Company Quick10K Filing
Hanesbrands
Price15.04 EPS2
Shares366 P/E9
MCap5,499 P/FCF22
Net Debt3,544 EBIT652
TEV9,043 TEV/EBIT14
TTM 2019-09-28, in MM, except price, ratios
10-Q 2020-09-26 Filed 2020-11-05
10-Q 2020-06-27 Filed 2020-07-31
10-Q 2020-03-28 Filed 2020-04-30
10-K 2019-12-28 Filed 2020-02-11
10-Q 2019-09-28 Filed 2019-10-31
10-Q 2019-06-29 Filed 2019-08-02
10-Q 2019-03-30 Filed 2019-05-02
10-K 2018-12-29 Filed 2019-02-11
10-Q 2018-09-29 Filed 2018-11-01
10-Q 2018-06-30 Filed 2018-08-02
10-Q 2018-03-31 Filed 2018-05-01
10-K 2017-12-30 Filed 2018-02-09
10-Q 2017-09-30 Filed 2017-11-03
10-Q 2017-07-01 Filed 2017-08-02
10-Q 2017-04-01 Filed 2017-05-03
10-K 2016-12-31 Filed 2017-02-03
10-Q 2016-10-01 Filed 2016-10-28
10-Q 2016-07-02 Filed 2016-08-04
10-Q 2016-04-02 Filed 2016-04-26
10-K 2016-01-02 Filed 2016-02-05
10-Q 2015-10-03 Filed 2015-10-29
10-Q 2015-07-04 Filed 2015-07-31
10-Q 2015-04-04 Filed 2015-05-01
10-K 2015-01-03 Filed 2015-02-06
10-Q 2014-09-27 Filed 2014-10-30
10-Q 2014-06-28 Filed 2014-07-24
10-Q 2014-03-29 Filed 2014-04-25
10-K 2013-12-28 Filed 2014-02-06
10-Q 2013-09-28 Filed 2013-10-31
10-Q 2013-06-29 Filed 2013-07-31
10-Q 2013-03-30 Filed 2013-04-24
10-K 2012-12-29 Filed 2013-02-06
10-Q 2012-09-29 Filed 2012-10-24
10-Q 2012-06-30 Filed 2012-08-02
10-Q 2012-03-31 Filed 2012-04-25
10-K 2011-12-31 Filed 2012-02-17
10-Q 2011-10-01 Filed 2011-11-03
10-Q 2011-07-02 Filed 2011-07-28
10-Q 2011-04-02 Filed 2011-04-28
10-K 2011-01-01 Filed 2011-02-16
10-Q 2010-10-02 Filed 2010-10-28
10-Q 2010-07-03 Filed 2010-07-28
10-Q 2010-04-03 Filed 2010-04-29
10-K 2010-01-02 Filed 2010-02-09
8-K 2020-11-05 Officers, Exhibits
8-K 2020-11-05 Earnings, Regulation FD, Exhibits
8-K 2020-08-06 Officers, Exhibits
8-K 2020-07-28 Earnings, Officers, Regulation FD, Exhibits
8-K 2020-06-09
8-K 2020-05-04
8-K 2020-05-04
8-K 2020-04-30
8-K 2020-04-28
8-K 2020-04-27
8-K 2020-03-25
8-K 2020-03-05
8-K 2020-02-07
8-K 2020-01-28
8-K 2020-01-09
8-K 2019-11-21
8-K 2019-10-31
8-K 2019-08-01
8-K 2019-08-01
8-K 2019-05-02
8-K 2019-04-23
8-K 2019-02-07
8-K 2018-11-01
8-K 2018-08-01
8-K 2018-07-24
8-K 2018-05-15
8-K 2018-05-03
8-K 2018-05-01
8-K 2018-04-24
8-K 2018-02-02

HBI 10Q Quarterly Report

Part I
Item 1.Financial Statements
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3.Quantitative and Qualitative Disclosures About Market Risk
Item 4.Controls and Procedures
Part II
Item 1.Legal Proceedings
Item 1A.Risk Factors
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.Defaults Upon Senior Securities
Item 4.Mine Safety Disclosures
Item 5.Other Information
Item 6.Exhibits
EX-10.4 hbi-20200926xex104.htm
EX-31.1 hbi-20200926xex311.htm
EX-31.2 hbi-20200926xex312.htm
EX-32.1 hbi-20200926xex321.htm
EX-32.2 hbi-20200926xex322.htm

Hanesbrands Earnings 2020-09-26

Balance SheetIncome StatementCash Flow
151296302012201420172020
Assets, Equity
4.13.22.31.40.5-0.42012201420172020
Rev, G Profit, Net Income
0.80.50.2-0.2-0.5-0.82012201420172020
Ops, Inv, Fin

hbi-20200926
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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 26, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to                     
Commission file number: 001-32891
Hanesbrands Inc.
(Exact name of registrant as specified in its charter)
Maryland20-3552316
(State of incorporation)(I.R.S. employer identification no.)
1000 East Hanes Mill Road
Winston-Salem,North Carolina27105
(Address of principal executive office)(Zip code)
(336) 519-8080
(Registrant’s telephone number including area code)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, Par Value $0.01HBINew York Stock Exchange
As of October 30, 2020, there were 348,324,092 shares of the registrant’s common stock outstanding.


Table of Contents
TABLE OF CONTENTS
 
Page
Item 1.
Item 2.
Item 3.
Item 4.
PART II
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.



Table of Contents
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains information that may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). Forward-looking statements include all statements that do not relate solely to historical or current facts, and can generally be identified by the use of words such as “may,” “believe,” “will,” “expect,” “project,” “estimate,” “intend,” “anticipate,” “plan,” “continue” or similar expressions. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements regarding our intent, belief and current expectations about our strategic direction, prospects and future results are forward-looking statements. Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. In particular, statements with respect to trends associated with our business, our future financial performance and the potential effects of the global COVID-19 coronavirus outbreak included in this Quarterly Report on Form 10-Q specifically appearing under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” include forward-looking statements.
More information on factors that could cause actual results or events to differ materially from those anticipated is included from time to time in our reports filed with the Securities and Exchange Commission (the “SEC”), including this Quarterly Report on Form 10-Q, our Quarterly Report on Form 10-Q for the quarter ended March 28, 2020 and our Annual Report on Form 10-K for the year ended December 28, 2019, under the caption “Risk Factors,” and available on the “Investors” section of our corporate website, www.Hanes.com/investors. The contents of our corporate website are not incorporated by reference in this Quarterly Report on Form 10-Q.
1

Table of Contents
PART I

Item 1.Financial Statements

HANESBRANDS INC.
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(unaudited)
Quarters EndedNine Months Ended
September 26,
2020
September 28,
2019
September 26,
2020
September 28,
2019
Net sales$1,808,266 $1,866,967 $4,863,507 $5,215,918 
Cost of sales1,191,553 1,149,934 3,140,050 3,203,331 
Gross profit616,713 717,033 1,723,457 2,012,587 
Selling, general and administrative expenses442,142 449,962 1,273,220 1,366,272 
Operating profit174,571 267,071 450,237 646,315 
Other expenses5,309 8,066 16,849 23,766 
Interest expense, net43,868 43,091 122,376 137,672 
Income before income tax expense125,394 215,914 311,012 484,877 
Income tax expense22,116 30,823 54,427 69,143 
Net income$103,278 $185,091 $256,585 $415,734 
Earnings per share:
Basic$0.29 $0.51 $0.73 $1.14 
Diluted$0.29 $0.51 $0.72 $1.14 

See accompanying notes to Condensed Consolidated Financial Statements.
2

Table of Contents
HANESBRANDS INC.
Condensed Consolidated Statements of Comprehensive Income
(in thousands)
(unaudited)
Quarters EndedNine Months Ended
September 26,
2020
September 28,
2019
September 26,
2020
September 28,
2019
Net income$103,278 $185,091 $256,585 $415,734 
Other comprehensive income (loss):
Translation adjustments23,678 (44,997)1,557 (40,813)
Unrealized gain (loss) on qualifying cash flow hedges, net of tax of $3,035, $(920), $(214) and $2,653, respectively(11,250)2,059 (9,644)(7,018)
Unrecognized income from pension and postretirement plans, net of tax of $(1,396), $(1,358), $(4,462) and $(3,974), respectively3,798 3,605 10,952 10,555 
Total other comprehensive income (loss) 16,226 (39,333)2,865 (37,276)
Comprehensive income$119,504 $145,758 $259,450 $378,458 

See accompanying notes to Condensed Consolidated Financial Statements.
3

Table of Contents
HANESBRANDS INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts)
(unaudited)
September 26,
2020
December 28,
2019
September 28,
2019
Assets
Cash and cash equivalents$731,481 $328,876 $317,024 
Trade accounts receivable, net984,571 815,210 1,033,938 
Inventories2,170,552 1,905,845 2,095,035 
Other current assets210,617 174,634 174,172 
Total current assets4,097,221 3,224,565 3,620,169 
Property, net553,748 587,896 581,971 
Right-of-use assets461,117 487,787 475,037 
Trademarks and other identifiable intangibles, net1,501,161 1,520,800 1,493,969 
Goodwill1,246,113 1,235,711 1,223,216 
Deferred tax assets200,877 203,331 213,649 
Other noncurrent assets99,447 93,896 115,821 
Total assets$8,159,684 $7,353,986 $7,723,832 
Liabilities and Stockholders’ Equity
Accounts payable$1,144,190 $959,006 $997,069 
Accrued liabilities716,590 531,184 587,932 
Lease liabilities156,709 166,091 145,055 
Notes payable5,257 4,244 4,275 
Accounts Receivable Securitization Facility  208,604 
Current portion of long-term debt 110,914 151,909 
Total current liabilities2,022,746 1,771,439 2,094,844 
Long-term debt3,972,212 3,256,870 3,467,591 
Lease liabilities - noncurrent347,604 358,281 364,083 
Pension and postretirement benefits371,330 403,458 348,674 
Other noncurrent liabilities296,259 327,343 330,547 
Total liabilities7,010,151 6,117,391 6,605,739 
Stockholders’ equity:
Preferred stock (50,000,000 authorized shares; $.01 par value)
Issued and outstanding — None   
Common stock (2,000,000,000 authorized shares; $.01 par value)
Issued and outstanding — 348,288,056, 362,449,037 and 361,612,383, respectively3,483 3,624 3,616 
Additional paid-in capital306,157 304,395 310,327 
Retained earnings1,454,676 1,546,224 1,416,109 
Accumulated other comprehensive loss(614,783)(617,648)(611,959)
Total stockholders’ equity1,149,533 1,236,595 1,118,093 
Total liabilities and stockholders’ equity$8,159,684 $7,353,986 $7,723,832 


See accompanying notes to Condensed Consolidated Financial Statements.
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HANESBRANDS INC.
Condensed Consolidated Statements of Stockholders’ Equity
(in thousands, except per share data)
(unaudited)
 Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossTotal
 SharesAmount
Balances at June 27, 2020348,093 $3,481 $302,522 $1,404,326 $(631,009)$1,079,320 
Net income— — — 103,278 — 103,278 
Dividends ($0.15 per common share)
— — — (52,928)— (52,928)
Other comprehensive income— — — — 16,226 16,226 
Stock-based compensation— — 4,538 — — 4,538 
Net exercise of stock options, vesting of restricted stock units and other
195 2 (903)— — (901)
Balances at September 26, 2020348,288 $3,483 $306,157 $1,454,676 $(614,783)$1,149,533 

 Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossTotal
 SharesAmount
Balances at December 28, 2019362,449 $3,624 $304,395 $1,546,224 $(617,648)$1,236,595 
Net income— — — 256,585 — 256,585 
Dividends ($0.45 per common share)
— — — (160,264)— (160,264)
Other comprehensive income— — — — 2,865 2,865 
Stock-based compensation— — 13,572 — — 13,572 
Net exercise of stock options, vesting of restricted stock units and other
303 4 445 — — 449 
Share repurchases(14,464)(145)(12,255)(187,869)— (200,269)
Balances at September 26, 2020348,288 $3,483 $306,157 $1,454,676 $(614,783)$1,149,533 






















See accompanying notes to Condensed Consolidated Financial Statements.
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HANESBRANDS INC.
Condensed Consolidated Statements of Stockholders’ Equity - (Continued)
(in thousands, except per share data)
(unaudited)

 Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossTotal
 SharesAmount
Balances at June 29, 2019361,531 $3,615 $308,555 $1,285,842 $(572,626)$1,025,386 
Net income— — — 185,091 — 185,091 
Dividends ($0.15 per common share)
— — — (54,824)— (54,824)
Other comprehensive loss— — — — (39,333)(39,333)
Stock-based compensation— — 1,467 — — 1,467 
Net exercise of stock options, vesting of restricted stock units and other
81 1 305 — — 306 
Balances at September 28, 2019361,612 $3,616 $310,327 $1,416,109 $(611,959)$1,118,093 

 Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossTotal
 SharesAmount
Balances at December 29, 2018361,330 $3,613 $284,877 $1,079,503 $(495,867)$872,126 
Net income— — — 415,734 — 415,734 
Dividends ($0.45 per common share)
— — — (164,500)— (164,500)
Other comprehensive loss— — — — (37,276)(37,276)
Stock-based compensation— — 8,506 — — 8,506 
Net exercise of stock options, vesting of restricted stock units and other
282 3 2,570 — — 2,573 
Modification of deferred compensation plans
— — 14,374 — — 14,374 
Cumulative effect of change in adoption of leases standard
— — — 6,556 — 6,556 
Stranded tax related to U.S. pension plan
— — — 78,816 (78,816) 
Balances at September 28, 2019361,612 $3,616 $310,327 $1,416,109 $(611,959)$1,118,093 

See accompanying notes to Condensed Consolidated Financial Statements.
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HANESBRANDS INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended
September 26,
2020
September 28,
2019
Operating activities:
Net income$256,585 $415,734 
Adjustments to reconcile net income to net cash from operating activities:
Depreciation67,676 71,612 
Amortization of acquisition intangibles18,503 18,709 
Other amortization8,091 7,521 
Impairment of intangible assets20,319  
Amortization of debt issuance costs8,303 7,021 
Stock compensation expense13,801 8,794 
Deferred taxes6,853 (3,661)
Other5,004 1,662 
Changes in assets and liabilities:
Accounts receivable(175,879)(170,348)
Inventories(259,367)(56,470)
Other assets(43,359)(26,031)
Accounts payable189,566 (11,969)
Accrued pension and postretirement benefits(18,965)(14,361)
Accrued liabilities and other134,091 (3,513)
Net cash from operating activities231,222 244,700 
Investing activities:
Capital expenditures(49,033)(79,950)
Proceeds from sales of assets331 3,530 
Acquisition of business (21,360)
Other7,618  
Net cash from investing activities(41,084)(97,780)
Financing activities:
Borrowings on notes payable166,558 250,712 
Repayments on notes payable(166,108)(252,084)
Borrowings on Accounts Receivable Securitization Facility227,061 207,105 
Repayments on Accounts Receivable Securitization Facility(227,061)(160,110)
Borrowings on Revolving Loan Facilities1,638,000 2,584,277 
Repayments on Revolving Loan Facilities(1,756,189)(2,585,592)
Borrowings on Senior Notes700,000  
Repayments on Term Loan Facilities (152,248)
Borrowings on International Debt31,222 27,680 
Repayments on International Debt(36,383)(41,424)
Share repurchases(200,269) 
Cash dividends paid(158,132)(162,689)
Payments of debt issuance costs(14,938)(1,098)
Taxes paid related to net shares settlement of equity awards(1,615)(1,523)
Other1,295 1,378 
Net cash from financing activities203,441 (285,616)
Effect of changes in foreign exchange rates on cash9,052 1,008 
Change in cash, cash equivalents and restricted cash402,631 (137,688)
Cash, cash equivalents and restricted cash at beginning of year329,923 455,732 
Cash, cash equivalents and restricted cash at end of period732,554 318,044 
Less restricted cash at end of period1,073 1,020 
Cash and cash equivalents per balance sheet at end of period$731,481 $317,024 
Capital expenditures included in accounts payable at September 26, 2020 and December 28, 2019, were $8,817 and $19,327, respectively. For the nine months ended September 26, 2020 and September 28, 2019, right-of-use assets obtained in exchange for lease obligations were $39,532 and $54,524, respectively.
See accompanying notes to Condensed Consolidated Financial Statements.
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements
(amounts in thousands, except per share data)
(unaudited)


(1)    Basis of Presentation
These statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and, in accordance with those rules and regulations, do not include all information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Management believes that the disclosures made are adequate for a fair statement of the results of operations, financial condition and cash flows of Hanesbrands Inc. and its consolidated subsidiaries (the “Company” or “Hanesbrands”). In the opinion of management, the condensed consolidated interim financial statements reflect all adjustments, which consist only of normal recurring adjustments, necessary to state fairly the results of operations, financial condition and cash flows for the interim periods presented herein. The preparation of condensed consolidated interim financial statements in conformity with GAAP requires management to make use of estimates and assumptions that affect the reported amounts and disclosures. The duration and severity of the global novel coronavirus ("COVID-19") pandemic, which is subject to uncertainty, is having a significant impact on the Company’s business. Management's estimates and assumptions have contemplated both current and expected impacts related to COVID-19 based on available information. Actual results may vary from these estimates.
These condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2019 Annual Report on Form 10-K. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the full year.
Impact of COVID-19
The COVID-19 pandemic has impacted the Company’s business operations and financial results in 2020. During the nine months of 2020, the rapid expansion of the COVID-19 pandemic has resulted in a sharp decline in net sales and earnings in the Company’s apparel businesses due to decreased customer traffic and temporary retail store closures worldwide. While most of the Company’s retail stores were temporarily closed for varying periods of time throughout the second quarter, most reopened by the end of the second quarter but have experienced, and are expected to continue to experience, reductions in customer traffic and therefore, net sales. In addition, many of the Company’s wholesale customers have also experienced business disruptions, including lower traffic and consumer demand, resulting in decreased shipments to these customers. Sales of personal protective equipment (“PPE”), used to help mitigate the spread of the COVID-19 virus, partially offset the negative impact of the decline in net sales and earnings due to the COVID-19 pandemic on the Company’s financial results. In addition, the Company’s e-commerce sites have remained open in all regions and online sales have grown as consumer spending continued to shift towards online shopping experiences due to the changing retail landscape as a result of the COVID-19 pandemic. The Company’s operating results also reflected impairment charges related to intangible assets, charges to reserve for increased excess and obsolete inventory, bad debt charges and charges to re-start the Company’s supply chain following the extended shut-down of parts of its manufacturing network due to the ongoing effects of the COVID-19 pandemic. While many retail stores have reopened and many government restrictions have been removed or lightened, the ultimate impact of the COVID-19 pandemic remains highly uncertain and could continue to have a material adverse impact on the Company’s business operations and financial results, including net sales, earnings and cash flows for the remainder of 2020, and beyond.
Goodwill and indefinite-lived intangible assets are evaluated for impairment at least annually as of the first day of the third quarter, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit or intangible asset below its carrying values. During the second quarter of 2020, the Company completed a quantitative impairment analysis for certain indefinite-lived intangible assets as a result of the significant impact of the COVID-19 pandemic on their performance. Based on this analysis, the Company recorded impairment charges of $20,319 on trademarks and other intangible assets which are reflected in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statement of Income.
In connection with the annual goodwill impairment testing performed in the third quarter of 2020, the Company performed a quantitative assessment utilizing an income approach to estimate the fair value of each reporting unit. The most significant assumptions include the weighted average cost of capital, revenue growth rate, terminal growth rate and operating profit margin, all of which are used to estimate the fair value of the reporting units and indefinite-lived intangible assets. The tests indicated the reporting units had fair values that exceeded their carrying values. Certain reporting units, including Hanes
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
Europe Innerwear and U.S. Hosiery, are considered to be at a higher risk for future impairment if any assumptions used in the estimate of the reporting units’ fair values change in the future given their respective fair values exceeded their carrying values by less than 20% and trends in the associated businesses indicate a declining fair value. In particular, as of September 26, 2020, the fair value of the Hanes Europe Innerwear reporting unit is slightly higher than its carrying value. The combined goodwill associated with these reporting units was approximately $120,000. Additionally, in connection with the annual impairment testing, the Company performed a quantitative assessment, utilizing an income approach to estimate the fair value of each indefinite-lived intangible asset. The tests indicated the indefinite-lived intangible assets have fair values that exceeded their carrying values. Certain indefinite-lived trademarks are considered to be at a higher risk for future impairment if any assumptions used in the estimate of the trademarks’ fair value change in the future given their respective fair values exceeded their carrying values by less than 20% and trends in the associated businesses indicate a declining fair value. As of September 26, 2020, the Company considered four trademarks within the Hanes Europe Innerwear business to be at a higher risk for future impairment. The carrying value of these four indefinite-lived trademarks was approximately $80,000. Although the Company determined that no impairment exists for the Company's goodwill or indefinite-lived intangible assets, these assets could be at risk for future impairment should global economic conditions continue to deteriorate beyond current expectations as a result of the COVID-19 pandemic.
Revisions of Previously Issued Consolidated Financial Statements
As previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 28, 2019, during the fourth quarter of 2019 the Company identified tax errors, which originated prior to 2017, in its previously issued 2018 and 2017 annual consolidated financial statements and quarterly condensed consolidated interim financial statements for each of the quarterly periods of 2018 and the first three quarterly periods of 2019. Although the Company assessed the materiality of the errors and concluded that the errors were not material to the previously issued annual or interim financial statements, the Company did revise its previously issued 2018 and 2017 annual financial statements to correct for such tax errors in connection with the filing of its 2019 Annual Report on Form 10-K, and disclosed that it would be revising its 2019 condensed consolidated interim financial statements in connection with the filing of its Quarterly Reports on Form 10-Q during 2020. In connection with such revision, the Company also corrected for certain other immaterial errors. In connection with the filing of this Quarterly Report on Form 10-Q, the Company has revised the accompanying condensed consolidated interim financial statements as of and for the quarter and nine months ended September 28, 2019 to correct for the impact of such errors, including the impact to retained earnings as of September 28, 2019 to correct for the errors which originated in periods prior to 2019, which primarily related to the tax errors. The accompanying footnotes have also been corrected to reflect the impact of the revisions of the previously filed condensed consolidated interim financial statements. See Note, "Revisions of Previously Issued Condensed Consolidated Interim Financial Statements" for reconciliations between as reported and as revised amounts as of and for the quarter and nine months ended September 28, 2019.
(2)    Recent Accounting Pronouncements
Financial Instruments - Credit Losses
In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which requires a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected. The new accounting rules eliminate the probable initial recognition threshold and, instead, reflect an entity’s current estimate of all expected credit losses. The new accounting rules were effective for the Company in the first quarter of 2020 and apply to its trade receivables.
Under the new accounting rules, trade receivables are now evaluated on a collective (pool) basis and aggregated on the basis of similar risk characteristics. These classifications will be reassessed at each measurement date. A combination of factors, such as industry trends, customers’ financial strength, credit standing and payment and default history are considered in determining the appropriate estimate of expected credit losses. The adoption of the new accounting rules did not have a material impact on the Company’s financial condition, results of operations or cash flows.
Goodwill Impairment
In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” The new accounting rules simplify how an entity is required to test goodwill for impairment by
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
eliminating Step 2 from the goodwill impairment test which previously measured a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount. The new accounting rules were effective for the Company in the first quarter of 2020. As a result of adopting the new rules, the Company compared the estimated fair value of its reporting units to their respective carrying values when evaluating the recoverability of goodwill. When the carrying value of a reporting unit exceeds its fair value, an impairment charge will be recognized for the amount by which its carrying value exceeds the reporting unit’s fair value; however, the loss recognized will not exceed the goodwill allocated to the reporting unit. The adoption of the new accounting rules did not have an impact on the Company’s financial condition, results of operations or cash flows.
Fair Value
In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820),” which modifies the disclosure requirements on fair value measurements. The new accounting rules were effective for the Company in the first quarter of 2020. The adoption of the new accounting rules did not have a material impact on the Company’s financial condition, results of operations or cash flows; however, its disclosures were updated upon adoption.
Retirement Benefits
In August 2018, the FASB issued ASU 2018-14, “Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20).” The new accounting rules expand disclosure requirements for employer sponsored defined benefit pension and other retirement plans. The new accounting rules were effective for the Company in the first quarter of 2020. The adoption of the new accounting rules did not have a material impact on the Company’s financial condition, results of operations or cash flows; however, expanded disclosures will be required on the Company’s Annual Report on Form 10-K for the year ended January 2, 2021.
Internal-Use Software
In August 2018, the FASB issued ASU 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 340-40),” which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The new accounting rules were effective for the Company in the first quarter of 2020. The adoption of the new accounting rules did not have a material impact on the Company’s financial condition, results of operations or cash flows.
Codification Improvements to Financial Instruments
In March 2020, the FASB issued ASU 2020-03, “Codification Improvements to Financial Instruments.” The new accounting rules clarify guidance around several subtopics by adopting enhanced verbiage to the following subtopics: fair value option disclosures, fair value measurement, investments - debt and equities securities, debt modifications and extinguishments, credit losses, and sales of financial assets. The standard was effective for the Company in the first quarter of 2020. The adoption of the new accounting rules did not have a material impact on the Company’s results of operations or cash flows.
Income Taxes
In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” The new accounting rules reduce complexity by removing specific exceptions to general principles related to intraperiod tax allocations, ownership changes in foreign investments, and interim period income tax accounting for year-to-date losses that exceed anticipated losses. The new accounting rules also simplify accounting for franchise taxes that are partially based on income, transactions with a government that result in a step up in the tax basis of goodwill, separate financial statements of legal entities that are not subject to tax, and enacted changes in tax laws in interim periods. The new accounting rules will be effective for the Company in the first quarter of 2021. The Company does not expect the adoption of the new accounting rules to have a material impact on the Company’s financial condition, results of operations, cash flows or disclosures.
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
Reference Rate Reform
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The new accounting rules provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform. The amendments in this standard can be applied anytime between the first quarter of 2020 and the fourth quarter of 2022. The Company is currently in the process of evaluating the impact of adoption of the new rules on the Company’s financial condition, results of operations, cash flows and disclosures.
(3)    Revenue Recognition
Revenue is recognized 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 the Company expects to receive in exchange for transferring goods, which includes estimates for variable consideration. Variable consideration includes trade discounts, rebates, volume-based incentives, cooperative advertising and product returns, which are offered within contracts between the Company and its customers, employing the practical expedient for contract costs. Incidental items that are immaterial to the context of the contract are recognized as expense at the transaction date.
The following table presents the Company’s revenues disaggregated by the customer’s method of purchase:

Quarters EndedNine Months Ended
September 26,
2020
September 28,
2019
September 26,
2020
September 28,
2019
Third-party brick-and-mortar wholesale$1,277,261 $1,436,935 $3,600,404 $4,029,352 
Consumer-directed531,005 430,032 1,263,103 1,186,566 
Total net sales$1,808,266 $1,866,967 $4,863,507 $5,215,918 
Revenue Sources
Third-Party Brick-and-Mortar Wholesale Revenue
Third-party brick-and-mortar wholesale revenue is primarily generated by sales of the Company’s products to retailers to support their brick-and-mortar operations. Also included within third-party brick-and-mortar wholesale revenues is royalty revenue from licensing agreements. The Company earns royalties through license agreements with manufacturers of other consumer products that incorporate certain of the Company’s brands. The Company accrues revenue earned under these contracts based upon reported sales from the licensees. Additionally, in the quarter and nine months ended September 26, 2020, third-party brick-and-mortar wholesale revenue includes $4,053 and $645,776 of revenue from contracts with governments generated from the sale of both cloth face coverings and gowns for use to help mitigate the spread of the virus during the COVID-19 pandemic, respectively.
Consumer-Directed Revenue
Consumer-directed revenue is primarily generated through sales driven directly by the consumer through company-operated stores and e-commerce platforms, which include both owned sites and the sites of the Company’s retail customers.
(4)    Acquisitions
Bras N Things
On February 12, 2018, the Company acquired 100% of the outstanding equity of BNT Holdco Pty Limited (“Bras N Things”) for a total purchase price of A$498,236 (U.S.$391,572). During 2018, due to the final working capital adjustment, the purchase consideration was reduced by A$3,012 (U.S.$2,367), ultimately resulting in a revised purchase price of A$495,224 (U.S.$389,205), which included a cash payment of A$428,956 (U.S.$337,123), an indemnification escrow of A$31,988 (U.S.$25,140) and debt assumed of A$34,280 (U.S.$26,942). U.S. dollar equivalents are based on acquisition date exchange rates.
The Company funded the acquisition with a combination of short-term borrowings under its existing revolving loan facility (the “Revolving Loan Facility”) and cash on hand. During the third quarter of 2019, A$31,425 (U.S.$21,360) of the
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HANESBRANDS INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(amounts in thousands, except per share data)
(unaudited)
indemnification escrow, including interest earned, was paid to the sellers. The remaining indemnification escrow, held in one of the Company’s bank accounts, is recognized and classified as restricted cash, with the balance as of September 26, 2020 included in the “Other current assets” line of the Condensed Consolidated Balance Sheet.
Since February 12, 2018, goodwill related to the Bras N Things acquisition decreased by $792 as a result of measurement period adjustments, primarily related to working capital adjustments. The purchase price allocation was finalized in the first quarter of 2019.
(5)    Stockholders’ Equity
Basic earnings per share (“EPS”) was computed by dividing net income by the number of weighted average shares of common stock outstanding during the period. Diluted EPS was calculated to give effect to all potentially issuable dilutive shares of common stock using the treasury stock method.
The reconciliation of basic to diluted weighted average shares outstanding is as follows:
Quarters EndedNine Months Ended
September 26,
2020
September 28,
2019
September 26,
2020
September 28,
2019
Basic weighted average shares outstanding350,703 364,743 353,419 364,650 
Effect of potentially dilutive securities:
Stock options90 437 151 463 
Restricted stock units809 412 380 361 
Employee stock purchase plan and other