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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 3, 2021
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. (Check one):
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting companyEmerging 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 May 7, 2021, there were 349,115,441 shares of the registrant’s common stock outstanding.


Table of Contents
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.



Table of Contents
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains information that may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). Forward-looking statements include all statements that do not relate solely to historical or current facts, and can generally be identified by the use of words such as “may,” “believe,” “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 with respect to trends associated with our business, our Full Potential plan, our future financial performance and the potential effects of the ongoing global COVID-19 coronavirus 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.
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 January 2, 2021, 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

Table of Contents
PART I

Item 1.Financial Statements

HANESBRANDS INC.
Condensed Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)
Quarters Ended
April 3,
2021
March 28,
2020
Net sales$1,508,029 $1,203,070 
Cost of sales905,348 784,902 
Gross profit602,681 418,168 
Selling, general and administrative expenses412,559 370,215 
Operating profit190,122 47,953 
Other expenses2,561 6,101 
Interest expense, net44,460 36,027 
Income from continuing operations before income tax expense143,101 5,825 
Income tax expense14,697 707 
Income from continuing operations128,404 5,118 
Loss from discontinued operations, net of tax(391,666)(12,992)
Net loss$(263,262)$(7,874)
Earnings (loss) per share - basic:
Continuing operations$0.37 $0.01 
Discontinued operations(1.12)(0.04)
Net loss$(0.75)$(0.02)
Earnings (loss) per share - diluted:
Continuing operations$0.37 $0.01 
Discontinued operations(1.11)(0.04)
Net loss$(0.75)$(0.02)

See accompanying notes to Condensed Consolidated Financial Statements.
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HANESBRANDS INC.
Condensed Consolidated Statements of Comprehensive Income
(in thousands)
(unaudited)
Quarters Ended
April 3,
2021
March 28,
2020
Net loss$(263,262)$(7,874)
Other comprehensive income (loss):
Translation adjustments(25,201)(117,154)
Unrealized gain on qualifying cash flow hedges, net of tax of $(5,176) and $(7,280), respectively8,540 7,783 
Unrecognized income from pension and postretirement plans, net of tax of $(2,049) and $(1,272), respectively6,735 3,594 
Total other comprehensive loss(9,926)(105,777)
Comprehensive loss$(273,188)$(113,651)

See accompanying notes to Condensed Consolidated Financial Statements.
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HANESBRANDS INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)
April 3,
2021
January 2,
2021
March 28,
2020
Assets
Cash and cash equivalents$530,403 $900,615 $1,069,490 
Trade accounts receivable, net807,738 768,221 666,603 
Inventories1,489,565 1,367,758 1,787,660 
Other current assets153,358 158,700 155,074 
Current assets of discontinued operations303,045 234,086 296,889 
Total current assets3,284,109 3,429,380 3,975,716 
Property, net458,434 477,821 502,167 
Right-of-use assets416,136 432,631 434,225 
Trademarks and other identifiable intangibles, net1,269,932 1,293,847 1,161,350 
Goodwill1,150,138 1,158,938 1,119,646 
Deferred tax assets355,826 367,976 181,807 
Other noncurrent assets54,678 64,773 113,263 
Noncurrent assets of discontinued operations 494,501 479,927 
Total assets$6,989,253 $7,719,867 $7,968,101 
Liabilities and Stockholders’ Equity
Accounts payable$976,887 $891,868 $876,394 
Accrued liabilities571,410 609,864 357,514 
Lease liabilities132,127 136,510 138,298 
Notes payable  1,660 
Accounts Receivable Securitization Facility  152,153 
Current portion of long-term debt34,375 263,936 2,533 
Current liabilities of discontinued operations288,936 222,183 285,359 
Total current liabilities2,003,735 2,124,361 1,813,911 
Long-term debt3,649,631 3,739,434 4,236,955 
Lease liabilities - noncurrent315,382 331,577 327,745 
Pension and postretirement benefits333,460 381,457 331,205 
Other noncurrent liabilities202,564 216,091 272,780 
Noncurrent liabilities of discontinued operations 112,989 111,934 
Total liabilities6,504,772 6,905,909 7,094,530 
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 — 349,090,472, 348,802,220 and 348,035,310, respectively3,491 3,488 3,480 
Additional paid-in capital304,090 307,883 297,456 
Retained earnings753,785 1,069,546 1,296,060 
Accumulated other comprehensive loss(576,885)(566,959)(723,425)
Total stockholders’ equity484,481 813,958 873,571 
Total liabilities and stockholders’ equity$6,989,253 $7,719,867 $7,968,101 


See accompanying notes to Condensed Consolidated Financial Statements.
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HANESBRANDS INC.
Condensed Consolidated Statements of Stockholders’ Equity
(in thousands, except per share data)
(unaudited)

 Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossTotal
 SharesAmount
Balances at January 2, 2021348,802 $3,488 $307,883 $1,069,546 $(566,959)$813,958 
Net loss— — — (263,262)— (263,262)
Dividends ($0.15 per common share)— — — (52,499)— (52,499)
Other comprehensive loss— — — — (9,926)(9,926)
Stock-based compensation— — (1,534)— — (1,534)
Net exercise of stock options, vesting of restricted stock units and other288 3 (2,259)— — (2,256)
Balances at April 3, 2021349,090 $3,491 $304,090 $753,785 $(576,885)$484,481 


 Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossTotal
 SharesAmount
Balances at December 28, 2019362,449 $3,624 $304,395 $1,546,224 $(617,648)$1,236,595 
Net loss— — — (7,874)— (7,874)
Dividends ($0.15 per common share)— — — (54,421)— (54,421)
Other comprehensive loss— — — — (105,777)(105,777)
Stock-based compensation— — 4,641 — — 4,641 
Net exercise of stock options, vesting of restricted stock units and other50 1 675 — — 676 
Share repurchases(14,464)(145)(12,255)(187,869)— (200,269)
Balances at March 28, 2020348,035 $3,480 $297,456 $1,296,060 $(723,425)$873,571 


See accompanying notes to Condensed Consolidated Financial Statements.
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HANESBRANDS INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Quarters Ended
April 3, 2021(1)
March 28, 2020(1)
Operating activities:
Net loss$(263,262)$(7,874)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation24,142 22,781 
Amortization of acquisition intangibles6,179 6,113 
Other amortization3,020 2,477 
Impairment of intangible assets and goodwill163,047  
Loss on classification of assets held for sale226,352  
Amortization of debt issuance costs4,580 2,123 
Other(5,835)(5,258)
Changes in assets and liabilities:
Accounts receivable(63,955)73,694 
Inventories(122,781)(86,785)
Other assets9,606 26,790 
Accounts payable109,197 (13,605)
Accrued pension and postretirement benefits(38,757)(21,481)
Accrued liabilities and other(34,587)(82,191)
Net cash from operating activities16,946 (83,216)
Investing activities:
Capital expenditures(17,804)(25,759)
Proceeds from sales of assets2,406 66 
Other1,794 1,216 
Net cash from investing activities(13,604)(24,477)
Financing activities:
Repayments on Term Loan Facilities(300,000) 
Borrowings on Accounts Receivable Securitization Facility 227,061 
Repayments on Accounts Receivable Securitization Facility (74,909)
Borrowings on Revolving Loan Facilities 1,638,000 
Repayments on Revolving Loan Facilities (688,000)
Borrowings on International Debt 31,222 
Borrowings on notes payable21,106 62,312 
Repayments on notes payable(20,276)(64,352)
Share repurchases (200,269)
Cash dividends paid(52,351)(53,683)
Payments of debt issuance costs
Other(2,902)132 
Net cash from financing activities(354,423)877,514 
Effect of changes in foreign exchange rates on cash(17,662)(15,061)
Change in cash, cash equivalents and restricted cash(368,743)754,760 
Cash, cash equivalents and restricted cash at beginning of year910,603 329,923 
Cash, cash equivalents and restricted cash at end of period541,860 1,084,683 
Less restricted cash at end of period1,153 903 
Cash and cash equivalents at end of period$540,707 $1,083,780 
Balances included in the Condensed Consolidated Balance Sheets:
Cash and cash equivalents$530,403 $1,069,490 
Cash and cash equivalents included in current assets of discontinued operations10,304 14,290 
Cash and cash equivalents at end of period$540,707 $1,083,780 

(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 April 3, 2021 and January 2, 2021 were $4,670 and $17,931, respectively. For the quarters ended April 3, 2021 and March 28, 2020, right-of-use assets obtained in exchange for lease obligations were $4,755 and $17,551, respectively.
See accompanying notes to Condensed Consolidated Financial Statements.
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements
(amounts in thousands, except per share data)
(unaudited)


(1)    Basis of Presentation
These statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and, in accordance with those rules and regulations, do not include all information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Management believes that the disclosures made are adequate for a fair statement of the results of operations, financial condition and cash flows of Hanesbrands Inc. and its consolidated subsidiaries (the “Company” or “Hanesbrands”). In the opinion of management, the condensed consolidated interim financial statements reflect all adjustments, which consist only of normal recurring adjustments, necessary to state fairly the results of operations, financial condition and cash flows for the interim periods presented herein. The preparation of condensed consolidated interim financial statements in conformity with GAAP requires management to make use of estimates and assumptions that affect the reported amounts and disclosures. Actual results may vary from these estimates.
These condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended January 2, 2021. The 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 on discontinued operations.
(2)    Recent Accounting Pronouncements
Income Taxes
In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” The new 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 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 disclosures.
Reference Rate Reform
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” In January 2021, the FASB clarified the scope of that guidance with the issuance of ASU 2021-01, “Reference Rate Reform: Scope.” The new accounting rules provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform. The amendments in this standard can be adopted any time before the fourth quarter of 2022. The Company is currently in the process of evaluating the impact of adoption of the new rules on the Company’s financial condition, results of operations, cash flows and disclosures.
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
Codification Improvements
In October 2020, the FASB issued ASU 2020-10, “Codification Improvements.” The new accounting rules improve the consistency of the 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 Codification. Additionally, the new rules also clarify guidance across various topics including defined benefit plans, foreign currency transactions, and interest expense. The new accounting rules were effective for the Company in the first quarter of 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 disclosures.
(3)    Discontinued Operations
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. The Company is actively marketing the business to prospective buyers and expects to complete the sale of this business within one year.
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 beginning in the first quarter of 2021 and 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 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 quarter ended April 3, 2021. In addition, the Company recorded a non-cash charge of $226,352 as "Loss on classification of assets held for sale" in the summarized discontinued operations financial information for the quarter ended April 3, 2021 to record a valuation allowance against the net assets held for sale to write down the carrying value of the disposal group to the estimated fair value less costs of disposal. Additionally, the Company recorded an impairment charge of $7,302 in continuing operations on an indefinite-lived trademark 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 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 European Innerwear business.
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 in all periods presented and have not been eliminated as intercompany transactions in consolidation. The related receivables from the European Innerwear business have been reclassified to “Trade accounts receivable, net” in the Condensed Consolidated Balance Sheets for all periods presented.

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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
The operating results of the discontinued operations only reflect revenues and expenses that are directly attributable to the European Innerwear business that will be eliminated from continuing operations. The key components from discontinued operations related to the European Innerwear business are as follows:
Quarters Ended
April 3,
2021
March 28,
2020
Net sales$135,845 $127,671 
Cost of sales75,523 72,107 
Gross profit60,322 55,564 
Selling, general and administrative expenses83,392 69,387 
Impairment of intangible assets and goodwill155,745  
Loss on classification of assets held for sale226,352  
Operating loss(405,167)(13,823)
Interest expense, net90 822 
Other expenses334 389 
Loss from discontinued operations before income tax expense(405,591)(15,034)
Income tax benefit(13,925)(2,042)
Net loss from discontinued operations, net of tax$(391,666)$(12,992)
Assets and liabilities of discontinued operations classified as held for sale in the Condensed Consolidated Balance Sheets as of April 3, 2021, January 2, 2021 and March 28, 2020 consist of the following:
April 3,
2021
January 2, 2021(1)
March 28, 2020(1)
Cash and cash equivalents$10,304 $8,822 $14,290 
Trade accounts receivable, net80,458 84,632 83,331 
Inventories106,192 123,337 176,097 
Other current assets11,190 17,295 23,171 
Property, net61,763 67,950 68,838 
Right-of-use assets34,779 34,637 39,711 
Trademarks and other identifiable intangibles, net208,601 284,170 274,006 
Goodwill 96,692 85,549 
Deferred tax assets8,505 5,438 6,197 
Other noncurrent assets4,860 5,614 5,626 
Allowance to adjust assets to estimated fair value, less costs of disposal(223,607)  
Total assets of discontinued operations$303,045 $728,587 $776,816 
Accounts payable62,199 77,636 73,866 
Accrued liabilities120,475 133,431 89,887 
Lease liabilities9,159 10,332 12,270 
Notes payable1,574 784 510 
Current portion of long-term debt  108,826 
Lease liabilities - noncurrent27,038 28,775 31,103 
Pension and postretirement benefits44,428 46,569 44,306 
Other noncurrent liabilities24,063 37,645 36,525 
Total liabilities of discontinued operations$288,936 $335,172 $397,293 
(1)Amounts at January 2, 2021 and March 28, 2020 have been classified as current and long-term in the Condensed Consolidated Balance Sheets.
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(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
April 3,
2021
March 28,
2020
Depreciation$2,608 $2,665 
Amortization1,460 1,282 
Capital expenditures3,335 3,538 
Impairment of intangible assets and goodwill155,745  
Loss on classification of assets held for sale226,352  
Other investing activities1,794 1,216 
Capital expenditures included in accounts payable52 1,033 
(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 following table presents the Company’s revenues disaggregated by the customer’s method of purchase:

Quarters Ended
April 3,
2021
March 28,
2020
Third-party brick-and-mortar wholesale$1,024,739 $886,535 
Consumer-directed483,290 316,535 
Total net sales$1,508,029 $1,203,070 
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. 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 other consumer products that incorporate certain of the Company’s brands. The Company accrues revenue earned under these contracts based upon reported sales from the licensees.
Consumer-Directed Revenue
Consumer-directed revenue is primarily generated through sales driven directly by the consumer through company-operated stores and e-commerce platforms, which include both owned sites and the sites of the Company’s retail customers.
(5)    Stockholders’ Equity
Basic earnings per share (“EPS”) was computed by dividing net income (loss) by the number of weighted average shares of common stock outstanding during the period. Diluted EPS was calculated to give effect to all potentially issuable dilutive shares of common stock using the treasury stock method.
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
The reconciliation of basic to diluted weighted average shares outstanding is as follows:
Quarters Ended
April 3,
2021
March 28,
2020
Basic weighted average shares outstanding351,003 359,017 
Effect of potentially dilutive securities:
Stock options9 220 
Restricted stock units671 188 
Employee stock purchase plan and other3 11 
Diluted weighted average shares outstanding351,686 359,436 
For the quarter ended April 3, 2021, there were 592 restricted stock units and 167 stock options to purchase shares of common stock excluded from the diluted earnings per share calculation because their effect would be anti-dilutive. For the quarter ended March 28, 2020, there were 1,080 restricted stock units and no stock options to purchase shares of common stock excluded from the diluted earnings per share calculation because their effect would be anti-dilutive.
On May 11, 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 June 1, 2021 to stockholders of record at the close of business on May 21, 2021.
On 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 quarter ended April 3, 2021, the Company did not enter into any transactions to repurchase shares under the new program. For the quarter ended March 28, 2020, the Company entered into transactions to repurchase 14,464 shares at a weighted average repurchase price of $13.83 per share under the new program. The shares were repurchased at a total cost of $200,269. At April 3, 2021, the remaining repurchase authorization under the current share repurchase program totaled 25,536 shares. The primary objective of the share repurchase program is to utilize excess cash to generate shareholder value. Share repurchases are currently prohibited under the Senior Secured Credit Facility as a result of the amendment signed in April 2020. See Note “Debt” for additional information on the Company’s debt facilities.
(6)    Inventories
Inventories consisted of the following: 
April 3,
2021
January 2,
2021
March 28,
2020
Raw materials$74,123 $67,111 $73,450 
Work in process99,619 108,844 115,129 
Finished goods1,315,823 1,191,803 1,599,081 
$1,489,565 $1,367,758 $1,787,660 
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
(7)    Debt
Debt consisted of the following: 
Interest Rate as of April 3,
2021
Principal AmountMaturity Date
 April 3,
2021
January 2,
2021
Senior Secured Credit Facility:
Revolving Loan Facility$ $ December 2022
Term Loan A2.11%625,000 625,000 December 2022
Term Loan B 300,000 December 2024
Australian Revolving Loan Facility  July 2021
5.375% Senior Notes5.38%700,000 700,000 May 2025
4.875% Senior Notes4.88%900,000 900,000 May 2026
4.625% Senior Notes4.63%900,000 900,000 May 2024
3.5% Senior Notes3.50%587,959 610,724 June 2024
Accounts Receivable Securitization Facility  June 2022
Total debt3,712,959 4,035,724 
Less long-term debt issuance costs28,953 32,354 
Less current maturities34,375 263,936 
Total long-term debt$3,649,631 $3,739,434 
As of April 3, 2021, the Company had $995,824 of borrowing availability under the $1,000,000 Revolving Loan Facility after taking into account $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 April 3, 2021. The Company had $87,403 of borrowing availability under the Accounts Receivable Securitization Facility at April 3, 2021.
The Company had $45,572 of borrowing availability under the Australian Revolving Loan Facility and $85,245 of borrowing availability under other international credit facilities after taking into account outstanding borrowings and letters of credit outstanding under the applicable facilities at April 3, 2021.
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 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 ending July 3, 2021, after which the covenants revert to their original, pre-amendment levels.
As of April 3, 2021, 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. 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 worsen
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
and the Company’s earnings and operating cash flows do not 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
The components of accumulated other comprehensive loss (“AOCI”) are as follows:
Cumulative Translation Adjustment(1)
Cash Flow HedgesDefined Benefit PlansIncome TaxesAccumulated Other Comprehensive Loss
Balance at January 2, 2021$(52,820)$(26,538)$(668,730)$181,129 $(566,959)
Amounts reclassified from accumulated other comprehensive loss
 5,242 7,085 (3,004)9,323 
Current-period other comprehensive income (loss) activity
(25,201)8,474 1,699 (4,221)(19,249)
Total other comprehensive income (loss)(25,201)13,716 8,784 (7,225)(9,926)
Balance at April 3, 2021$(78,021)$(12,822)$(659,946)$173,904 $(576,885)

Cumulative Translation Adjustment(1)
Cash Flow HedgesDefined Benefit PlansIncome TaxesAccumulated Other Comprehensive Loss
Balance at December 28, 2019$(157,138)$4,786 $(629,360)$164,064 $(617,648)
Amounts reclassified from accumulated other comprehensive loss
 (5,017)4,866  (151)
Current-period other comprehensive income (loss) activity
(117,154)20,080  (8,552)(105,626)
Total other comprehensive income (loss)(117,154)15,063 4,866 (8,552)(105,777)
Balance at March 28, 2020$(274,292)$19,849 $(624,494)$155,512 $(723,425)
(1)Cumulative Translation Adjustment includes translation adjustments and net investment hedges. See Note, “Financial Instruments and Risk Management” for additional disclosures about net investment hedges.
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
The Company had the following reclassifications out of AOCI:
Component of AOCI Location of Reclassification into IncomeAmount of Reclassification from AOCI
Quarters Ended
April 3,
2021
March 28,
2020
Gain (loss) on forward foreign exchange contracts designated as cash flow hedgesCost of sales$(4,377)$2,869 
Income tax1,208 (762)
Loss from discontinued operations, net of tax(244)1,638 
Net of tax(3,413)3,745 
Loss on cross-currency swap contracts designated as cash flow hedgesSelling, general and administrative expenses(557) 
Income tax89  
Net of tax(468) 
Amortization of deferred actuarial loss and prior service costOther expenses(7,707)(2,762)
Income tax1,746 1,233 
Loss from discontinued operations, net of tax519 (2,065)
Net of tax(5,442)(3,594)
Total reclassifications$(9,323)$151 
(9)    Financial Instruments and Risk Management
The Company uses forward foreign exchange contracts and cross-currency swap contracts to manage its exposures to movements in foreign exchange rates primarily related to the Euro, Australian dollar, Canadian dollar and Mexican peso. The Company also uses a combination of cross-currency swap contracts and long-term debt to manage its exposure to foreign currency risk associated with the Company’s net investment in certain European subsidiaries.
Hedge TypeApril 3,
2021
January 2,
2021
U.S. dollar equivalent notional amount of derivative instruments:
Forward foreign exchange contractsCash Flow and
Mark to Market
$426,204 $617,912 
Cross-currency swap contractsCash Flow$352,920 $ 
Cross-currency swap contractsNet Investment$335,940 $335,940 
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
Fair Values of Derivative Instruments
The fair values of derivative 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 LocationFair Value
April 3,
2021
January 2,
2021
Derivatives designated as hedging instruments:
Forward foreign exchange contractsOther current assets$1,676 $1 
Cross-currency swap contractsOther current assets2,817 918 
Forward foreign exchange contractsCurrent assets of discontinued operations226 40 
Forward foreign exchange contractsOther noncurrent assets488  
Derivatives not designated as hedging instruments:
Forward foreign exchange contractsOther current assets1,564 2,459 
Forward foreign exchange contractsCurrent assets of discontinued operations64 198 
Total derivative assets6,835 3,616 
Derivatives designated as hedging instruments:
Forward foreign exchange contractsAccrued liabilities(6,152)(12,898)
Forward foreign exchange contractsCurrent liabilities of discontinued operations(656)(4,747)
Forward foreign exchange contractsOther noncurrent liabilities (2,190)
Cross-currency swap contractsOther noncurrent liabilities(6,530)(16,526)
Derivatives not designated as hedging instruments:
Forward foreign exchange contractsAccrued liabilities(5,327)(16,488)
Forward foreign exchange contractsCurrent liabilities of discontinued operations(850)(2,195)
Total derivative liabilities(19,515)(55,044)
Net derivative liability$(12,680)$(51,428)
Cash Flow Hedges
The Company uses forward foreign exchange contracts and cross-currency swap contracts to reduce the effect of fluctuating foreign currencies on foreign currency-denominated transactions, foreign currency-denominated investments and other known foreign currency exposures. Gains and losses on these contracts are intended to offset losses and gains on the hedged transaction in an effort to reduce the earnings volatility resulting from fluctuating foreign currency exchange rates.
On April 1, 2021, in connection with a reduction in the amount of the 3.5% Senior Notes designated in the European net investment hedge discussed below, the Company entered into three pay-fixed rate, receive-fixed rate cross-currency swap contracts with a total notional amount of €300,000. The Company designated these cross-currency swap contracts to hedge the undesignated portion of the foreign currency cash flow exposure related to the Company’s 3.5% Senior Notes, which had a carrying amount of €500,000 as of April 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 $18,182. The Company is hedging exposure to the variability in future foreign currency-denominated cash flows for forecasted transactions over the next 16 months and for long-term debt over the next 39 months.
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(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
April 3,
2021
March 28,
2020
Forward foreign exchange contracts$8,486