Business Segment Information

9 Months Ended

Sep. 28, 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				Nine Months Ended
	September 28, 2019		September 29, 2018		September 28, 2019		September 29, 2018
Net sales:
Innerwear	$	578,453	$	599,726	$	1,733,002	$	1,785,498
Activewear	548,117		554,953		1,401,734		1,306,863
International	663,525		619,435		1,878,568		1,735,184
Other	76,872		74,593		202,614		208,109
Total net sales	$	1,866,967	$	1,848,707	$	5,215,918	$	5,035,654



	Quarter Ended						Nine Months Ended
	September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018
Segment operating profit:
Innerwear	$	121,467		$	132,244		$	375,623		$	392,792
Activewear	97,314			93,605			209,686			189,400
International	107,168			99,624			280,944			253,243
Other	9,643			8,400			16,429			18,187
Total segment operating profit	335,592			333,873			882,682			853,622
Items not included in segment operating profit:
General corporate expenses	(47,269		)	(46,161		)	(160,722		)	(136,694		)
Acquisition, integration and other action-related charges	(9,937		)	(20,732		)	(43,919		)	(65,514		)
Amortization of intangibles	(8,630		)	(10,091		)	(26,230		)	(28,404		)
Total operating profit	269,756			256,889			651,811			623,010
Other expenses	(8,066		)	(7,285		)	(23,766		)	(19,616		)
Interest expense, net	(43,091		)	(52,795		)	(137,672		)	(146,988		)
Income before income tax expense	$	218,599		$	196,809		$	490,373		$	456,406

For the quarter ended September 28, 2019, the Company incurred pre-tax acquisition, integration and other action-related charges of $9,937, of which $9,424 is reported in the “Cost of sales” line and $513 is reported in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statement of Income. For the quarter ended September 29, 2018, the Company incurred pre-tax acquisition, integration and other action-related charges of $20,732, of which $11,760 is reported in the “Cost of sales” line and $8,972 is reported in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statement of Income.

For the nine months ended September 28, 2019, the Company incurred pre-tax acquisition, integration and other action-related charges of $43,919, of which $39,714 is reported in the “Cost of sales” line and $4,205 is reported in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statement of Income. For the nine months ended September 29, 2018, the Company incurred pre-tax acquisition-related, integration and other action-related charges of $65,514, of which $33,596 is reported in the “Cost of sales” line and $31,918 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 nine months ended September 28, 2019, the Company approved actions to close certain supply chain facilities and reduce overhead costs and incurred charges of $12,392 for employee termination and other benefits for employees affected by separation programs, with $9,720 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 nine months ended September 28, 2019, benefit payments, other accrual adjustments and foreign currency adjustments of $11,681 have been made, resulting in an ending accrual of $11,517, of which $9,548 and $1,969 is included in the “Accrued liabilities” and “Other noncurrent liabilities” lines of the Condensed Consolidated Balance Sheet, respectively.