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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 28, 2024
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to                     
Commission file number: 001-32891
Hanesbrands Inc.
(Exact name of registrant as specified in its charter)
Maryland20-3552316
(State of incorporation)(I.R.S. employer identification no.)
1000 East Hanes Mill Road
Winston-Salem,North Carolina27105
(Address of principal executive office)(Zip code)
(336) 519-8080
(Registrant’s telephone number including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, Par Value $0.01HBINew York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒
As of November 1, 2024, there were 352,495,979 shares of the registrant’s common stock outstanding.


TABLE OF CONTENTS
 
Page
Item 1.
Item 2.
Item 3.
Item 4.
PART II
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.


FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains information that may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). Forward-looking statements include all statements that do not relate solely to historical or current facts, and can generally be identified by the use of words such as “may,” “believe,” “could,” “will,” “expect,” “outlook,” “potential,” “project,” “estimate,” “future,” “intend,” “anticipate,” “plan,” “continue” or similar expressions. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements regarding our intent, belief and current expectations about our strategic direction, prospects and future results are forward-looking statements and are subject to risks and uncertainties that could cause actual results to differ materially from those implied or expressed by such statements. These risks and uncertainties include, but are not limited to: our ability to realize the expected benefits from the sale of the global Champion business, which was completed subsequent to our third quarter on September 30, 2024; our ability to successfully operate the Champion business in certain sectors and geographies through a transition period ending on January 31, 2025, and to execute, and realize the expected benefits, successfully, or at all, from the sale of certain remaining assets of the global Champion business at the end of this transition period; our ability to successfully implement our strategic plans, including our supply chain restructuring and consolidation and other cost savings initiatives; trends associated with our business; the rapidly changing retail environment and the level of consumer demand; the effects of any geopolitical conflicts (including the ongoing Russia-Ukraine conflict and Middle East conflicts) or public health emergencies or severe global health crises, including effects on consumer spending, global supply chains, critical supply routes and the financial markets; our ability to deleverage on the anticipated time frame or at all, which could negatively impact our ability to satisfy the financial covenants in our credit agreement or other contractual arrangements; any inadequacy, interruption, integration failure or security failure with respect to our information technology; future intangible assets or goodwill impairment due to changes in our business, market conditions, or other factors, including the sale of the global Champion business; significant fluctuations in foreign exchange rates; legal, regulatory, political and economic risks related to our international operations; our ability to effectively manage our complex international tax structure; and our future financial performance. 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. Such statements speak only as of the date when made and 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.
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, including our Annual Report on Form 10-K for the year ended December 30, 2023, under the caption “Risk Factors”, and available on the “Investors” section of our corporate website, www.Hanes.com/investors. The contents of our corporate website are not incorporated by reference in this Quarterly Report on Form 10-Q.
1
PART I

Item 1.Financial Statements

HANESBRANDS INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)

Quarters EndedNine Months Ended
September 28,
2024		September 30,
2023		September 28,
2024		September 30,
2023
Net sales$937,103 $961,294 $2,710,709 $2,880,328 
Cost of sales546,663 611,513 1,703,881 1,891,375 
Gross profit390,440 349,781 1,006,828 988,953 
Selling, general and administrative expenses287,442 268,751 927,851 812,446 
Operating profit102,998 81,030 78,977 176,507 
Other expenses9,505 9,079 29,519 31,056 
Interest expense, net48,606 56,648 149,511 160,586 
Income (loss) from continuing operations before income taxes44,887 15,303 (100,053)(15,135)
Income tax expense12,508 21,280 34,723 50,286 
Income (loss) from continuing operations32,379 (5,977)(134,776)(65,421)
Loss from discontinued operations, net of tax(2,428)(32,822)(172,775)(30,246)
Net income (loss)$29,951 $(38,799)$(307,551)$(95,667)
Earnings (loss) per share - basic:
Continuing operations$0.09 $(0.02)$(0.38)$(0.19)
Discontinued operations(0.01)(0.09)(0.49)(0.09)
Net income (loss)$0.09 $(0.11)$(0.87)$(0.27)
Earnings (loss) per share - diluted:
Continuing operations$0.09 $(0.02)$(0.38)$(0.19)
Discontinued operations(0.01)(0.09)(0.49)(0.09)
Net income (loss)$0.08 $(0.11)$(0.87)$(0.27)

See accompanying notes to Condensed Consolidated Financial Statements.
2
HANESBRANDS INC.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
(unaudited)

Quarters EndedNine Months Ended
September 28,
2024		September 30,
2023		September 28,
2024		September 30,
2023
Net income (loss)$29,951 $(38,799)$(307,551)$(95,667)
Other comprehensive income (loss):
Translation adjustments53,550 (53,517)5,369 (61,386)
Unrealized gain (loss) on qualifying cash flow hedges, net of tax of $1,127, $(1,761), $594 and $(1,192), respectively(11,451)8,490 (236)5,955 
Unrecognized income from pension and postretirement plans, net of tax of $(578), $(20), $(409) and $91, respectively3,987 4,105 13,673 12,342 
Total other comprehensive income (loss)46,086 (40,922)18,806 (43,089)
Comprehensive income (loss)$76,037 $(79,721)$(288,745)$(138,756)

See accompanying notes to Condensed Consolidated Financial Statements.
3
HANESBRANDS INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)

September 28,
2024		December 30,
2023		September 30,
2023
Assets
Cash and cash equivalents$317,301 $185,717 $172,787 
Trade accounts receivable, net505,614 451,052 572,744 
Inventories927,754 972,654 1,066,161 
Other current assets187,541 117,057 155,289 
Current assets held for sale401,492 549,735 628,775 
Total current assets2,339,702 2,276,215 2,595,756 
Property, net198,006 354,410 356,474 
Right-of-use assets255,799 281,898 279,417 
Trademarks and other identifiable intangibles, net954,945 959,851 928,425 
Goodwill667,468 664,805 650,263 
Deferred tax assets19,740 18,176 5,267 
Other noncurrent assets120,333 139,151 148,464 
Noncurrent assets held for sale905,605 945,808 949,222 
Total assets$5,461,598 $5,640,314 $5,913,288 
Liabilities and Stockholders’ Equity
Accounts payable$684,838 $580,285 $628,765 
Accrued liabilities544,071 421,805 432,553 
Lease liabilities71,604 70,490 70,701 
Accounts Receivable Securitization Facility— 6,000 200,500 
Current portion of long-term debt59,000 59,000 59,000 
Current liabilities held for sale215,949 252,988 263,759 
Total current liabilities1,575,462 1,390,568 1,655,278 
Long-term debt3,211,248 3,235,640 3,310,256 
Lease liabilities - noncurrent231,262 239,686 234,149 
Pension and postretirement benefits89,385 103,456 107,129 
Other noncurrent liabilities104,356 123,918 201,859 
Noncurrent liabilities held for sale100,541 127,693 130,581 
Total liabilities5,312,254 5,220,961 5,639,252 
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 — 351,779,995, 350,137,826 and 350,022,378, respectively3,518 3,501 3,500 
Additional paid-in capital371,966 353,367 348,837 
Retained earnings247,365 554,796 476,796 
Accumulated other comprehensive loss(473,505)(492,311)(555,097)
Total stockholders’ equity149,344 419,353 274,036 
Total liabilities and stockholders’ equity$5,461,598 $5,640,314 $5,913,288 


See accompanying notes to Condensed Consolidated Financial Statements.
4
HANESBRANDS INC.
Condensed Consolidated Statements of Stockholders’ Equity
(in thousands)
(unaudited)

 Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossTotal
 SharesAmount
Balances at June 29, 2024351,644 $3,516 $363,078 $217,400 $(519,591)$64,403 
Net income— — — 29,951 — 29,951 
Other comprehensive income— — — — 46,086 46,086 
Stock-based compensation— — 8,865 — — 8,865 
Vesting of restricted stock units and other136 2 23 14 — 39 
Balances at September 28, 2024351,780 $3,518 $371,966 $247,365 $(473,505)$149,344 

 Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossTotal
 SharesAmount
Balances at December 30, 2023350,138 $3,501 $353,367 $554,796 $(492,311)$419,353 
Net loss— — — (307,551)— (307,551)
Other comprehensive income— — — — 18,806 18,806 
Stock-based compensation— — 21,012 — — 21,012 
Vesting of restricted stock units and other1,642 17 (2,413)120 — (2,276)
Balances at September 28, 2024351,780 $3,518 $371,966 $247,365 $(473,505)$149,344 


See accompanying notes to Condensed Consolidated Financial Statements.
5
HANESBRANDS INC.
Condensed Consolidated Statements of Stockholders’ Equity (Continued)
(in thousands)
(unaudited)

 Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossTotal
 SharesAmount
Balances at July 1, 2023349,840 $3,498 $343,042 $515,595 $(514,175)$347,960 
Net loss— — — (38,799)— (38,799)
Other comprehensive loss— — — — (40,922)(40,922)
Stock-based compensation— — 5,685 — — 5,685 
Vesting of restricted stock units and other182 2 110 — — 112 
Balances at September 30, 2023350,022 $3,500 $348,837 $476,796 $(555,097)$274,036 

 Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossTotal
 SharesAmount
Balances at December 31, 2022349,009 $3,490 $334,676 $572,106 $(512,008)$398,264 
Net loss— — — (95,667)— (95,667)
Other comprehensive loss— — — — (43,089)(43,089)
Stock-based compensation— — 15,821 — — 15,821 
Vesting of restricted stock units and other1,013 10 (1,660)357 — (1,293)
Balances at September 30, 2023350,022 $3,500 $348,837 $476,796 $(555,097)$274,036 
See accompanying notes to Condensed Consolidated Financial Statements.
6
HANESBRANDS INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

Nine Months Ended
September 28,
2024(1)
September 30,
2023(1)
Operating activities:
Net loss$(307,551)$(95,667)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation58,506 56,246 
Amortization of acquisition intangibles10,127 12,478 
Other amortization8,195 9,856 
Impairment of long-lived assets and goodwill76,746 — 
Inventory write-down charges, net of recoveries113,528 — 
Loss on extinguishment of debt— 8,466 
Loss on sale of business and classification of assets held for sale50,330 3,641 
Amortization of debt issuance costs and debt discount7,648 6,577 
Other25,281 8,984 
Changes in assets and liabilities:
Accounts receivable(86,606)12,169 
Inventories55,836 444,592 
Other assets(12,886)(20,833)
Accounts payable85,057 (125,411)
Accrued pension and postretirement benefits(2,617)4,181 
Accrued liabilities and other115,218 (37,935)
Net cash from operating activities196,812 287,344 
Investing activities:
Capital expenditures(32,179)(35,790)
Proceeds from sales of assets12,336 172 
Proceeds from (payments for) disposition of business(12,000)1,300 
Other— 18,941 
Net cash from investing activities(31,843)(15,377)
Financing activities:
Borrowings on Term Loan Facilities— 891,000 
Repayments on Term Loan Facilities(29,500)(29,500)
Borrowings on Accounts Receivable Securitization Facility1,611,000 1,728,500 
Repayments on Accounts Receivable Securitization Facility(1,617,000)(1,737,500)
Borrowings on Revolving Loan Facilities613,500 1,616,500 
Repayments on Revolving Loan Facilities(613,500)(1,908,500)
Borrowings on Senior Notes— 600,000 
Repayments on Senior Notes— (1,436,884)
Payments to amend and refinance credit facilities(712)(28,503)
Other(3,949)(2,884)
Net cash from financing activities(40,161)(307,771)
Effect of changes in foreign exchange rates on cash(3,398)(11,518)
Change in cash and cash equivalents121,410 (47,322)
Cash and cash equivalents at beginning of year205,501 238,413 
Cash and cash equivalents at end of period$326,911 $191,091 
Balances included in the Condensed Consolidated Balance Sheets:
Cash and cash equivalents$317,301 $172,787 
Cash and cash equivalents included in current assets held for sale9,610 18,304 
Cash and cash equivalents at end of period$326,911 $191,091 
(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 September 28, 2024 and December 30, 2023 were $3,514 and $18,550, respectively.
See accompanying notes to Condensed Consolidated Financial Statements.
7
HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements
(amounts in thousands, except per share data)
(unaudited)


(1)    Basis of Presentation
These statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission and, in accordance with those rules and regulations, do not include all information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Management believes that the disclosures made are adequate for a fair statement of the results of operations, financial condition and cash flows of Hanesbrands Inc. and its consolidated subsidiaries (the “Company” or “Hanesbrands”). In the opinion of management, the condensed consolidated interim financial statements reflect all adjustments, which consist only of normal recurring adjustments, necessary to state fairly the results of operations, financial condition and cash flows for the interim periods presented herein. The preparation of condensed consolidated interim financial statements in conformity with GAAP requires management to make use of estimates and assumptions that affect the reported amounts and disclosures. Actual results may vary from these estimates.
These condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 30, 2023. The year-end condensed consolidated balance sheet data was derived from audited consolidated financial statements but does not include all disclosures required by GAAP. The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the full year or any future period.
Discontinued Operations
In September 2023, the Company announced that its Board of Directors and executive leadership team, with the assistance of financial and legal advisors, were undertaking an evaluation of strategic alternatives for the global Champion business. As part of this process, the Company’s Board of Directors considered a broad range of alternatives to maximize shareholder value and also considered an evaluation of the strategic alternatives for the Company’s U.S.-based outlet store business impacted by the global Champion business. In the second quarter of 2024, the Company reached the decision to exit the global Champion business and its U.S.-based outlet store business. The Company completed the exit of the U.S.-based outlet store business in July 2024 and completed the sale of the intellectual property and certain operating assets of the global Champion business subsequent to the Company’s third quarter on September 30, 2024. The Company determined that the exit of the global Champion and U.S.-based outlet store businesses represented multiple components of a single strategic plan that met held-for-sale and discontinued operations accounting criteria at the end of the second quarter of 2024. Accordingly, the Company began to separately report the results of the global Champion and U.S.-based outlet store businesses as discontinued operations in its Condensed Consolidated Statements of Operations and to present the related assets and liabilities as held for sale in its Condensed Consolidated Balance Sheets in the second quarter of 2024. 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 “Assets and Liabilities of Businesses Held for Sale” for additional information about discontinued operations. In addition, the Company realigned its reportable segments in the second quarter of 2024 and has applied this change to all periods presented. See Note “Business Segment Information” for additional information about reportable segments.
Goodwill and Indefinite-lived Intangible Assets
Goodwill and indefinite-lived intangible assets are evaluated for impairment at least annually as of the first day of the third quarter, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit or intangible asset below its carrying value. In connection with the annual impairment analysis, the Company performs a quantitative assessment utilizing an income approach to estimate the fair values of its reporting units and certain indefinite-lived intangible assets. The most significant assumptions used to estimate the fair values of the reporting units and certain indefinite-lived intangible assets include the weighted average cost of capital, revenue growth rate, terminal growth rate and operating profit margin.
During the quarter ended September 28, 2024, the Company completed its annual quantitative impairment analysis for each reporting unit and the respective goodwill balances. The analysis indicated that all reporting units had fair values that exceeded their carrying values by more than 20% at the time the analysis was performed.
8
HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
The Company also completed its annual quantitative impairment analysis for certain indefinite-lived intangible assets during the quarter ended September 28, 2024. While the analysis indicated that those indefinite-lived intangible assets had fair values that exceeded their carrying values, the Company noted a meaningful decline in the fair value cushion above the carrying value for one of the indefinite-lived trademarks within the Australian business. The decline in this trademark was driven by continued macroeconomic pressures impacting consumer spending in Australia and resulted in a fair value that exceeded the carrying value by approximately 10% at the time the analysis was performed. As a result, this trademark was considered to be at a higher risk for future impairment if economic conditions worsen or earnings and operating cash flows do not recover as currently estimated by management. As of September 28, 2024, the carrying value of this trademark was $238,810, which is reflected in the “Trademarks and other identifiable intangibles, net” line in the Condensed Consolidated Balance Sheets.
Although the Company determined that no impairment existed for the Company's goodwill or indefinite-lived intangible assets as of September 28, 2024, these assets could be at risk for future impairment due to changes in the Company’s business or global economic conditions.
Ransomware Attack
As previously disclosed, on May 24, 2022, the Company identified that it had become subject to a ransomware attack that affected certain of its information technology systems. The Company activated its incident response and business continuity plans and contained the incident. There is no ongoing operational impact on the Company’s ability to provide its products and services. The Company maintains insurance, including coverage for cyber-attacks, subject to certain deductibles and policy limitations, in an amount that the Company believes appropriate.
During the quarter ended September 30, 2023, the Company recognized a benefit related to business interruption insurance proceeds of $17,792, of which $15,000 was received in the quarter ended September 30, 2023. During the nine months ended September 30, 2023, the Company recognized a benefit related to business interruption insurance proceeds of $24,062, of which $20,562 was received during the nine months ended September 30, 2023. The remaining receivable for the expected final payment was recognized in the “Other current assets” line in the Condensed Consolidated Balance Sheets at September 30, 2023 and was received in October 2023. The business interruption insurance proceeds received were primarily related to the recovery of lost profit from business interruptions. The Company recognized a benefit of $17,792 and $23,354, respectively, for the business interruption insurance proceeds in the “Cost of sales” line of the Condensed Consolidated Statements of Operations during the quarter and nine months ended September 30, 2023. The Company recognized a benefit of $708 for the reimbursement of costs related primarily to legal fees in the “Selling, general and administrative expenses” line of the Condensed Consolidated Statements of Operations during the nine months ended September 30, 2023.
Reclassifications
Certain prior year amounts in the condensed consolidated statements of cash flows have been reclassified to conform with the current year presentation.
(2)    Recent Accounting Pronouncements
Reference Rate Reform
In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” In January 2021, the FASB clarified the scope of that guidance with the issuance of ASU 2021-01, “Reference Rate Reform: Scope.” The new accounting rules provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform. In December 2022, the FASB deferred the expiration date of Topic 848 with the issuance of ASU 2022-06, “Reference Rate Reform: Deferral of the Sunset Date of Topic 848.” The new accounting rules extend the relief in Topic 848 beyond the cessation date of USD London Interbank Offered Rate (“LIBOR”). The new accounting rules must be adopted by the fourth quarter of 2024. The Company’s contracts referencing LIBOR have previously been amended or replaced with Secured Overnight Financing Rate (“SOFR”) based contracts. The Company does not expect the new accounting rules to have an impact on the Company’s financial condition, results of operations, cash flows or disclosures.
9
HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
Supplier Finance Program Obligations
In September 2022, the FASB issued ASU 2022-04, “Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations.” The new accounting rules create certain disclosure requirements for a buyer in a supplier finance program. The new accounting rules require qualitative and quantitative disclosures including key terms of the program, balance sheet presentation of related amounts, the obligation amount the buyer has confirmed as valid to the finance provider and a rollforward of the obligation. The accounting rules do not impact the recognition, measurement, or financial statement presentation of supplier finance program obligations. The disclosure of the obligation rollforward is effective for the Company for annual periods beginning in 2024 and all other disclosures were effective for the Company in the first quarter of 2023. While the new accounting rules did not have any impact on the Company’s financial condition, results of operations or cash flows, the adoption of the new accounting rules did result in additional disclosures for the Company beginning in the first quarter of 2023, which are included in Note “Accounts Receivable and Supplier Finance Programs”.
Leases
In March 2023, the FASB issued ASU 2023-01, “Leases (Topic 842): Common Control Arrangements.” The new accounting rules require that leasehold improvements associated with common control leases be amortized by the lessee over the useful life of the leasehold improvements to the common control group (regardless of the lease term) as long as the lessee controls the use of the underlying asset (the leased asset) through a lease. These leases should also be accounted for as a transfer between entities under common control through an adjustment to equity if, and when, the lessee no longer controls the use of the underlying asset. The new accounting rules were effective for the Company in the first quarter of 2024. The adoption of the new accounting rules did not have a material impact on the Company’s financial condition, results of operations, cash flows and disclosures.
Segment Reporting
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” The new accounting rules are designed to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The new accounting rules will be effective for the Company for annual periods beginning in 2024 and interim periods beginning in 2025. Early adoption is permitted. While the new accounting rules will not have any impact on the Company’s financial condition, results of operations or cash flows, the adoption of the new accounting rules will result in additional disclosures.
Income Taxes
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The new accounting rules on income tax disclosures require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit as separated between domestic and foreign and (3) income tax expense or benefit from continuing operations as separated by federal, state, and foreign. The new accounting rules also require entities to disclose their income tax payments to federal, state and local jurisdictions, and international, among other changes. The new accounting rules will be effective for the Company for the annual periods beginning in 2025 and should be applied on a prospective basis, but retrospective application is permitted. Early adoption is permitted. While the new accounting rules will not have any impact on the Company’s financial condition, results of operations or cash flows, the adoption of the new accounting rules will result in additional disclosures.
10
HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
(3)    Assets and Liabilities of Businesses Held for Sale
Assets and liabilities of businesses classified as held for sale in the Condensed Consolidated Balance Sheets consist of the following:
September 28,
2024		December 30,
2023		September 30,
2023
Global Champion business - discontinued operations
$401,492 $513,247 $590,177 
U.S.-based outlet store business - discontinued operations— 36,488 38,598 
Current assets held for sale$401,492 $549,735 $628,775 
Global Champion business - discontinued operations
$905,605 $926,141 $925,675 
U.S.-based outlet store business - discontinued operations— 19,667 23,547 
Noncurrent assets held for sale$905,605 $945,808 $949,222 
Global Champion business - discontinued operations
$215,949 $245,272 $254,447 
U.S.-based outlet store business - discontinued operations— 7,716 9,312 
Current liabilities held for sale$215,949 $252,988 $263,759 
Global Champion business - discontinued operations
$100,541 $120,247 $121,872 
U.S.-based outlet store business - discontinued operations— 7,446 8,709 
Noncurrent liabilities held for sale$100,541 $127,693 $130,581 
U.S. Sheer Hosiery Business - Continuing Operations
In the fourth quarter of 2021, the Company reached the decision to divest its U.S. Sheer Hosiery business, including the L’eggs brand, as part of its strategy to streamline its portfolio under its Full Potential transformation plan and determined that this business met held-for-sale accounting criteria. The Company recorded a non-cash charge in the fourth quarter of 2021 against the net assets held for sale to write down the carrying value of the disposal group to the estimated fair value less costs of disposal. In 2022, the Company recorded a non-cash gain to adjust the valuation allowance primarily resulting from a decrease in carrying value due to changes in working capital. In the quarter and nine months ended September 30, 2023, the Company recognized a gain of $1,558 and a loss, net of proceeds, of $3,641, respectively, which are reflected in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statements of Operations, associated with the sale of the U.S. Sheer Hosiery business and adjustments to the related valuation allowance prior to the sale primarily resulting from changes in carrying value due to changes in working capital. The operations of the U.S. Sheer Hosiery business were reported in Other for the quarter and nine months ended September 30, 2023 in Note “Business Segment Information”.
The Company completed the sale of its U.S. Sheer Hosiery business to AllStar Hosiery LLC, an affiliate of AllStar Marketing Group, LLC, on September 29, 2023 for $3,300 in total proceeds, which included cash of $1,300 and a receivable of $2,000, which was included in the “Other current assets” line in the Condensed Consolidated Balance Sheets at December 30, 2023.
Discontinued Operations
In the second quarter of 2024, the Company reached the decision to exit the global Champion and U.S.-based outlet store businesses and determined that the exit of these two businesses represented multiple components of a single strategic plan that met held-for-sale and discontinued operations accounting criteria at the end of the second quarter of 2024. Accordingly, the Company began to separately report the results of the global Champion and U.S.-based outlet store businesses as discontinued operations in its Condensed Consolidated Statements of Operations and to present the related assets and liabilities as held for sale in its Condensed Consolidated Balance Sheets. In addition, certain expenses related to the operations of the global Champion and U.S.-based outlet store businesses 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 beginning in the second quarter of 2024. These changes have been applied to all periods presented. See Note “Basis of Presentation” for additional information.
11
HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
While the operations of the global Champion business were reflected within all reportable segments prior to its reclassification to discontinued operations, the U.S. Champion business made up the majority of the Company’s former Activewear segment. The operations of the U.S.-based outlet store business were reported in Other in Note “Business Segment Information” prior to its reclassification to discontinued operations. See Note “Business Segment Information” for additional discussion regarding realignment of the Company’s reportable segments.
Global Champion Business
In the second quarter of 2024, the Company announced that it had reached an agreement to sell the intellectual property and certain operating assets of the global Champion business to Authentic Brands Group LLC (“Authentic”). Pursuant to the agreement, as amended, the Company completed the sale of the intellectual property and certain operating assets of the global Champion business to Authentic subsequent to the Company’s third quarter on September 30, 2024 (the “Initial Closing”) in exchange for gross cash proceeds of $857,450 and a receivable of $12,162. In addition, the Company has the potential to receive additional contingent cash consideration of up to $300,000 pursuant to the agreement. The Company will continue to provide certain transition services to Authentic pursuant to the terms of the Transition Services Agreement entered into among the Company, Authentic and the applicable service recipients and will continue to operate the Champion business in certain sectors and geographies through a transition period ending on January 31, 2025 (the “Deferred Business”). At the end of the transition period, Authentic will purchase from the Company certain remaining assets of the Deferred Business. The global Champion business sale transaction excluded the operating assets of the Champion business in Japan, and the Company will continue to operate the Champion business in Japan as a licensee of Authentic pursuant to the terms of a license agreement entered into at the Initial Closing. The Company used net sale proceeds from the Initial Closing of $783,208, which excludes customary transaction costs and other deductions permitted under the Company’s senior secured credit facility (the “Senior Secured Credit Facility”), to pay down a portion of the Company’s outstanding term debt in October 2024.
U.S.-Based Outlet Store Business
In the second quarter of 2024, the Company began actively marketing its U.S.-based outlet store business to prospective buyers. In July 2024, the Company entered into a purchase agreement with Restore Capital (HCR Stores), LLC (“Restore”), an affiliate of Hilco Merchant Resources, LLC, and completed the exit of the U.S.-based outlet store business. Under the purchase agreement, the Company agreed to pay Restore $12,000 at closing and an additional $3,000 in January 2025 and to provide certain inventory to Restore, in exchange for Restore agreeing to assume the operations and certain liabilities of the Company’s U.S.-based outlet store business. As of September 28, 2024, the Company had a valuation allowance of $13,979 for the full balance of the remaining inventory that had not yet been transferred to Restore. The remaining inventory balance as of September 28, 2024 is reflected in the “Inventories” line and the offsetting valuation allowance is reflected in the “Valuation allowance - U.S.-based outlet store business” line in the “Assets and liabilities of the discontinued operations of the global Champion and U.S.-based outlet store businesses” table below. The agreement with Restore did not include Champion-branded U.S. retail stores, which were addressed in accordance with the purchase agreement governing the sale of the global Champion business to Authentic, which was completed subsequent to the Company’s third quarter on September 30, 2024.
Upon meeting the criteria for held-for-sale classification in the second quarter of 2024, which qualified as a triggering event, the Company performed an impairment analysis of the goodwill associated with the Company’s U.S.-based outlet store business, which resulted in a non-cash impairment charge of $2,500 in the nine months ended September 28, 2024. Additionally, in the second quarter of 2024, the Company recorded a valuation allowance against the net assets held for sale, which were primarily current assets, to adjust the carrying value of the U.S.-based outlet store business to the estimated fair value less costs of disposal. In the quarter and nine months ended September 28, 2024, the Company recorded a non-cash gain of $741 and a non-cash charge of $50,330, respectively, associated with the sale of the U.S.-based outlet store business and adjustments to the related valuation allowance prior to the sale, primarily resulting from a decrease in carrying value due to changes in working capital in the quarter ended September 28, 2024. These amounts are reflected in the “(Gain) loss on sale of business and classification of assets held for sale - U.S.-based outlet store business” in the summarized discontinued operations financial information below.
12
HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
The operating results of the discontinued operations of the global Champion and U.S.-based outlet store businesses only reflect revenues and expenses that are directly attributable to the global Champion and U.S.-based outlet store businesses that will be eliminated from continuing operations. The Company allocated interest expense to discontinued operations of approximately $17,124 and $17,291 in the quarters ended September 28, 2024 and September 30, 2023, respectively, and $52,786 and $47,786 in the nine months ended September 28, 2024 and September 30, 2023, respectively, resulting from the requirement to pay down a portion of the Company’s outstanding term debt under the Senior Secured Credit Facility with the net proceeds from the sale of the global Champion business. Discontinued operations does not include any allocation of corporate overhead expense. The key components from discontinued operations related to the global Champion and U.S.-based outlet store businesses are as follows:
Quarters EndedNine Months Ended
September 28,
2024		September 30,
2023		September 28,
2024		September 30,
2023
Net sales$443,535 $550,012 $1,180,057 $1,459,368 
Cost of sales297,176 429,482 830,348 1,045,580 
Gross profit146,359 120,530 349,709 413,788 
Selling, general and administrative expenses126,810 135,598 408,926 397,610 
Impairment of goodwill— — 2,500 — 
(Gain) loss on sale of business and classification of assets held for sale - U.S.-based outlet store business(741)— 50,330 — 
Operating income (loss)20,290 (15,068)(112,047)16,178 
Other expenses1 32 44 89 
Interest expense, net15,335 15,961 46,982 45,080 
Income (loss) from discontinued operations before income taxes4,954 (31,061)(159,073)(28,991)
Income tax expense7,382 1,761 13,702 1,255 
Loss from discontinued operations, net of tax$(2,428)$(32,822)$(172,775)$(30,246)
13
HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
Assets and liabilities of the discontinued operations of the global Champion and U.S.-based outlet store businesses classified as held for sale in the Condensed Consolidated Balance Sheets as of September 28, 2024, December 30, 2023 and September 30, 2023 consist of the following:
September 28,
2024		December 30,
2023		September 30,
2023
Cash and cash equivalents$9,610 $19,784 $18,304 
Trade accounts receivable, net132,319 106,677 140,084 
Inventories246,844 395,364 450,618 
Other current assets26,698 27,910 19,769 
Valuation allowance - U.S.-based outlet store business(13,979)— — 
Current assets held for sale - discontinued operations401,492 549,735 628,775 
Property, net54,202 59,956 59,053 
Right-of-use assets117,785 147,020 148,193 
Trademarks and other identifiable intangibles, net272,761 275,853 272,583 
Goodwill446,789 447,939 442,836 
Deferred tax assets5,848 3,778 14,866 
Other noncurrent assets8,220 11,262 11,691 
Noncurrent assets held for sale - discontinued operations905,605 945,808 949,222 
Total assets of discontinued operations$1,307,097 $1,495,543 $1,577,997 
Accounts payable$119,908 $155,967 $161,158 
Accrued liabilities65,510 56,871 60,581 
Lease liabilities30,531 40,150 42,020 
Current liabilities held for sale - discontinued operations215,949 252,988 263,759 
Lease liabilities - noncurrent85,835 114,329 113,923 
Pension and postretirement benefits400 799 410 
Other noncurrent liabilities14,306 12,565 16,248 
Noncurrent liabilities held for sale - discontinued operations100,541 127,693 130,581 
Total liabilities of discontinued operations$316,490 $380,681 $394,340 
The cash flows related to the discontinued operations of the global Champion and U.S.-based outlet store businesses have not been segregated and are included in the Condensed Consolidated Statements of Cash Flows. The following table presents cash flow and non-cash information related to the discontinued operations of the global Champion and U.S.-based outlet store businesses:
Quarters EndedNine Months Ended
September 28,
2024		September 30,
2023		September 28,
2024		September 30,
2023
Depreciation$— $3,263 $6,757 $10,188 
Amortization$— $2,760 $5,453 $8,219 
Capital expenditures$945 $1,567 $4,605 $22,093 
Impairment of goodwill$— $— $2,500 $— 
Inventory write-down charges, net of recoveries$(4,135)$— $65,128 $— 
(Gain) loss on sale of business and classification of assets held for sale - U.S.-based outlet store business$(741)$— $50,330 $— 

14
HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
(4)    Revenue Recognition
The following table presents the Company’s revenues disaggregated by the customer’s method of purchase:

Quarters EndedNine Months Ended
September 28,
2024		September 30,
2023		September 28,
2024		September 30,
2023
Third-party brick-and-mortar wholesale$609,537 $633,464 $1,778,910 $1,993,391 
Consumer-directed327,566 327,830 931,799 886,937 
Total net sales$937,103 $961,294 $2,710,709 $2,880,328 
Revenue Sources
Third-Party Brick-and-Mortar Wholesale Revenue
Third-party brick-and-mortar wholesale revenue is primarily generated by sales of the Company’s products to retailers to support their brick-and-mortar operations. Third-party brick-and-mortar wholesale revenue also includes royalty revenue from license agreements. The Company earns royalties through license agreements with manufacturers of other consumer products that incorporate certain of the Company’s brands. The Company accrues revenue earned under these contracts based upon reported sales from the licensees.
Consumer-Directed Revenue
Consumer-directed revenue is primarily generated through sales driven directly by the consumer through company-operated stores as well as e-commerce platforms, which include both owned websites and the websites of the Company’s retail customers.
(5)    Stockholders’ Equity
Basic earnings (loss) per share was computed by dividing net income (loss) by the number of weighted average shares of common stock outstanding during the period. Diluted earnings (loss) per share was calculated to give effect to all potentially issuable dilutive shares of common stock using the treasury stock method. In the quarter ended September 30, 2023 and nine months ended September 28, 2024 and September 30, 2023, all potentially dilutive securities were excluded from the diluted weighted average share calculation because the Company incurred a net loss in each of those periods and their inclusion would be anti-dilutive.
The weighted average number of shares used in the basic and diluted earnings (loss) per share calculation is as follows:
Quarters EndedNine Months Ended
September 28,
2024		September 30,
2023		September 28,
2024		September 30,
2023
Basic weighted average shares outstanding352,107 350,667 351,891 350,534 
Effect of potentially dilutive securities:
Restricted stock units2,727 — — — 
Employee stock purchase plan and other5 — — — 
Diluted weighted average shares outstanding354,839 350,667 351,891 350,534 
The following securities were excluded from the diluted weighted average share calculation because their effect would be anti-dilutive:
Quarters EndedNine Months Ended
September 28,
2024		September 30,
2023		September 28,
2024		September 30,
2023
Stock options250 250 250 250 
Restricted stock units553 4,592 1,783 4,343 
Employee stock purchase plan and other— 8 5 12 
15
HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
On February 2, 2022, the Company’s Board of Directors approved a share repurchase program for up to $600,000 of shares to be repurchased in open market transactions or privately negotiated transactions, subject to market conditions, legal requirements and other factors. Unless terminated earlier by the Company’s Board of Directors, the program will expire on December 28, 2024. Additionally, management has been granted authority to establish a trading plan under Rule 10b5-1 of the Exchange Act in connection with share repurchases, which allows the Company to repurchase shares in the open market during periods in which the stock trading window is otherwise closed for the Company, the Company’s directors and certain of the Company’s officers and employees pursuant to the Company’s insider trading policy. The Company did not repurchase any shares under the program in the quarters and nine months ended September 28, 2024 and September 30, 2023. At September 28, 2024, the remaining repurchase authorization under the share repurchase program totaled $575,013. Share repurchases are currently prohibited under the Senior Secured Credit Facility. See Note “Debt” for additional information.
(6)    Inventories
Inventories consisted of the following: 
September 28,
2024		December 30,
2023		September 30,
2023
Raw materials$46,136 $45,960 $54,895 
Work in process71,307 70,932 84,187 
Finished goods810,311 855,762 927,079 
$927,754 $972,654 $1,066,161 
(7)    Accounts Receivable and Supplier Finance Programs
Sales of Trade Accounts Receivable
The Company has entered into agreements to sell selected trade accounts receivable to financial institutions based on programs sponsored by the Company as well as working capital programs offered by certain of the Company’s customers. As a result of the strong creditworthiness of these customers, the discount taken on most of these programs is less than the marginal borrowing rate on the Company’s variable rate credit facilities. In all agreements, after the sale, the Company does not retain any beneficial interests in the receivables. The applicable financial institution services and collects the accounts receivable directly from the customer for programs offered by the Company’s customers. For programs sponsored by the Company, the Company maintains continued involvement as the servicer to collect the accounts receivable from the customer and remit payment to the financial institutions. Net proceeds of these accounts receivable sale programs are recognized in the Condensed Consolidated Statements of Cash Flows as part of operating cash flows.
The Company sold total trade accounts receivable related to Company sponsored programs of $450,607 and $328,309 during the quarters ended September 28, 2024 and September 30, 2023, respectively, and $1,317,620 and $1,046,535 during the nine months ended September 28, 2024 and September 30, 2023, respectively, and removed the trade accounts receivable from the Company’s Condensed Consolidated Balance Sheets at the time of sale. As of September 28, 2024, December 30, 2023 and September 30, 2023, $430,653, $297,807 and $321,348, respectively, of the sold trade accounts receivable remain outstanding with the financial institutions as a result of the related servicing obligation. Collections of accounts receivable not yet submitted to the financial institutions are remitted within one week of collection and recognized within the “Accounts payable” line of the Condensed Consolidated Balance Sheets. As these funds are related to the ongoing service agreement and do not serve in a financing capacity, cash flows collected from customers and submitted to the financial institutions are recognized in the Condensed Consolidated Statements of Cash Flows as part of operating cash flows.
The Company recognized total funding fees of $6,354 and $7,027 during the quarters ended September 28, 2024 and September 30, 2023, respectively, and $20,094 and $16,672 during the nine months ended September 28, 2024 and September 30, 2023, respectively, for sales of trade accounts receivable to financial institutions and working capital programs in the “Other expenses” line in the Condensed Consolidated Statements of Operations.
16
HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
Supplier Finance Program Obligations
The Company reviews supplier terms and conditions on an ongoing basis and has negotiated payment term extensions in recent years in connection with its efforts to effectively manage working capital and improve cash flow. Separate from these payment term extension actions noted above, the Company and certain financial institutions facilitate voluntary supplier finance programs that enable participating suppliers the ability to request payment of their invoices from the financial institutions earlier than the terms stated in Company’s payment policy. The Company is not a party to the arrangements between the suppliers and the financial institutions and its obligations to suppliers, including amounts due and scheduled payment dates, are not impacted by the suppliers’ participation in the supplier finance programs. The Company’s payment terms to the financial institutions, including the timing and amount of payments, are based on the original supplier invoices. The Company has no economic interest in a supplier’s decision to participate in the supplier finance programs and has no financial impact in connection with the supplier finance programs. Accordingly, obligations under these programs continue to be trade payables and are not indicative of borrowing arrangements. As of September 28, 2024, December 30, 2023 and September 30, 2023, the amounts due to suppliers participating in supplier finance programs totaled $114,762, $108,499 and $134,826, respectively, which are included in the “Accounts Payable” line of the Condensed Consolidated Balance Sheets. 
(8)    Debt
Debt consisted of the following: 
Interest Rate as of September 28,
2024		Principal AmountMaturity Date
 September 28,
2024		December 30,
2023
Senior Secured Credit Facility:
Revolving Loan Facility—%$— $— November 2026
Term Loan A7.35%912,500 937,500 November 2026
Term Loan B9.00%888,750 893,250 March 2030
9.000% Senior Notes9.00%600,000 600,000 February 2031
4.875% Senior Notes4.88%900,000 900,000 May 2026
Accounts Receivable Securitization Facility—%— 6,000 May 2025
3,301,250 3,336,750 
Less long-term debt issuance costs and debt discount31,002 36,110 
Less current maturities59,000 65,000 
$3,211,248 $3,235,640 
As of September 28, 2024 the Company’s primary financing arrangements were the Senior Secured Credit Facility, the 9.000% senior notes (the “9.000% Senior Notes”), the 4.875% senior notes (the “4.875% Senior Notes”) and the accounts receivable securitization facility (the “ARS Facility”). The outstanding balances at September 28, 2024 and December 30, 2023 are reported in the “Accounts Receivable Securitization Facility”, “Current portion of long-term debt” and “Long-term debt” lines in the Condensed Consolidated Balance Sheets.
Debt Refinancing and Amendments
In February and March 2023, the Company refinanced its debt structure to provide greater near-term financial flexibility given the uncertainty within the global macroeconomic environment. The refinancing consisted of entering into a new senior secured term loan B facility in an aggregate principal amount of $900,000 due in 2030 (the “Term Loan B”), issuing $600,000 aggregate principal amount of the 9.000% Senior Notes and redeeming the Company’s 4.625% senior notes due in May 2024 (the “4.625% Senior Notes”) and 3.5% senior notes due in June 2024 (the “3.5% Senior Notes”).
17
HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
The Company used the net proceeds from borrowings under the Term Loan B together with the net proceeds from the offering of the 9.000% Senior Notes to redeem all of its outstanding 4.625% Senior Notes and 3.5% Senior Notes and pay the related fees and expenses which resulted in total charges of $8,466 in the nine months ended September 30, 2023. The charges, which are recorded in the “Other expenses” line in the Condensed Consolidated Statements of Operations in the nine months ended September 30, 2023, included a payment of $4,632 for a required make-whole premium related to the redemption of the 3.5% Senior Notes, a non-cash charge of $1,654 for the write-off of unamortized debt issuance costs related to the redemption of the 3.5% Senior Notes and a non-cash charge of $2,180 for the write-off of unamortized debt issuance costs related to the redemption of the 4.625% Senior Notes. The refinancing activities in the nine months ended September 30, 2023 resulted in a debt discount of $9,000 related to the Term Loan B and total capitalized debt issuance costs of $22,965 which included $11,909 related to the Term Loan B and $11,056 related to the 9.000% Senior Notes. The debt discount and debt issuance costs are amortized into interest expense over the respective terms of the debt instruments. The cash payments for the make-whole premium and fees capitalized as debt issuance costs are reported in “Net cash from financing activities” in the Condensed Consolidated Statements of Cash Flows in the nine months ended September 30, 2023.
Additionally, in 2023, the Company amended the credit agreement governing its Senior Secured Credit Facility prior to any potential future covenant violation in order to modify the financial covenants and to provide greater strategic and operating flexibility. The most recent amendment in 2023 effected changes to certain provisions and covenants under the Senior Secured Credit Facility, including changes to certain covenants and provisions that were previously amended in November 2022 and February 2023, during the period beginning with the fiscal quarter ending December 30, 2023 and continuing through the fiscal quarter ending September 27, 2025, or such earlier date as the Company may elect (such period of time, the “Extended Covenant Relief Period”), including: (a) an extension of the original Covenant Relief Period from March 30, 2024 to September 27, 2025; (b) an increase in the maximum leverage ratio to 6.75 to 1.00 for the quarters ending December 30, 2023 and March 30, 2024, 6.63 to 1.00 for the quarters ending June 29, 2024 and September 28, 2024, 6.38 to 1.00 for the quarter ending December 28, 2024, 5.63 to 1.00 for the quarter ending March 29, 2025, 5.25 to 1.00 for the quarter ending June 28, 2025, and 5.00 to 1.00 for the quarter ending September 27, 2025, reverting back to 4.50 to 1.00 for each quarter after the Extended Covenant Relief Period has ended; and (c) a reduction of the minimum interest coverage ratio to 1.63 to 1.00 for the quarters ending December 30, 2023 through September 28, 2024, 1.75 to 1.00 for the quarter ending December 28, 2024, 2.00 to 1.00 for the quarter ending March 29, 2025, 2.25 to 1.00 for the quarter ending June 28, 2025, and 2.50 to 1.00 for the quarter ending September 27, 2025 and each quarter after the Extended Covenant Relief Period has ended. The amendment also included the following additional baskets and restrictions: (a) an additional basket for permitted asset sales of $60,000; (b) suspended the Company’s reinvestment rights with respect to net proceeds in respect of certain asset sales (including the additional asset sale basket described in (a) above) and casualty and condemnation events (requiring the Company to prepay the credit agreement term loan obligations with such net proceeds, subject to step-downs for such prepayment requirement based on the leverage ratio); (c) reduced the cap on the Company’s general lien basket from $165,000 to $85,000 during the Extended Covenant Relief Period; (d) reduced the maximum amount for incremental facilities secured by a lien to $100,000 during the Extended Covenant Relief Period; and (e) suspended the payment of annual dividends during the Extended Covenant Relief Period, which will revert back to the greater of (x) $350,000 and (y) 8.0% of Total Tangible Assets after the Extended Covenant Relief Period has ended. In addition, the amendment increased the applicable interest rate margins and commitment fee rates based on the leverage ratio during the Extended Covenant Relief Period.
In October 2024, the Company paid down $867,983 of its outstanding term debt under the Senior Secured Credit Facility using a combination of cash generated from operations and net sale proceeds from the Initial Closing of the sale of the global Champion business, which was completed subsequent to the Company’s third quarter on September 30, 2024. See Note “Assets and Liabilities of Businesses Held for Sale” for additional information.
18
HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
Other Debt Related Activity
As of September 28, 2024, the Company had $996,743 of borrowing availability under the $1,000,000 Revolving Loan Facility after taking into account $3,257 of standby and trade letters of credit issued and outstanding under this facility.
The ARS Facility, which was entered into in November 2007, was amended in May 2024. The amendment extended the maturity date to May 2025 with no change to the quarterly fluctuating facility limit. Additionally, the amendment removed the two pricing tiers that were added in the previous amendment, reverting back to a single tier pricing structure. Borrowing availability under the Company’s ARS Facility is subject to a quarterly fluctuating facility limit ranging from $200,000 in the first and second quarters to $225,000 in the third and fourth quarters and permitted only to the extent that the face of the receivables in the collateral pool, net of applicable reserves and other deductions, exceeds the outstanding loans. As of September 28, 2024, the quarterly fluctuating facility limit was $225,000, the maximum borrowing capacity was $106,480 and the Company had $106,480 of borrowing availability under the ARS Facility.
The Company had $3,708 of borrowing capacity under other international credit facilities which had no outstanding borrowings at September 28, 2024. The Company had $9,066 of international letters of credit outstanding at September 28, 2024. Available liquidity for other international credit facilities is reduced for any outstanding international letters of credit. The international letters of credit are not outstanding under any specific credit facility and do not reduce actual borrowing capacity under the specific credit facilities.
As of September 28, 2024, the Company was in compliance with all financial covenants under its credit facilities and other outstanding indebtedness. Under the terms of its Senior Secured Credit Facility, among other financial and non-financial covenants, the Company is required to maintain a minimum interest coverage ratio and a maximum leverage ratio as described above, each of which is defined in the Senior Secured Credit Facility. The method of calculating all the components used in the covenants is included in the Senior Secured Credit Facility.
(9)    Income Taxes
In the quarter ended September 28, 2024, income tax expense was $12,508 resulting in an effective income tax rate of 27.9% and in the quarter ended September 30, 2023, income tax expense was $21,280 resulting in an effective income tax rate of 139.1%. In the nine months ended September 28, 2024, income tax expense was $34,723 resulting in an effective income tax rate of (34.7)% and in the nine months ended September 30, 2023, income tax expense was $50,286 resulting in an effective income tax rate of (332.2)%. The Company's effective tax rates for the quarters and nine months ended September 28, 2024 and September 30, 2023 primarily differ from the U.S. statutory rate due to valuation allowances against certain net deferred tax assets. Additionally, the Company had unfavorable discrete items of $1,198 and favorable discrete items of $424 for the quarter and nine months ended September 28, 2024, respectively, and favorable discrete items of $3,539 and unfavorable discrete items of $4,175 for the quarter and nine months ended September 30, 2023, respectively.
The Organization for Economic Co-operation and Development (the “OECD”), an international association of 38 countries including the U.S., has proposed changes to numerous long-standing tax principles, including a global minimum tax initiative. On December 12, 2022, the European Union member states agreed to implement the OECD’s Pillar 2 global corporate minimum tax rate of 15% on companies with revenues of at least $790,000, which went into effect in 2024. While there is uncertainty whether the U.S. will enact legislation to adopt Pillar 2, certain countries in which the Company operates have adopted legislation, and other countries are in the process of introducing legislation to implement Pillar 2. The Company does not expect Pillar 2 to have a material impact on its effective tax rate or its consolidated results of operations, financial position and cash flows for 2024. The Company is continuing to monitor the developing laws of Pillar 2 and its potential impact on future periods.
19
HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
(10)    Accumulated Other Comprehensive