| Business Segment Information | Business Segment Information The Company’s operations are managed and reported in four operating segments, each of which is a reportable segment for financial reporting purposes: Innerwear, Activewear, Direct to Consumer and International. These segments are organized principally by product category, geographic location and distribution channel. Each segment has its own management that is responsible for the operations of the segment’s businesses, but the segments share a common supply chain and media and marketing platforms. As a result of a shift in management responsibilities, the Company decided in the first quarter of 2016 to move its wholesale e-commerce business, that sells products directly to retailers, from its Direct to Consumer segment into the respective Innerwear and Activewear segments. Prior year segment sales and operating profit results have been revised to conform to the current year presentation. The types of products and services from which each reportable segment derives its revenues are as follows: • Innerwear sells basic branded products that are replenishment in nature under the product categories of men’s underwear, panties, children’s underwear, socks, hosiery and intimate apparel, which includes bras and shapewear. • Activewear sells basic branded products that are primarily seasonal in nature under the product categories of branded printwear and retail activewear, as well as licensed logo apparel in collegiate bookstores, mass retail and other channels. • Direct to Consumer includes the Company’s value-based (“outlet”) stores and retail Internet operations that sell products from the Company’s portfolio of leading brands directly to consumers. • International primarily relates to the Europe, Asia, Latin America, Canada and Australia geographic locations that sell products that span across the Innerwear and Activewear reportable segments. The Company evaluates the operating performance of its segments based upon segment operating profit, which is defined as operating profit before general corporate expenses and amortization of intangibles. The Company decided in the first quarter of 2016 to revise the manner in which the Company allocates certain selling, general and administrative expenses. Certain prior year segment operating profit disclosures have been revised to conform to current year presentation. The accounting policies of the segments are consistent with those described in Note 2 to the Company’s consolidated financial statements included in its Annual Report on Form 10-K for the year ended January 2, 2016 . Quarter Ended Six Months Ended July 2, July 4, July 2, July 4, Net sales: Innerwear $ 749,224 $ 786,400 $ 1,309,950 $ 1,340,004 Activewear 367,394 381,087 676,919 682,097 Direct to Consumer 86,451 89,814 156,253 160,971 International 269,662 264,732 548,749 547,882 Total net sales $ 1,472,731 $ 1,522,033 $ 2,691,871 $ 2,730,954 Quarter Ended Six Months Ended July 2, July 4, July 2, July 4, Segment operating profit: Innerwear $ 181,447 $ 202,036 $ 299,419 $ 318,099 Activewear 55,816 60,033 88,385 91,203 Direct to Consumer 8,299 8,856 5,277 4,326 International 23,153 20,384 47,872 41,879 Total segment operating profit 268,715 291,309 440,953 455,507 Items not included in segment operating profit: General corporate expenses (18,587 ) (19,997 ) (40,022 ) (45,778 ) Acquisition, integration and other action related charges (24,395 ) (125,966 ) (49,064 ) (169,194 ) Amortization of intangibles (4,523 ) (6,413 ) (8,252 ) (11,671 ) Total operating profit 221,210 138,933 343,615 228,864 Other expenses (48,325 ) (830 ) (48,974 ) (1,212 ) Interest expense, net (36,540 ) (29,020 ) (68,106 ) (55,907 ) Income before income tax expense $ 136,345 $ 109,083 $ 226,535 $ 171,745 For the quarter ended July 2, 2016 , the Company incurred acquisition, integration and other action related charges of $71,686 , of which $9,300 is reported in the “Cost of sales” line, $15,095 is reported in the “Selling, general and administrative expenses” line and $47,291 is reported in the “Other expenses” line in the Condensed Consolidated Statement of Income. For the quarter ended July 4, 2015 , the Company incurred acquisition, integration and other action related charges of $125,966 , of which $26,151 is reported in the “Cost of sales” line and $99,815 is reported in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statement of Income. For the six months ended July 2, 2016 , the Company incurred acquisition, integration and other action related charges of $96,355 , of which $14,169 is reported in the “Cost of sales” line, $34,895 is reported in the “Selling, general and administrative expenses” line and $47,291 is reported in the “Other expenses” line in the Condensed Consolidated Statement of Income. For the six months ended July 4, 2015 , the Company incurred acquisition, integration and other action related charges of $169,194 , of which $40,219 is reported in the “Cost of sales” line and $128,975 is reported in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statement of Income. As part of the Hanes Europe Innerwear acquisition strategy, the Company has identified management and administrative positions that are considered non-essential and/or duplicative that will be eliminated. As of January 2, 2016, the Company had accrued approximately $54,000 for employee termination and other benefits recognized in accordance with expected benefit payments for affected employees. The charges were reflected in the “Cost of sales” and “Selling, general and administrative expenses” lines of the Consolidated Statements of Income. As of July 2, 2016 , approximately $10,475 of benefit payments had been made, resulting in an accrual of $43,525 , of which, $24,890 and $18,635 , is included in the “Accrued liabilities” and “Other noncurrent liabilities” lines of the Condensed Consolidated Balance Sheet, respectively. |
