Business Segment Information

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

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


•	Innerwear sells basic branded products that are replenishment in nature under the product categories of men’s underwear, panties, children’s underwear, socks and intimate apparel, which includes bras and shapewear.


•	Activewear sells basic branded products that are primarily seasonal in nature under the product categories of branded printwear and retail activewear, as well as licensed logo apparel in collegiate bookstores, mass retail and other channels.


•	International primarily relates to the Europe, Australia, Asia, Latin America and Canada geographic locations that sell products that primarily span across the Innerwear and Activewear product categories.

The Company evaluates the operating performance of its segments based upon segment operating profit, which is defined as operating profit before general corporate expenses, acquisition, integration and other action-related charges and amortization of intangibles. In the first quarter of 2018, the Company eliminated the allocation of certain corporate overhead selling, general and administrative expenses related to the legal, human resources, information technology, finance and real estate departments to the segments, in order to reflect the manner in which the business is managed and results are reviewed by the chief executive officer, who is the Company’s chief operating decision maker. Prior year segment operating profit disclosures have been revised to conform to the current year presentation. The accounting policies of the segments are consistent with those described in Note 2 to the Company’s consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 30, 2017.



	Quarter Ended
	March 31, 2018		April 1, 2017
Net sales:
Innerwear	$	491,078	$	505,190
Activewear	346,125		327,343
International	569,887		477,398
Other	64,414		70,424
Total net sales	$	1,471,504	$	1,380,355



	Quarter Ended
	March 31, 2018			April 1, 2017
Segment operating profit:
Innerwear	$	101,419		$	116,622
Activewear	38,287			43,350
International	77,061			52,662
Other	2,627			2,628
Total segment operating profit	219,394			215,262
Items not included in segment operating profit:
General corporate expenses	(44,531		)	(43,281		)
Acquisition, integration and other action-related charges	(19,617		)	(38,367		)
Amortization of intangibles	(9,188		)	(7,185		)
Total operating profit	146,058			126,429
Other expenses	(5,761		)	(6,545		)
Interest expense, net	(45,763		)	(42,137		)
Income from continuing operations before income tax expense	$	94,534		$	77,747

For the quarter ended March 31, 2018, the Company incurred acquisition, integration and other action-related charges that impact operating profit of $19,617, of which $10,753 is reported in the “Cost of sales” line and $8,864 is reported in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statement of Income. For the quarter ended April 1, 2017, the Company incurred acquisition-related and integration charges of $38,367, of which $15,475 is reported in the “Cost of sales” line and $22,892 is reported in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statement of Income.

As part of the Hanes Europe Innerwear acquisition strategy, in 2015 the Company identified management and administrative positions that were considered non-essential and/or duplicative that have or will be eliminated. As of December 30, 2017, the Company had accrued $22,302 for expected benefit payments related to employee termination and other benefits for affected employees. During the quarter ended March 31, 2018, there were $2,513 of benefit payments and foreign currency adjustments, resulting in an ending accrual of $19,789, of which, $9,645 and $10,144, is included in the “Accrued liabilities” and “Other noncurrent liabilities” lines of the Condensed Consolidated Balance Sheet, respectively.