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 span across the Innerwear and Activewear reportable segments.

The Company evaluates the operating performance of its segments based upon segment operating profit, which is defined as operating profit before general corporate expenses, 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				Six Months Ended
	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
Net sales:
Innerwear	$	694,694	$	719,006	$	1,185,772	$	1,224,196
Activewear	405,785		379,756		751,910		707,099
International	545,862		475,242		1,115,749		952,640
Other	69,102		72,606		133,516		143,030
Total net sales	$	1,715,443	$	1,646,610	$	3,186,947	$	3,026,965



	Quarter Ended						Six Months Ended
	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
Segment operating profit:
Innerwear	$	159,129		$	177,628		$	260,548		$	294,250
Activewear	57,508			58,972			95,795			102,322
International	76,558			60,147			153,619			112,809
Other	7,160			7,716			9,787			10,344
Total segment operating profit	300,355			304,463			519,749			519,725
Items not included in segment operating profit:
General corporate expenses	(46,002		)	(38,565		)	(90,533		)	(81,846		)
Acquisition, integration and other action-related charges	(25,165		)	(26,062		)	(44,782		)	(64,429		)
Amortization of intangibles	(9,125		)	(6,131		)	(18,313		)	(13,316		)
Total operating profit	220,063			233,705			366,121			360,134
Other expenses	(6,570		)	(6,422		)	(12,331		)	(12,967		)
Interest expense, net	(48,430		)	(44,130		)	(94,193		)	(86,267		)
Income from continuing operations before income tax expense	$	165,063		$	183,153		$	259,597		$	260,900

For the quarter ended June 30, 2018, the Company incurred $25,165 of acquisition, integration and other action-related charges that impact operating profit, of which $11,083 is reported in the “Cost of sales” line and $14,082 is reported in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statement of Income. For the quarter ended July 1, 2017, the Company incurred $26,062 of acquisition-related and integration charges, of which $4,284 is reported in the “Cost of sales” line and $21,778 is reported in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statement of Income.

For the six months ended June 30, 2018, the Company incurred acquisition, integration and other action-related charges that impact operating profit of $44,782, of which $21,836 is reported in the “Cost of sales” line and $22,946 is reported in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statement of Income. For the six months ended July 1, 2017, the Company incurred acquisition-related and integration charges of $64,429, of which $19,759 is reported in the “Cost of sales” line and $44,670 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 six months ended June 30, 2018, there were $4,577 of benefit payments and foreign currency adjustments, resulting in an ending accrual of $17,725, of which $9,535 and $8,190 is included in the “Accrued liabilities” and “Other noncurrent liabilities” lines of the Condensed Consolidated Balance Sheet, respectively.