This management's discussion and analysis of financial condition and results of
operations, or MD&A, contains forward-looking statements that involve risks and
uncertainties. Please see "Forward-Looking Statements" and "Risk Factors" in
this Annual Report on Form 10-K for a discussion of the uncertainties, risks and
assumptions associated with these statements. This discussion should be read in
conjunction with our historical financial statements and related notes thereto
and the other disclosures contained elsewhere in this Annual Report on
Form 10-K. The results of operations for the periods reflected herein are not
necessarily indicative of results that may be expected for future periods, and
our actual results may differ materially from those discussed in the
forward-looking statements as a result of various factors, including but not
limited to those listed under "Risk Factors" in this Annual Report on Form 10-K
and included elsewhere in this Annual Report on Form 10-K.
This MD&A is a supplement to our consolidated financial statements and notes
thereto included elsewhere in this Annual Report on Form 10-K, and is provided
to enhance your understanding of our results of operations and financial
condition. Our MD&A is organized as follows:
•       Overview. This section provides a general description of our Company and
        operating segments, business and industry trends, our key business
        strategies and background information on other matters discussed in this
        MD&A.


•       2019 Highlights. This section discusses some of the highlights of our
        performance and activities during 2019.

• Consolidated Results of Operations and Operating Results by Business


        Segment. These sections provide our analysis and outlook for the
        significant line items on our Consolidated Statements of Income, as well
        as other information that we deem meaningful to an understanding of our

results of operations on both a consolidated basis and a business segment

basis.

• Liquidity and Capital Resources. This section provides an analysis of

trends and uncertainties affecting liquidity, cash requirements for our

business, sources and uses of our cash and our financing arrangements.

• Critical Accounting Policies and Estimates. This section discusses the


        accounting policies that we consider important to the evaluation and
        reporting of our financial condition and results of operations, and whose
        application requires significant judgments or a complex estimation
        process.


•       Recently Issued Accounting Pronouncements. This section provides a
        summary of the most recent authoritative accounting pronouncements that
        were adopted during 2019 and that we will be required to adopt in a
        future period.


The consolidated financial statements for the years ended December 29, 2018 and
December 30, 2017 have been revised to correct prior period errors as discussed
in Note, "Summary of Significant Accounting Policies" and Note, "Revisions of
Previously Issued Consolidated Financial Statements" to our consolidated
financial statements included in this Annual Report on Form 10-K. Accordingly,
this MD&A reflects the impact of those revisions.

Overview


Our Company
Hanesbrands Inc. is a socially responsible leading marketer of everyday basic
innerwear and activewear apparel in the Americas, Europe, Australia and
Asia/Pacific under some of the world's strongest apparel brands, including
Hanes, Champion, Bonds, DIM, Maidenform, Bali, Playtex, Lovable, Bras N Things,
Nur Die/Nur Der, Alternative, L'eggs, JMS/Just My Size, Wonderbra, Berlei and
Gear for Sports. We design, manufacture, source and sell a broad range of basic
apparel such as T-shirts, bras, panties, men's underwear, children's underwear,
activewear, socks and hosiery. Our brands hold either the number one or number
two market position by units sold in many of the product categories and
geographies in which we compete.
Our Segments
Our 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 our U.S. value-based ("outlet") stores and U.S. hosiery business.
The reportable segments are as follows:
•       Innerwear includes sales in the United States 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.



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• Activewear includes sales in the United States 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 our categories outside

the United States, primarily in Europe, Australia, Asia, Latin America


        and Canada.


Outlook for 2020 Our 2020 results are expected to be impacted by the exit of our C9 Champion program at a major mass retailer and the exit of our DKNY intimate apparel license. We estimate our 2020 guidance as follows: • Net sales of $6.675 billion to $6.775 billion, operating profit of $850

million to $880 million, and net income of $568 million to $595 million;

• Pre-tax restructuring and other action-related charges of approximately

$50 million reflected in operating profit;

• Interest expense and other expenses of approximately $185 million combined;

• An annual effective tax rate of approximately 14.5%;

• Cash flow from operations of $700 million to $800 million; and

• Capital expenditure investment of approximately $100 million.




Business and Industry Trends
Inflation and Changing Prices
Cotton is the primary raw material used in manufacturing many of our products.
While we do not own yarn operations, we are still exposed to fluctuations in the
cost of cotton. Increases in the cost of cotton can result in higher costs in
the price we pay for yarn from our large-scale yarn suppliers and may result in
the need to implement future price increases in order to maintain our margins.
Decreases in cotton prices can lead to lower margins for inventory and products
produced from cotton we have already purchased, particularly if there is
downward price pressure as a result of consumer demand, competition or other
factors.
Our costs for cotton yarn and cotton-based textiles vary based upon the
fluctuating cost of cotton, which is affected by, among other factors, weather,
consumer demand, speculation on the commodities market, the relative valuations
and fluctuations of the currencies of producer versus consumer countries and
other factors that are generally unpredictable and beyond our control. We are
able to lock in the cost of cotton reflected in the price we pay for yarn from
our primary yarn suppliers in an attempt to protect our business from the
volatility of the market price of cotton. Under our agreements with these
suppliers, we have the ability to periodically fix the cotton cost component of
our yarn purchases. When we elect to fix the cotton cost component under these
agreements, interim fluctuations in the price of cotton do not impact the price
we pay for the specified volume of yarn. The yarn suppliers bear the risk of
cotton fluctuations for the yarn volume specified and it is their responsibility
to procure the cotton at the agreed upon pricing through arrangements they make
with their cotton suppliers. However, our business can be affected by dramatic
movements in cotton prices. The cost of cotton used in goods manufactured by us
represented only approximately 4% of our cost of sales in 2019. Costs incurred
today for materials and labor, including cotton, typically do not impact our
results until the inventory is sold approximately six to nine months later.
Inflation can have a long-term impact on us because increasing costs of
materials and labor may impact our ability to maintain satisfactory margins. For
example, the cost of the materials that are used in our manufacturing process,
such as oil-related commodity prices and other raw materials, including cotton,
dyes and chemicals, and other costs, such as fuel, energy and utility costs, can
fluctuate as a result of inflation and other factors. Costs incurred for
materials and labor are capitalized into inventory and impact our results as the
inventory is sold. In addition, a significant portion of our products are
manufactured in countries other than the United States and declines in the value
of the U.S. dollar may result in higher manufacturing costs. Increases in
inflation may not be matched by growth in consumer income, which also could have
a negative impact on spending.
Other Business and Industry Trends
The basic apparel market is highly competitive and rapidly evolving. Competition
generally is based upon brand, comfort, fit, style and price. The majority of
our core styles continue from year to year, with variations only in color,
fabric or design details. Some products, however, such as intimate apparel,
activewear and sheer hosiery, do have more of an emphasis on style and
innovation. Our businesses face competition today from other large domestic and
foreign corporations and

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manufacturers, as well as smaller companies, department stores, specialty stores
and other retailers that market and sell basic apparel products under private
labels that compete directly with our brands.
Our top 10 customers accounted for 40% of our net sales in 2019. Our largest
customers in 2019 were Wal-Mart and Target, which accounted for 14% and 11% of
total sales, respectively. The increasing bargaining power of retailers can
create pricing pressures as our customers grow larger and seek greater
concessions in their purchase of our products, while also demanding exclusivity
with respect to some of our products. To counteract these effects, it has become
increasingly important to leverage our national brands through investment in our
largest and strongest brands as our customers strive to maximize their
performance especially in today's challenging retail economic environment.
Brands are important in our core categories to drive traffic and project the
quality and value our customers demand.
Consumers are increasingly embracing shopping online through e-commerce
platforms. As a result, an increasing portion of our revenue across all channels
is being generated online through e-commerce platforms. We are continuing to
develop and expand our omnichannel capabilities to allow a consumer to use more
than one channel when making a purchase, including in-store, at one of our
retail or outlet stores or those of our retail partners, online or with a mobile
device, through one of our branded websites, the website of one of our retail
partners, or an online retailer, such as Amazon. In addition to broadening our
assortment of product offerings across all online channels, we are also
increasing the proportion of our media budget dedicated to digital marketing.
Foreign Exchange Rates
Changes in exchange rates between the U.S. Dollar and other currencies can
impact our financial results in two ways; a translation impact and a transaction
impact. The translation impact refers to the impact that changes in exchange
rates can have on our published financial results. Similar to many
multi-national corporations that publish financial results in U.S. Dollars, our
revenue and profit earned in local foreign currencies is translated back into
U.S. Dollars using an average exchange rate over the representative period. A
period of strengthening in the U.S. Dollar results in a negative impact to our
published financial results (because it would take more units of a local
currency to convert into a dollar). The opposite is true during a period of
weakening in the U.S. Dollar. Our biggest foreign currency exposures are the
Australian dollar and the Euro. We use cross-currency swap contracts and
nonderivative financial instruments to minimize material foreign currency
translation exposures.
The transaction impact on financial results is common for apparel companies that
source goods because these goods are purchased in U.S. Dollars. The transaction
impact from a strengthening U.S. Dollar would have a negative impact to our
financial results (because the U.S. Dollar-based costs would convert into a
higher amount of local currency units, which means a higher local-currency cost
of goods, and in turn, a lower local-currency gross profit). The transaction
impact from exchange rates is typically recovered over time with price
increases. However, during periods of rapid change in exchange rates; pricing is
unable to change quickly enough, therefore we use forward foreign exchange
contracts to hedge against our sourcing costs to minimize our exposure to
fluctuating exchange rates.
Our Key Business Strategies
Our Innovate-to-Elevate strategy integrates our brand superiority,
industry-leading innovation and low-cost global supply chain to provide higher
value products while lowering production costs.
The first element of our Innovate-to-Elevate strategy is our brand power. We
seek to drive sales growth by consistently offering consumers brands they trust
and products with strong value. Our brands have a strong heritage in the basic
apparel industry. Our brands hold either the number one or number two market
position by units sold in many of the product categories and geographies in
which we compete. Internationally, our commercial markets include Europe,
Australasia, Japan, Canada, China, Mexico and South Korea, where we expect a
substantial amount of gross domestic product growth outside the United States
will be concentrated over the next decade. Our ability to react to changing
customer needs and industry trends is key to our success. Our design, research
and product development teams, in partnership with our marketing teams, drive
our efforts to bring innovations to market. We seek to leverage our insights
into consumer demand in the basic apparel industry to develop new products
within our existing lines and to modify our existing core products in ways that
make them more appealing, addressing changing customer needs and industry
trends. We also support our key brands with targeted, effective advertising and
marketing campaigns.
The second element of our Innovate-to-Elevate strategy is platform innovation.
We focus on identifying the long-term megatrends that will impact our categories
over the next five to 10 years. Once we have identified these trends, we utilize
a disciplined big-idea process to put more science into the art of apparel. Our
approach to innovation is to focus on big platforms. Our Tagless apparel
platform, Comfort Flex Fit apparel platform, ComfortBlend fabric platform,
temperature-control X-Temp fabric platform, FreshIQ advanced odor protection
technology fabric platform, SmoothTec fabric technology, Cool Comfort fabric
technology and DreamWire underwire technology incorporate big-idea innovation to
span brands,

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product categories, business segments, retailer and distribution channels and
geographies. We are focused on driving innovation that is margin accretive and
that can leverage our supply chain in order to drive further economies of scale.
The third element of our Innovate-to-Elevate strategy is our low-cost global
supply chain. We seek to expand margins through optimizing our low-cost global
supply chain and streamlining our operations to reduce costs. We believe that we
are able to leverage our significant scale of operations to provide us with
greater manufacturing efficiencies, purchasing power and product design,
marketing and customer management resources than our smaller competitors. Our
global supply chain spans across both the Western and Eastern hemispheres and
provides us with a balanced approach to product supply, which relies on a
combination of owned, contracted and sourced manufacturing located across
different geographic regions, increases the efficiency of our operations,
reduces product costs and offers customers a reliable source of supply. Our
global supply chain enables us to expand and leverage our production scale as we
balance our supply chain across hemispheres, thereby diversifying our production
risks. We have generated significant cost savings, margin expansion and
contributions to cash flow and should continue to do so as we further optimize
our size, scale and production capability.
We seek to generate strong cash flow through effectively optimizing our capital
structure and managing working capital levels. Our capital allocation strategy
is to deploy our significant, consistent cash flow effectively to generate the
best long-term returns for our shareholders. Our goal is for our leverage ratio
of net debt-to-adjusted EBTIDA to be in a range of 2 to 3 times. Adjusted EBITDA
is defined as earnings before interest, taxes, depreciation and amortization
excluding restructuring and other action-related costs and stock compensation
expense. Net debt is defined as total debt less cash and cash equivalents. Our
strategy is to use our cash flow from operations to first fund capital
investments and dividends. When we are within our targeted leverage range, we
intend to use debt for strategic acquisitions and use excess free cash flow,
which is defined as cash flow from operations less capital expenditures and
dividends, for share repurchases. When we are outside our targeted leverage
range, we plan to use excess free cash flow to pay down debt.
Tax Expense
As a global company, we are subject to income taxes and file income tax returns
in more than 100 United States and foreign jurisdictions each year. For the year
ended December 28, 2019, a substantial majority of our foreign income was earned
by our manufacturing and sourcing operations in El Salvador, Hong Kong,
Dominican Republic, Honduras, Vietnam and Thailand. The relatively lower
effective tax rates in these jurisdictions as a result of favorable local tax
regimes and various free trade zone agreements significantly reduced our
consolidated effective tax rate. Our future effective tax rates could be
adversely affected by earnings being lower than anticipated in countries where
we have lower effective tax rates and higher than anticipated in countries where
we have higher effective tax rates, or by changes in tax laws or regulations.
In addition, future acquisitions may affect the proportion of our pre-tax income
from foreign jurisdictions, both due to external sales and also increased volume
in our self-owned supply chain. We follow a disciplined acquisition strategy
focused on acquisitions that meet strict criteria for strong likely returns with
relatively low risk. It is difficult to predict whether or when such
acquisitions will occur and whether the acquisition targets will be foreign or
domestic. Therefore, it is also difficult to predict the effect of acquisitions
on the future distribution of our pre-tax income.
We maintain intercompany transfer pricing agreements governing sales within our
self-owned supply chain, which can impact the amount of pre-tax income we
recognize in foreign jurisdictions. In compliance with applicable tax laws, we
regularly review the terms of these agreements utilizing independent third-party
transfer pricing studies to ensure that intercompany pricing is consistent with
what a seller would charge an independent, arm's length customer, or what a
buyer would pay an independent, arm's length supplier. Therefore, changes in
intercompany pricing are often driven by market conditions, which are also
difficult to predict.
The Tax Act significantly revised United States corporate income tax law by,
among other things, reducing the corporate income tax rate to 21%, imposing a
new minimum tax on GILTI and implementing a modified territorial tax system that
included a one-time transition tax on deemed repatriated earnings of foreign
subsidiaries. In response to the Tax Act, the SEC issued SAB 118 which allowed
issuers to recognize provisional estimates of the impact of the Tax Act in their
financial statements, during a measurement period not to exceed one year from
the date of enactment. We completed our accounting for the enactment of the Tax
Act in accordance with SAB 118 in the fourth quarter of 2018.
As of December 28, 2019, we have continued to evaluate the effects of the Tax
Act and its inherent interplay with our global capital allocation strategy and
its impact on our historical permanent reinvestment assertion with respect to
the accumulated earnings of our foreign subsidiaries. As a result of our overall
and continuous evaluation, we have not changed our assertion from prior year and
we will continue to permanently reinvest a portion of our unremitted foreign
earnings. The portion of our unremitted foreign earnings as of December 28, 2019
that we intend to remit to the United States totals approximately $1 billion. We
intend to use these earnings to pay down debt held in the United States and
execute share repurchases. The remaining portion of our unremitted foreign
earnings will continue to be permanently reinvested to fund working capital
requirements and operations abroad. As of December 28, 2019, we have accrued for
income taxes of $43

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million in connection with the $1 billion of unremitted foreign earnings we
intend to remit in the future. These income tax effects include United States
federal, state, foreign and withholding tax implications in accordance with the
planned remittance of such foreign earnings.
We regularly assess any significant exposure associated with increases in
effective tax rates, and adjustments are made as events occur that warrant
adjustment to our tax provisions. See "Risk Factors." - We have a complex
multinational tax structure, and changes in effective tax rates or adverse
outcomes resulting from examination of our income tax returns could impact our
capital deployment strategy and adversely affect our results."

2019 Highlights

Key financial highlights are as follows: • Total net sales in 2019 were $7.0 billion, compared with $6.8 billion in

2018, representing a 2% increase.

• Operating profit was $890 million in 2019 compared with $865 million in

2018, representing a 3% increase. As a percentage of sales, operating

profit was 12.8% in 2019 compared to 12.7% in 2018. Included within

operating profit were restructuring and other action-related charges of

$63 million and $80 million in 2019 and 2018, respectively.


•       Diluted earnings per share was $1.64 in 2019, compared with $1.48 in
        2018, representing a 11% increase.

• Operating cash flows were $803 million in 2019 compared to $643 million


        in 2018.


•       As part of our cash deployment strategy, we paid four quarterly

dividends, in March, June, September and December, of $0.15 per share.

Consolidated Results of Operations - Year Ended December 28, 2019 ("2019") Compared with Year Ended December 29, 2018 ("2018")



                                                 Years Ended
                                       December 28,       December 29,        Higher        Percent
                                           2019               2018           (Lower)         Change
                                                          (dollars in thousands)
Net sales                            $    6,966,923     $    6,803,955     $  162,968           2.4  %
Cost of sales                             4,247,593          4,150,736         96,857           2.3
Gross profit                              2,719,330          2,653,219         66,111           2.5
Selling, general and administrative
expenses                                  1,829,600          1,788,568         41,032           2.3
Operating profit                            889,730            864,651         25,079           2.9
Other expenses                               31,424             26,395          5,029          19.1
Interest expense, net                       178,579            194,675        (16,096 )        (8.3 )
Income before income tax expense            679,727            643,581         36,146           5.6
Income tax expense                           79,007            103,915        (24,908 )       (24.0 )
Net income                           $      600,720     $      539,666     $   61,054          11.3  %

Net Sales Net sales increased 2% primarily due to the following: • Our acquisition of Bras N Things in 2018 contributed non-organic sales of

$18 million in 2019;

• Organic sales on a constant currency basis, defined as sales excluding

the impact of foreign currency and businesses acquired within the past 12

months, increased 4% in 2019, as a result of sales growth in Europe,

Asia, Australia and the Americas primarily driven by strong growth in our

global Champion brand and our international innerwear business.




Partially offset by:
•       Unfavorable impact from foreign currency exchange rates in our
        International businesses of approximately $122 million; and

• A decrease in U.S. innerwear sales driven by a decline in net sales in


        our intimate apparel and basics businesses.



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Operating Profit
Operating profit as a percentage of net sales was 12.8% in 2019, an increase
from the prior year of approximately 10 basis points. Price increases taken in
2019, higher margin product sales mix and lower bad debt charges, primarily
related to the Sears Holdings Corporation ("Sears") bankruptcy filing in 2018
were partially offset by increased input costs, planned investments to support
our brands and future growth initiatives, unfavorable impact from foreign
exchange rates and higher variable compensation accruals. Included in operating
profit in 2019 and 2018 were charges of $63 million and $80 million,
respectively related to restructuring and other action-related costs.
Other Highlights
Other Expenses - Other expenses were higher by $5 million in 2019 compared to
2018 primarily due to higher pension expense in 2019.
Interest Expense - Interest expense was lower by $16 million in 2019 compared to
2018 driven by lower debt balances and the impact of the cross-currency swap
contracts entered into in July 2019 partially offset by a higher weighted
average interest rate on our borrowings. Our weighted average interest rate on
our outstanding debt was 4.08% during 2019, compared to 3.91% during 2018.
Income Tax Expense - Our effective income tax rate was 11.6% and 16.1% for 2019
and 2018, respectively. The lower tax rate in 2019 compared to 2018 is primarily
due to a discrete tax benefit recorded in 2019.

Operating Results by Business Segment - Year Ended December 28, 2019 ("2019") Compared with Year Ended December 29, 2018 ("2018")



                          Net Sales
                         Years Ended
               December 28,      December 29,       Higher      Percent
                   2019              2018           (Lower)      Change
                                (dollars in thousands)
Innerwear     $    2,302,632    $    2,379,675    $ (77,043 )    (3.2 )%
Activewear         1,854,704         1,792,280       62,424       3.5
International      2,529,375         2,344,115      185,260       7.9
Other                280,212           287,885       (7,673 )    (2.7 )
Total         $    6,966,923    $    6,803,955    $ 162,968       2.4  %


                      Operating Profit and Margin
                              Years Ended
                  December 28,           December 29,         Higher      Percent
                      2019                   2018             (Lower)      Change
                                     (dollars in thousands)
Innerwear     $ 515,991     22.4 %   $ 526,831     22.1 %   $ (10,840 )    (2.1 )%
Activewear      281,319     15.2       267,428     14.9        13,891       5.2
International   384,784     15.2       351,769     15.0        33,015       9.4
Other            24,829      8.9        25,348      8.8          (519 )    (2.0 )
Corporate      (317,193 )     NM      (306,725 )     NM       (10,468 )    (3.4 )
Total         $ 889,730     12.8 %   $ 864,651     12.7 %   $  25,079       2.9  %


Innerwear
Innerwear net sales decreased 3% compared to 2018 driven by a 2% decline in our
basics business and a 6% decline in our intimate apparel business. Net sales in
our intimate apparel business decreased as a result of declines in our bras
product category in the first nine months of 2019, which was impacted by door
closings and the challenging retail landscape within the mid-tier and department
store channel. This decline was partially offset by growth in our shapewear
product category.
Innerwear operating margin was 22.4%, representing an increase from 22.1% in
2018. Price increases implemented in 2019 were partially offset by lower volume
and higher materials costs.
Activewear
Activewear net sales increased 3% in 2019 compared to the prior year. Core
Champion sales within the Activewear segment, which we define as Champion sales
outside of the mass retail channel, were up 34% in 2019, driven by strong

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consumer demand and growth across channels. Sales declined in the remainder of
our activewear business due to our previously announced exit from commodity
programs within the mass retail channel as we focused on remixing parts of our
activewear business to branded products, as well as, softer trends in the
printwear channel.
Activewear operating margin was 15.2%, representing an increase from 14.9% in
the prior year as a result of improved Champion profitability, higher margin
sales mix from our remixing activity and pricing, partially offset by higher
materials costs and higher selling, general and administrative expenses,
reflecting an increase in investments to support our brands and growth
initiatives.
International
Net sales in the International segment increased 8% as a result of the
following:
•       Our acquisition of Bras N Things in the first quarter of 2018, which
        contributed non-organic net sales of $18 million in 2019;

• Organic sales on a constant currency basis, defined as sales excluding

the impact of foreign currency and businesses acquired within the past 12

months, increased 12% in 2019, driven by growth in both our innerwear and

activewear businesses.

Partially offset by: • Unfavorable impact of foreign currency exchange rates of approximately

$122 million.




International operating margin was 15.2%, an increase from 2018 of 20 basis
points, primarily due to increased efficiencies of scale and the continued
realization of acquisition synergies, coupled with improved Champion
profitability and high margin contributions from the acquired Bras N Things
business. Operating profit in 2019 was reduced by a $3 million bad debt charge
related to a retailer bankruptcy in Australia.
Other
Other net sales were lower as a result of continued declines in hosiery sales in
the United States offset by increased traffic at our retail outlet stores.
Operating margin increased primarily due to the increase in sales at our retail
outlet stores.
Corporate
Corporate expenses included certain administrative costs including restructuring
and other action-related charges. Corporate expenses increased in 2019 compared
to the same period in 2018 primarily due to higher variable compensation
accruals partially offset by lower restructuring and other action-related
charges and lower bad debt expense as a result of a charge recorded in 2018
related to the Sears bankruptcy filing. Supply chain actions include the
reduction of overhead costs, principally within our Western Hemisphere network.
Program exit charges are costs associated with exiting the C9 Champion business
with Target and the DKNY license. Acquisition and integration costs are expenses
directly related to an acquisition and its integration into the organization.
Other acquisitions and other action-related costs include acquisition and
integration charges for smaller acquisitions such as Bras N Things, as well as
other action-related costs including corporate workforce reductions.
                                                                       Years Ended
                                                             December 28,       December 29,
                                                                 2019               2018
                                                                 (dollars in thousands)
Restructuring and other action-related charges included in
operating profit:
Supply chain actions                                       $       53,651     $            -
Program exit costs                                                  4,616                  -
Hanes Europe Innerwear                                                  -             26,403
Hanes Australasia                                                       -             14,266
Other acquisitions and other action-related costs                   5,219   

39,529

Total restructuring and other action-related charges included in operating profit

$       63,486     $       80,198




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Consolidated Results of Operations - Year Ended December 29, 2018 ("2018") Compared with Year Ended December 30, 2017 ("2017")



                                                Years Ended
                                       December 29,      December 30,       Higher        Percent
                                           2018              2017          (Lower)         Change
                                                         (dollars in thousands)
Net sales                            $    6,803,955     $  6,471,410     $  332,545           5.1  %
Cost of sales                             4,150,736        3,981,959        168,777           4.2
Gross profit                              2,653,219        2,489,451        163,768           6.6
Selling, general and administrative
expenses                                  1,788,568        1,725,424         63,144           3.7
Change in fair value of contingent
consideration                                     -           27,852        (27,852 )          NM
Operating profit                            864,651          736,175        128,476          17.5
Other expenses                               26,395           32,645         (6,250 )       (19.1 )
Interest expense, net                       194,675          174,435         20,240          11.6
Income from continuing operations
before income tax expense                   643,581          529,095        114,486          21.6
Income tax expense                          103,915          453,117       (349,202 )       (77.1 )
Income from continuing operations           539,666           75,978        463,688         610.3
Income (loss) from discontinued
operations, net of tax                            -           (2,097 )        2,097            NM
Net income                           $      539,666     $     73,881     $  465,785         630.5  %


Net Sales
Net sales increased 5% primarily due to the following:
•       Acquisitions of Bras N Things in 2018 and Alternative Apparel in 2017,
        which added incremental net sales of $177 million in 2018;

• Organic sales on a constant currency basis, defined as sales excluding

the impact of foreign currency and businesses acquired within the past 12

months, increased 2% in 2018, driven by strong growth in our global

Champion sales, our innerwear businesses in Australia, Asia and Americas


        and online sales offset in part by declines in our United States
        innerwear business and United States Hanes activewear business; and


•       Favorable impact from foreign currency exchange rates in our
        International businesses of approximately $13 million.


Operating Profit
Operating profit as a percentage of net sales was 12.7% in 2018, an increase
from the prior year of approximately 130 basis points, primarily due to the
following:
•       Gross margin expansion of approximately 50 basis points as the increase
        in International gross profit from acquisition synergies and lower
        restructuring and other action-related charges was partially offset by
        higher input costs; and

• Lower selling, general and administrative expenses as a percentage of net

sales of approximately 40 basis points primarily due to lower

restructuring and other action-related charges and cost savings realized

from the corporate headcount reduction efforts in 2017, partially offset

by increased bad debt charges, primarily related to the Sears bankruptcy


        filing, increased distribution expenses from investments to support
        future growth and higher proportion of selling, general and
        administrative costs at our recently acquired businesses.


Included within operating profit are charges of approximately $80 million and
$191 million related to restructuring and other action-related costs in 2018 and
2017, respectively. Included within restructuring and other action-related costs
in 2017, is $28 million related to the change in fair value of contingent
consideration resulting from the final settlement ruling for the contingent
consideration liability in connection with the Champion Europe acquisition in
2016.
Other Highlights
Other Expenses - Other expenses were lower by $6 million in 2018 compared to
2017 primarily due to $4 million of lower pension expense in 2018 and higher
costs in 2017 to refinance credit facilities.

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Interest Expense - Interest expense was higher by $20 million in 2018 compared
to 2017 driven by higher debt balances and a higher weighted average interest
rate. Our weighted average interest rate on our outstanding debt was 3.91%
during 2018, compared to 3.78% during 2017.
Income Tax Expense - Our effective income tax rate was 16.1% and 85.6% for 2018
and 2017, respectively. The lower tax rate in 2018 compared to 2017 is primarily
due to the provisional charge recorded in 2017 related to the Tax Act of $437
million, primarily related to a transition tax charge on deemed repatriated
earnings of foreign subsidiaries and a charge for the revaluation of our
deferred tax assets and liabilities to the lower corporate income tax rate of
21%.
Discontinued Operations - The results of our discontinued operations in 2017
included the operations of two businesses, Dunlop Flooring and Tontine Pillow,
purchased in the Hanes Australasia acquisition and sold in 2017.

Operating Results by Business Segment - Year Ended December 29, 2018 ("2018") Compared with Year Ended December 30, 2017 ("2017")



                            Net Sales
                           Years Ended
                                      December 30,       Higher      Percent
               December 29, 2018          2017           (Lower)      Change
                                  (dollars in thousands)
Innerwear     $         2,379,675    $    2,462,876    $ (83,201 )    (3.4 )%
Activewear              1,792,280         1,654,278      138,002       8.3
International           2,344,115         2,054,664      289,451      14.1
Other                     287,885           299,592      (11,707 )    (3.9 )
Total         $         6,803,955    $    6,471,410    $ 332,545       5.1  %


                      Operating Profit and Margin
                              Years Ended
                  December 29,           December 30,         Higher      Percent
                      2018                   2017             (Lower)      Change
                                     (dollars in thousands)
Innerwear     $ 526,831     22.1 %   $ 580,879     23.6 %   $ (54,048 )    (9.3 )%
Activewear      267,428     14.9       264,975     16.0         2,453       0.9
International   351,769     15.0       268,367     13.1        83,402      31.1
Other            25,348      8.8        31,540     10.5        (6,192 )   (19.6 )
Corporate      (306,725 )     NM      (409,586 )     NM       102,861      25.1
Total         $ 864,651     12.7 %   $ 736,175     11.4 %   $ 128,476      17.5  %


Innerwear
Innerwear net sales decreased 3% compared to 2017 driven by a 1% decline in our
basics business and a 10% decline in our intimate apparel business. Within our
basics business, strength in our men's underwear business was more than offset
by declines in our women's panties, children's underwear and sock businesses.
Net sales in our intimate apparel business decreased primarily due to declines
in our bras product category, which continues to be impacted by door closings
and the challenging retail landscape within the mid-tier and department store
channel.
Innerwear operating margin was 22.1%, representing a reduction from 2017 of
approximately 150 basis points due to the impact from lower sales volume, higher
raw material costs and product mix, which was partially offset by lower selling,
general and administrative expenses as a result of the prior year's corporate
headcount reduction efforts.
Activewear
Activewear net sales increased as a result of our acquisition of Alternative
Apparel in October 2017, which contributed incremental net sales in 2018 of $54
million, as well as approximately 5% increase in net sales among our other
activewear businesses. Core Champion sales within our Activewear segment, which
we define as Champion sales outside of the mass retail channel, were up 48% in
2018, driven by strong consumer demand, space gains in the sports specialty
channels and growth in the online channel. Growth in core Champion sales more
than offset declines in our Champion and Hanes activewear businesses within the
mass retail channel due to space reductions.
Activewear operating margin was 14.9%, representing a decline from 2017 of
approximately 110 basis points as favorable product mix and cost savings
associated with prior year's corporate headcount reduction efforts were more
than offset

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by higher raw material costs, higher distribution costs primarily driven by
investments to support future growth and a higher proportion of selling, general
and administrative expenses from our recently acquired businesses.
International
Net sales in the International segment were higher as a result of the following:
•       Our acquisition of Bras N Things in the first quarter of 2018, which
        contributed incremental net sales of nearly $123 million;

• Organic sales on a constant currency basis, defined as sales excluding

the impact of foreign currency and businesses acquired within the past 12

months, increased in 2018, driven by our global Champion sales growth,

primarily in the Europe and Asia markets, and growth in our innerwear

businesses in Australia, Asia and Americas; and

• Favorable impact of foreign currency exchange rates of approximately $13

million.




International operating margin was 15.0%, an increase from 2017 of approximately
190 basis points primarily due to scale efficiencies, favorable mix and the
continued realization of acquisition synergies coupled with high margin
contributions from the recently acquired Bras N Things business.
Other
Other net sales were lower as a result of continued declines in hosiery sales in
the United States and slower traffic at our outlet stores. Operating margin
decreased slightly as the impact from lower sales volume was only partially
offset by continued cost control.
Corporate
Corporate expenses decreased in 2018 primarily related to lower restructuring
and other action-related charges of $111 million, partially offset by increased
bad debt charges, primarily related to the Sears bankruptcy filing. Acquisition
and integration costs are expenses directly related to an acquisition and its
integration into the organization. Other acquisitions and other action-related
costs include acquisition and integration charges for smaller acquisitions such
as Bras N Things, Champion Europe and Alternative Apparel, as well as other
action-related costs including corporate workforce reductions. Contingent
consideration related to Champion Europe represents the charge recognized in
relation to the final contingent consideration settlement in excess of amounts
previously accrued, as further described in Note, "Acquisitions" to our
consolidated financial statements.
                                                                       Years Ended
                                                             December 29,       December 30,
                                                                 2018               2017
                                                                 (dollars in thousands)
Restructuring and other action-related charges included in
operating profit:
Hanes Europe Innerwear                                     $       26,403     $       65,995
Hanes Australasia                                                  14,266             40,681
Other acquisitions and other action-related costs                  39,529   

56,376


Contingent consideration related to Champion Europe                     -   

27,852

Total restructuring and other action-related charges included in operating profit

$       80,198

$ 190,904





Liquidity and Capital Resources
Cash Requirements and Trends Affecting Liquidity
We rely on our cash flows generated from operations and the borrowing capacity
under our credit facilities to meet the cash requirements of our business. The
primary cash requirements of our business are payments to vendors in the normal
course of business, capital expenditures, maturities of debt and related
interest payments, business acquisitions, contributions to our pension plans,
repurchases of our stock, regular quarterly dividend payments and income tax
payments. We believe we have sufficient cash and available borrowings for our
foreseeable liquidity needs.
We typically use cash during the first half of the year and generate most of our
cash flow in the second half of the year. We expect the top priorities of our
cash deployment strategy in the future will include capital investments and
dividends. When we are within our targeted leverage range, we intend to use debt
for strategic acquisitions and use excess free cash flow for share repurchases.
When we are outside our targeted leverage range, we plan to use excess free cash
flow to pay down debt.

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Our primary sources of liquidity are cash generated from global operations and
cash available under our Revolving Loan Facility, our Accounts Receivable
Securitization Facility and our international loan facilities, including our
Australian Revolving Loan Facility and our European Revolving Loan Facility.
We had the following borrowing capacity and availability under our credit
facilities as of December 28, 2019:
                                                   As of December 28, 2019
                                                 Borrowing         Borrowing
                                                  Capacity       Availability
                                                    (dollars in thousands)
Senior Secured Credit Facility:
Revolving Loan Facility                        $   1,000,000    $      

995,565


Australian Revolving Loan Facility                    41,497            

41,497


European Revolving Loan Facility                     110,914                

-

Accounts Receivable Securitization Facility(1) 235,743 235,743 Other international credit facilities

                130,199           

111,033

Total liquidity from credit facilities $ 1,518,353 $ 1,383,838

(1) Borrowing availability under the Accounts Receivable Securitization Facility

is subject to a quarterly fluctuating facility limit, not to exceed $300

million and 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.




As of December 28, 2019, we had $329 million in cash and cash equivalents. We
currently believe that our existing cash balances and cash generated by
operations, together with our borrowing availability, will enable us to comply
with the terms of our indebtedness and meet foreseeable liquidity requirements.
The following have impacted or are expected to impact liquidity:
•       We may repurchase shares of the Company's common stock under our new

share repurchase program, which was approved by our Board of Directors on

February 6, 2020 and authorizes the purchase of up to 40 million shares.


        We did not repurchase any shares of common stock during 2019 or 2018.
        During 2017, we repurchased 19.6 million shares (at a cost of $400
        million) under our prior share repurchase program.

• Our Board of Directors has authorized a regular quarterly dividend.

• We have principal and interest obligations under our outstanding debt.

• We expect to continue to invest in efforts to accelerate worldwide


        omnichannel and global growth initiatives, as well as marketing and brand
        building.


•       We expect to continue to invest in efforts to improve operating
        efficiencies and lower costs.

• We acquired Bras N Things in February 2018 and Alternative Apparel in

October 2017 and we may pursue strategic acquisitions in the future.


•       We made contributions of $26 million to our U.S. pension plan in 2019 and

expect to make required cash contributions of $25 million to our U.S.

pension plan in 2020 based on a preliminary calculation by our actuary.

We may also elect to make additional voluntary contributions. Our U.S.

qualified pension plan was approximately 91% and 93% funded as of

December 28, 2019 and December 29, 2018, respectively, under the Pension

Protection Act funding rules.

• We may increase or decrease the portion of the current-year income of our

foreign subsidiaries that we remit to the United States, which could

impact our effective income tax rate. We have not changed our

reinvestment strategy from the prior year with regards to our historic


        earnings which were taxed as part of the Tax Act and intend to remit
        foreign earnings totaling $1 billion.


•       We are obligated to make installment payments over an eight-year period

related to our transition tax liability resulting from the implementation


        of the Tax Act, which began in 2018, in addition to any estimated income
        taxes due based on current year taxable income. In 2019, we made an
        installment payment on our transition tax liability in the amount of $7
        million and have a remaining balance due of $101 million to be paid in
        installment payments through 2025.

Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements within the meaning of Item 303(a)(4) of SEC Regulation S-K.


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Future Contractual Obligations and Commitments
The following table contains information on our contractual obligations and
commitments as of December 28, 2019, and their expected timing on future cash
flows and liquidity.

                                                                  Payments Due by Period
                                                                                                  Fiscal
                            At December 28,       Fiscal          Fiscal          Fiscal         2025 and
                                  2019             2020          2021-2022       2023-2024      Thereafter
                                                         (dollars in thousands)
Operating activities:
Interest on debt
obligations(1)              $      657,741     $   136,011     $   267,263     $   194,017     $    60,450
Inventory purchase
obligations                        493,403         485,968           7,435               -               -

Operating lease obligations 595,599 166,833 216,989

        118,023          93,754
Marketing and advertising
obligations                         10,072           9,237             835               -               -
Defined benefit plan
minimum contributions(2)            25,000          25,000               -               -               -
Tax obligations(3)                 178,724          33,358          62,778          45,069          37,519
Other long-term
obligations(4)                     521,220         176,373         137,325         107,274         100,248
Investing activities:
Capital expenditures                17,940          17,554             386               -               -
Financing activities:
Debt                             3,394,761         110,914         625,000       1,758,847         900,000
Notes payable                        4,244           4,244               -               -               -
Total                       $    5,898,704     $ 1,165,492     $ 1,318,011
   $ 2,223,230     $ 1,191,971

(1) Interest obligations on floating rate debt instruments are calculated for

future periods using interest rates in effect at December 28, 2019.

(2) Represents only the required minimum pension contributions to our U.S.

qualified pension plan in 2020. In addition to the required cash

contributions, we may elect to make voluntary contributions to maintain

certain funded levels. For a discussion of our pension plan obligations, see

Note, "Defined Benefit Pension Plans," to our consolidated financial

statements.

(3) Represents current tax liabilities, uncertain tax positions and transition

tax liabilities resulting from the Tax Act.

(4) Represents the projected payment for long-term liabilities recorded on the


    Consolidated Balance Sheet for certain employee benefit claims,
    royalty-bearing license agreement payments, postemployment benefit
    obligations and deferred compensation.


Sources and Uses of Our Cash
The information presented below regarding the sources and uses of our cash flows
for the years ended December 28, 2019 and December 29, 2018 was derived from our
consolidated financial statements.

                                                                           Years Ended
                                                                 December 28,      December 29,
                                                                     2019              2018
                                                                     (dollars in thousands)
Operating activities                                            $     803,432     $     643,402
Investing activities                                                 (109,660 )        (418,651 )
Financing activities                                                 (824,010 )        (200,497 )
Effect of changes in foreign exchange rates on cash                     4,429             9,912
Change in cash, cash equivalents and restricted cash                 

(125,809 ) 34,166 Cash, cash equivalents and restricted cash at beginning of year 455,732

           421,566
Cash, cash equivalents and restricted cash at end of year             329,923           455,732
Less restricted cash at end of year                                     1,047            22,710
Cash and cash equivalents at end of year                        $     

328,876 $ 433,022




Operating Activities
Our overall liquidity is primarily driven by our strong cash flow provided by
operating activities, which is dependent on net income and changes in working
capital. As compared to the prior year, the higher net cash generated by
operating activities was due to higher profitability and improved working
capital management, specifically related to the reduction of inventory levels,
offset by a $26 million of U.S. pension contribution made in the first quarter
of 2019. Cash generated by operating

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activities in 2018 included the final Champion Europe contingent consideration
payment of $32 million and $17 million of U.S. pension contributions.
Investing Activities
The decrease in cash used by investing activities was primarily the result of
the acquisition of Bras N Things in 2018. In 2019, we paid $21 million of the
indemnification escrow related to the Bras N Things acquisition. Additionally,
we increased capital investments into our business to support our global growth
compared to the prior year.
Financing Activities
Cash used by financing activities increased primarily as a result of repayments
on our loan facilities in 2019 as compared to the same period of 2018 including
our payment of the outstanding balance and termination of the Australian Term
A-1 loan in 2019.
Financing Arrangements
We believe our financing structure provides a secure base to support our
operations and key business strategies. As of December 28, 2019, we were in
compliance with all financial covenants under our credit facilities and other
outstanding indebtedness discussed below. We continue to monitor our covenant
compliance carefully. We expect to maintain compliance with our covenants during
2020, however economic conditions or the occurrence of events discussed above
under "Risk Factors" could cause noncompliance.
For further details regarding our liquidity from our available cash balances and
credit facilities see, "Cash Requirements and Trends Affecting Liquidity,"
above.

Critical Accounting Policies and Estimates
We have chosen accounting policies that we believe are appropriate to accurately
and fairly report our operating results and financial condition in conformity
with accounting principles generally accepted in the United States. We apply
these accounting policies in a consistent manner. Our significant accounting
policies are discussed in Note, "Summary of Significant Accounting Policies," to
our consolidated financial statements.
The application of critical accounting policies requires that we make estimates
and assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses and related disclosures. These estimates and assumptions
are based on historical and other factors believed to be reasonable under the
circumstances. We evaluate these estimates and assumptions on an ongoing basis
and may retain outside consultants to assist in our evaluation. If actual
results ultimately differ from previous estimates, the revisions are included in
results of operations in the period in which the actual amounts become known.
The critical accounting policies that involve the most significant management
judgments and estimates used in preparation of our consolidated financial
statements, or are the most sensitive to change from outside factors, are
described below:
Sales Recognition and Incentives
We recognize revenue 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 we
expect to receive in exchange for transferring goods, which includes estimates
for variable consideration. We record provisions for any uncollectible amounts
based upon our historical collection statistics and current customer
information. Our management reviews these estimates each quarter and makes
adjustments based upon actual experience.
Note, "Summary of Significant Accounting Policies  - (e) Sales Recognition and
Incentives," to our consolidated financial statements describes a variety of
sales incentives that we offer to resellers and consumers of our products.
Measuring the cost of these incentives requires, in many cases, estimating
future customer utilization and redemption rates. We use historical data for
similar transactions to estimate the cost of current incentive programs. Our
management reviews these estimates each quarter and makes adjustments based upon
actual experience and other available information. We classify the costs
associated with cooperative advertising as a reduction of "Net sales" in our
Consolidated Statements of Income.
Accounts Receivable Valuation
Accounts receivable consist primarily of amounts due from customers. We carry
our accounts receivable at their net realizable value. In determining the
appropriate allowance for doubtful accounts, we consider a combination of
factors, such as the aging of trade receivables, industry trends, and our
customers' financial strength, credit standing and payment and default history.
Changes in the aforementioned factors, among others, may lead to adjustments in
our allowance for doubtful accounts. The calculation of the required allowance
requires judgment by our management as to the impact of these and other factors
on

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the ultimate realization of our trade receivables. Charges to the allowance for
doubtful accounts are reflected in the "Selling, general and administrative
expenses" line and charges to the allowance for customer chargebacks and other
customer deductions are primarily reflected as a reduction in the "Net sales"
line of our Consolidated Statements of Income. Our management reviews these
estimates each quarter and makes adjustments based upon actual experience.
Because we cannot predict future changes in the financial stability of our
customers, actual future losses from uncollectible accounts may differ from our
estimates. If the financial condition of our customers were to deteriorate,
resulting in their inability to make payments, a large reserve might be
required. The amount of actual historical losses has not varied materially from
our estimates for bad debts.
Inventory Valuation
We carry inventory on our balance sheet at the estimated lower of cost or
market. Cost is determined by the first-in, first-out, or "FIFO," method for our
inventories. We carry obsolete, damaged and excess inventory at the net
realizable value, which we determine by assessing historical recovery rates,
current market conditions and our future marketing and sales plans. Because our
assessment of net realizable value is made at a point in time, there are
inherent uncertainties related to our value determination. Market factors and
other conditions underlying the net realizable value may change, resulting in
further reserve requirements. A reduction in the carrying amount of an inventory
item from cost to market value creates a new cost basis for the item that cannot
be reversed at a later period. While we believe that adequate write-downs for
inventory obsolescence have been provided in the consolidated financial
statements, consumer tastes and preferences will continue to change and we could
experience additional inventory write-downs in the future.
Rebates, discounts and other cash consideration received from a vendor related
to inventory purchases are reflected as reductions in the cost of the related
inventory item, and are therefore reflected in "Cost of Sales" in our
Consolidated Statements of Income when the related inventory item is sold.
Income Taxes
Deferred tax assets and liabilities are established for temporary differences
between the financial reporting basis and the income tax basis of our assets and
liabilities, as well as for realizable operating loss and tax credit
carryforwards, at tax rates in effect for the years in which the differences are
expected to reverse. Realization of deferred tax assets is dependent on future
taxable income in specific jurisdictions, the amount and timing of which are
uncertain, and on possible changes in tax laws and tax planning strategies. If
in our judgment it appears that it is more likely than not that all or some
portion of the asset will not be realized, valuation allowances are established
against our deferred tax assets, which increase income tax expense in the period
when such determination is made.
We recognize the tax benefit from an uncertain tax position only if it is more
likely than not that the tax position will be sustained on examination by the
taxing authorities, based on the technical merits of the position. The tax
benefits recognized in the consolidated financial statements from such a
position are measured based on the largest benefit that has a greater than 50%
likelihood of being realized upon ultimate resolution. These assessments of
uncertain tax positions contain judgments related to the interpretation of tax
regulations in the jurisdictions in which we transact business. The judgments
and estimates made at a point in time may change based on the outcome of tax
audits, expiration of statutes of limitations, as well as changes to, or further
interpretations of, tax laws and regulations. Income tax expense is adjusted in
our Consolidated Statements of Income in the period in which these events occur.
We completed our accounting for the enactment of the Tax Act in the fourth
quarter of 2018.
Assets and Liabilities Acquired in Business Combinations
We account for business combinations using the purchase method, which requires
us to allocate the cost of an acquired business to the acquired assets and
assumed liabilities based on their estimated fair values at the acquisition
date. We recognize the excess of an acquired business' cost over the fair value
of acquired assets and assumed liabilities as goodwill. We use a variety of
information sources to determine the fair value of acquired assets and assumed
liabilities. We generally use third-party appraisers to assist management in
determination of the fair value and lives of property and identifiable
intangibles, consulting actuaries to assist management in determining the fair
value of obligations associated with defined benefit pension plans and legal
counsel to assist management in assessing obligations associated with legal and
environmental claims.
Trademarks and Other Identifiable Intangibles
Trademarks, license agreements, customer and distributor relationships and
computer software are our primary identifiable intangible assets. We amortize
identifiable intangibles with finite lives over their estimated useful lives,
and we do not amortize identifiable intangibles with indefinite lives. As of
December 28, 2019, the net book value of trademarks and other

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identifiable intangible assets was $1.5 billion, of which we are amortizing a
balance of $188 million. We anticipate that our amortization expense for 2020
will be approximately $33 million.
We evaluate identifiable intangible assets subject to amortization for
impairment at least annually and as triggering events occur, such as significant
adverse changes in business climate, several periods of operating or cash flow
losses, forecasted continued losses or a current expectation that an intangible
asset's value will be eliminated prior to the end of its useful life. We
estimate an intangible asset's useful life based on historical experience, the
level of maintenance expenditures required to obtain future cash flows, future
business plans and the period over which the asset will be economically useful
to us. Our policies require that we periodically review our assets' remaining
depreciable lives based upon actual experience and expected future utilization.
A change in the depreciable life is treated as a change in accounting estimate
and the accelerated amortization is accounted for in the period of change and
future periods.
We assess identifiable intangible assets not subject to amortization for
impairment at least annually, as of the first day of the third fiscal quarter,
and more often as triggering events occur. In order to determine the impairment
of identifiable intangible assets, we compare the fair value of the intangible
asset to its carrying amount. Fair values of intangible assets are primarily
based on future cash flows projected to be generated from that asset. We
recognize an impairment loss for the amount by which an identifiable intangible
asset's carrying value exceeds its fair value.
In connection with our annual impairment testing performed in 2019, we performed
a quantitative assessment for each indefinite-lived asset. The tests indicate
that the indefinite-lived intangible assets have fair values that exceeded their
carrying amounts and no impairment of trademarks or other identifiable
intangible assets was identified as a result of our testing conducted in 2019.
Goodwill
As of December 28, 2019, we had $1.2 billion of goodwill. We do not amortize
goodwill, but we assess for impairment at least annually and more often as
triggering events occur. The timing of our annual goodwill impairment testing is
the first day of the third fiscal quarter. The estimated fair values
significantly exceeded the carrying values of each of our reporting units as of
the first day of the third fiscal quarter, and no impairment of goodwill was
identified as a result of the testing conducted in 2019.
In evaluating the recoverability of goodwill in 2019, we estimated the fair
value of our reporting units. We relied on a number of factors to determine the
fair value of our reporting units and evaluated various factors to discount
anticipated future cash flows, including operating results, business plans and
present value techniques. As discussed above under "Trademarks and Other
Identifiable Intangibles," there are inherent uncertainties related to these
factors, and our judgment in applying them and the assumptions underlying the
impairment analysis may change in such a manner that impairment in value may
occur in the future. Such impairment will be recognized in the period in which
it becomes known.
Defined Benefit Pension Plans
For a discussion of our net periodic benefit cost, plan obligations, plan assets
and how we measure the amount of these costs, see Note, "Defined Benefit Pension
Plans," to our consolidated financial statements. The funded status of our
defined benefit pension plans are recognized on our balance sheet. Differences
between actual results in a given year and the actuarially determined assumed
results for that year are deferred as unrecognized actuarial gains or losses in
comprehensive income. We measure the funded status of our plans as of the date
of our fiscal year end.
The net periodic benefit cost of the pension plans is determined using
projections and actuarial assumptions, the most significant of which are the
discount rate and the long-term rate of asset return. The net periodic pension
income or expense is recognized in the year incurred. Gains and losses, which
occur when actual experience differs from actuarial assumptions, are amortized
over the average future expected life of participants. As benefits under the
Hanesbrands Inc. Pension Plan are frozen, year over year fluctuations in our
pension expense are not expected to be material and not expected to have a
material impact on our Consolidated Statements of Income.
Our policies regarding the establishment of pension assumptions are as follows:
•       Discount rate assumptions are generally based on yield curves applicable

to each country and the expected cash flows for each plan. For our U.S.

defined benefit plans, we use the full series of spot rates along the Aon

Hewitt AA Above Median Yield Curve and expected plan cash flows to

determine liabilities and expense. Single equivalent discount rates are

shown for disclosure purposes.

• Salary increase assumptions, where applicable, are generally based on


        historical experience and management expectations. This assumption is not
        applicable to the U.S., Germany, or Italy as benefits under these plans
        are either



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frozen or not tied to pay. The benefits under the Hanesbrands Inc. Pension Plan
were frozen as of December 31, 2005.
•       Long-term rate of return on plan assets assumptions, where applicable,

are generally based on each plan's investment mix and forward-looking

capital market assumptions applicable to each country. Expected returns

also reflect an incremental premium for actively managed investments and

a reduction for trust-paid expenses. This assumption is not applicable to


        unfunded plans.


•       Retirement and turnover assumptions are generally based on actual plan
        experience while standard actuarial mortality tables applicable to each
        country are used to estimate life expectancy. For our U.S. defined
        benefit plans, the 2019 mortality tables are from the Society of

Actuaries' Private Plan study published in 2019 (Pri-2012) projected

generationally with Scale MP-2019.




The sensitivity of changes in actuarial assumptions on our annual pension
expense and on our plans' benefit obligations, all other factors being equal, is
illustrated by the following:

                                              Increase (Decrease) in
                                             Pension           Benefit
                                             Expense         Obligation
                                                   (in millions)
1% decrease in discount rate              $      (2 )       $       161
1% increase in discount rate                      1                (131 )
1% decrease in expected investment return         8                 N/A
1% increase in expected investment return        (8 )               N/A



Recently Issued Accounting Pronouncements
For a summary of recently issued accounting pronouncements, see Note, "Summary
of Significant Accounting Policies" to our consolidated financial statements
included in this Annual Report on Form 10-K.

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