

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



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

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

(Registrant’s telephone number including area code)



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. Yesx☒No¨☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). Yesx☒No¨☐

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

Large accelerated filer

x☒

Accelerated filer

¨☐

Non-accelerated filer

¨~~(Do not check if a smaller reporting company)~~

☐

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¨☐Nox☒

As of ~~October 27, 2017,~~July 30, 2021, there were ~~364,584,181~~349,151,707 shares of the registrant’s common stock outstanding.

This Quarterly Report on Form 10-Q ~~includes forward-looking statements~~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.~~1934 (the “Exchange Act”). Forward-looking statements include all statements that do not relate solely to historical or current facts, and can generally be identified by the use of words such as “may,” “believe,” “will,” “expect,” “project,” “estimate,” “intend,” “anticipate,” “plan,” “continue” or similar expressions. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements regarding our intent, belief and current expectations about our strategic direction, prospects and future results are forward-looking statements. Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. In particular, statements ~~under~~with respect to trends associated with our business, our Full Potential plan, our future financial performance and the ~~heading “Outlook” and other information~~potential effects of the ongoing global novel coronavirus (“COVID-19”) pandemic included in this Quarterly Report on Form 10-Q specifically appearing under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” include forward-looking statements. ~~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 and believed to have a reasonable basis. However, there can be no assurance that the expectation or belief will result or will be achieved or accomplished. More information on factors that could cause actual results or events to differ materially from those anticipated is included from time to time in our reports filed with the Securities and Exchange Commission (the “SEC”), including this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended ~~December 31, 2016~~,January 2, 2021, under the caption “Risk Factors,” and available on the “Investors” section of our corporate website, www.Hanes.com/investors.

~~All forward-looking statements speak only as~~ The contents of ~~the date of this Quarterly Report on Form 10-Q and~~our corporate website are ~~expressly qualified in their entirety~~not incorporated by ~~the cautionary statements included~~reference in this Quarterly Report on Form ~~10-Q or our Annual Report on Form 10-K for the year ended~~ ~~December 31, 2016~~, particularly under the caption “Risk Factors.” 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 occurrence10-Q.

Table of ~~unanticipated events, other than as required by law.~~Contents

~~WHERE YOU CAN FIND MORE INFORMATION~~

~~We file annual, quarterly and current reports, proxy statements and other information with the SEC. You can read our SEC filings over the Internet at the SEC’s website at~~ ~~www.sec.gov. To receive copies of public records not posted to the SEC’s web site at prescribed rates, you may complete an online form at~~ ~~www.sec.gov~~, send a fax to (202) 772-9337 or submit a written request to the SEC, Office of FOIA/PA Operations, 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information.

~~We make available free of charge at~~ ~~www.Hanes.com/investors~~ ~~(in the “Investors” section) copies of materials we file with, or furnish to, the SEC. By referring to our corporate website,~~ ~~www.Hanes.com/corporate, or any of our other websites, we do not incorporate any such website or its contents into this Quarterly Report on Form 10-Q.~~

PART I



Item 1.			Financial Statements

HANESBRANDS INC.

Condensed Consolidated Statements of Income

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

(unaudited)


	Quarters Ended				Six Months Ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Net sales	$	1,751,311	$	1,543,083	$	3,259,340	$	2,746,153
Cost of sales	1,069,682		1,029,221		1,975,030		1,814,123
Gross profit	681,629		513,862		1,284,310		932,030
Selling, general and administrative expenses	464,235		311,729		876,794		681,944
Operating profit	217,394		202,133		407,516		250,086
Other expenses	1,855		4,653		4,416		10,754
Interest expense, net	42,440		41,075		86,900		77,102
Income from continuing operations before income tax expense	173,099		156,405		316,200		162,230
Income tax expense	25,236		19,837		39,933		20,544
Income from continuing operations	147,863		136,568		276,267		141,686
Income (loss) from discontinued operations, net of tax	(19,187)		24,613		(410,853)		11,621
Net income (loss)	$	128,676	$	161,181	$	(134,586)	$	153,307

Earnings (loss) per share - basic:
Continuing operations	$	0.42	$	0.39	$	0.79	$	0.40
Discontinued operations	(0.05)		0.07		(1.17)		0.03
Net income (loss)	$	0.37	$	0.46	$	(0.38)	$	0.43

Earnings (loss) per share - diluted:
Continuing operations	$	0.42	$	0.39	$	0.79	$	0.40
Discontinued operations	(0.05)		0.07		(1.17)		0.03
Net income (loss)	$	0.37	$	0.46	$	(0.38)	$	0.43

See accompanying notes to Condensed Consolidated Financial Statements.

Quarter Ended Nine Months Ended
September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016
Net sales $ 1,799,270
$ 1,761,019
$ 4,826,235
$ 4,452,890
Cost of sales 1,120,813
1,111,653
2,962,345
2,788,977
Gross profit 678,457
649,366
1,863,890
1,663,913
Selling, general and administrative expenses 425,153
421,014
1,260,641
1,091,946
Operating profit 253,304
228,352
603,249
571,967
Other expenses 1,881
1,559
4,659
50,533
Interest expense, net 43,917
43,433
130,184
111,539
Income from continuing operations before income tax expense 207,506
183,360
468,406
409,895
Income tax expense 4,150
10,570
19,804
28,693
Income from continuing operations 203,356
172,790
448,602
381,202
Income (loss) from discontinued operations, net of tax —
1,068
(2,097 ) 1,068
Net income $ 203,356
$ 173,858
$ 446,505
$ 382,270

Earnings per share — basic:
Continuing operations $ 0.56
$ 0.46
$ 1.22
$ 1.00
Discontinued operations —
—
(0.01 ) —
Net income $ 0.56
$ 0.46
$ 1.21
$ 1.00

Earnings per share — diluted:
Continuing operations $ 0.55
$ 0.45
$ 1.21
$ 0.99
Discontinued operations —
—
(0.01 ) —
Net income $ 0.55
$ 0.45
$ 1.20
$ 0.99

Table of Contents

HANESBRANDS INC.

Condensed Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)


	Quarters Ended				Six Months Ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Net income (loss)	$	128,676	$	161,181	$	(134,586)	$	153,307
Other comprehensive income (loss):
Translation adjustments	(11,231)		95,033		(36,432)		(22,121)
Unrealized gain (loss) on qualifying cash flow hedges, net of tax of $(1,140), $4,031, $(6,316) and $(3,249), respectively	2,856		(6,177)		11,396		1,606
Unrecognized income from pension and postretirement plans, net of tax of $(1,566), $(1,794), $(3,615) and $(3,066), respectively	4,332		3,560		11,067		7,154
Total other comprehensive income (loss)	(4,043)		92,416		(13,969)		(13,361)
Comprehensive income (loss)	$	124,633	$	253,597	$	(148,555)	$	139,946

See accompanying notes to Condensed Consolidated Financial Statements.

Quarter Ended Nine Months Ended
September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016
Net income $ 203,356
$ 173,858
$ 446,505
$ 382,270
Other comprehensive income (loss), net of tax of $1,427, ($247), $7,870 and ($701), respectively 5,051
(2,713 ) 9,349
13,691
Comprehensive income $ 208,407
$ 171,145
$ 455,854
$ 395,961

Table of Contents

HANESBRANDS INC.

Condensed Consolidated Balance Sheets

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

(unaudited)


	July 3, 2021		January 2, 2021		June 27, 2020
Assets
Cash and cash equivalents	$	667,298	$	900,615	$	556,099
Trade accounts receivable, net	960,993		768,221		1,139,130
Inventories	1,530,622		1,367,758		1,774,139
Other current assets	159,715		158,700		171,435
Current assets of discontinued operations	301,986		234,086		401,347
Total current assets	3,620,614		3,429,380		4,042,150
Property, net	446,356		477,821		496,933
Right-of-use assets	398,526		432,631		438,683
Trademarks and other identifiable intangibles, net	1,258,783		1,293,847		1,196,359
Goodwill	1,148,021		1,158,938		1,144,739
Deferred tax assets	351,309		367,976		193,100
Other noncurrent assets	54,380		64,773		118,296
Noncurrent assets of discontinued operations	0		494,501		493,045
Total assets	$	7,277,989	$	7,719,867	$	8,123,305

Liabilities and Stockholders’ Equity
Accounts payable	$	1,171,645	$	891,868	$	1,101,438
Accrued liabilities	628,007		609,864		452,763
Lease liabilities	129,053		136,510		147,406
Notes payable	0		0		13

Current portion of long-term debt	37,500		263,936		0
Current liabilities of discontinued operations	289,751		222,183		310,972
Total current liabilities	2,255,956		2,124,361		2,012,592
Long-term debt	3,647,482		3,739,434		3,985,631
Lease liabilities - noncurrent	299,380		331,577		330,599
Pension and postretirement benefits	327,597		381,457		328,647
Other noncurrent liabilities	185,384		216,091		270,152
Noncurrent liabilities of discontinued operations	0		112,989		116,364
Total liabilities	6,715,799		6,905,909		7,043,985

Stockholders’ equity:
Preferred stock (50,000,000 authorized shares; $.01 par value)
Issued and outstanding — None	0		0		0
Common stock (2,000,000,000 authorized shares; $.01 par value)
Issued and outstanding — 349,115,441, 348,802,220 and 348,092,986, respectively	3,491		3,488		3,481
Additional paid-in capital	310,148		307,883		302,522
Retained earnings	829,479		1,069,546		1,404,326
Accumulated other comprehensive loss	(580,928)		(566,959)		(631,009)
Total stockholders’ equity	562,190		813,958		1,079,320
Total liabilities and stockholders’ equity	$	7,277,989	$	7,719,867	$	8,123,305

See accompanying notes to Condensed Consolidated Financial Statements.

September 30,
2017 December 31,
2016
Assets
Cash and cash equivalents $ 400,045
$ 460,245
Trade accounts receivable, net 1,009,188
836,924
Inventories 1,953,918
1,840,565
Other current assets 196,875
137,535
Current assets of discontinued operations —
45,897
Total current assets 3,560,026
3,321,166
Property, net 624,602
692,464
Trademarks and other identifiable intangibles, net 1,371,007
1,285,458
Goodwill 1,141,942
1,098,540
Deferred tax assets 504,059
464,872
Other noncurrent assets 79,087
67,980
Total assets $ 7,280,723
$ 6,930,480

Liabilities and Stockholders’ Equity
Accounts payable $ 852,671
$ 761,647
Accrued liabilities 614,599
619,795
Notes payable 23,969
56,396
Accounts Receivable Securitization Facility 250,995
44,521
Current portion of long-term debt 154,395
133,843
Current liabilities of discontinued operations —
9,466
Total current liabilities 1,896,629
1,625,668
Long-term debt 3,566,547
3,507,685
Pension and postretirement benefits 378,573
371,612
Other noncurrent liabilities 207,807
201,601
Total liabilities 6,049,556
5,706,566

Stockholders’ equity:
Preferred stock (50,000,000 authorized shares; $.01 par value)
Issued and outstanding — None —
—
Common stock (2,000,000,000 authorized shares; $.01 par value)
Issued and outstanding — 364,571,559 and 378,687,052, respectively 3,646
3,787
Additional paid-in capital 267,675
260,002
Retained earnings 1,386,488
1,396,116
Accumulated other comprehensive loss (426,642 ) (435,991 )
Total stockholders’ equity 1,231,167
1,223,914
Total liabilities and stockholders’ equity $ 7,280,723
$ 6,930,480

Table of Contents

HANESBRANDS INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

Nine Months Ended
September 30,
2017 October 1,
2016
Operating activities:
Net income $ 446,505
$ 382,270
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization of long-lived assets 89,762
73,715
Write-off on early extinguishment of debt 2,153
12,667
Charges incurred for amendments of credit facilities —
34,624
Amortization of debt issuance costs 7,943
6,401
Stock compensation expense 6,351
16,292
Deferred taxes and other (12,744 ) (18,938 )
Changes in assets and liabilities, net of acquisition of businesses:

Accounts receivable (147,933 ) (198,217 )
Inventories (74,945 ) 4,557
Other assets (42,664 ) (6,167 )
Accounts payable 71,264
(80,589 )
Accrued pension and postretirement benefits 15,021
(34,419 )
Accrued liabilities and other (29,623 ) 16,095
Net cash from operating activities 331,090
208,291
Investing activities:
Purchases of property, plant and equipment (60,418 ) (65,439 )
Proceeds from sales of assets 4,398
68,701
Acquisition of businesses, net of cash acquired (524 ) (963,127 )
Disposition of businesses 40,285
—
Net cash from investing activities (16,259 ) (959,865 )
Financing activities:
Borrowings on notes payable 212,804
854,915
Repayments on notes payable (249,708 ) (943,893 )
Borrowings on Accounts Receivable Securitization Facility 342,315
194,549
Repayments on Accounts Receivable Securitization Facility (135,841 ) (145,638 )
Borrowings on Revolving Loan Facilities 2,957,799
2,995,442
Repayments on Revolving Loan Facilities (2,738,000 ) (2,992,000 )
Borrowings on Senior Notes —
2,359,347
Repayments on Senior Notes —
(1,000,000 )
Borrowings on Term Loan Facilities —
301,272
Repayments on Term Loan Facilities (201,281 ) (154,670 )
Borrowings on International Debt —
8,368
Repayments on International Debt (44,073 ) (11,186 )
Share repurchases (299,919 ) (379,901 )
Cash dividends paid (165,211 ) (125,798 )
Payments to amend and refinance credit facilities (559 ) (79,492 )
Payment of contingent consideration (41,250 ) —
Taxes paid related to net shares settlement of equity awards (8,075 ) (2,919 )
Other 3,401
1,529
Net cash from financing activities (367,598 ) 879,925
Effect of changes in foreign exchange rates on cash (7,433 ) 2,693
Change in cash and cash equivalents (60,200 ) 131,044
Cash and cash equivalents at beginning of year 460,245
319,169
Cash and cash equivalents at end of period $ 400,045
$ 450,213

HANESBRANDS INC.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except per share data)

(unaudited)


	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
	Shares	Amount
Balances at April 3, 2021	349,090	$	3,491	$	304,090	$	753,785	$	(576,885)	$	484,481
Net income	—	—		—		128,676		—		128,676
Dividends ($0.15 per common share)	—	—		—		(52,982)		—		(52,982)
Other comprehensive loss	—	—		—		—		(4,043)		(4,043)
Stock-based compensation	—	—		5,342		—		—		5,342
Net exercise of stock options, vesting of restricted stock units and other	25	0		716		—		—		716
Balances at July 3, 2021	349,115	$	3,491	$	310,148	$	829,479	$	(580,928)	$	562,190


	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	—	—		—		(134,586)		—		(134,586)
Dividends ($0.30 per common share)	—	—		—		(105,481)		—		(105,481)
Other comprehensive loss	—	—		—		—		(13,969)		(13,969)
Stock-based compensation	—	—		3,808		—		—		3,808
Net exercise of stock options, vesting of restricted stock units and other	313	3		(1,543)		—		—		(1,540)
Balances at July 3, 2021	349,115	$	3,491	$	310,148	$	829,479	$	(580,928)	$	562,190

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 March 28, 2020	348,035	$	3,480	$	297,456	$	1,296,060	$	(723,425)	$	873,571
Net income	—	—		—		161,181		—		161,181
Dividends ($0.15 per common share)	—	—		—		(52,915)		—		(52,915)
Other comprehensive income	—	—		—		—		92,416		92,416
Stock-based compensation	—	—		4,393		—		—		4,393
Net exercise of stock options, vesting of restricted stock units and other	58	1		673		—		—		674
Balances at June 27, 2020	348,093	$	3,481	$	302,522	$	1,404,326	$	(631,009)	$	1,079,320


	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
	Shares	Amount
Balances at December 28, 2019	362,449	$	3,624	$	304,395	$	1,546,224	$	(617,648)	$	1,236,595
Net income	—	—		—		153,307		—		153,307
Dividends ($0.30 per common share)	—	—		—		(107,336)		—		(107,336)
Other comprehensive loss	—	—		—		—		(13,361)		(13,361)
Stock-based compensation	—	—		9,034		—		—		9,034
Net exercise of stock options, vesting of restricted stock units and other	108	2		1,348		—		—		1,350
Share repurchases	(14,464)	(145)		(12,255)		(187,869)		—		(200,269)
Balances at June 27, 2020	348,093	$	3,481	$	302,522	$	1,404,326	$	(631,009)	$	1,079,320

See accompanying notes to Condensed Consolidated Financial Statements.

Table of Contents

HANESBRANDS INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Six Months Ended
	July 3, 2021(1)		June 27, 2020(1)
Operating activities:
Net income (loss)	$	(134,586)	$	153,307
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation	43,565		45,399
Amortization of acquisition intangibles	10,978		12,199
Other amortization	5,814		5,107
Impairment of intangible assets and goodwill	163,047		20,319
Loss on classification of assets held for sale	236,180		0
Amortization of debt issuance costs	7,669		5,119
Other	(14,224)		16,247
Changes in assets and liabilities:
Accounts receivable	(200,106)		(392,134)
Inventories	(175,149)		(61,409)
Other assets	4,451		(31,570)
Accounts payable	300,318		210,338
Accrued pension and postretirement benefits	(39,176)		(19,318)
Accrued liabilities and other	3,475		18,603
Net cash from operating activities	212,256		(17,793)
Investing activities:
Capital expenditures	(25,331)		(46,512)
Proceeds from sales of assets	2,455		66

Other	6,937		5,823
Net cash from investing activities	(15,939)		(40,623)
Financing activities:
Repayments on Term Loan Facilities	(306,250)		0
Borrowings on Accounts Receivable Securitization Facility	0		227,061
Repayments on Accounts Receivable Securitization Facility	0		(227,061)
Borrowings on Revolving Loan Facilities	0		1,638,000
Repayments on Revolving Loan Facilities	0		(1,638,000)
Borrowings on Senior Notes	0		700,000
Borrowings on International Debt	0		31,222

Borrowings on notes payable	42,638		116,669
Repayments on notes payable	(43,066)		(112,373)
Share repurchases	0		(200,269)
Cash dividends paid	(104,719)		(105,896)


Other	(2,524)		(14,035)
Net cash from financing activities	(413,921)		415,318
Effect of changes in foreign exchange rates on cash	(16,780)		(2,669)
Change in cash, cash equivalents and restricted cash	(234,384)		354,233
Cash, cash equivalents and restricted cash at beginning of year	910,603		329,923
Cash, cash equivalents and restricted cash at end of period	676,219		684,156
Less restricted cash at end of period	0		1,042
Cash and cash equivalents at end of period	$	676,219	$	683,114

Balances included in the Condensed Consolidated Balance Sheets:
Cash and cash equivalents	$	667,298	$	556,099
Cash and cash equivalents included in current assets of discontinued operations	8,921		127,015
Cash and cash equivalents at end of period	$	676,219	$	683,114

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

Capital expenditures included in accounts payable at July 3, 2021 and January 2, 2021 were $11,477 and $17,931, respectively. For the six months ended July 3, 2021 and June 27, 2020, right-of-use assets obtained in exchange for lease obligations were $37,725 and $23,769, respectively.

See accompanying notes to Condensed Consolidated Financial Statements.

Table of Contents

HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements

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

(unaudited)

(1) Basis of Presentation


~~(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.~~, a Maryland corporation,~~ 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. Three subsidiaries of the Company close on the calendar month-end, which is less than a week different than the Company’s consolidated quarter end. The difference in reporting of financial information for these subsidiaries did not have a material impact on the Company’s financial condition, results of operations or cash flows.

As a result of further policy harmonization related to acquired businesses, certain prior year amounts in the condensed consolidated financial statements, none of which are material, have been reclassified to conform with the current year presentation. The reclassification on the Condensed Consolidated Balance Sheet is between the “Trade accounts receivable, net” line and the “Accrued liabilities” line of $22,746 as of December 31, 2016. The reclassification on the Condensed Consolidated Statement of Cash Flow is between the “Accounts Receivable” and the “Accrued liabilities and other” line of $2,744 for the nine months ended October 1, 2016. This reclassification had no impact on the Company’s results of operations.

These condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s ~~most recent~~ Annual Report on Form ~~10-K.~~10-K for the year ended January 2, 2021. The ~~year end~~year-end condensed balance sheet data was derived from audited 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.

In the first quarter of 2021, the Company announced that as part of its strategic plan, it was exploring alternatives for its European Innerwear business and subsequently reached the decision to exit this business. The Company determined that its European Innerwear business met held-for-sale and discontinued operations accounting criteria at the end of the first quarter of 2021. Accordingly, the Company began to separately report the results of its European Innerwear business as discontinued operations in its Condensed Consolidated Statements of Income, and to present the related assets and liabilities as held for sale in the Condensed Consolidated Balance Sheets. These changes have been applied to all periods presented. Unless otherwise noted, discussion within these notes to the condensed consolidated interim financial statements relates to continuing operations. See note “Discontinued Operations” for additional information.


~~(2)~~	~~Recent Accounting Pronouncements~~

~~Inventory~~

(2) Recent Accounting Pronouncements

Income Taxes

In ~~July 2015,~~December 2019, the FASB issued ASU ~~2015-11, “Inventory:~~2019-12, “Income Taxes (Topic 740): Simplifying the ~~Measurement of Inventory”, which requires inventory to be recorded at the lower of cost or net realizable value.~~Accounting for Income Taxes.” The new ~~standard was~~accounting rules reduce complexity by removing specific exceptions to general principles related to intraperiod tax allocations, ownership changes in foreign investments, and interim period income tax accounting for year-to-date losses that exceed anticipated losses. The new accounting rules also simplify accounting for franchise taxes that are partially based on income, transactions with a government that result in a step up in the tax basis of goodwill, separate financial statements of legal entities that are not subject to tax, and enacted changes in tax laws in interim periods. The new accounting rules were effective for the Company in the first quarter of ~~2017.~~2021. The adoption of the new accounting rules did not have a material impact on the Company’s financial condition, results of operations, cash flows or ~~cash flows.~~disclosures.

~~Hedge Accounting~~Reference Rate Reform

In March ~~2016,~~2020, the FASB issued ASU ~~2016-05, “Derivatives and Hedging~~2020-04, “Reference Rate Reform (Topic ~~815)~~848): ~~Effect~~Facilitation of ~~Derivative Contract Novations~~the Effects of Reference Rate Reform on ~~Existing Hedge Accounting Relationships”, which clarifies~~Financial Reporting.” In January 2021, the FASB clarified the scope of that ~~a change in~~guidance with the ~~counterparty to a derivative contract, in and~~issuance of ~~itself, does not require the dedesignation of a hedging relationship.~~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 amendments in this standard ~~which~~ can be adopted ~~prospectively or on a modified retrospective basis, was effective for~~any time before the ~~Company in the first~~fourth quarter of 2017. Also in March 2016, the FASB issued ASU 2016-06, “Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments”, which clarify the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. The new standard was effective for the Company in the first quarter of 2017. The adoption of the new accounting rules did not have a material impact on the Company’s financial condition, results of operations and cash flows.

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~~HANESBRANDS INC.~~

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

~~(dollars and shares in thousands, except per share data)~~

~~(unaudited)~~

~~Revenue from Contracts with Customers~~

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”, a new accounting standard on revenue recognition that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The FASB has subsequently issued updates to the standard to provide additional clarification on specific topics. The new standard will be effective for the Company in the first quarter of 2018 and can be applied using a modified retrospective or full retrospective method. The Company has established an implementation team consisting of finance, accounting and front-end business partners to analyze the impact of the guidance across all of its revenue sources. The Company has evaluated the new standard against its existing accounting policies and practices, including reviewing standard purchase orders, invoices, shipping terms, conducting questionnaires with our global team and reviewing contracts with customers. The Company has not identified any information that would indicate that the new guidance will have a material impact on the Company’s financial statements. The Company expects to have enhanced disclosures related to disaggregation of revenue sources and accounting policies. The Company expects to adopt the new standard in the first quarter of 2018 using the modified retrospective transition method.

~~Statement of Cash Flows~~

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments”. Issues addressed in the new guidance that are relevant to the Company include debt prepayment and extinguishment costs, contingent consideration payments made after a business combination and beneficial interests in securitization transactions. The new rules will be effective for the Company in the first quarter of 2018. The Company does not expect the adoption of the new accounting rules to have a material impact on the Company’s cash flows.

~~Income Taxes~~

In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory”. The new rules eliminate the exception for an intra-entity transfer of an asset other than inventory, which aligns the recognition of income tax consequences for such transfers. The new rules require the recognition of current and deferred income taxes resulting from these transfers when the transfer occurs rather than when it is sold to an external party. The new rules will be effective for the Company in the first quarter of 2018. The Company does not expect the adoption of the new accounting rules to have a material impact on the Company’s financial condition, results of operations and cash flows.

~~Definition of a Business~~

In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business”. The new rules provide for the application of a screen test to consider whether substantially all the fair value of the assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If the screen test determines this to be true, the set is not a business. The new rules will be effective for the Company in the first quarter of 2018. The Company does not expect the adoption of the new accounting rules to have a material impact on the Company’s financial condition, results of operations and cash flows.

~~Compensation Retirement Benefits~~

In March 2017, the FASB issued ASU 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the presentation of net periodic pension cost and net periodic postretirement benefit cost”. The new rules require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. The new rules will be effective for the Company in the first quarter of 2018. Early adoption is permitted. The Company does not expect the adoption of the new accounting rules to have a material impact on the Company’s financial condition, results of operations and cash flows.

~~Stock Compensation~~

In May 2017, the FASB issued ASU 2017-09, “Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting”. The new rules provide guidance about which changes to the terms or conditions of a share-based payment award

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~~HANESBRANDS INC.~~

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

~~(dollars and shares in thousands, except per share data)~~

~~(unaudited)~~

require an entity to apply modification accounting. Under the new rules, an entity should account for the effects of a modification unless the fair value, vesting conditions and classification of the modified award are the same as the original award immediately before the original award is modified. The new rules will be effective for the Company in the first quarter of 2018. Early adoption is permitted. The Company does not expect the adoption of the new accounting rules to have a material impact on the Company’s financial condition, results of operations and cash flows.

~~Lease Accounting~~

In February 2016, the FASB issued ASU 2016-02, “Leases”, which will require lessees to recognize a right-of-use asset and a lease liability for all leases that are not short-term in nature. The new rules will be effective for the Company in the first quarter of 2019.2022. 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 ~~cash flows.~~disclosures.

~~Derivatives and Hedging~~

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HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

Codification Improvements

In ~~August 2017,~~October 2020, the FASB issued ASU ~~2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities”.~~2020-10, “Codification Improvements.” The new accounting rules ~~expand~~improve the ~~hedging strategies that qualify for hedge accounting, including contractually-specified price components of a commodity purchase or sale, hedges~~consistency of the ~~benchmark rate component~~Codification by including all disclosure guidance in the appropriate Disclosure Section (Section 50) that had only been included in the Other Presentation Matters Section (Section 45) of the ~~contractual coupon cash flows of fixed-rate assets and liabilities, hedges of~~Codification. Additionally, the ~~portion of a closed portfolio of prepayable assets and partial-term hedges of fixed-rate assets and liabilities. The~~ new rules also ~~allow additional time to complete hedge effectiveness testing~~clarify guidance across various topics including defined benefit plans, foreign currency transactions, and ~~allow qualitative assessments subsequent to initial quantitative tests if there is a supportable expectation that the hedge will remain highly effective.~~interest expense. The new accounting rules ~~will be~~were effective for the Company in the first quarter of ~~2019, with early adoption permitted.~~2021. The ~~Company does not expect the~~ adoption of the new accounting rules todid not have a material impact on the Company’s financial condition, results of operations, ~~and~~ cash ~~flows.~~flows or disclosures.

~~Goodwill Impairment~~

(3) Discontinued Operations

In ~~January 2017,~~ the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment”. The new rules simplify how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair valuefirst quarter of ~~a reporting unit’s goodwill with the carrying amount. The new rules will be effective for~~2021, the Company announced that as part of its strategic plan, it was exploring alternatives for its European Innerwear business and subsequently reached the decision to exit this business. The Company determined that its European Innerwear business met held-for-sale and discontinued operations accounting criteria at the end of the first quarter of 2021. Accordingly, the Company began to separately report the results of its European Innerwear business as discontinued operations in its Condensed Consolidated Statements of Income, and to present the related assets and liabilities as held for sale in the Condensed Consolidated Balance Sheets. These changes have been applied to all periods presented. The Company is actively marketing the business to prospective buyers and expects to complete the sale of this business before the end of the first quarter of 2022.

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

Upon meeting the criteria for held for sale classification which qualified as a triggering event, the Company performed a full impairment analysis of the disposal group's indefinite-lived intangible assets and goodwill. As a result of the strategic decision to exit the European Innerwear business, a strategic review was completed in the first quarter of ~~2020.~~2021 with revised forecasts to include updated market conditions and the removal of strategic operating decisions that would no longer occur under the Company's ownership. The revised forecasts indicated impairment charges of certain indefinite-lived trademarks and license agreements as well as the full goodwill balance. 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 six months ended July 3, 2021. In addition, the Company ~~does not expect~~recorded non-cash charges of $9,828 and $236,180 as "Loss on classification of assets held for sale" in the ~~adoption~~summarized discontinued operations financial information for the quarter and the six months ended July 3, 2021, respectively, to record a valuation allowance against the net assets held for sale to write down the carrying value of the ~~new accounting rules~~disposal group to ~~have a material impact on~~ the ~~Company’s financial condition, results~~estimated fair value less costs of ~~operations~~disposal. The non-cash charge recorded in the quarter ended July 3, 2021 resulted from changes in working capital balances and ~~cash flows.~~


~~(3)~~	~~Acquisitions~~

~~Hanes Australasia~~

On July 14, 2016, the Company acquired 100% of the outstanding shares of Pacific Brands Limited (“Hanes Australasia”) for a total purchase price of AUD$1,049,360 ($800,871). US dollar equivalents are based on acquisition dateforeign exchange rates. The Company ~~funded~~will continue to assess the ~~acquisition through~~valuation allowance in each interim period until the European Innerwear business is sold. Additionally, the Company recorded an impairment charge of $7,302 in continuing operations on an indefinite-lived trademark for the six months ended July 3, 2021 which is reflected in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statement of Income. This charge relates to the full impairment of an indefinite-lived trademark related to a ~~combination of cash on hand, a portion~~specific brand within the European Innerwear business that was excluded from the disposal group as it is not being marketed for sale. The Company intends to exit this brand subsequent to the sale of the ~~net proceeds~~European Innerwear business.

During the second quarter of 2020, the Company completed a quantitative impairment analysis for certain indefinite-lived intangible assets as a result of the significant impact of the COVID-19 pandemic on their performance. Based on this analysis, the Company recorded impairment charges of $20,319 on certain indefinite-lived trademarks and other intangible assets within the European Innerwear business which are reflected in the “Impairment of intangible assets and goodwill” line in the summarized discontinued operations financial information for the quarter and six months ended June 27, 2020.

The Company expects to continue certain sales from its supply chain to the European Innerwear business after the sale of the business. Those sales and the related profit are included in continuing operations in the Condensed Consolidated Statements of Income and in “Other” in note “Business Segment Information” in all periods presented and have not been eliminated as intercompany transactions in consolidation. The related receivables from the ~~3.5% Senior Notes issued~~European Innerwear business have been reclassified to “Trade accounts receivable, net” in ~~June 2016 and borrowings under~~ the ~~Australian Term A-1 Loan Facility and the Australian Term A-2 Loan Facility.~~

Condensed Consolidated Balance Sheets for all periods presented.

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HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

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

(unaudited)

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


	Quarters Ended				Six Months Ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Net sales	$	117,506	$	205,591	$	253,351	$	333,262
Cost of sales	63,137		86,441		138,660		158,548
Gross profit	54,369		119,150		114,691		174,714
Selling, general and administrative expenses	61,134		59,428		144,526		128,815
Impairment of intangible assets and goodwill	0		20,319		155,745		20,319
Loss on classification of assets held for sale	9,828		0		236,180		0
Operating income (loss)	(16,593)		39,403		(421,760)		25,580
Other expenses	280		397		614		786
Interest expense, net	69		584		159		1,406
Income (loss) from discontinued operations before income tax expense	(16,942)		38,422		(422,533)		23,388
Income tax expense (benefit)	2,245		13,809		(11,680)		11,767
Net income (loss) from discontinued operations, net of tax	$	(19,187)	$	24,613	$	(410,853)	$	11,621

Assets and liabilities atof discontinued operations classified as held for sale in the ~~date~~Condensed Consolidated Balance Sheets as of ~~acquisition (July 14, 2016) include~~July 3, 2021, January 2, 2021 and June 27, 2020 consist of the following:

Cash and cash equivalents $ 54,294
Accounts receivable, net 36,019
Inventories 104,806
Other current assets 16,588
Current assets of discontinued operations 50,839
Property, net 34,835
Trademarks and other identifiable intangibles 506,170
Deferred tax assets and other noncurrent assets 23,687
Total assets acquired 827,238
Accounts payable 89,309
Accrued liabilities and other 24,912
Current liabilities of discontinued operations 14,564
Long-term debt 41,976
Deferred tax liabilities and other noncurrent liabilities 16,320
Total liabilities assumed 187,081
Net assets acquired 640,157
Goodwill 160,714
Purchase price $ 800,871

Since July 14, 2016, goodwill decreased by $25,434 as a result of measurement period adjustments, primarily related to the valuation adjustments for the Dunlop Flooring and Tontine Pillow businesses and completion of deferred tax balances. The purchase price allocation was finalized in the third quarter of 2017.


	July 3, 2021		January 2, 2021(1)		June 27, 2020(1)
Cash and cash equivalents	$	8,921	$	8,822	$	127,015
Trade accounts receivable, net	70,432		84,632		68,041
Inventories	119,627		123,337		184,304
Other current assets	15,114		17,295		21,987
Property, net	63,222		67,950		68,916
Right-of-use assets	34,051		34,637		40,994
Trademarks and other identifiable intangibles, net	211,534		284,170		282,362
Goodwill	0		96,692		88,445
Deferred tax assets	10,376		5,438		6,947
Other noncurrent assets	4,421		5,614		5,381
Allowance to adjust assets to estimated fair value, less costs of disposal	(235,712)		0		0
Total assets of discontinued operations	$	301,986	$	728,587	$	894,392

Accounts payable	$	70,185	$	77,636	$	61,179
Accrued liabilities	111,321		133,431		115,465
Lease liabilities	8,693		10,332		13,026
Notes payable	377		784		8,790
Current portion of long-term debt	0		0		112,512
Lease liabilities - noncurrent	26,766		28,775		31,971
Pension and postretirement benefits	44,328		46,569		45,405
Other noncurrent liabilities	28,081		37,645		38,988
Total liabilities of discontinued operations	$	289,751	$	335,172	$	427,336

~~Champion Europe~~

On(1)Amounts at January 2, 2021 and June ~~30, 2016, the Company acquired 100% of Champion Europe S.p.A. (“Champion Europe”), which owns the trademark for the~~ ~~Champion~~ ~~brand in Europe, the Middle East~~27, 2020 have been classified as current and ~~Africa, from certain individual shareholders in an all-cash transaction valued at €220,751 ($245,554) on an enterprise value basis, less working capital adjustments as defined~~long-term in the purchase agreement, which included €40,700 ($45,277) in estimated contingent consideration. US dollar equivalents are based on acquisition date exchange rates. The Company funded the acquisition through a combination of cash on hand and a portion of the net proceeds from the 3.5% Senior Notes issued in June 2016.

~~The estimated contingent consideration is included in the “Accrued liabilities” line in the accompanying~~ Condensed Consolidated Balance Sheet and is based on 10 times Champion Europe’s earnings before interest, taxes, depreciation and amortization (“EBITDA”) in excess of €18,600, calculated as defined by the purchase agreement, for the calendar year 2016 and is payable in 2017. The contingent consideration is required to be revalued each reporting period until paid. At September 30, 2017, the contingent consideration payment was pending finalization of Champion Europe’s calendar year 2016 EBITDA calculation in accordance with the purchase agreement. On April 28, 2017, an initial payment of €37,820 ($41,250) was made to the sellers towards the contingent consideration liability, which represents the mutually agreed portion of the contingent consideration. Management continues to evaluate and discuss the proposed adjustments to the EBITDA calculation with the sellers and believes the remaining accrual is consistent with management’s expectations for any additional amount that will be due in connection with the contingent consideration. In addition to the initial payment, additional contingent consideration payments could total up to approximately €46,600.

Sheets.

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HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

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

(unaudited)

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				Six Months Ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Depreciation	$	0	$	2,682	$	2,608	$	5,347
Amortization	0		1,262		1,460		2,544
Capital expenditures	735		1,862		4,070		5,400
Impairment of intangible assets and goodwill	0		20,319		155,745		20,319
Loss on classification of assets held for sale	9,828		0		236,180		0
Other investing activities	1,580		615		3,374		1,831
Capital expenditures included in accounts payable at end of period	486		264		486		264
Right-of-use assets obtained in exchange for lease obligations	1,642		0		3,137		201

(4) Revenue Recognition

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

The ~~acquired assets, contingent consideration and assumed liabilities at~~following table presents the ~~date~~Company’s revenues disaggregated by the customer’s method of ~~acquisition (June 30, 2016) include~~purchase:


	Quarters Ended				Six Months Ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Third-party brick-and-mortar wholesale	$	1,233,531	$	1,164,078	$	2,258,270	$	2,050,613
Consumer-directed	517,780		379,005		1,001,070		695,540
Total net sales	$	1,751,311	$	1,543,083	$	3,259,340	$	2,746,153

Revenue Sources

Third-Party Brick-and-Mortar Wholesale Revenue

Third-party brick-and-mortar wholesale revenue is primarily generated by sales of the ~~following:~~

Cash and cash equivalents $ 14,581
Trade accounts receivable, net 27,926
Inventories 53,816
Other current assets 5,976
Property, net 24,605
Trademarks and other identifiable intangibles 135,277
Deferred tax assets and other noncurrent assets 3,777
Total assets acquired 265,958
Accounts payable 66,594
Accrued liabilities and other (including contingent consideration) 60,887
Notes payable 27,748
Deferred tax liabilities and other noncurrent liabilities 20,282
Total liabilities assumed and contingent consideration 175,511
Net assets acquired 90,447
Goodwill 109,830
Initial consideration paid 200,277
Estimated contingent consideration 45,277
Total purchase price $ 245,554

~~Since June 30, 2016, goodwill increased by $1,665 as a result~~Company’s products to retailers to support their brick-and-mortar operations. Also included within third-party brick-and-mortar wholesale revenue is royalty revenue from licensing agreements. The Company earns royalties through license agreements with manufacturers of ~~measurement period adjustments primarily to working capital.~~other consumer products that incorporate certain of the Company’s brands. The ~~purchase price allocation was finalized~~Company accrues revenue earned under these contracts based upon reported sales from the licensees. Additionally, in ~~the second quarter of 2017.~~

~~Consolidated Pro Forma Results~~

Consolidated unaudited pro forma results of operations for the Company are presented below assuming that the 2016 acquisitions of Hanes Australasia and Champion Europe had occurred on January 4, 2015. Pro forma operating results for the quarter and ~~nine~~six months ended ~~October 1, 2016 exclude expenses totaling $751~~June 27, 2020, third-party brick-and-mortar wholesale revenue included $514,256 of revenue from contracts with governments generated from the sale of both cloth face coverings and ~~$6,187 respectively,~~gowns for ~~acquisition-related adjustments~~use during the COVID-19 pandemic. Receivables from government contracts of $484,162 were included in “Trade accounts receivable, net” in the Company’s Condensed Consolidated Balance Sheet at June 27, 2020.

Consumer-Directed Revenue

Consumer-directed revenue is primarily ~~related to inventory and stock compensation.~~

Quarter Ended Nine Months Ended
September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016
Net sales $ 1,799,270
$ 1,780,530
$ 4,826,235
$ 4,859,619
Net income from continuing operations 203,356
172,040
448,602
448,589
Earnings per share from continuing operations:
Basic $ 0.56
$ 0.45
$ 1.22
$ 1.17
Diluted 0.55
0.45
1.21
1.16

~~Subsequent Event~~

On October 13, 2017, the Company acquired 100% of Alternative Apparel, Inc. (“Alternative Apparel”) from Rosewood Capital V, L.P. and certain individual shareholders in an all-cash transaction valued at approximately ~~$60,000~~ ~~on an enterprise value basis. Alternative Apparel sells the~~ ~~Alternative~~ ~~brand better basics T-shirts, fleece and other tops and bottoms.~~ ~~Alternative~~ is a lifestyle brand known for its comfort, style and social responsibility. The Company funded the acquisition with cash on hand and short term borrowing under the Revolving Loan Facility. The Company believes this acquisition will create growth opportunities by supporting its Activewear growth strategy by expanding its market and channel penetration, including online, supportedgenerated 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 ~~global low-cost supply chain and manufacturing network. Due to the immaterial nature of this acquisition, the Company has not provided additional disclosures herein.~~

retail customers.

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HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

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

(unaudited)

(5) Stockholders’ Equity


~~(4)~~	~~Discontinued Operations~~

As part of the Company’s acquisition of Hanes Australasia, the Company acquired Hanes Australasia’s legacy Dunlop Flooring and Tontine Pillow businesses. The Company concluded that these businesses were not a strategic fit; therefore, the decision was made to divest of the businesses.

In February 2017, the Company sold its Dunlop Flooring business for AUD$34,564 ($26,219) in net cash proceeds at the time of sale, with an additional AUD$1,334 ($1,012) of proceeds received in April 2017 related to a working capital adjustment, resulting in a pre-tax loss of AUD$2,715 ($2,083). US dollar equivalents are based on exchange rates on the date of the sale transaction. The Dunlop Flooring business was reported as part of discontinued operations since the date of acquisition.

In March 2017, the Company sold its Tontine Pillow business for AUD$13,500 ($10,363) in net cash proceeds at the time of sale. A working capital adjustment of AUD$966 ($742) was paid to the buyer in April 2017, resulting in a net pre-tax gain of AUD$2,415 ($1,856). US dollar equivalents are based on exchange rates on the date of the sale transaction. The Tontine Pillow business was reported as part of discontinued operations since the date of acquisition.

The operating results of these discontinued operations only reflect revenues and expenses that are directly attributable to these businesses that were eliminated from ongoing operations. The key components from discontinued operations related to the Dunlop Flooring and Tontine Pillow businesses were as follows:

Quarter Ended Nine Months Ended
September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016
Net sales $ —
$ 15,587
$ 6,865
$ 15,587
Cost of sales —
9,996
4,507
9,996
Gross profit —
5,591
2,358
5,591
Selling, general and administrative expenses —
3,570
3,729
3,570
Operating profit (loss) —
2,021
(1,371 ) 2,021
Other expenses —
495
303
495
Net loss on disposal of businesses —
—
242
—
Income (loss) from discontinued operations before income tax expense —
1,526
(1,916 ) 1,526
Income tax expense —
458
181
458
Net income (loss) from discontinued operations, net of tax $ —
$ 1,068
$ (2,097 ) $ 1,068


~~(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.~~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		Six Months Ended
	July 3, 2021	June 27, 2020	July 3, 2021	June 27, 2020
Basic weighted average shares outstanding	350,987	350,538	350,995	354,778
Effect of potentially dilutive securities:
Stock options	24	143	16	182
Restricted stock units	1,039	143	855	165
Employee stock purchase plan and other	2	5	3	8
Diluted weighted average shares outstanding	352,052	350,829	351,869	355,133

Quarter Ended Nine Months Ended
September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016
Basic weighted average shares outstanding 366,083
379,368
368,885
382,235
Effect of potentially dilutive securities:
Stock options 1,541
1,890
1,591
2,016
Restricted stock units 535
1,293
470
1,210
Employee stock purchase plan and other 1
7
1
17
Diluted weighted average shares outstanding 368,160
382,558
370,947
385,478

~~There were 28 and 58 restricted stock units excluded from the diluted earnings per share calculation because their effect would be anti-dilutive for the quarter and nine months ended~~ ~~September 30, 2017, respectively. For the quarter and nine months~~

~~Table of Contents~~

~~HANESBRANDS INC.~~

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

~~(dollars and shares in thousands, except per share data)~~

~~(unaudited)~~

ended October 1, 2016, there were 42 restricted stock units excluded from the diluted earnings per share calculation because their effect would be anti-dilutive. For the quarters and nine months ended September 30, 2017 and October 1, 2016, no optionsThe following securities were excluded from the diluted earnings per share calculation because their effect would be ~~anti-dilutive.~~anti-dilutive:

For the quarters ended September 30, 2017 and October 1, 2016, the Company declared cash dividends of $0.15 and $0.11 per share, respectively. For the nine months ended September 30, 2017 and October 1, 2016, the Company declared cash dividends of $0.45 and $0.33 per share, respectively.


	Quarters Ended		Six Months Ended
	July 3, 2021	June 27, 2020	July 3, 2021	June 27, 2020
Stock options	83	0	167	0
Restricted stock units	45	1,599	44	1,330

On ~~October 24, 2017,~~July 27, 2021, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.15 per share on outstanding shares of common stock to be paid on ~~December 5, 2017~~August 31, 2021 to stockholders of record at the close of business on ~~November 14, 2017.~~August 10, 2021.

On ~~April 27, 2016,~~February 6, 2020, the Company’s Board of Directors approved a new share repurchase program for up to 40,000 shares to be repurchased in open market transactions, subject to market conditions, legal requirements and other factors. Additionally, management has been granted authority to establish one or more trading plans under Rule 10b5-1 of the Exchange Act in connection with share repurchases, which will allow the Company to repurchase shares in the open market during periods in which the stock trading window is otherwise closed for the Company and certain of the Company’s officers and employees pursuant to the Company’s insider trading policy. Unless terminated earlier by the Company’s Board of Directors, the new program will expire when the Company has repurchased all shares authorized for repurchase under the new program. The new program replaced the Company’s previous share repurchase program for up to 40,000 shares that was originally approved in 2016. For the quarters ended July 3, 2021 and June 27, 2020 and the six months ended July 3, 2021, the Company did not enter into any transactions to repurchase ~~any~~ shares ~~during~~under the ~~quarters ended September 30, 2017 and October 1, 2016.~~new program. For the ~~nine~~six months ended ~~September 30, 2017,~~June 27, 2020, the Company entered into transactions to repurchase ~~14,696~~14,464 shares at a weighted average repurchase price of ~~$20.39~~$13.83 per ~~share.~~share under the new program. The shares were repurchased at a total cost of $299,919. For the nine months ended October 1, 2016, the Company repurchased 14,243 shares under the previous share repurchase program at a weighted average purchase price of $26.65 per share. The shares were repurchased at a total cost of $379,901.$200,269. At ~~September 30, 2017,~~July 3, 2021, the remaining repurchase authorization under the current share repurchase program totaled ~~25,304~~25,536 shares. The primary objective of the share repurchase program ~~does not obligate~~is to utilize excess cash to generate shareholder value. Share repurchases were previously prohibited under the Senior Secured Credit Facility as a result of the amendment signed in April 2020. The Company terminated such amendment when it submitted its April 3, 2021 compliance certificate in order to ~~acquire any particular amount of common stock~~reduce interest expense and ~~may be suspended or discontinued at any time at~~increase flexibility for restricted payments, investments, indebtedness, and permitted acquisitions. See Note “Debt” for additional information on the Company’s ~~discretion.~~debt facilities.


~~(6)~~	~~Inventories~~

~~Inventories consisted of the following:~~

September 30,
2017 December 31,
2016
Raw materials $ 130,567
$ 131,228
Work in process 201,729
185,066
Finished goods 1,621,622
1,524,271
$ 1,953,918
$ 1,840,565

Table of Contents

HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

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

(unaudited)

(6) Inventories


~~(7)~~	~~Debt~~

Inventories consisted of the following:


	July 3, 2021		January 2, 2021		June 27, 2020
Raw materials	$	72,436	$	67,111	$	80,610
Work in process	101,862		108,844		127,924
Finished goods	1,356,324		1,191,803		1,565,605
	$	1,530,622	$	1,367,758	$	1,774,139

(7) Debt

Debt consisted of the following:


	Interest Rate as of September 30, 2017	Principal Amount				Maturity Date		Interest Rate as of July 3, 2021	Principal Amount				Maturity Date
		September 30, 2017		December 31, 2016					July 3, 2021		January 2, 2021
Senior Secured Credit Facility:							Senior Secured Credit Facility:
Revolving Loan Facility	2.99%	$	211,000	$	—	April 2020	Revolving Loan Facility	0	$	0	$	0	December 2022

Term Loan A	2.95%	605,625		655,469		April 2020	Term Loan A	1.34%	618,750		625,000		December 2022
Term Loan B	3.74%	318,625		318,625		April 2022	Term Loan B	0	0		300,000		December 2024
Australian Term A-1	3.15%	156,974		143,544		July 2019
Australian Term A-2	—%	—		143,544		July 2021

Australian Revolving Loan Facility							Australian Revolving Loan Facility	0	0		0		July 2022
5.375% Senior Notes							5.375% Senior Notes	5.38%	700,000		700,000		May 2025
4.875% Senior Notes	4.88%	900,000		900,000		May 2026	4.875% Senior Notes	4.88%	900,000		900,000		May 2026
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	3.50%	587,268		520,617		June 2024	3.5% Senior Notes	3.50%	593,261		610,724		June 2024
European Revolving Loan Facility	1.50%	79,868		62,474		September 2018
Accounts Receivable Securitization Facility	2.12%	250,995		44,521		March 2018	Accounts Receivable Securitization Facility	0	0		0		June 2022
Other International Debt	Various	2,027		43,789		Various
		4,012,382		3,732,583
Less long-term debt issuance cost		40,445		46,534
Total debt							Total debt		3,712,011		4,035,724
Less long-term debt issuance costs							Less long-term debt issuance costs		27,029		32,354
Less current maturities		405,390		178,364			Less current maturities		37,500		263,936
		$	3,566,547	$	3,507,685
Total long-term debt							Total long-term debt		$	3,647,482	$	3,739,434

As of ~~September 30, 2017,~~July 3, 2021, the Company had ~~$784,117~~$995,824 of borrowing availability under the $1,000,000 Revolving Loan Facility after taking into account ~~outstanding borrowings and $4,883~~$4,176 of standby and trade letters of credit issued and outstanding under this facility. In March 2021, the Company repaid the outstanding balance of Term Loan B which consisted of a required excess cash flow prepayment of $238,936 and a voluntary prepayment of $61,064.

The Company’s accounts receivable securitization facility (the “Accounts Receivable Securitization Facility”) entered into in November 2007 was amended in March 2021. The latest amendment decreased the fluctuating facility limit to $175,000 (previously $225,000) and extended the maturity date to June 2022. Additionally, the amendment changed certain ratios and borrowing base calculations, raised pricing and added certain receivables to the pledged collateral pool for the facility. Borrowings under the Accounts Receivable Securitization Facility are permitted only to the extent that the face of the receivables in the collateral pool, net of applicable reserves and other deductions, exceeds the outstanding loans and also subject to a fluctuating facility limit, not to exceed $175,000. The Company’s maximum borrowing capacity under the Accounts Receivable Securitization Facility was $150,000 as of July 3, 2021. The Company ~~also~~ had ~~$24,005~~$88,833 of borrowing availability under the Accounts Receivable Securitization Facility ~~$37,586 of borrowing availability under the European Revolving Loan Facility, $51,016~~at July 3, 2021.

The Company had $44,994 of borrowing availability under the Australian Revolving Loan Facility and ~~$60,648~~$33,610 of borrowing availability under other international ~~lines of~~ credit facilities after taking into account outstanding borrowings and letters of credit outstanding under the applicable ~~facility.~~

~~In March 2017, the Company amended the Accounts Receivable Securitization~~facilities at July 3, 2021. The Australian Revolving Loan Facility, ~~that it~~originally entered into in ~~November 2007 (the “Accounts Receivable Securitization Facility”). This amendment primarily extended the maturity date to March 2018.~~

~~In September 2017, the Company~~July 2016, was amended ~~the European Revolving Loan Facility primarily~~in July 2021 to extend the maturity date to ~~September 2018.~~July 2022 and to reduce the bilateral cash advance limit from A$50,000 to A$46,000 with an offsetting increase in the bank overdraft limit from A$10,000 to A$14,000.

In April 2020, given the rapidly changing business environment and level of uncertainty being created by the COVID-19 pandemic and the associated impact on future earnings, the Company amended its Senior Secured Credit Facility prior to any

Table of Contents

HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

potential covenant violation in order to modify the financial covenants and to provide operating flexibility during the COVID-19 crisis. The amendment changed certain provisions and covenants under the Senior Secured Credit Facility through the fiscal quarter ended July 3, 2021, after which the covenants were to revert to their original, pre-amendment levels. The Company voluntarily terminated the covenant relief amendment when it submitted its April 3, 2021 compliance certificate in order to reduce interest expense and increase flexibility for restricted payments, investments, indebtedness, and permitted acquisitions. After termination, the covenants reverted to their original, pre-amendment levels for the fiscal quarter ended July 3, 2021.

As of ~~September 30, 2017,~~July 3, 2021, the Company was in compliance with all financial covenants under its credit ~~facilities.~~facilities and other outstanding indebtedness. Under the terms of its Senior Secured Credit Facility, among other financial and non-financial covenants, the Company is required to maintain a minimum interest coverage ratio and a maximum leverage ratio. The interest coverage ratio covenant is the ratio of the Company’s EBITDA for the preceding four fiscal quarters to its consolidated total interest expense and the maximum leverage ratio covenant is the ratio of the Company’s net debt to EBITDA for the preceding four fiscal quarters. EBITDA is defined as earnings before interest, income taxes, depreciation expense and amortization, as computed pursuant to the Senior Secured Credit Facility.

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


~~(8)~~	~~Accumulated Other Comprehensive Loss~~

(8) Accumulated Other Comprehensive Loss

The components of ~~Accumulated~~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 April 3, 2021	$	(78,021)	$	(12,822)	$	(659,946)	$	173,904	$	(576,885)
Amounts reclassified from accumulated other comprehensive loss	0		4,671		6,022		(2,993)		7,700
Current-period other comprehensive income (loss) activity	(11,231)		(675)		(124)		287		(11,743)
Total other comprehensive income (loss)	(11,231)		3,996		5,898		(2,706)		(4,043)

Balance at July 3, 2021	$	(89,252)	$	(8,826)	$	(654,048)	$	171,198	$	(580,928)


																				Cumulative Translation Adjustment(1)					Cash Flow Hedges		Defined Benefit Plans		Income Taxes		Accumulated Other Comprehensive Loss
	Cumulative Translation Adjustment			Hedges			Defined Benefit Plans				Income Taxes				Accumulated Other Comprehensive Loss

Balance at December 31, 2016	$	(78,059	)	$	13,772				$	(606,583				)					$	234,879		$	(435,991	)
Balance at January 2, 2021																		Balance at January 2, 2021		$	(52,820)				$	(26,538)	$	(668,730)	$	181,129	$	(566,959)
Amounts reclassified from accumulated other comprehensive loss	—			(3,348		)	14,440				(4,611		)		6,481			Amounts reclassified from accumulated other comprehensive loss		0					9,913		13,107		(5,997)		17,023
Current-period other comprehensive income (loss) activity	34,047			(43,660		)	—				12,481				2,868			Current-period other comprehensive income (loss) activity		(36,432)					7,799		1,575		(3,934)		(30,992)
Total other comprehensive income (loss)																		Total other comprehensive income (loss)		(36,432)					17,712		14,682		(9,931)		(13,969)

Balance at September 30, 2017	$	(44,012	)	$	(33,236	)	$	(592,143	)		$	242,749			$	(426,642	)
Balance at July 3, 2021																		Balance at July 3, 2021		$	(89,252)				$	(8,826)	$	(654,048)	$	171,198	$	(580,928)

(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)

(~~dollars and shares~~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 March 28, 2020	$	(274,292)	$	19,849	$	(624,494)	$	155,512	$	(723,425)
Amounts reclassified from accumulated other comprehensive loss	0		(3,157)		5,423		(416)		1,850
Current-period other comprehensive income (loss) activity	95,033		(7,051)		(69)		2,653		90,566
Total other comprehensive income (loss)	95,033		(10,208)		5,354		2,237		92,416

Balance at June 27, 2020	$	(179,259)	$	9,641	$	(619,140)	$	157,749	$	(631,009)


	Cumulative Translation Adjustment(1)		Cash Flow Hedges		Defined Benefit Plans		Income Taxes		Accumulated Other Comprehensive Loss
Balance at December 28, 2019	$	(157,138)	$	4,786	$	(629,360)	$	164,064	$	(617,648)
Amounts reclassified from accumulated other comprehensive loss	0		(8,174)		10,289		(416)		1,699
Current-period other comprehensive income (loss) activity	(22,121)		13,029		(69)		(5,899)		(15,060)
Total other comprehensive income (loss)	(22,121)		4,855		10,220		(6,315)		(13,361)

Balance at June 27, 2020	$	(179,259)	$	9,641	$	(619,140)	$	157,749	$	(631,009)

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	Location of Reclassification into Income	Amount of Reclassification from AOCI
		Quarters Ended				Six Months Ended
		July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Gain (loss) on forward foreign exchange contracts designated as cash flow hedges	Cost of sales	$	(5,278)	$	1,758	$	(9,655)	$	4,627
	Income tax	1,444		(483)		2,652		(1,245)
	Income (loss) from discontinued operations, net of tax	(1,278)		1,080		(1,522)		2,718
	Net of tax	(5,112)		2,355		(8,525)		6,100

Gain (loss) on cross-currency swap contracts designated as cash flow hedges	Selling, general and administrative expenses	3,168		0		2,611		0
	Interest expense, net	(1,018)		0		(1,018)		0
	Income tax	(312)		0		(223)		0
	Net of tax	1,838		0		1,370		0

Amortization of deferred actuarial loss and prior service cost	Other expenses	(6,081)		(5,466)		(13,788)		(8,228)
	Income tax	1,596		1,261		3,342		2,494
	Income (loss) from discontinued operations, net of tax	59		0		578		(2,065)
	Net of tax	(4,426)		(4,205)		(9,868)		(7,799)

Total reclassifications		$	(7,700)	$	(1,850)	$	(17,023)	$	(1,699)

(9) Financial Instruments and Risk Management

Component of AOCI Location of Reclassification into Income Amount of Reclassification
from AOCI Amount of Reclassification
from AOCI
Quarter Ended Nine Months Ended
September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016
Gain on foreign exchange contracts Cost of sales $ 414
$ 715
$ 3,348
$ 4,424

Income tax 191
(278 ) (934 ) (1,721 )

Net of tax 605
437
2,414
2,703
Amortization of deferred actuarial loss and prior service cost Selling, general and administrative
expenses (4,862 ) (4,307 ) (14,440 ) (12,843 )

Income tax 1,867
1,675
5,545
4,996

Net of tax (2,995 ) (2,632 ) (8,895 ) (7,847 )

Total reclassifications $ (2,390 ) $ (2,195 ) $ (6,481 ) $ (5,144 )

The Company uses forward foreign exchange contracts and cross-currency swap contracts to manage its exposures to movements in foreign exchange ~~rates. As~~rates primarily related to the Euro, Australian dollar, Canadian dollar and Mexican peso. The Company also uses a combination of ~~September 30, 2017, the notional U.S. dollar equivalent of commitments~~cross-currency swap contracts and long-term debt to ~~sell~~manage its exposure to foreign ~~currencies within~~currency risk associated with the Company’s ~~derivative portfolio was~~ ~~$588,866, primarily consisting~~net investment in certain European subsidiaries.


	Hedge Type	July 3, 2021		January 2, 2021
U.S. dollar equivalent notional amount of derivative instruments:
Forward foreign exchange contracts	Cash Flow and Mark to Market	$	355,633	$	617,912
Cross-currency swap contracts	Cash Flow	$	352,920	$	0
Cross-currency swap contracts	Net Investment	$	335,940	$	335,940

Table of ~~contracts hedging exposures~~Contents

HANESBRANDS INC.

Notes to ~~the Australian dollar, Euro, Canadian dollar, Mexican peso, and the New Zealand dollar.~~Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

Fair Values of Derivative Instruments

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

Balance Sheet Location Fair Value
September 30,
2017 December 31,
2016
Hedges Other current assets $ 907
$ 16,729
Non-hedges Other current assets 541
4,363
Total derivative assets 1,448
21,092

Hedges Accrued liabilities (21,169 ) (207 )
Non-hedges Accrued liabilities (4,503 ) (172 )
Total derivative liabilities (25,672 ) (379 )

Net derivative (liability) asset $ (24,224 ) $ 20,713


	Balance Sheet Location	Fair Value
		July 3, 2021		January 2, 2021
Derivatives designated as hedging instruments:
Forward foreign exchange contracts	Other current assets	$	1,989	$	1
Cross-currency swap contracts	Other current assets	970		918
Forward foreign exchange contracts	Current assets of discontinued operations	17		40
Forward foreign exchange contracts	Other noncurrent assets	732		0
Cross-currency swap contracts	Other noncurrent assets	1,723		0
Derivatives not designated as hedging instruments:
Forward foreign exchange contracts	Other current assets	1,545		2,459
Forward foreign exchange contracts	Current assets of discontinued operations	24		198
Total derivative assets		7,000		3,616

Derivatives designated as hedging instruments:
Forward foreign exchange contracts	Accrued liabilities	(2,329)		(12,898)
Cross-currency swap contracts	Accrued liabilities	(223)		0
Forward foreign exchange contracts	Current liabilities of discontinued operations	(321)		(4,747)
Forward foreign exchange contracts	Other noncurrent liabilities	0		(2,190)
Cross-currency swap contracts	Other noncurrent liabilities	(9,300)		(16,526)
Derivatives not designated as hedging instruments:
Forward foreign exchange contracts	Accrued liabilities	(4,151)		(16,488)
Forward foreign exchange contracts	Current liabilities of discontinued operations	(589)		(2,195)
Total derivative liabilities		(16,913)		(55,044)

Net derivative liability		$	(9,913)	$	(51,428)

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

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

The Company expects to reclassify into earnings during the next 12 months a net loss from AOCI of approximately ~~$16,432.~~

$12,581. The ~~changes~~Company is hedging exposure to the variability in ~~fair value of derivatives excluded from~~future foreign currency-denominated cash flows for forecasted transactions over the ~~Company’s effectiveness assessments~~next 15 months and for long-term debt over the ineffective portion of the changes in the fair value of derivatives used as cash flow hedges are reported in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statements of Income.

Table of Contents

HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

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

(unaudited)

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


	Amount of Gain (Loss) Recognized in AOCI on Derivative Instruments
	Quarters Ended				Six Months Ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020

Forward foreign exchange contracts	$	(1,392)	$	(7,051)	$	7,094	$	13,029
Cross-currency swap contracts	717		0		705		0

Total	$	(675)	$	(7,051)	$	7,799	$	13,029


	Location of Gain (Loss) Reclassified from AOCI into Income	Amount of Gain (Loss) Reclassified from AOCI into Income
		Quarters Ended				Six Months Ended
		July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020


Forward foreign exchange contracts(1)	Cost of sales	$	(5,278)	$	1,758	$	(9,655)	$	4,627
Forward foreign exchange contracts(1)	Income (loss) from discontinued operations, net of tax	(1,543)		1,399		$	(1,851)	$	3,547
Cross-currency swap contracts(1)	Selling, general and administrative expenses	3,168		0		$	2,611	$	0
Cross-currency swap contracts(1)	Interest expense, net	(1,018)		0		$	(1,018)	$	0

Total		$	(4,671)	$	3,157	$	(9,913)	$	8,174

(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.

Net Investment Hedges

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

In July 2019, the Company also designated the full amount of its 3.5% Senior Notes with a carrying value of €500,000, which is a nonderivative financial instrument, as a hedge of a portion of the beginning balance of the Company’s European net investment. As of April 1, 2021, the Company reduced the amount of its 3.5% Senior Notes designated in the European net investment hedge from €500,000 to €200,000. As of July 3, 2021 and January 2, 2021, the U.S. dollar equivalent carrying value of Euro-denominated long-term debt designated as a partial European net investment hedge was $237,304 and $610,724, respectively.

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HANESBRANDS INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

Amount of Loss
Recognized in AOCI
(Effective Portion) Amount of Loss
Recognized in AOCI
(Effective Portion)
Quarter Ended Nine Months Ended
September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016
Foreign exchange contracts $ (17,379 ) $ (3,594 ) $ (43,660 ) $ (7,131 )
The amount of after-tax gains (losses) included in AOCI in the Condensed Consolidated Balance Sheets related to derivative instruments and nonderivative financial instruments designated as net investment hedges and the amount of gains included in the “Interest expense, net” line in the Condensed Consolidated Statements of Income related to amounts excluded from the assessment of hedge effectiveness for derivative instruments designated as net investment hedges are as follows:


	Amount of Gain (Loss) Recognized in AOCI
	Quarters Ended				Six Months Ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Euro-denominated long-term debt	$	(1,544)	$	(4,196)	$	17,756	$	(1,538)
Cross-currency swap contracts	(2,066)		(1,004)		5,307		10,728
Total	$	(3,610)	$	(5,200)	$	23,063	$	9,190


	Location of Gain Recognized in Income	Amount of Gain Recognized in Income (Amount Excluded from Effectiveness Testing)
		Quarters Ended				Six Months Ended
		July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Cross-currency swap contracts	Interest expense, net	$	1,715	$	2,020	$	3,614	$	3,967


		Quarters Ended				Six Months Ended
		July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Total interest expense, net in which the amounts excluded from effectiveness testing for net investment hedges are recorded		$	42,440	$	41,075	$	86,900	$	77,102

Location of
Gain Reclassified from AOCI into Income
(Effective Portion) Amount of Gain
Reclassified from AOCI
into Income
(Effective Portion) Amount of Gain
Reclassified from AOCI
into Income
(Effective Portion)
Quarter Ended Nine Months Ended
September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016
Foreign exchange contracts Cost of sales $ 414
$ 715
$ 3,348
$ 4,424

~~Derivative Contracts Not Designated As~~Mark to Market Hedges

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

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


	Location of Gain (Loss) Recognized in Income on Derivatives	Amount of Gain (Loss) Recognized in Income
		Quarters Ended				Six Months Ended
		July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Forward foreign exchange contracts	Cost of sales	$	5,629	$	(16,081)	$	18,624	$	(9,532)
Forward foreign exchange contracts	Selling, general and administrative expenses	880		1,962		3,091		928
Forward foreign exchange contracts	Income (loss) from discontinued operations, net of tax	1,314		(3,026)		3,953		(3,451)
Total		$	7,823	$	(17,145)	$	25,668	$	(12,055)

Location of Gain (Loss)
Recognized in Income on
Derivative Amount of Gain
Recognized in Income Amount of Gain (Loss)
Recognized in Income
Quarter Ended Nine Months Ended
September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016
Foreign exchange contracts Selling, general and administrative expenses $ 3,277
$ 7,694
$ (1,398 ) $ 7,970

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HANESBRANDS INC.


~~(10)~~	~~Fair Value of Assets and Liabilities~~

Notes to Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

(10) Fair Value of Assets and Liabilities

As of ~~September 30, 2017,~~July 3, 2021, the Company held certain financial assets and liabilities that are required to be measured at fair value on a recurring basis. These consisted of the Company’s derivative instruments related to forward foreign exchange ~~rates,~~derivative contracts, cross-currency swap derivative contracts and deferred compensation plan ~~liabilities and contingent consideration resulting from the Champion Europe acquisition.~~liabilities. The fair values of forward foreign ~~currency derivatives~~exchange derivative contracts are determined using the cash flows of the ~~foreign exchange contract,~~forward contracts, discount rates to account for the passage of time and current foreign exchange market data which are all based on inputs readily available in public markets and are categorized as Level 2. The fair values of cross-currency swap derivative contracts are determined using the cash flows of the swap contracts, discount rates to account for the passage of time, current foreign exchange and interest rate market data and credit risk, which are all based on inputs readily available in public markets and are categorized as Level 2. The fair value of deferred compensation plans is based on readily available current market data and is categorized as Level 2. The fair value of the contingent consideration obligation was determined by applying a multiple of 10 times Champion Europe’s EBITDA for calendar year 2016 in excess of €18,600, as defined per the purchase agreement, as further described in Note 3 to the Company’s condensed consolidated financial statements, and is categorized as Level 3. An initial payment of €37,820 was made on April 28, 2017 to the sellers, which represents the mutually agreed portion of the contingent consideration. The remaining contingent consideration obligation will be revalued each reporting period until the related contingencies are resolved, with any adjustments to the fair value recognized in earnings. The Company’s defined benefit pension plan investments are not required to be measured at fair value on a quarterly recurring basis.

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~~HANESBRANDS INC.~~

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

~~(dollars and shares in thousands, except per share data)~~

~~(unaudited)~~

There were no changes during the quarter and six months ended ~~September 30, 2017~~July 3, 2021 to the Company’s valuation techniques used to measure asset and liability fair values on a recurring basis. ~~There were no transfers into or out of Level 1, Level 2 or Level 3 during the quarter ended September 30, 2017.~~ As of and during the quarter and ~~nine~~six months ended ~~September 30, 2017,~~July 3, 2021, the Company did not have any non-financial assets or liabilities that were required to be measured at fair value on a recurring or non-recurring basis.

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

Assets (Liabilities) at Fair Value as of
September 30, 2017
Total Quoted Prices In
Active Markets
for Identical
Assets
(Level 1) Significant
Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3)
Foreign exchange derivative contracts $ 1,448
$ —
$ 1,448
$ —
Foreign exchange derivative contracts (25,672 ) —
(25,672 ) —
(24,224 ) —
(24,224 ) —
Champion Europe contingent consideration (3,383 ) —
—
(3,383 )
Deferred compensation plan liability (53,237 ) —
(53,237 ) —
Total $ (80,844 ) $ —
$ (77,461 ) $ (3,383 )


	Assets (Liabilities) at Fair Value as of July 3, 2021
	Total		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Forward foreign exchange contracts - assets	$	4,266	$	0	$	4,266	$	0
Cross-currency swap contracts - assets	2,693		0		2,693		0
Forward foreign exchange contracts - liabilities	(6,480)		0		(6,480)		0
Cross-currency swap contracts - liabilities	(9,523)		0		(9,523)		0
	(9,044)		0		(9,044)		0
Deferred compensation plan liability	(19,634)		0		(19,634)		0
Total	$	(28,678)	$	0	$	(28,678)	$	0


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

Assets (Liabilities) at Fair Value as of
December 31, 2016
Total Quoted Prices In
Active Markets
for Identical
Assets
(Level 1) Significant
Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3)
Foreign exchange derivative contracts $ 21,092
$ —
$ 21,092
$ —
Foreign exchange derivative contracts (379 ) —
(379 ) —
20,713
—
20,713
—
Champion Europe contingent consideration (42,378 ) —
—
(42,378 )
Deferred compensation plan liability (51,868 ) —
(51,868 ) —
Total $ (73,533 ) $ —
$ (31,155 ) $ (42,378 )

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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, notes receivable and accounts payable approximated fair value as of ~~September 30, 2017~~July 3, 2021 and ~~December 31, 2016~~.January 2, 2021. The carrying amount of trade accounts receivable included allowance for doubtful accounts, chargebacks and other deductions of ~~$23,998~~$60,504 and ~~$18,726~~$48,745 as of ~~September 30, 2017~~July 3, 2021 and ~~December 31, 2016~~,January 2, 2021, respectively. The fair value of debt, which is classified as a Level 2 liability, was ~~$4,206,792~~$3,921,200 and ~~$3,729,270~~$4,230,985 as of ~~September 30, 2017~~July 3, 2021 and ~~December 31, 2016,~~January 2, 2021, respectively. Debt had a carrying value of ~~$4,012,382~~$3,712,011 and ~~$3,732,583~~$4,035,724 as of ~~September 30, 2017~~July 3, 2021 and ~~December 31, 2016,~~January 2, 2021, respectively. The fair values were estimated using quoted market prices as provided in secondary markets, which consider the Company’s credit risk and market related conditions. The carrying ~~amounts~~amount of the Company’s notes payable, which is classified as a Level 2 liability, approximated fair value ~~as of~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016~~, primarily due to the short-term nature of these instruments.

The Company’s effective income tax rate ~~for continuing operations~~ was 2%14.6% and 6%12.7% for the quarters ended ~~September 30, 2017~~July 3, 2021 and ~~October 1, 2016,~~June 27, 2020, respectively. The Company’s effective income tax rate ~~for continuing operations~~ was 4%12.6% and 7%12.7% for the ~~nine~~six months ended ~~September 30, 2017~~July 3, 2021 and ~~October 1, 2016,~~June 27, 2020, respectively. The ~~lower~~higher effective ~~income~~ tax rate for the quarter ~~and nine months~~ ended ~~September 30, 2017 compared to the quarter and nine months ended October 1, 2016~~July 3, 2021 was primarily due to ~~favorable adjustments resulting from~~ the ~~finalization~~COVID-19 related change in jurisdictional mix of income experienced during the quarter ended June 27, 2020.

The Company is subject to examinations in the U.S., various state and foreign jurisdictions and believes that it maintains appropriate accruals for unrecognized tax benefits related to uncertain tax positions, which are evaluated each quarter. During the six months ended July 3, 2021, the Company’s liability for unrecognized tax benefits, including interest and penalties, decreased by $8,060, of which $6,679 was a discrete reduction of the ~~prior year federal~~effective income tax ~~return, resulting in the recognition~~rate. The decrease was related to expirations of ~~previously unrecognized foreign~~statutes of limitations and approvals of certain filings with income tax ~~credits, recognized discretely in the period ending September 30, 2017.~~authorities.

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~~HANESBRANDS INC.~~

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

~~(dollars and shares in thousands, except per share data)~~

~~(unaudited)~~

Additionally, there was a lower proportion of earnings attributed to domestic subsidiaries, which are taxed at higher rates than foreign subsidiaries, for the nine months ending September 30, 2017 as compared to the nine months ending October 1, 2016.

In the first quarter of 2017, the Company realigned its reporting segments to reflect the new model under which the business will be managed and results will be reviewed by the chief executive officer, who is the Company’s chief operating decision maker. The former Direct to Consumer segment, which consisted of the Company’s U.S. value-based (“outlet”) stores, legacy catalog business and U.S. retail Internet operations, was eliminated. The Company’s U.S. retail Internet operations, which sells products directly to consumers, is now reported in the respective Innerwear and Activewear segments. Other consists of the Company’s U.S. value-based (“outlet”) stores, U.S. hosiery business (previously reported in the Innerwear segment) and legacy catalog operations. Prior year segment sales and operating profit results have been revised to conform to the current year presentation.

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

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

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

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

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

~~International primarily relates~~

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HANESBRANDS INC.

Notes to ~~the Europe, Australia, Asia, Latin America and Canada geographic locations that sell products that span across the Innerwear and Activewear reportable segments.~~Condensed Consolidated Financial Statements — (Continued)

(amounts in thousands, except per share data)

(unaudited)

The Company evaluates the operating performance of its segments based upon segment operating profit, which is defined as operating profit before general corporate expenses, ~~acquisition-related~~restructuring and ~~integration~~other action-related charges and amortization of intangibles. The accounting policies of the segments are consistent with those described in Note, 2“Summary of Significant Accounting Policies” to the Company’s consolidated financial statements included in its Annual Report on Form 10-K for the year ended ~~December 31, 2016.~~January 2, 2021.


	Quarters Ended				Six Months Ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Net sales:
Innerwear	$	780,650	$	1,094,814	$	1,351,085	$	1,517,216
Activewear	404,189		168,379		768,192		456,379
International	478,923		251,285		985,184		679,515
Other	87,549		28,605		154,879		93,043
Total net sales	$	1,751,311	$	1,543,083	$	3,259,340	$	2,746,153

Quarter Ended Nine Months Ended
September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016
Net sales:
Innerwear $ 644,059
$ 679,096
$ 1,868,255
$ 1,953,807
Activewear 519,496
516,713
1,226,595
1,207,767
International 556,730
478,122
1,509,370
1,026,871
Other 78,985
87,088
222,015
264,445
Total net sales $ 1,799,270
$ 1,761,019
$ 4,826,235
$ 4,452,890


	Quarters Ended				Six Months Ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Segment operating profit:
Innerwear	$	186,169	$	304,524	$	313,586	$	386,075
Activewear	41,047		(5,751)		101,641		2,357
International	61,900		5,162		149,080		55,907
Other	9,220		(11,929)		11,106		(15,322)
Total segment operating profit	298,336		292,006		575,413		429,017
Items not included in segment operating profit:
General corporate expenses	(54,685)		(50,140)		(114,508)		(107,566)
Restructuring and other action-related charges	(18,664)		(32,279)		(38,057)		(56,603)
Amortization of intangibles	(7,593)		(7,454)		(15,332)		(14,762)
Total operating profit	217,394		202,133		407,516		250,086
Other expenses	(1,855)		(4,653)		(4,416)		(10,754)
Interest expense, net	(42,440)		(41,075)		(86,900)		(77,102)
Income from continuing operations before income tax expense	$	173,099	$	156,405	$	316,200	$	162,230

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~~HANESBRANDS INC.~~

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

~~(dollars and shares in thousands, except per share data)~~

~~(unaudited)~~

Quarter Ended Nine Months Ended
September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016
Segment operating profit:
Innerwear $ 141,002
$ 147,902
$ 407,982
$ 435,660
Activewear 79,015
72,962
162,053
160,076
International 76,414
61,312
185,216
109,184
Other 10,162
9,199
16,250
27,408
Total segment operating profit 306,593
291,375
771,501
732,328
Items not included in segment operating profit:
General corporate expenses (26,136 ) (14,776 ) (63,354 ) (54,798 )
Acquisition-related and integration charges (16,874 ) (42,587 ) (81,303 ) (91,651 )
Amortization of intangibles (10,279 ) (5,660 ) (23,595 ) (13,912 )
Total operating profit 253,304
228,352
603,249
571,967
Other expenses (1,881 ) (1,559 ) (4,659 ) (50,533 )
Interest expense, net (43,917 ) (43,433 ) (130,184 ) (111,539 )
Income from continuing operations before income tax expense $ 207,506
$ 183,360
$ 468,406
$ 409,895

~~For the quarter ended September 30, 2017, the~~The Company incurred ~~acquisition-related~~pre-tax restructuring and ~~integration~~other action-related charges ~~of $16,874, of which $2,230 is~~that were reported in the ~~“Cost of sales” line and $14,644 is reported~~following lines in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statement of Income. For the quarter ended October 1, 2016, the Company incurred acquisition-related and integration charges of $42,587, of which $13,563 is reported in the “Cost of sales” line and $29,024 is reported in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statement of Income.

For the nine months ended September 30, 2017, the Company incurred acquisition-related and integration charges of $81,303, of which $21,989 is reported in the “Cost of sales” line and $59,314 is reported in the “Selling, general and administrative expenses” line. For the nine months ended October 1, 2016, the Company incurred acquisition-related and integration charges of $138,942, of which $27,732 is reported in the “Cost of sales” line, $63,919 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.

As part of the Hanes Europe Innerwear acquisition strategy, in 2015 the Company identified management and administrative positions that were considered non-essential and/or duplicative that have or will be eliminated. As of December 31, 2016, the Company had accrued approximately $32,542 for expected benefit payments related to employee termination and other benefits for affected employees. During the nine months ended September 30, 2017, there were approximately $9,836 of benefit payments and foreign currency adjustments, resulting in an accrual of $22,706, of which, $10,905 and $11,801, is included in the “Accrued liabilities” and “Other noncurrent liabilities” lines of the Condensed Consolidated Balance Sheet, respectively.

In the first quarter of 2017, the Company approved an action to resize its U.S. corporate office workforce through separation programs affecting employees primarily in the Innerwear and Activewear segments. As of April 1, 2017, the Company accrued approximately $10,145 for employee termination and other benefits in accordance with expected benefit payments, with the majority of charges reflected in the “Selling, general and administrative expenses” line of the Condensed Consolidated Statements of Income. During the nine months ended September 30, 2017, there were approximately $8,477 of benefit payments and an additional accrual of $4,653, resulting in an ending accrual of $6,321 included in the “Accrued liabilities” line of the Condensed Consolidated Balance Sheet.Income:

The Company closed its Nanjing, China textile plant in the first quarter of 2017 as part of a plan to realign its Asia textile production in order to better support its global commercial footprint, which has evolved over the past 10 years through major acquisitions in the United States, Europe and Australia. As of April 1, 2017, the Company accrued approximately $8,534 for employee termination and other benefits in accordance with expected benefit payments for employees. The charges, along with other facility exit costs of $2,831, were reflected in the “Cost of sales” line of the Condensed Consolidated Statements of Income. During the nine months ended September 30, 2017, there were approximately $8,057 of benefit payments and foreign


	Quarters Ended				Six Months Ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Cost of sales	$	1,900	$	18,418	$	4,707	$	40,229
Selling, general and administrative expenses	16,764		13,861		33,350		16,374
Total	$	18,664	$	32,279	$	38,057	$	56,603

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~~HANESBRANDS INC.~~

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

~~(dollars and shares in thousands, except per share data)~~

~~(unaudited)~~

currency adjustments, resulting in an accrual of $477, which is included in the “Accrued liabilities” line of the Condensed Consolidated Balance Sheet. As of September 30, 2017, the Nanjing, China textile plant, valued at $65,570, was classified as assets held for sale and reported within the “Other current assets” line of the Condensed Consolidated Balance Sheet.



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

This management’s discussion and analysis of financial condition and results of operations, or MD&A, contains forward-looking statements that involve risks and uncertainties. Please see “Forward-Looking Statements” in this Quarterly Report on Form 10-Q for a discussion of the uncertainties, risks and assumptions associated with these statements. This discussion should be read in conjunction with our historical financial statements and related notes thereto and the other disclosures contained elsewhere in this Quarterly Report on Form 10-Q. The unaudited condensed interim consolidated financial statements and notes included herein should be read in conjunction with our audited consolidated financial statements and notes for the year ended ~~December 31, 2016,~~January 2, 2021, which were included in our Annual Report on Form 10-K filed with the SEC. The results of operations for the periods reflected herein are not necessarily indicative of results that may be expected for future periods, and our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including but not limited to those included elsewhere in this Quarterly Report on Form 10-Q and those included in the “Risk Factors” section and elsewhere in our Annual Report on Form 10-K for the year ended ~~December 31, 2016~~.January 2, 2021. In particular, statements with respect to trends associated with our business, our Full Potential plan, our future financial performance and the potential effects of the ongoing global novel coronavirus (“COVID-19”) pandemic included in this MD&A include forward-looking statements.

~~We are~~Hanesbrands Inc. (collectively with its subsidiaries, “we,” “us,” “our,” or the “Company”) is a ~~consumer goods company with a portfolio~~socially responsible leading marketer of ~~leading~~everyday basic innerwear and activewear apparel in the Americas, Australia, Europe and Asia/Pacific under some of the world’s strongest apparel brands, including Hanes,, Champion,, ~~DIM~~, Bonds, Bali, Maidenform,, Playtex,, ~~Bonds~~, ~~Bali~~, ~~JMS~~/ Bras N Things, JMS/Just My Size,, ~~Nur Die/Nur Der~~, Wonderbra, Alternative, Berlei, L’eggs, ~~Lovable~~, ~~Wonderbra~~, ~~Flexees~~, ~~Berlei~~, ~~Lilyette~~ andGear for Sports. We ~~design, manufacture, source and~~ sell ~~a broad range of basic apparel such as~~ T-shirts, bras, panties, ~~men’s~~shapewear, underwear, ~~children’s underwear,~~socks, hosiery and activewear ~~socks~~produced in our low-cost global supply chain. Our products are marketed to consumers shopping in mass merchants, mid-tier and ~~hosiery.~~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. hosiery business and certain sales from our supply chain to the European Innerwear business.

Our Key Business Strategies

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

In the fourth quarter of 2020, we began the implementation of our Full Potential plan and as part of our strategy to streamline our portfolio, we determined that our personal protective equipment (“PPE”) business was no longer a growth opportunity for our company and recorded a charge to write down our entire PPE inventory balance to its estimated net realizable value.

In the first quarter of ~~2017,~~2021, we ~~realigned~~announced that as part of our ~~reporting segments~~strategic plan, we were exploring alternatives for our European Innerwear business and subsequently reached the decision to ~~reflect~~exit this business. We determined that our European Innerwear business met held-for-sale and discontinued operations accounting criteria during the ~~new model~~first quarter of 2021. Accordingly, we began to separately report the results of our European Innerwear business as discontinued operations in our Condensed Consolidated Statements of Income, and to present the related assets and liabilities as held for sale in the Condensed

Consolidated Balance Sheets. See note “Discontinued Operations” to our condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q for additional information on discontinued operations.

Impact of COVID-19 on Our Business

The COVID-19 pandemic impacted our business operations and financial results for the second quarter and six months ended 2021 and 2020 as described in more detail under ~~which~~“Condensed Consolidated Results of Operations - Second Quarter Ended July 3, 2021 Compared with Second Quarter Ended June 27, 2020” and “Condensed Consolidated Results of Operations - Six Months Ended July 3, 2021 Compared with Six Months Ended June 27, 2020” below, primarily through reduced traffic and closures of company-operated and third-party retail locations for portions of each of the periods in certain markets. Global supply chain disruptions have also resulted in higher operating costs and higher levels of inflation. The future impact of the COVID-19 pandemic remains highly uncertain, and our business ~~will be managed~~ and results ~~will~~of operations, including our net revenues, earnings and cash flows, could continue to be ~~reviewed by the chief executive officer, who is~~adversely impacted.

We estimate our chief operating decision maker. The former Direct to Consumer segment, which consisted of our U.S. value-based (“outlet”) stores, legacy catalog business and U.S. retail Internet operations, was eliminated. Our U.S. retail Internet operations, which sells products directly to consumers, is now reported in the respective Innerwear and Activewear segments. Other consists of our U.S. value-based (“outlet”) stores, U.S. hosiery business (previously reported in the Innerwear segment) and legacy catalog operations. Prior year segment sales and operating profit results have been revised to conform to the current year presentation.

~~Highlights from the Third Quarter Ended September 30, 2017~~

~~Key financial highlights are~~2021 guidance as follows:

~~Total net~~•Net sales ~~in the third quarter~~ of ~~2017 were $1.80~~$6.75 billion ~~compared with $1.76 billion in the same period of 2016, representing a 2% increase.~~to $6.85 billion;

•Operating profit ~~increased 11%~~of $795 million to $253 million in the third quarter of 2017, compared with $228 million in the same period of 2016. As a percentage of sales, operating profit was 14.1% in the third quarter of 2017 compared to 13.0% in the same period of 2016. Included within operating profit for both the third quarter of 2017 and 2016 were acquisition-related and integration$825 million;

•Full Potential plan-related charges of ~~$17~~approximately $85 million reflected in operating profit;

•Interest expense and ~~$43~~other expenses of approximately $182 million ~~respectively.~~combined;

•An annual effective tax rate from continuing operations of approximately 13%;

•Diluted earnings per share from continuing operations ~~increased 22%~~from $1.50 to ~~$0.55 in the third quarter of 2017, compared with $0.45 in the same period of 2016.~~$1.58;

In 2017, we began executing a multi-year program (“Project Booster”) to drive investment for sales growth, cost reduction and increased cash flow. Under Project Booster, we are investing to accelerate worldwide omnichannel and global ~~Champion~~ growth, while also investing in marketing and brand building for our leading lineup of brands globally. To fund growth initiatives, reduce costs and increase cash flow, we expect to reduce overhead, including headcount, to reflect market trends and needs; drive additional supply chain optimization beyond integration synergies; and focus on inventory turns and other working capital improvements. We intend to use our size and scale to drive supply chain optimization, including by investing in our domestic distribution center network to better serve the online channel, gaining procurement and product development savings, utilizing global fabric platforms and silhouettes, and continuing to internalize production.

The Project Booster initiative is expected to generate approximately $150 million in annualized cost savings. We expect to annually reinvest approximately $50 million of the savings in targeted growth opportunities, which would result in approximately $100 million of annual net cost savings and incremental cash from operations by the end of 2019. In addition to the annual net cost savings, we also plan to drive approximately $200 million of non-recurring working capital improvements which will result in a one-time benefit to cash from operations by the end of 2019.

~~We expect our 2017 full year net sales to be approximately $6.450 billion to $6.475 billion.~~

~~Interest and other expenses are expected to be approximately $180 million, combined.~~

~~We estimate our full year effective income tax rate to be approximately 5%, assuming no changes to U.S. tax law and policy.~~

~~We expect cash~~•Cash flow from ~~operations to be in the range~~operating activities of ~~$625 million to $725 million. We expect capital~~approximately $550 million; and

•Capital expenditures of approximately ~~$90~~$100 million.

Seasonality and Other Factors

~~Our~~Absent the effects of the COVID-19 pandemic, our operating results are typically subject to some variability due to seasonality and other factors. ~~Generally, our diverse range of product offerings helps mitigate the impact of seasonal changes in demand for certain items. We generally~~For instance, we have historically generated higher sales during the back-to-school and holiday shopping seasons and during periods of cooler weather, which benefits certain product categories such as fleece. Sales levels in any period are also impacted by our customers’ decisions to increase or decrease their inventory levels in response to anticipated consumer demand. Our customers may cancel ororders, change delivery schedules ~~manage on-hand inventory levels,~~ 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.

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 ~~by consumers.~~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, ~~gasoline~~energy prices, ~~weather,~~ unemployment trends and other matters that influence consumer confidence and spending. ~~Many of these factors are outside of our control.~~ 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. ~~These~~As a result, consumers may choose to purchase fewer of our products, or 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.

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 ~~customers’~~consumers’ preferences and discretionary spending.

Condensed Consolidated Results of Operations — ~~Third~~Second Quarter Ended~~September 30, 2017~~ July 3, 2021 Compared with ~~Third~~Second Quarter Ended~~October 1, 2016~~ June 27, 2020

Net sales increased 2%13% during the ~~third~~second quarter of ~~2017~~2021 versus the second quarter of 2020 primarily due to the following:

~~Acquisition~~•Retailers continuing to replenish inventory levels as well as pent-up consumer demand as stores reopened after temporary closures due to the COVID-19 pandemic in 2020 and incremental sales partially as a result of ~~It’s Greek~~higher U.S. government stimulus spending;

•Lower second quarter 2020 sales due to MeCOVID-19 pandemic-related shutdowns; and ~~GTM Retail, Inc. (“GTM”) in 2016, which added incremental net sales of approximately $15 million in the third quarter of 2017;~~

~~Increased net sales driven by our global~~ ~~Champion~~ ~~and global online growth initiatives;~~

Partially offset by:

~~Lower~~•The exit of the PPE business, which contributed net sales ~~in our remaining U.S. product categories as a result~~ of ~~softer-than-expected back-to-school trends driven by weak traffic at retail and continued declines~~$614 million in the ~~overall apparel category; and~~second quarter of 2020.

~~Declines in hosiery sales within the U.S. and certain European markets.~~

~~Gross~~Operating Profit

~~The increase in gross~~Operating profit was attributable to supply chain efficiencies and synergies recognized from the integration of our acquisitions and lower acquisition-related and integration charges. Included in gross profit in the third quarters of 2017 and 2016 are charges of approximately $2 million and $14 million, respectively, related to acquisition-related and integration costs.

~~Selling, General and Administrative Expenses~~

As a percentage of net sales, our selling, general and administrative expenses were 23.6% for the third quarter of 2017 compared to 23.9% in the same period of 2016. Included in selling, general and administrative expenses were charges of $15 million and $29 million of acquisition-related and integration costs for the third quarters of 2017 and 2016, respectively. Selling, general and administrative expenses, as a percentage of net sales ~~decreased slightly due~~was 12.4%, representing a decrease from 13.1% in the prior year. Operating margins benefited from fixed cost leverage from higher sales of core apparel and the favorable impact from foreign exchange rates, which was more than offset by higher freight costs and sourcing premiums to ~~lower acquisition-related~~service demand, higher investments in brand marketing and ~~integration costs for the third quarter of 2017 compared to 2016, offset partially by the~~ higher ~~proportion selling,~~compensation costs. Selling, general and administrative expenses ~~for~~in the ~~recently acquired entities, primarily GTM.~~second quarter of 2020 benefited from temporary cost savings initiatives implemented in response to the COVID-19 pandemic. The second quarter of 2020 included operating profit related to the PPE business that was exited.

Included in operating profit in the second quarter of 2021 were charges of $19 million related to the implementation of our Full Potential plan. Included in operating profit in the second quarter of 2020 were charges of $32 million related to supply chain actions, program exits, asset write-down charges recorded as a result of the effects of the COVID-19 pandemic and other actions.

~~Interest Expense~~ Other Expenses – ~~relatively flat~~Other expenses decreased $3 million in the ~~third~~second quarter of ~~2017~~2021 compared to the ~~third~~second quarter of ~~2016. A~~2020 primarily due to lower pension expense in 2021.

Interest Expense – Interest expense was higher ~~weighted average interest rate~~by $1 million in ~~2017~~the second quarter of 2021 compared to the ~~same period~~second quarter of ~~2016 was nearly offset in full by lower debt balances.~~2020 due to interest expense on cross-currency swap contracts entered into on April 1, 2021 that are being used to hedge foreign currency cash flows. Our weighted average interest rate on our outstanding debt was ~~3.84%~~4.17% for the second quarter of 2021, compared to 3.71% for the second quarter of 2020. The increase in interest expense due to a higher weighted average interest rate during the ~~third~~quarter was offset by lower outstanding debt balances during the second quarter of ~~2017,~~2021 compared to ~~3.69% in third~~the second quarter of ~~2016.~~2020.

Income Tax Expense – ~~our~~Our effective income tax rate was 2%14.6% and 6%12.7% for the ~~third~~second quarters of ~~2017~~2021 and ~~2016,~~2020, respectively. The ~~lower~~higher effective tax rate ~~in 2017 compared to~~for the ~~same period~~second quarter of ~~2016 is~~2021 was primarily ~~driven by favorable adjustments~~ due to the ~~finalization~~COVID-19 related change in jurisdictional mix of income experienced during the quarter ended June 27, 2020.

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 ~~prior year federal tax return, resulting~~first quarter of 2021 in connection with our Full Potential plan. See note “Discontinued Operations” to our condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q for a discussion of a non-cash charge to record a valuation allowance against the ~~recognition~~net assets held for sale to write down the carrying value to the estimated fair value less costs of previously unrecognized foreign tax credits, recognized discretely in the quarter. Additionally, there was a lower proportion of earnings attributed to domestic subsidiaries in the quarter, which are taxed at higher rates than foreign subsidiaries. disposal.

Operating Results by Business Segment — ~~Third~~Second Quarter Ended~~September 30, 2017~~ July 3, 2021 Compared with ~~Third~~Second Quarter Ended~~October 1, 2016~~ June 27, 2020

Net Sales Operating Profit
Quarter Ended Quarter Ended
September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016
(dollars in thousands)
Innerwear $ 644,059
$ 679,096
$ 141,002
$ 147,902
Activewear 519,496
516,713
79,015
72,962
International 556,730
478,122
76,414
61,312
Other 78,985
87,088
10,162
9,199
Corporate —
—
(53,289 ) (63,023 )
Total $ 1,799,270
$ 1,761,019
$ 253,304
$ 228,352

~~Innerwear~~


	Operating Profit and Margin
	Quarters Ended
	July 3, 2021				June 27, 2020				Higher (Lower)		Percent Change
	(dollars in thousands)
Innerwear	$	186,169	23.8	%	$	304,524	27.8	%	$	(118,355)	(38.9)	%
Activewear	41,047		10.2		(5,751)		(3.4)		46,798		NM
International	61,900		12.9		5,162		2.1		56,738		1,099.1
Other	9,220		10.5		(11,929)		(41.7)		21,149		NM
Corporate	(80,942)		NM		(89,873)		NM		8,931		(9.9)
Total	$	217,394	12.4	%	$	202,133	13.1	%	$	15,261	7.5	%

Quarter Ended
September 30,
2017 October 1,
2016
Higher
(Lower)

Percent
Change
(dollars in thousands)
Net sales $ 644,059
$ 679,096
$ (35,037 ) (5.2 )%
Segment operating profit 141,002
147,902
(6,900 ) (4.7 )
Innerwear

Innerwear net sales decreased 29% compared to the second quarter of 2020 primarily due to ~~lower net sales~~our exit of the PPE business in ~~both our basics and intimates apparel businesses. Strength in our sock and licensed intimate apparel businesses was more than offset by declines in other product categories~~2021 as a result of ~~softer-than-expected back-to-school trends driven by weak traffic at retail and continued declines~~the implementation of our Full Potential plan. Net sales of PPE represented $614 million of the decrease in the ~~overall apparel category. Declines at retail were~~second quarter of 2021 compared to the second quarter of 2020. This decrease was partially offset by ~~strong online growth across all Innerwear product categories.~~

~~Decreased operating profit was largely driven by lower sales volume coupled with lower margins from unfavorable product mix, partially offset by lower selling, general~~a 48% and ~~administrative expenses from continued cost control.~~

Quarter Ended
September 30,
2017 October 1,
2016
Higher
(Lower)

Percent
Change
(dollars in thousands)
Net sales $ 519,496
$ 516,713
$ 2,783
0.5 %
Segment operating profit 79,015
72,962
6,053
8.3

~~Activewear net sales increased with our expansion into the teamwear and fanware space with the acquisition of GTM~~a 150% increase in ~~2016, increased~~ net sales in ~~the licensed sports~~our basics and intimate apparel ~~business within the college bookstore business and growth in the online channel across Activewear product categories. Sales increases were offset partially by sales declines in our~~ ~~Hanes~~ ~~activewear apparel, primarily in the mass merchant channel.~~

~~Operating profit increased~~businesses, respectively, primarily as a result of lower sales in the second quarter of 2020 due to COVID-19 pandemic-related shutdowns, retailers continuing to replenish inventory levels and pent-up consumer demand as stores reopened after temporary closures due to the COVID-19 pandemic in 2020 and incremental sales partially as a result of higher U.S. government stimulus spending.

Innerwear operating margin was 23.8%, a decrease from 27.8% in the same period a year ago due to fixed cost deleverage from lower sales, higher freight costs and sourcing premiums to service demand, higher investments in brand marketing and higher compensation costs. The second quarter of 2020 included operating profit related to the PPE business that was exited.

Activewear net sales increased 140% compared to the second quarter last year driven by lower sales in the second quarter of 2020 due to COVID-19 pandemic-related shutdowns and incremental sales partially as a result of higher U.S. government stimulus spending. We experienced growth in all product ~~mix favoring~~categories.

Activewear operating margin was 10.2%, an increase from (3.4)% in the same period a year ago. Operating margin improvement resulted primarily from fixed cost leverage from higher ~~gross margin businesses,~~ sales, ~~volume and continued cost control.~~which more than offset higher investments in brand marketing.

Quarter Ended
September 30,
2017 October 1,
2016
Higher
(Lower)

Percent
Change
(dollars in thousands)
Net sales $ 556,730
$ 478,122
$ 78,608
16.4 %
Segment operating profit 76,414
61,312
15,102
24.6

Net sales in the International segment increased 91% as a result of lower sales in the second quarter of 2020 due to the negative impact of the COVID-19 pandemic and the favorable impact of foreign currency exchange rates of approximately $51 million in the second quarter of 2021. International net sales on a constant currency basis, defined as net sales excluding the impact of foreign currency, increased 70%. The impact of foreign exchange rates is calculated by applying prior period exchange rates to the current year financial results. Net sales in certain of our international markets continue to be negatively impacted by COVID-19 related shutdowns.

International operating margin was 12.9%, an increase from 2.1% in the same period a year ago. Operating margin improvement resulted primarily from fixed cost leverage from higher sales, sales mix and the favorable impact from foreign exchange rates.

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

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

Corporate expenses were ~~higher~~lower in the second quarter of 2021 compared to the second quarter of 2020 due to lower restructuring and other action-related charges. Included in restructuring and other action-related charges in the second quarter of 2021 were $19 million of charges related to the implementation of our Full Potential plan. Included in restructuring and other action-related charges in the second quarter of 2020 were $24 million of asset write-down charges recorded as a result of the ~~following:~~

~~Increased net sales driven by our global~~ effects of the COVID-19 pandemic. Supply chain actions include actions to reduce overhead costs. Program exit charges are costs associated with exiting the C9 Champion ~~sales growth, primarily~~ mass program and the DKNY intimate apparel license at the end of 2019. Other charges in the ~~Europe and Asia markets;~~second quarter of 2020 include action-related costs such as workforce reductions.


	Quarters Ended
	July 3, 2021		June 27, 2020
	(dollars in thousands)
Restructuring and other action-related charges included in operating profit:
Full Potential Plan:
Professional services	$	13,804	$	—


Other	4,860		—
2020 actions:
Supply chain actions	—		2,637
Program exit costs	—		1,285
Other	—		4,070
COVID-19 related charges:
Bad debt	—		9,418
Inventory	—		14,869
Total restructuring and other action-related charges included in operating profit	$	18,664	$	32,279

~~Increased innerwear net sales within our Hanes Australasia and Latin America businesses; and~~

~~Favorable impact~~

Table of ~~foreign currency exchange rates.~~

~~Partially offset by:~~

~~Declining hosiery sales and slower traffic at retail in certain European markets.~~

~~Operating profit increased primarily due to higher sales volume, coupled with cost synergies realized in our Hanes Europe Innerwear and Hanes Australasia businesses.~~

~~Other~~

Contents

Quarter Ended
September 30,
2017 October 1,
2016
Higher
(Lower)

Percent
Change
(dollars in thousands)
Net sales $ 78,985
$ 87,088
$ (8,103 ) (9.3 )%
Segment operating profit 10,162
9,199
963
10.5

Other net sales were lower as a result of continued declines in hosiery sales in the U.S. and slower traffic at our outlet stores and the impact from weather-related store closures. Operating profit increased as a result of continued cost control partially offset by lower sales volume.

~~Corporate~~

Corporate expenses included certain administrative costs and acquisition-related and integration charges. Acquisition-related and integration costs are expenses related directly to an acquisition and its integration into the organization. These costs include legal fees, consulting fees, bank fees, severance costs, certain purchase accounting items, facility closures, inventory write-offs, information technology costs and similar charges. Acquisition-related currency transactions represent the foreign exchange gain from financing activities related to the Champion Europe and Hanes Australasia acquisitions.

Quarter Ended
September 30,
2017 October 1,
2016
(dollars in thousands)
Acquisition-related and integration costs:

Hanes Australasia $ 9,383
$ 19,575
Hanes Europe Innerwear 8,136
18,673
Champion Europe 2,528
6,032
Knights Apparel (3,429 ) 5,588
Other acquisitions 256
549
Acquisition-related currency transactions —
(7,830 )
Total acquisition-related and integration costs $ 16,874
$ 42,587

Condensed Consolidated Results of Operations — ~~Nine~~Six Months Ended~~September 30, 2017~~ July 3, 2021 Compared with ~~Nine~~Six Months Ended~~October 1, 2016~~ June 27, 2020


	Nine Months Ended											Six Months Ended
	September 30, 2017			October 1, 2016		Higher (Lower)			Percent Change			July 3, 2021		June 27, 2020		Higher (Lower)		Percent Change
	(dollars in thousands)											(dollars in thousands)
Net sales	$	4,826,235		$	4,452,890	$	373,345		8.4	%	Net sales	$	3,259,340	$	2,746,153	$	513,187	18.7	%
Cost of sales	2,962,345			2,788,977		173,368			6.2		Cost of sales	1,975,030		1,814,123		160,907		8.9
Gross profit	1,863,890			1,663,913		199,977			12.0		Gross profit	1,284,310		932,030		352,280		37.8
Selling, general and administrative expenses	1,260,641			1,091,946		168,695			15.4		Selling, general and administrative expenses	876,794		681,944		194,850		28.6
Operating profit	603,249			571,967		31,282			5.5		Operating profit	407,516		250,086		157,430		63.0
Other expenses	4,659			50,533		(45,874		)	(90.8	)	Other expenses	4,416		10,754		(6,338)		(58.9)
Interest expense, net	130,184			111,539		18,645			16.7		Interest expense, net	86,900		77,102		9,798		12.7
Income from continuing operations before income tax expense	468,406			409,895		58,511			14.3		Income from continuing operations before income tax expense	316,200		162,230		153,970		94.9
Income tax expense	19,804			28,693		(8,889		)	(31.0	)	Income tax expense	39,933		20,544		19,389		94.4
Income from continuing operations	448,602			381,202		67,400			17.7		Income from continuing operations	276,267		141,686		134,581		95.0
Income from discontinued operations, net of tax	(2,097		)	1,068		(3,165		)	NM
Net income	$	446,505		$	382,270	$	64,235		16.8	%
Income (loss) from discontinued operations, net of tax											Income (loss) from discontinued operations, net of tax	(410,853)		11,621		(422,474)		(3,635.4)
Net income (loss)											Net income (loss)	$	(134,586)	$	153,307	$	(287,893)	(187.8)	%

Net sales increased 8%19% during the six months of 2021 versus the six months of 2020 primarily due to the following:

•Retailers continuing to replenish inventory levels as well as pent-up consumer demand as stores reopened after temporary closures due to the COVID-19 pandemic in 2020 and incremental sales partially as a result of higher U.S. government stimulus spending;

•Lower sales in the ~~nine~~six months of ~~2017 compared~~2020 due to COVID-19 pandemic-related shutdowns; and

•The favorable impact from foreign exchange rates in our International business of approximately $94 million.

Partially offset by:

•The exit of the PPE business, which contributed net sales of $614 million in the six months of 2020.

Operating profit as a percentage of net sales was 12.5%, representing an increase from 9.1% in the prior year. Increased operating profit was the result of higher sales and the favorable impact from foreign exchange rates, which more than offset higher freight costs and sourcing premiums to service demand, higher investments in brand marketing, higher distribution and selling expenses related to higher sales volume and higher compensation costs. Selling, general and administrative expenses in the six months of 2020 benefited from temporary cost savings initiatives implemented in response to the ~~same period~~COVID-19 pandemic. The six months of ~~2016~~2020 included operating profit related to the PPE business that was exited.

Included in operating profit in the six months of 2021 were charges of $38 million related to the implementation of our Full Potential plan. Included in operating profit in the six months of 2021 were charges of $57 million related to supply chain actions, program exits, asset write-down charges recorded as a result of the ~~following:~~effects of the COVID-19 pandemic and other actions.

~~Acquisitions of Hanes Australasia, Champion Europe and GTM in 2016, which added incremental net sales of approximately $451~~Other Highlights

Other Expenses – Other expenses decreased $6 million in the ~~nine~~six months of ~~2017;~~

~~Increased net sales driven by our global~~ ~~Champion~~ ~~and global online growth initiatives;~~

~~Partially offset by:~~

~~Lower net sales in our licensed sports apparel business and~~ ~~Hanes~~ ~~activewear apparel within the mass merchant channel; and~~

~~Gross profit increased in the nine months of 2017~~2021 compared to the same period in ~~2016~~2020 due to ~~higher sales volume primarily from acquisitions, supply chain efficiencies and synergies recognized from the integration of our acquisitions,~~lower pension expense and lower ~~acquisition-related and integration charges. Included~~funding fees for sales of accounts receivable to financial institutions in ~~gross profit~~2021.

Interest Expense – Interest expense was higher by $10 million in the ~~nine~~six months of ~~2017 and 2016 are charges of approximately $22 million and $28 million, respectively, related to acquisition-related and integration costs.~~

~~Selling, General and Administrative Expenses~~

~~As a percentage of net sales, our selling, general and administrative expenses were 26.1% for the nine months of 2017~~2021 compared to ~~24.5% in~~ the same period ~~of 2016. Included~~ in selling, general and administrative expenses were charges of $59 million and $64 million of acquisition-related and integration costs for the nine months of 2017 and 2016, respectively. The higher selling, general and administrative expenses, as a percentage of net sales, resulted from the higher proportion of selling, general and administrative expenses for our recently acquired businesses, primarily Hanes Australasia, Champion Europe and GTM, and expenses related to our Project Booster initiative including our U.S. corporate office headcount reduction efforts, offset partially2020, driven by synergy benefits from the integration of prior acquisitions, cost savings from the planned reduction of our legacy catalog distribution, lower acquisition-related and integration costs and continued cost control.

~~Other Highlights~~

~~Other Expenses~~ –lower by $46 million in the nine months of 2017 compared to 2016, primarily due to costs associated with the redemption of our 6.375% Senior Notes in 2016, which included a call premium and write-off of unamortized debt issuance costs.

~~Interest Expense~~ ~~– higher by $19 million for the nine months of 2017 compared to 2016 primarily due to higher debt balances to help fund acquisitions and share repurchases coupled with~~ a higher weighted average interest ~~rate.~~rate on our borrowings during the six months of 2021 and interest expense on cross-currency swap contracts entered into on April 1, 2021 that are being used to hedge foreign currency cash flows. Our weighted average interest rate on our outstanding debt was ~~3.78%~~4.12% for the ~~nine~~six months of ~~2017 and 3.65%~~2021, compared to 3.81% for the ~~nine~~six months of ~~2016.~~2020.

Income Tax Expense – ~~our~~Our effective income tax rate was 4%12.6% and 7%12.7% for the ~~nine~~six months of ~~2017~~2021 and ~~2016,~~2020, respectively. The ~~lower~~ effective ~~income~~ tax rate for the ~~nine~~six months ~~ended September 30, 2017 compared to~~of 2021 is consistent with the ~~nine~~effective tax rate for the six months ~~ended October 1, 2016 was primarily due to favorable adjustments related to the finalization~~ of ~~the prior year federal tax return, resulting in the recognition~~2020.

DiscontinuedOperations– ~~the~~The results of our discontinued operations include the operations of ~~two businesses, Dunlop Flooring and Tontine Pillow,~~our European Innerwear business which ~~were purchased in~~we reached the ~~Hanes Australasia acquisition in 2016 and sold during~~decision to exit at the end of the first quarter of ~~2017.~~2021 in connection with our Full Potential plan. See note “Discontinued Operations” to our condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q for a discussion of non-cash asset impairment charges and non-cash charges to record a valuation allowance against the net assets held for sale to write down the carrying value to the estimated fair value less costs of disposal.

Operating Results by Business Segment — ~~Nine~~Six Months Ended~~September 30, 2017~~ July 3, 2021 Compared with ~~Nine~~Six Months Ended~~October 1, 2016~~ June 27, 2020


	Net Sales
	Six Months Ended
	July 3, 2021		June 27, 2020		Higher (Lower)		Percent Change
	(dollars in thousands)
Innerwear	$	1,351,085	$	1,517,216	$	(166,131)	(10.9)	%
Activewear	768,192		456,379		311,813		68.3
International	985,184		679,515		305,669		45.0
Other	154,879		93,043		61,836		66.5
Total	$	3,259,340	$	2,746,153	$	513,187	18.7	%

Nine Months Ended
September 30,
2017 October 1,
2016
Higher
(Lower)

Percent
Change
(dollars in thousands)
Net sales $ 1,868,255
$ 1,953,807
$ (85,552 ) (4.4 )%
Segment operating profit 407,982
435,660
(27,678 ) (6.4 )

Innerwear net sales decreased 11% compared to the six months of 2020 primarily due to our exit of the PPE business in ~~both~~2021 as a result of the implementation of our Full Potential plan. Net sales of PPE represented $614 million of the decrease in the six months of 2021 compared to the six months of 2020. This decrease was partially offset by a 44% and a 77% increase in net sales in our basics and ~~intimates apparel businesses. Strength in our sock and licensed~~ intimate apparel businesses, respectively, primarily as ~~well as growth~~a result of lower sales in the ~~online channel was more than offset by declines in other product categories~~six months of 2020 due to ~~challenging~~COVID-19 pandemic-related shutdowns, retailers continuing to replenish inventory levels and pent-up consumer ~~traffic at retail~~demand as stores reopened after temporary closures due to the COVID-19 pandemic in 2020 and ~~cautious inventory management by retailers. Our intimate apparel business also experienced~~incremental sales ~~declines driven by the continued impact~~partially as a result of higher U.S. government stimulus spending.

Innerwear operating margin was 23.2%, a decrease from ~~retail store closures~~25.4% in the ~~mid-tier~~same period a year ago due to fixed cost deleverage from lower sales, higher freight costs and ~~department store channel, partially offset by strong performance from our new~~ ~~Maidenform~~ ~~sport~~sourcing premiums to service demand, higher investments in brand marketing and ~~millennial product offerings.~~

~~Decreased~~higher compensation costs. The six months of 2020 included operating profit related to the PPE business that was exited.

Activewear net sales increased 68% compared to the six months of 2020 driven ~~largely~~ by lower sales ~~volume coupled with~~in the six months of 2020 due to COVID-19 pandemic-related shutdowns and incremental sales partially as a result of higher U.S. government stimulus spending. We experienced growth in all product categories.

Activewear operating margin was 13.2%, an increase from 0.5% in the same period a year ago. Operating margin improvement resulted primarily from fixed cost leverage from higher sales.

Net sales in the International segment increased 45% as a result of lower ~~margins~~sales in the six months of 2020 due to the negative impact of the COVID-19 pandemic and the favorable impact of foreign currency exchange rates of approximately $94 million in the six months of 2021. International net sales on a constant currency basis, defined as net sales excluding the impact of foreign currency, increased 31%. The impact of foreign exchange rates is calculated by applying prior period exchange rates to the current year financial results. Net sales in certain of our international markets continue to be negatively impacted by COVID-19 related shutdowns.

International operating margin was 15.1%, an increase from ~~unfavorable product~~8.2% in the same period a year ago. Operating margin improvement resulted primarily from fixed cost leverage from higher sales, sales mix ~~as well as expenses related to Project Booster, offset partially by continued cost control.~~and the favorable impact from foreign exchange rates.

Nine Months Ended
September 30,
2017 October 1,
2016
Higher
(Lower)

Percent
Change
(dollars in thousands)
Net sales $ 1,226,595
$ 1,207,767
$ 18,828
1.6 %
Segment operating profit 162,053
160,076
1,977
1.2

~~Activewear~~Other net sales increased as a result of increased sales at our ~~expansion into~~retail outlets during the ~~teamwear and fanware space with the acquisition~~six months of ~~GTM in 2016, growth in our core~~ ~~Champion~~ brand outside of the mass merchant channel, increased licensed sports apparel sales in the college bookstore business, and growth across Activewear product categories online, partially offset by sales declines in ~~Hanes~~ ~~activewear apparel and licensed sports apparel within the mass merchant channel.~~

~~Operating profit increased primarily~~2021 as a result of stores reopening after temporary store closures during the six months of 2020 due to the COVID-19 pandemic. Operating margin increased due to the increase in sales ~~volume~~volume.

We expect to continue certain sales from our supply chain to the European Innerwear business after the sale of the business. Those sales and ~~continued cost control offset,~~the related profit are included in ~~part, by the impact of retailer bankruptcies~~Other in all periods presented and ~~higher proportion of selling, general and administrative~~have not been eliminated as intercompany transactions in consolidation.

Corporate expenses ~~at our recently acquired GTM business.~~

Nine Months Ended
September 30,
2017 October 1,
2016
Higher
(Lower)

Percent
Change
(dollars in thousands)
Net sales $ 1,509,370
$ 1,026,871
$ 482,499
47.0 %
Segment operating profit 185,216
109,184
76,032
69.6

~~Net sales~~ in the ~~International segment~~six months of 2021 included incremental recurring COVID-19 related costs such as cleaning and health-related supplies to protect our employees and customers, as well as higher compensation expense compared to the six months of 2020. Corporate expenses were ~~higher~~lower in the six months of 2021 compared to the same period of 2020 due to lower restructuring and other action-related charges and bad debt expense. Included in restructuring and other action-related charges in the six months of 2021 were $38 million of charges related to the implementation of our Full Potential plan including impairment charges of $7 million related to the full impairment of an indefinite-lived trademark related to a specific brand within the European Innerwear business that was excluded from the disposal group as it is not being marketed for sale. Included in restructuring and other action-related charges in the six months of 2020 were $24 million of asset write-down charges recorded as a result of the ~~following:~~


				Page
Forward-Looking Statements				1

			~~Page~~
~~Forward-Looking Statements~~	1
~~Where You Can Find More Information~~	1

PART I
Item 1.		Financial Statements (unaudited):
		Condensed Consolidated Statements of Income for the quarters and ~~nine~~six months ended ~~September 30, 2017~~July 3, 2021 and ~~October 1, 2016~~June 27 , 2020		2
		Condensed Consolidated Statements of Comprehensive Income for the quarters and ~~nine~~six months ended ~~September 30, 2017~~July 3, 2021 and ~~October 1, 2016~~June 27, 2020		3
		Condensed Consolidated Balance Sheets at ~~September 30, 2017~~July 3, 2021, January 2, 2021 and ~~December 31, 2016~~June 27 , 2020		4
		Condensed Consolidated Statements of Stockholders’ Equity for the quarters and six months ended July 3, 2021 and June 27, 2020		5
		Condensed Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September 30, 2017~~July 3, 2021 and ~~October 1, 2016~~June 27, 2020		57
		Notes to Condensed Consolidated Financial Statements		68
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		2023
Item 3.		Quantitative and Qualitative Disclosures about Market Risk		3033
Item 4.		Controls and Procedures		3033

PART II
Item 1.		Legal Proceedings		3134
Item 1A.		Risk Factors		3134
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		3134
Item 3.		Defaults Upon Senior Securities		3134
Item 4.		Mine Safety Disclosures		3134
Item 5.		Other Information		3134
Item 6.		Exhibits		3235
Signatures				3336



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


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



	Quarter Ended				Nine Months Ended
	September 30, 2017		October 1, 2016		September 30, 2017			October 1, 2016
Net sales	$	1,799,270	$	1,761,019	$	4,826,235		$	4,452,890
Cost of sales	1,120,813		1,111,653		2,962,345			2,788,977
Gross profit	678,457		649,366		1,863,890			1,663,913
Selling, general and administrative expenses	425,153		421,014		1,260,641			1,091,946
Operating profit	253,304		228,352		603,249			571,967
Other expenses	1,881		1,559		4,659			50,533
Interest expense, net	43,917		43,433		130,184			111,539
Income from continuing operations before income tax expense	207,506		183,360		468,406			409,895
Income tax expense	4,150		10,570		19,804			28,693
Income from continuing operations	203,356		172,790		448,602			381,202
Income (loss) from discontinued operations, net of tax	—		1,068		(2,097		)	1,068
Net income	$	203,356	$	173,858	$	446,505		$	382,270

Earnings per share — basic:
Continuing operations	$	0.56	$	0.46	$	1.22		$	1.00
Discontinued operations	—		—		(0.01		)	—
Net income	$	0.56	$	0.46	$	1.21		$	1.00

Earnings per share — diluted:
Continuing operations	$	0.55	$	0.45	$	1.21		$	0.99
Discontinued operations	—		—		(0.01		)	—
Net income	$	0.55	$	0.45	$	1.20		$	0.99



Cash and cash equivalents	$	54,294
Accounts receivable, net	36,019
Inventories	104,806
Other current assets	16,588
Current assets of discontinued operations	50,839
Property, net	34,835
Trademarks and other identifiable intangibles	506,170
Deferred tax assets and other noncurrent assets	23,687
Total assets acquired	827,238
Accounts payable	89,309
Accrued liabilities and other	24,912
Current liabilities of discontinued operations	14,564
Long-term debt	41,976
Deferred tax liabilities and other noncurrent liabilities	16,320
Total liabilities assumed	187,081
Net assets acquired	640,157
Goodwill	160,714
Purchase price	$	800,871



Cash and cash equivalents	$	14,581
Trade accounts receivable, net	27,926
Inventories	53,816
Other current assets	5,976
Property, net	24,605
Trademarks and other identifiable intangibles	135,277
Deferred tax assets and other noncurrent assets	3,777
Total assets acquired	265,958
Accounts payable	66,594
Accrued liabilities and other (including contingent consideration)	60,887
Notes payable	27,748
Deferred tax liabilities and other noncurrent liabilities	20,282
Total liabilities assumed and contingent consideration	175,511
Net assets acquired	90,447
Goodwill	109,830
Initial consideration paid	200,277
Estimated contingent consideration	45,277
Total purchase price	$	245,554



Component of AOCI	Location of Reclassification into Income	Amount of Reclassification from AOCI						Amount of Reclassification from AOCI
		Quarter Ended						Nine Months Ended
		September 30, 2017			October 1, 2016			September 30, 2017			October 1, 2016
Gain on foreign exchange contracts	Cost of sales	$	414		$	715		$	3,348		$	4,424
	Income tax	191			(278		)	(934		)	(1,721		)
	Net of tax	605			437			2,414			2,703
Amortization of deferred actuarial loss and prior service cost	Selling, general and administrative expenses	(4,862		)	(4,307		)	(14,440		)	(12,843		)
	Income tax	1,867			1,675			5,545			4,996
	Net of tax	(2,995		)	(2,632		)	(8,895		)	(7,847		)

Total reclassifications		$	(2,390	)	$	(2,195	)	$	(6,481	)	$	(5,144	)



	Location of Gain Reclassified from AOCI into Income (Effective Portion)	Amount of Gain Reclassified from AOCI into Income (Effective Portion)				Amount of Gain Reclassified from AOCI into Income (Effective Portion)
		Quarter Ended				Nine Months Ended
		September 30, 2017		October 1, 2016		September 30, 2017		October 1, 2016
Foreign exchange contracts	Cost of sales	$	414	$	715	$	3,348	$	4,424



	Location of Gain (Loss) Recognized in Income on Derivative	Amount of Gain Recognized in Income				Amount of Gain (Loss) Recognized in Income
		Quarter Ended				Nine Months Ended
		September 30, 2017		October 1, 2016		September 30, 2017			October 1, 2016
Foreign exchange contracts	Selling, general and administrative expenses	$	3,277	$	7,694	$	(1,398	)	$	7,970


	As of July 3, 2021
	Borrowing Capacity		Available Liquidity
	(dollars in thousands)
Senior Secured Credit Facility:
Revolving Loan Facility	$	1,000,000	$	995,824


Australian Revolving Loan Facility	44,994		44,994

Accounts Receivable Securitization Facility(1)	88,833		88,833
Other international credit facilities	90,315		33,610
Total liquidity from credit facilities	$	1,224,142	$	1,163,261
Cash and cash equivalents			667,298
Total liquidity			$	1,830,559



Exhibit Number		Description

~~2.1~~3.1		Scheme Implementation Deed, Dated April 27, 2016, between Hanesbrands Inc. and Pacific Brands Limited (incorporated by reference from Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 20, 2016).

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

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

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

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

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

~~31.1~~10.1		Letter Agreement with Michael P. Dastugue dated April 8, 2021.*

31.1		Certification of ~~Gerald W. Evans, Jr.,~~Stephen B. Bratspies, Chief Executive Officer.

31.2		Certification of ~~Richard D. Moss, Principal~~Michael P. Dastugue, Chief Financial Officer.

32.1		Section 1350 Certification of ~~Gerald W. Evans, Jr.,~~Stephen B. Bratspies, Chief Executive Officer.

32.2		Section 1350 Certification of ~~Richard D. Moss, Principal~~Michael P. Dastugue, Chief Financial Officer.

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HANESBRANDS INC.

By:						/s/ ~~Richard D. Moss~~Michael P. Dastugue
						~~Richard D. Moss~~ ~~Duly Appointed Officer and Principal~~Michael P. Dastugue Chief Financial Officer (Duly authorized officer and principal financial officer)