Business Segment Information

6 Months Ended

Jun. 29, 2019

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 team that is responsible for the operations of the segment’s businesses, but the segments share a common supply chain and media and marketing platforms. Other consists of the Company’s U.S. 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 includes sales of basic branded apparel products that are replenishment in nature under the product categories of men’s underwear, women’s panties, children’s underwear and socks, and intimate apparel, which includes bras and shapewear.


•	Activewear includes sales of basic branded products that are primarily seasonal in nature to both retailers and wholesalers, as well as licensed sports apparel and licensed logo apparel in collegiate bookstores, mass retailers and other channels.


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

The Company evaluates the operating performance of its segments based upon segment operating profit, which is defined as operating profit before general corporate expenses, acquisition-related and integration charges and amortization of

intangibles. 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 29, 2018.



	Quarter Ended				Six Months Ended
	June 29, 2019		June 30, 2018		June 29, 2019		June 30, 2018
Net sales:
Innerwear	$	678,604	$	694,694	$	1,154,549	$	1,185,772
Activewear	448,277		405,785		853,617		751,910
International	568,863		545,862		1,215,043		1,115,749
Other	65,183		69,102		125,742		133,516
Total net sales	$	1,760,927	$	1,715,443	$	3,348,951	$	3,186,947



	Quarter Ended						Six Months Ended
	June 29, 2019			June 30, 2018			June 29, 2019			June 30, 2018
Segment operating profit:
Innerwear	$	149,530		$	159,129		$	254,156		$	260,548
Activewear	68,779			57,508			112,372			95,795
International	81,078			76,558			173,776			153,619
Other	6,032			7,160			6,786			9,787
Total segment operating profit	305,419			300,355			547,090			519,749
Items not included in segment operating profit:
General corporate expenses	(50,573		)	(46,002		)	(113,453		)	(90,533		)
Acquisition, integration and other action-related charges	(12,609		)	(25,165		)	(33,982		)	(44,782		)
Amortization of intangibles	(8,220		)	(9,125		)	(17,600		)	(18,313		)
Total operating profit	234,017			220,063			382,055			366,121
Other expenses	(8,249		)	(6,570		)	(15,700		)	(12,331		)
Interest expense, net	(46,522		)	(48,430		)	(94,581		)	(94,193		)
Income before income tax expense	$	179,246		$	165,063		$	271,774		$	259,597

For the quarter ended June 29, 2019, the Company incurred pre-tax acquisition, integration and other action-related charges of $12,609, of which $12,598 is reported in the “Cost of sales” line and $11 is reported in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statement of Income. For the quarter ended June 30, 2018, the Company incurred pre-tax acquisition, integration and other action-related charges of $25,165, 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 six months ended June 29, 2019, the Company incurred pre-tax acquisition, integration and other action-related charges of $33,982, of which $30,290 is reported in the “Cost of sales” line and $3,692 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 pre-tax acquisition-related, integration and other action-related charges 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.

As of December 29, 2018, the Company had an accrual of $10,806 for expected benefit payments related to actions taken in prior years. During the six months ended June 29, 2019, the Company approved actions to close certain supply chain facilities and reduce overhead costs and incurred charges of $11,092 for employee termination and other benefits for employees affected by separation programs, with $8,420 and $2,672 of charges reflected in the “Cost of sales” and “Selling, general and administrative expenses” lines, respectively, in the Condensed Consolidated Statement of Income. During the six months ended June 29, 2019, benefit payments, other accrual adjustments and foreign currency adjustments of $5,659 have been made, resulting in an ending accrual of $16,239, of which $12,955 and $3,284 is included in the “Accrued liabilities” and “Other noncurrent liabilities” lines of the Condensed Consolidated Balance Sheet, respectively.