribution worldwide, we expect to be able to leverage global product design as well as our low‐cost supply chain to further reduce costs and ultimately improve our operating margins. With this acquisition, we now sell Champion products on five continents and have approximately $1.2 billion in Champion revenue worldwide. We believe our Champion revenue can increase at high single‐digit to low double‐digit rates and could approach $2 billion within five to six years. Q: Can you provide any insight into Champion Europe’s current financial performance? A: Champion Europe currently expects full‐year 2016 net sales of more than €190 million, EBITDA, excluding charges, of approximately €20 million, and operating profit, excluding charges, of approximately €15. Q: What is the expected financial contribution of the Champion Europe acquisition within three years? A: Over the next three years, excluding the broader global Champion growth opportunities, we believe Champion Europe’s stand‐alone operations can increase revenue from more than €190 million to well over €250 million. Through a combination of supply chain synergies and revenue growth, we believe Champion Europe’s stand‐alone operations, over the next three years, can increase operating profit, excluding acquisition and integration‐related charges(1), from roughly €15 million to well over €25 million. Q: Can you provide any insight into Champion Europe’s business operations? A: Champion Europe owns the trademark rights for the Champion brand in Europe, the Middle East and Africa. The Company, which is based in Italy, designs, sources and sells Champion athletic apparel and accessories wholesale to retailers and directly to consumers via roughly 130 company‐owned stores. The vast majority of Champion Europe’s revenue is in Italy and Greece. With respect to its merchandise mix, based on FY15 revenue, roughly 40% was men’s apparel, roughly 30% was women’s apparel, roughly 20% was youth and toddler apparel and the remainder was accessories. Q: Given the value creation is more weighted toward complementary revenue growth opportunities, is there an increased risk to achieving your expected IRR relative to prior acquisitions? A: No, like all of our acquisitions, we are able to justify Champion Europe based solely on the expected cost synergies, which in this case will come almost entirely from supply chain synergies. Champion Europe is not our first acquisition in which the value creation was weighted toward complementary revenue growth. This was also the case with both our Gear For Sports and Knight Apparel acquisitions. Looking at Gear For Sports, we are estimating approximately $350 million in revenue for 2016, which is more than 50% higher than their revenue base of roughly $225 million at the time of our acquisition in 2010. Looking at Knights Apparel, we are estimating revenue of approximately $200 million in 2016, which is approximately 20% higher than their 2014 revenue base of roughly $165 million. Q: Will Champion Europe be integrated into Hanes Europe Innerwear? A: No. We run Innerwear and Activewear separately in the U.S. and we will do the same in Europe. There are no real synergies to be gained by integrating these two businesses. Champion Europe will be integrated into our global supply chain but it will be run as part of the global Champion Activewear business.
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8 Q: Excluding the purchase price, what are the total costs associated with the Champion Europe acquisition? And what portion will be cash‐based? A: We will provide more detail once the acquisition is closed and we have a detailed integration plan in place. (1) We currently estimate the total, combined acquisition and integration costs for Champion Europe and Pacific Brands to be less than $100 million. # # # Charges for Actions and Reconciliation to GAAP Measures To supplement its financial guidance prepared in accordance with generally accepted accounting principles, Hanes provides quarterly results and guidance concerning certain non‐GAAP financial measures, including adjusted EPS, adjusted net income, adjusted operating profit (and margin), adjusted SG&A, adjusted gross profit (and margin) and EBITDA. Adjusted EPS is defined as diluted EPS excluding actions and the tax effect on actions. Adjusted net income is defined as net income excluding actions and the tax effect on actions. Adjusted operating profit is defined as operating profit excluding actions. Adjusted gross profit is defined as gross profit excluding actions. Adjusted SG&A is defined as selling, general and administrative expenses excluding actions. EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Hanes has chosen to provide these non‐GAAP measures to investors to enable additional analyses of past, present and future operating performance and as a supplemental means of evaluating company operations. However, non‐ GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. See Table 2 and Table 5 attached to our press release dated August 2, 2016 to reconcile these non‐GAAP performance measures to the most directly comparable GAAP measure. Full‐year GAAP operating profit guidance of $760 million to $795 million and EPS guidance of $1.44 to $1.54 reflects Hanes’ expectations for net sales, operating profit, interest expense, and tax rate as detailed in this FAQ document. Full‐year Non‐ GAAP adjusted operating profit guidance of $940 million to $975 million and adjusted EPS guidance of $1.89 to $1.95 reflects the GAAP guidance adjusted by adding back the approximately $180 million of expected pretax charges for debt refinancing and acquisition and integration expenses to adjusted operating profit and adjusted EPS. GAAP EPS is expected to be in the range of $0.43 to $0.45 for the third quarter and in the range of $0.47 to $0.55 for the fourth quarter. Excluding approximately $50 million and $33 million of expected pretax charges for acquisition and integration expenses during the third quarter and fourth quarter, respectively, adjusted EPS is expected to be in the range of $0.55 to $0.57 in the third quarter and in the range of $0.57 to $0.61 in the fourth quarter. Cautionary Statement Concerning Forward‐Looking Statements This press release includes forward‐looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward‐looking statements include all statements that do not relate solely to historical or current facts, and can generally be identified by the use of words such as “may,” “believe,” “will,” “expect,” “project,” “estimate,” “intend,” “anticipate,” “plan,” “continue” or similar expressions. In particular, among others, statements about our 2016 financial guidance and the HanesBrands acquisition of Pacific Brands, Champion Europe and Knights Apparel, as well as the re‐acquisition of the rights to Champion in Japan from Goldwin, Inc. (the “acquisitions”), including integration plans and the expected impact of the acquisitions on HanesBrands’ sales, earnings, operating profit and cash flow from operations, are forward‐looking statements. Forward‐looking statements inherently involve many risks and uncertainties that could cause actual results to differ materially from those projected in these statements. Where, in any forward‐looking statement, we express an expectation or belief as to future results or events, such expectation or belief is based on the current plans and expectations of our management, expressed in good faith. However, there can be no assurance that the expectation or belief will result or will be achieved or accomplished, and actual results may differ materially from those contemplated by the forward‐looking statements. A number of important factors could cause actual results to differ materially from those contemplated by the forward‐ looking statements, including, but not limited to our ability to achieve expected synergies and successfully integrate
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9 acquired businesses; the level of expenses and other charges related to the acquisitions and the funding thereof; any inadequacy, interruption, integration failure or security failure with respect to our information technology; the impact of significant fluctuations and volatility in various input costs, such as cotton and oil‐related materials, utilities, freight and wages; our ability to manage our inventory effectively and accurately forecast demand for our products; the highly competitive and evolving nature of the industry in which we compete; the risk of improper conduct by any of our employees, agents or business partners that threatens our reputation and ability to do business; our complex multinational tax structure; significant fluctuations in foreign exchange rates; our ability to access sufficient capital at reasonable rates or commercially reasonable terms or to maintain sufficient liquidity in the amounts and at the times needed; risks associated with our indebtedness; other risks related to our international operations, including the impact to our business as a result of the United Kingdom’s recent referendum to leave the European Union; and other risks identified from time to time in our most recent Securities and Exchange Commission reports, including our annual report on Form 10‐K and quarterly reports on Form 10‐Q. Since it is not possible to predict or identify all of the risks, uncertainties and other factors that may affect future results, the above list should not be considered a complete list. We believe these forward‐looking statements are reasonable; however, undue reliance should not be placed on any forward‐looking statements, which are based on current expectations. All forward‐looking statements speak only as of the date hereof. We undertake no obligation to update or revise forward‐looking statements that may be made to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events, other than as required by law.