Kontoor Brands, Inc.

NOTE 2 —ACQUISITION

On February 18, 2025, the Company entered into a definitive agreement to acquire all of the issued and outstanding share capital of CTC Triangle B.V., a Netherlands private limited liability company, which is the parent of a group of companies that operates the Helly Hansen®and Musto® brands, collectively referred to as "Helly Hansen." During the first and second quarters of 2025, the Company entered into foreign currency exchange contracts totaling $1.3 billion Canadian dollars ("CAD") to hedge the purchase price of the acquisition.

The acquisition of Helly Hansen (the "Acquisition") was completed on May 31, 2025 (the "Closing Date"), with cash consideration paid of $1.3 billion CAD, equivalent to $957.5 million U.S. dollars, subject to working capital and other closing adjustments. The purchase price was funded by indebtedness and cash on hand.

The following table summarizes the preliminary purchase price based on the Company's current estimates of working capital and other adjustments as of September 2025:

Helly Hansen® is a premium global outdoor and workwear brand, and Musto®is a premium sailing and outdoor brand. The Acquisition scales Kontoor's penetration in the large and growing outdoor and workwear markets globally, and diversifies Kontoor's portfolio across geographies, categories, consumers and points of distribution. The Company performed an analysis under ASC 280, Segment Reporting, and concluded that the Helly Hansen® brand is a reportable segment. In addition, we determined that the Musto® brand does not meet the criteria to be considered a reportable segment and is reported in the "Other" category.

For the three and nine months ended September 2025, net revenues attributable to the Acquisition were $192.7 million and $221.9 million. For the three and nine months ended September 2025, the Acquisition contributed net income of $1.9 million and net loss of $5.0 million, respectively.

9 Kontoor Brands, Inc. Q3 FY25 Form 10-Q

The following table summarizes the preliminary purchase price allocation of the estimated fair values of assets acquired and liabilities assumed at the Closing Date of the Acquisition:

The Company is continuing the process of finalizing working capital adjustments and valuing the assets acquired and liabilities assumed. These fair values were based on management's estimates and assumptions; accordingly, the amounts indicated above are preliminary in nature and are subject to adjustment as additional information is obtained about the facts and circumstances that existed as of the Closing Date. During the measurement period, adjustments may be made to the values of the assets acquired and liabilities assumed as additional information is obtained related to the finalization of working capital, income tax matters and other purchase price adjustments. During the three months ended September 2025, the Company recorded measurement period adjustments, primarily due to changes in working capital estimates, resulting in an increase to goodwill of $27.9 million. The final determination of the purchase price allocation will be completed as soon as practicable, and within the measurement period of up to one year from the Closing Date.

Goodwill is attributable to the acquired workforce of Helly Hansen and the significant synergies expected to arise as a result of the Acquisition. Substantially all of the goodwill was assigned to the Helly Hansen segment and is not deductible for tax purposes.

The Helly Hansen®and Musto® trademarks, which management believes to have indefinite lives, have been valued at $400.0 million and $4.0 million, respectively, using the relief-from-royalty method. Customer relationships have been valued at $36.0 million using the multi-period excess earnings method and are being amortized using an accelerated method over a 12-year period. The relief-from-royalty and multi-period excess earnings methods are both forms of the income valuation approach.

Kontoor Brands, Inc. Q3 FY25 Form 10-Q 10

The following table summarizes the unaudited pro forma results of operations for the Company assuming that the Acquisition had occurred on December 31, 2023, which is the first day of fiscal year 2024:

These pro forma results were based on estimates and assumptions which management believes are reasonable. They do not reflect the results that would have been realized had we been a combined company during the periods presented and are not necessarily indicative of our consolidated results of operations in future periods. The pro forma results include adjustments primarily related to interest expense from incremental borrowings and purchase accounting including depreciation and amortization. During the third quarter of 2025, the Company identified revisions to the previously reported unaudited pro forma results, and accordingly, has revised certain adjustments for the nine-month periods ended September 2025 and 2024. Acquisition costs and other non-recurring charges incurred are included in the earliest period presented. No assumptions have been applied to the pro forma results regarding potential operating cost savings or other business synergies expected to be achieved.

Joint Venture

On May 31, 2025, as part of the Acquisition, the Company acquired a 50% noncontrolling financial interest in a joint venture that was formed to develop and sell Helly Hansen® products in China. In addition, the Helly Hansen® brand has a licensing arrangement with the joint venture where it receives royalties based on a percentage of the licensed products’ net revenues. The Company has the ability to exercise significant influence, but not control, over the joint venture, and as such it is not consolidated. The Company accounts for the joint venture under the equity method of accounting, and recognizes 50% of the joint venture's profits and losses. The Company reports its 50% of the joint venture's profits and losses as "income from equity method investment", a separate component of net income within the statements of operations. The Company initially recorded its investment in the joint venture at fair value, which is reflected in the Company's preliminary purchase price allocation within "other assets."

NOTE 3 —REVENUES

Disaggregation of Revenue

The following tables present revenues disaggregated by channel and geography. Revenues from licensing arrangements are included within the U.S. or International Wholesale channels, based on the respective region where the licensee sells the product. Direct-to-Consumer revenues include sales from company-operated Wrangler®, Lee® and Helly Hansen®branded full-price and outlet stores, online and international concession arrangements.

Other includes sales and licensing of the Musto®, Chic®and Rock & Republic®brands, as well as other company-owned brands and private label apparel.

11 Kontoor Brands, Inc. Q3 FY25 Form 10-Q

Kontoor Brands, Inc. Q3 FY25 Form 10-Q 12

Contract Balances and Performance Obligations

The following table presents information about contract balances recorded in the Company's balance sheets:

(a) "Accounts receivable, net" at September 2025 includes $116.2 million related to Helly Hansen.

(b) Included within "prepaid expenses and other current assets" in the Company's balance sheets.

(c) Included within "accrued and other current liabilities" in the Company's balance sheets.

For the three and nine months ended September 2025 and September 2024, no significant revenue was recognized that was included in contract liabilities as of December 2024 and December 2023, respectively. For the three and nine months ended September 2025, no significant revenue was recognized from performance obligations satisfied, or partially satisfied, in prior periods. As of September 2025, the Company has contractual rights under its licensing agreements to receive $73.4 million of fixed consideration related to the future minimum guarantees through December 2030.

NOTE 4 —BUSINESS SEGMENT INFORMATION

The Company hasthree reportable segments:

•Wrangler —Wrangler® branded denim, apparel, footwear and accessories.

•Lee —Lee® branded denim, apparel, footwear and accessories.

•Helly Hansen —Helly Hansen® branded outdoor and workwear apparel, footwear and accessories.

The Company considers its chief executive officer to be its chief operating decision maker. The chief operating decision maker allocates resources and assesses performance based on the global brand net revenues and segment profit of Wrangler®, Lee® and Helly Hansen®, which are the Company's reportable segments. Segment profit is defined as income before income taxes, interest expense, interest income and corporate and other expenses. Segment assets and segment expenditures for long-lived assets are not regularly provided to or used by the chief operating decision maker and thus are not disclosed.

In addition, we report an "Other" category to reconcile the Company's segment revenues to total revenues and segment profit to income before income taxes. Other includes sales and licensing of the Musto®, Chic® and Rock & Republic® brands, as well as other company-owned brands and private label apparel, and the associated costs. Results of the Musto® brand have been included since the Helly Hansen acquisition on May 31, 2025. The businesses within the Other category, either individually or in the aggregate, do not meet the criteria to be considered reportable segments.

Accounting policies utilized for internal management reporting at the individual segments are consistent with those disclosed in the Company's 2024 Annual Report on Form 10-K.

Corporate and other expenses, including certain acquisition and integration-related costs and restructuring and transformation costs, as well as interest expense and interest income, are not controlled by segment management and therefore are excluded from the measurement of segment profit.

13 Kontoor Brands, Inc. Q3 FY25 Form 10-Q

The following table presents financial information for the Company's reportable segments and income before income taxes:

(1) Refer to Note 3 to the Company's financial statements in this Form 10-Q for the reconciliation of reportable segment revenues to consolidated net revenues.

(2) "Other segment items" for the Wrangler® and Lee® segments primarily includes funding fees related to the sale of trade accounts receivable program discussed in Note 5 to the Company's financial statements in this Form 10-Q. Funding fees are reflected in the Company's statements of operations within "other (expense) income, net".

(3) "Corporate and other expenses" includes a gain of $24.1 million for the nine months ended September 2025 related to the foreign currency exchange contracts to hedge the purchase price of the Acquisition. There wereno hedge gains recognized for the three months ended September 2025. Additionally, the Company recorded $38.1 million of restructuring and transformation charges related to the closure of a portion of our manufacturing facilities during the three and nine months ended September 2025.

(4) "Profit (loss) related to other revenues" includes sales and licensing of the Musto®, Chic® and Rock & Republic® brands, as well as other company-owned brands and private label apparel, and the associated costs, for purposes of reconciling "total reportable segment profit" to consolidated "income before income taxes."

Kontoor Brands, Inc. Q3 FY25 Form 10-Q 14

NOTE 5 —ACCOUNTS RECEIVABLE

Allowance for Doubtful Accounts

The following table presents a rollforward of the allowance for doubtful accounts, including the activity of Helly Hansen since the Closing Date:

(1)Other primarily includes the impact of foreign currency translation and recoveries of amounts previously written off, none of which were individually significant.

Sale of Trade Accounts Receivable

The Company is party to an agreement with a financial institution to sell selected U.S. trade accounts receivable of the Lee® and Wrangler® brands on a nonrecourse basis. Under this agreement, up to $377.5 million of the Company's trade accounts receivable may be sold to the financial institution and remain outstanding at any point in time. The Company removes the sold balances from "accounts receivable, net" in its balance sheet at the time of sale. The Company does not retain any interests in the sold trade accounts receivable but continues to service and collect outstanding trade accounts receivable on behalf of the financial institution.

During the nine months ended September 2025 and September 2024, the Company sold total trade accounts receivable of $1,040.2 million and $1,016.8 million, respectively. As of September 2025, December 2024 and September 2024, $218.0 million, $178.2 million and $243.1 million, respectively, of the sold trade accounts receivable remained outstanding with the financial institution.

The funding fees charged by the financial institution for this program are reflected in the Company's statements of operations within "other (expense) income, net" and were $2.5 million and $7.6 million for the three and nine months ended September 2025, respectively, and $3.2 million and $9.0 million for the three and nine months ended September 2024, respectively. Net proceeds of this program are reflected as operating activities in the Company's statements of cash flows.

NOTE 6 —INVENTORIES

The following table presents components of "inventories" recorded in the Company's balance sheets, including Helly Hansen inventories:

(a) "Total inventories" at September 2025 includes $205.4 million related to Helly Hansen.

NOTE 7 —SUPPLY CHAIN FINANCING

The Company facilitates voluntary Supply Chain Finance ("SCF") programs with its financial institutions that allow certain suppliers of the Lee® and Wrangler® brands the option to sell or assign their rights to receivables due from the Company, enabling the suppliers to receive payment from the financial institutions sooner than our negotiated payment terms. At September 2025, December 2024 and September 2024, accounts payable included total outstanding balances of $50.2 million, $31.1 million and $34.1 million, respectively, due to suppliers that participate in the SCF programs.

15 Kontoor Brands, Inc. Q3 FY25 Form 10-Q

NOTE 8 —SHORT-TERM BORROWINGS AND LONG-TERM DEBT

Short-term Borrowings

At September 2025, December 2024 and September 2024, the Company had availability of $19.6 million, $19.2 million and $20.0 million, respectively, under its previously established international line of credit which is uncommitted and may be terminated at any time by either the Company or the financial institution. In addition, the Company had $17.5 million available at September 2025 under a committed international line of credit as a result of the Acquisition. There wereno outstanding balances under either of these arrangements at September 2025, December 2024 and September 2024.

Long-term Debt

The following table presents the components of "long-term debt" as recorded in the Company's balance sheets:

Credit Facilities

The Company was previously party to an amended and restated senior secured Credit Agreement dated November 18, 2021 (the "2021 Credit Agreement") that provided for (i) afive-year $400.0 million term loan A facility ("2021 Term Loan A”) and (ii) afive-year $500.0 million revolving credit facility with the lenders and agents party thereto.

On April 8, 2025, the Company completed a refinancing pursuant to which it amended and restated the 2021 Credit Agreement to provide for (i) afive-year $700.0 million term loan facility ("Term Loan A-1") consisting of a $340.0 million initial term loan ("Initial Term Loan") and a $360.0 million delayed draw term loan ("Delayed Draw Term Loan"), (ii) athree-year $300.0 million delayed draw term loan facility ("Term Loan A-2") and (iii) afive-year $500.0 million revolving credit facility (the "Revolving Credit Facility"), collectively referred to as the "Credit Facilities," with the lenders and agents party thereto. Upon closing of the Credit Agreement (the "2025 Credit Agreement"), the net proceeds from the Initial Term Loan were used to repay all of the $340.0 million principal amount outstanding under the 2021 Term Loan A. On May 30, 2025, the Delayed Draw Term Loan and Term Loan A-2 were fully drawn and used to fund the Acquisition, along with approximately $300 million of cash on hand. Refer to Note 2 to the Company's financial statements in this Form 10-Q for additional information related to the Acquisition.

Term Loan A-1 and Term Loan A-2 had outstanding principal amounts of $700.0 million and $250.0 million at September 2025, respectively. The 2021 Term Loan A had an outstanding principal amount of $345.0 million and $350.0 million at December 2024 and September 2024, respectively. These balances are reported in the Company's balance sheet net of unamortized deferred financing costs. As of September 2025, interest expense on Term Loan A-1 and Term Loan A-2 was being recorded at an effective annual interest rate of 5.3% and 5.9%, respectively, including the amortization of deferred financing costs. Interest expense on Term Loan A-1 also includes the impact of the Company's interest rate swap agreements.

Term Loan A-1 is scheduled to be repaid in quarterly installments of $4.4 million beginning in September 2026 which increases to quarterly installments of $8.8 million beginning in September 2027, with the remaining principal due at maturity. Term Loan A-2 is scheduled to be repaid in full at maturity. During the three and nine months ended September 2025, the Company made voluntary early repayments of $25.0 million and $50.0 million, respectively, of the principal outstanding amount on Term Loan A-2.

Kontoor Brands, Inc. Q3 FY25 Form 10-Q 16

The Revolving Credit Facility may be used to borrow funds in both U.S. dollar and certain non-U.S. dollar currencies, and has a $75.0 million letter of credit sublimit. As of September 2025, the Company hadno outstanding borrowings under the Revolving Credit Facility and $6.3 million of outstanding standby letters of credit issued on behalf of the Company, leaving $493.7 million available for borrowing against this facility.

The interest rate per annum applicable to borrowings under the Credit Facilities is an interest rate benchmark elected by the Company based on the currency and term of the borrowings plus an applicable margin, as defined therein.

The 2025 Credit Agreement contains certain affirmative and negative covenants customary for financings of this type as well as customary events of default. In addition, the 2025 Credit Agreement contains financial covenants which require compliance with (i) a total leverage ratio not to exceed 4.50 to 1.00 as of the last day of any test period, with an allowance for up totwo elections to increase the limit to 5.00 to 1.00 in connection with future material acquisitions, and (ii) a consolidated interest coverage ratio as of the last day of any test period to be no less than 3.00 to 1.00. As of September 2025, the Company was in compliance with all covenants and expects to maintain compliance with the applicable covenants for at least one year from the issuance of these financial statements.

Senior Notes

On November 18, 2021, the Company entered into an indenture (the “Indenture”) by and among the Company and certain subsidiaries of the Company named as guarantors therein (the “Guarantors”), pursuant to which it issued $400.0 million of unsecured senior notes due November 2029 (the “Notes”) through a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and outside the United States to non-U.S. persons pursuant to Regulation S under the Securities Act. The Notes bear interest at a fixed rate of 4.125% per annum, payable in cash in arrears on May 15 and November 15 of each year.

The Notes had an outstanding principal amount of $400.0 million at September 2025, December 2024 and September 2024, which is reported net of unamortized deferred financing costs. As of September 2025, interest expense on the Notes was being recorded at an effective annual interest rate of 4.3%, including the amortization of deferred financing costs.

The Notes are guaranteed on a senior unsecured basis by the Company's existing and future domestic subsidiaries (other than certain excluded subsidiaries) that are borrowers under or guarantors of the Credit Facilities or certain other indebtedness. The Indenture contains customary negative covenants for financings of this type. The Indenture does not contain any financial covenants. As of September 2025, the Company was in compliance with the Indenture and expects to maintain compliance with the applicable non-financial covenants for at least one year from the issuance of these financial statements.

Refer to Note 11 in the Company's 2024 Annual Report on Form 10-K for additional information regarding the Company's debt obligations.

Total cash paid for interest was $35.2 million and $27.0 million during the nine months ended September 2025 and September 2024, respectively.

NOTE 9 —FAIR VALUE MEASUREMENTS

Financial assets and liabilities measured and reported at fair value are classified in a three-level hierarchy that prioritizes the inputs used in the valuation process. Categorization within the valuation hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The hierarchy is based on the observability and objectivity of the pricing inputs, as follows:

•Level 1 — Quoted prices in active markets for identical assets or liabilities.

•Level 2 — Significant directly observable data (other than Level 1 quoted prices) or significant indirectly observable data through corroboration with observable market data. Inputs would normally be (i) quoted prices in active markets for similar assets or liabilities, (ii) quoted prices in inactive markets for identical or similar assets or liabilities or (iii) information derived from or corroborated by observable market data.

•Level 3 — Prices or valuation techniques that require significant unobservable data inputs. These inputs would normally be the Company's own data and judgments about assumptions that market participants would use in pricing the asset or liability.

17 Kontoor Brands, Inc. Q3 FY25 Form 10-Q

Recurring Fair Value Measurements

The following tables present financial assets and financial liabilities that are measured and recorded in the Company's financial statements at fair value on a recurring basis:

The Company's cash equivalents include money market funds and short-term time deposits that approximate fair value based on Level 1 measurements. The fair value of derivative financial instruments, which consist of foreign currency exchange contracts and interest rate swap agreements, is determined based on observable market inputs (Level 2), including spot and forward exchange rates for foreign currencies and observable interest rate yield curves for interest rate swap agreements. Investment securities are held in the Company's deferred compensation plans as an economic hedge of the related deferred compensation liabilities and are comprised of mutual funds that are valued based on quoted prices in active markets (Level 1). Liabilities related to the Company's deferred compensation plans are recorded at amounts due to participants, based on the fair value of the participants' selection of hypothetical investments (Level 2).

Additionally, at September 2025, the carrying value of the Company's long-term debt was $1,342.1 million compared to a fair value of $1,322.3 million. At December 2024, the carrying value of the Company's long-term debt was $740.3 million compared to a fair value of $710.8 million. The fair value of long-term debt is a Level 2 estimate based on quoted market prices or values of comparable borrowings.

All other financial assets and financial liabilities are recorded in the Company's financial statements at cost. These other financial assets and financial liabilities include cash held as demand deposits, accounts receivable, short-term borrowings, accounts payable and accrued liabilities. At September 2025 and December 2024, their carrying values approximated fair value due to the short-term nature of these instruments.

Kontoor Brands, Inc. Q3 FY25 Form 10-Q 18

Nonrecurring Fair Value Measurements

In accounting for the Helly Hansen acquisition, the Company applied the acquisition method of accounting in accordance with ASC 805, Business Combinations. The purchase price is allocated to the assets acquired, liabilities assumed and the noncontrolling interest based on their estimated fair values as of the Closing Date. Any excess purchase price over the fair value of the net assets acquired is recorded as goodwill. We engaged a third-party appraisal firm to assist in the fair value determination of certain tangible and intangible assets. Valuation techniques include the relief-from-royalty method, the multi-period excess earnings method, and the replacement cost and income methods. The process of assigning fair values, particularly to acquired intangible assets, is highly subjective and requires the use of significant estimates including future expected cash inflows and outflows, growth rates, expected lives, discount rates, royalty rates and income tax rates. The Company's estimates of fair value are based on assumptions believed to be reasonable, but are inherently uncertain and actual results may differ from estimates used. Additionally, the purchase price allocation is preliminary and subject to revision as additional information is obtained about the facts and circumstances that existed as of the Closing Date. Refer to Note 2 to the Company's financial statements in this Form 10-Q for additional details regarding the Acquisition and the preliminary purchase price allocation.

NOTE 10 —DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

Summary of Derivative Financial Instruments

The Company enters into derivative contracts with external counterparties on a recurring basis to hedge certain foreign currency transactions. The notional amount of these outstanding foreign currency exchange contracts was $704.7 million at September 2025, $303.0 million at December 2024 and $317.0 million at September 2024, consisting primarily of contracts hedging exposures to the euro, Mexican peso, Norwegian krone, Canadian dollar, British pound, Polish zloty and Swedish krona. Foreign currency exchange contracts have maturities up to 20 months.

The Company periodically enters into "floating to fixed" interest rate swap agreements to mitigate exposure to volatility in reference rates on the Company's future interest payments on indebtedness. Because these swap agreements meet the criteria for hedge accounting, all related gains and losses are deferred within "accumulated other comprehensive loss" ("AOCL") in the Company's balance sheets and are amortized through the swap maturity dates.

During 2019, the Company entered into "floating to fixed" interest rate swap agreements that matured on April 18, 2024. On September 9, 2024, the Company entered into "floating to fixed" interest rate swap agreements that mature on August 18, 2029. In April 2025, the Company entered into "floating to fixed" interest rate swap agreements that mature on March 18, 2027 and April 18, 2027. The notional amount of these outstanding agreements was $650.0 million at September 2025 and $150.0 million at December 2024.

The Company's outstanding derivative financial instruments entered into on a recurring basis met the criteria for hedge accounting at the inception of the hedging relationship. At each reporting period, the Company assesses whether the hedging relationships continue to be highly effective in offsetting changes in cash flows of hedged items. If the Company determines that a specific hedging relationship has ceased to be highly effective, it discontinues hedge accounting. All designated hedging relationships were determined to be highly effective as of September 2025.

The following table presents the fair value of outstanding derivatives on an individual contract basis:

19 Kontoor Brands, Inc. Q3 FY25 Form 10-Q

The Company records and presents the fair value of all derivative assets and liabilities in the Company's balance sheets on a gross basis, even though certain derivative contracts are subject to master netting agreements. If the Company were to offset and record the asset and liability balances of its derivative contracts on a net basis in accordance with the terms of its master netting agreements, the amounts presented in the Company's balance sheets would be adjusted from the current gross presentation to the net amounts.

The following table presents a reconciliation of gross to net amounts for derivative asset and liability balances:

The following table presents the location of derivatives in the Company's balance sheets, with current or noncurrent classification based on maturity dates:

Cash Flow Hedges

The following tables present the pre-tax effects of cash flow hedges included in the Company's statements of operations and statements of comprehensive income:

Kontoor Brands, Inc. Q3 FY25 Form 10-Q 20

Derivative Contracts Not Designated as Hedges

Any derivative contracts that are not designated as hedges are recorded at fair value in the Company's balance sheets, and changes in the fair values of these contracts are recognized directly in earnings. During the first and second quarters of 2025, the Company entered into foreign currency exchange contracts totaling $1.3 billion CAD to hedge the purchase price of the Acquisition, which were settled on May 30, 2025, for a gain of $24.1 million. Derivative contracts not designated as hedges include these purchase price hedge contracts, along with a limited number of cash flow hedges that were deemed ineffective and de-designated during the nine months ended September 2025 and September 2024. Refer to Note 2 to the Company's financial statements in this Form 10-Q for additional information related to the Acquisition.

The following table presents a summary of derivatives not designated as hedges included in the Company's statements of operations:

Other Derivative Information

There were no significant amounts recognized in earnings for the ineffective portion of any hedging relationships during the three and nine months ended September 2025 and September 2024.

At September 2025, AOCL included $1.1 million of pre-tax net deferred losses for foreign currency exchange contracts and interest rate swap agreements that are expected to be reclassified to earnings during the next 12 months. The amounts ultimately reclassified to earnings will depend on rates in effect when outstanding derivative contracts are settled.

NOTE 11 —CAPITAL AND ACCUMULATED OTHER COMPREHENSIVE LOSS

Accumulated Other Comprehensive Loss

The following table presents deferred components of AOCL in equity, net of related taxes:

The following tables present changes in AOCL, net of related tax impact:

21 Kontoor Brands, Inc. Q3 FY25 Form 10-Q

Kontoor Brands, Inc. Q3 FY25 Form 10-Q 22

The following table presents reclassifications out of AOCL:

NOTE 12 —INCOME TAXES

The effective income tax rate for the nine months ended September 2025 was 22.1% compared to 19.5% in the 2024 period. The nine months ended September 2025 included a net discrete tax benefit primarily related to stock-based compensation, one-time benefits related to the release of tax reserves and the remeasurement of deferred tax assets, partially offset by an increase in valuation allowances in a foreign jurisdiction, the net impact of which decreased the effective income tax rate by 0.5%. The nine months ended September 2024 included a net discrete tax benefit primarily related to stock-based compensation which decreased the effective income tax rate by 0.7%. The effective tax rate without discrete items for the nine months ended September 2025 was 22.6% compared to 20.2% in the 2024 period. The increase was primarily due to changes in our jurisdictional mix of earnings and estimated non-deductible transaction costs incurred in conjunction with the Acquisition.

During the nine months ended September 2025, the amount of net unrecognized tax benefits and associated interest decreased by $0.9 million to $11.6 million. Management does not believe that the amount of unrecognized tax benefits will materially decrease within the next 12 fiscal months.

NOTE 13 —EARNINGS PER SHARE

The calculations of basic and diluted earnings per share ("EPS") are based on net income divided by the basic weighted average number of common shares and diluted weighted average number of common shares outstanding, respectively.

The following table presents the calculations of basic and diluted EPS:

23 Kontoor Brands, Inc. Q3 FY25 Form 10-Q

For the three and nine months ended September 2025 and September 2024, animmaterial number of shares were excluded from the dilutive earnings per share calculations because the effect of their inclusion would have been anti-dilutive.

For the three and nine months ended September 2025, a total of 0.6 million shares of performance-based restricted stock units were excluded from the calculations of diluted earnings per share as the units were not considered to be contingent outstanding shares. For the three and nine months ended September 2024, a total of 0.5 million and 0.6 million shares, respectively, of performance-based restricted stock units were excluded from the calculations of diluted earnings per share as the units were not considered to be contingent outstanding shares.

NOTE 14 —LEASES

The Company enters into operating leases for retail stores, operational facilities, vehicles and certain equipment, with terms expiring at various dates through 2036. Most leases have fixed rentals, with many of the real estate leases requiring additional payments for real estate taxes and occupancy-related costs.

The following table presents supplemental cash flow and non-cash information related to operating leases:

(1)Includes $96.6 million related to the right-of-use operating lease assets obtained in the Acquisition on May 31, 2025.

NOTE 15 —RESTRUCTURING

Restructuring charges relate to costs associated with exit or disposal activities. In the three months ended September 2025, charges primarily relate to the decision to close a portion of our manufacturing facilities, resulting in severance and employee-related charges of $32.2 million, asset impairments of $3.9 million and other facility termination costs of $1.9 million, all of which was recorded within 'cost of goods sold' in the Company's statement of operations.

During the three and nine months ended September 2025 and September 2024, the Company also incurred restructuring and transformation charges related to business optimization and other actions to streamline and transfer select production within our internal manufacturing network.

The following table summarizes the restructuring charges recorded during the three and nine months ended September 2025 and September 2024:

The following table presents the classification of these restructuring costs in the Company's statements of operations:

Kontoor Brands, Inc. Q3 FY25 Form 10-Q 24

The following table presents these restructuring costs by business segment:

The following table presents activity in the restructuring accrual for the nine-month period ended September 2025:

(1)The Company also recorded approximately $5.5 million of non-cash and other charges related to the closure of a portion of our manufacturing facilities and streamlining and transferring select production within our internal manufacturing network.

Of the $22.7 million restructuring accrual reported in the Company's balance sheet at September 2025, $22.2 million is expected to be paid out within the next 12 months and was classified within "accrued and other current liabilities," and the remaining $0.5 million was classified within "other liabilities." Of the $1.9 million restructuring accrual reported in the Company's balance sheet at December 2024, $1.8 million was classified within "accrued and other current liabilities," and the remaining $0.1 million was classified within "other liabilities."

NOTE 16 —SUBSEQUENT EVENT

On October 22, 2025, the Board of Directors declared a regular quarterly cash dividend of $0.53 per share of the Company's Common Stock. The cash dividend will be payable on December 18, 2025, to shareholders of record at the close of business on December 8, 2025.

25 Kontoor Brands, Inc. Q3 FY25 Form 10-Q