Kontoor Brands, Inc.

NOTE 2 —ASSETS HELD-FOR-SALE AND DISCONTINUED OPERATIONS

The Company continuously assesses the composition of its portfolio to ensure it is aligned with its strategic objectives and positioned to maximize growth and returns to shareholders.

The Company commenced a sale process of its global Lee®business during the first quarter of 2026, with an expectation of completing a transaction during fiscal 2026. At the end of the first quarter of 2026, the Company determined that the Lee® business met held-for-sale criteria and reported the assets and liabilities of the Lee®business as held-for-sale in the Company's balance sheets for all periods presented. Additionally, the sale represented a strategic shift that was expected to have a major effect on the Company's operations and financial results. During the second quarter of 2026, the Company entered into a Purchase Agreement with the Buyer to sell the Lee® business for $750.0 million in cash at closing, subject to customary adjustments, with an additional $250.0 million earnout opportunity based on the future performance of the Lee® business over afive-year period. Accordingly, the Company reported the Lee® business as discontinued operations in its statements of operations and statements of cash flows for all periods presented. The results of the Lee® business were historically reported in the Lee segment. Income from discontinued operations, net of tax was $4.1 million and $20.9 million for the three months ended September 2026 and September 2025, respectively, and $43.2 million and $68.7 million for the nine months ended September 2026 and September 2025, respectively.

During the first quarter of 2026, the Company determined that the decision to pursue a sale transaction of the Lee® business was a triggering event that required impairment testing of goodwill, the indefinite-lived intangible asset and long-lived assets of the Lee reporting unit. No impairment charges were required to be recorded as a result of the testing performed. Refer to Note 11 to the Company's financial statements in this Form 10-Q for additional details regarding the impairment testing related to the Lee®business.

Certain corporate overhead costs and segment costs previously allocated to the Lee®business for segment reporting purposes did not qualify for classification within discontinued operations and have been reported in continuing operations for all periods presented. For the three months ended September 2026 and September 2025, previously allocated costs of $3.7 million and $1.3 million, respectively, were reported as "cost of goods sold" in our statements of operations on a continuing operations basis. For the nine months ended September 2026 and September 2025, previously allocated costs of $6.8 million and $2.9 million, respectively, were reported as "cost of goods sold" in our statements of operations on a continuing operations basis. For the three months ended September 2026 and September 2025, previously allocated costs of $12.5 million and $7.6 million, respectively, were reported as "selling, general and administrative expenses" in our statements of operations on a continuing operations basis. For the nine months ended September 2026 and September 2025, previously allocated costs of $35.0 million and $23.2 million, respectively, were reported as "selling, general and administrative expense" in our statements of operations on a continuing operations basis. These previously allocated costs are reported within "corporate and other expenses" in the segment reporting reconciliation in Note 5 to the Company's financial statements in this Form 10-Q. Separation and related expenses associated with the sale of the Lee®business are reported as a component of "income from discontinued operations, net of tax" in our statements of operations.

On November 2, 2026, the Company completed the sale of the global Lee® business. Refer to Note 18 to the Company's financial statements in this Form 10-Q for additional information. Net cash proceeds received were approximately $698.2 million, subject to customary adjustments including for cash, indebtedness and working capital as set forth in the Purchase Agreement. In connection with the sale, the Company finalized transition services agreements to provide certain post-closing accounting, tax, treasury, technology and supply chain services on a transitional basis for periods extending up to 12 months, with options to request an extension of certain services.

Summarized Discontinued Operations Financial Information

The following table summarizes the major line items for the Lee®business that are included in income from discontinued operations, net of tax, in the Company's statements of operations:

Kontoor Brands, Inc. Q3 FY26 Form 10-Q 10

The following table summarizes the carrying amounts of major classes of assets and liabilities of discontinued operations as of September 2026, December 2025 and September 2025:

NOTE 3 —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 operate the Helly Hansen®and Musto® brands. 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 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. The purchase price was funded by indebtedness and cash on hand. The final purchase price of $934.7 million reflects working capital and other closing adjustments.

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.

11 Kontoor Brands, Inc. Q3 FY26 Form 10-Q

The results of operations of the Acquisition have been included in the Company's financial statements since the Closing Date. For the three and nine months ended September 2026, net revenues attributable to the Acquisition were $197.7 million and $487.6 million, respectively, and net income was $23.0 million and $52.7 million, respectively.

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

During the measurement period, adjustments were made to the values of the assets acquired and liabilities assumed as additional information was obtained. Since the Closing Date, the Company recorded measurement period adjustments resulting in an increase to goodwill of $46.2 million, primarily related to working capital, inventory and deferred income taxes. These measurement period adjustments did not have a material impact on the statements of operations. The Company completed the final determination of the purchase price allocation during the second quarter of 2026.

Goodwill is attributable to the acquired workforce of Helly Hansen Acquisition 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. As of May 2026, the Company performed an impairment assessment of the goodwill and trademarks associated with the Acquisition as required during the annual period following an acquisition. Management performed quantitative impairment assessments of goodwill and indefinite-lived trademarks by comparing the estimated fair value of the reporting unit and the indefinite-lived trademark to their respective carrying amounts. Based on results of testing, the fair values exceeded the carrying values and thereforeno impairment charges were recorded for the three months ended June 2026.

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. Customer relationships have been valued at $36.0 million and are being amortized using an accelerated method over a 12-year period.

Refer to Note 11 to the Company's financial statements in this Form 10-Q for information on the related fair value considerations.

Kontoor Brands, Inc. Q3 FY26 Form 10-Q 12

The following table summarizes the unaudited pro forma results of operations for the Company, on a continuing operations basis, 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 necessarily 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. Acquisition costs and other non-recurring charges incurred in 2025 are assumed to have been incurred in 2024 under the pro forma assumptions. 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 distributes Helly Hansen® products in China. The Helly Hansen® brand has a licensing arrangement with the joint venture where it receives royalties based on a percentage of the joint venture's 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 "Income from continuing operations" 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 final purchase price allocation within "other assets."

NOTE 4 —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® and Helly Hansen®branded full-price and outlet stores, online and international concession arrangements.

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

13 Kontoor Brands, Inc. Q3 FY26 Form 10-Q

Contract Balances and Performance Obligations

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

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

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

Kontoor Brands, Inc. Q3 FY26 Form 10-Q 14

For the three and nine months ended September 2026 and September 2025, no significant revenue was recognized that was included in contract liabilities as of December 2025 and December 2024, respectively. For the three and nine months ended September 2026, no significant revenue was recognized from performance obligations satisfied, or partially satisfied, in prior periods. As of September 2026, the Company has contractual rights under its licensing agreements to receive$44.7 million of fixed consideration related to the future minimum guarantees through December 2033.

NOTE 5 —BUSINESS SEGMENT INFORMATION

The Company hastwo reportable segments:

•Wrangler —Wrangler® 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®and Helly Hansen®, which are the Company's reportable segments. Segment profit is defined as income from continuing operations 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 from continuing operations before income taxes. Loss related to other revenues includes the operating results of the Musto® and Chic® brands, as well as other company-owned brands and private label apparel, and the Rock & Republic®brand through the date of disposition of March 3, 2026. Results of the Musto® brand have been included since the 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 2025 Annual Report on Form 10-K.

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

15 Kontoor Brands, Inc. Q3 FY26 Form 10-Q

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

(1) Refer to Note 4 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" primarily includes funding fees related to the sale of trade accounts receivable program discussed in Note 6 to the Company's financial statements in this Form 10-Q. Funding fees are reflected in the Company's statements of operations on a continuing operations basis within "Other income (expense), net".

(3) Costs previously allocated to the Lee segment that did not qualify for classification as discontinued operations and are reported within "Corporate and other expenses" above are as follows: for the three and nine months ended September 2026, $16.2 million and $41.8 million, respectively, and for the three and nine months ended September 2025, $8.9 million and $26.1 million, respectively.

(4) "Loss related to other revenues" includes the operating results of the Musto®, and Chic® brands, as well as other company-owned brands and private label apparel, along with the Rock & Republic®brand through the date of disposition, for purposes of reconciling "total reportable segment profit" to "income from continuing operations before income taxes."

NOTE 6 —ACCOUNTS RECEIVABLE

Allowance for Doubtful Accounts

The following table presents a rollforward of the allowance for doubtful accounts:

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

Kontoor Brands, Inc. Q3 FY26 Form 10-Q 16

Sale of Trade Accounts Receivable

The Company is party to an agreement (the "Accounts Receivable Purchase Agreement") with a financial institution to sell selected U.S. trade accounts receivable 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, under the Accounts Receivable Purchase Agreement, but continues to service and collect outstanding trade accounts receivable on behalf of the financial institution.

In addition, the Company is party to another accounts receivable sale agreement (the "2025 Accounts Receivable Purchase Agreement") with a separate financial institution to sell selected U.S. and Canadian trade accounts receivable not eligible under the Accounts Receivable Purchase Agreement, on a limited recourse basis. Under the 2025 Accounts Receivable Purchase Agreement, up to $60.0 million U.S. dollars and $20.0 million Canadian dollars of the Company's trade accounts receivable may be sold to the financial institution and remain outstanding at any point in time. Subject to certain requirements, the Company can request to increase the commitment by an additional $20.0 million U.S. dollars and an additional $10.0 million Canadian dollars. The Company removes the sold balances from "accounts receivable, net" in its balance sheet at the time of the sale but retains a deferred purchase price asset for sold accounts receivable due from the financial institution. The Company continues to service and collect outstanding trade accounts receivable on behalf of the financial institution.

During the nine months ended September 2026, the Company sold total trade accounts receivable from continuing operations of $1,129.5 million under both agreements. During the nine months ended September 2025, the Company sold total trade accounts receivable from continuing operations of $779.5 million under the Accounts Receivable Purchase Agreement. As of September 2026, December 2025 and September 2025, $258.8 million, $218.4 million and $161.6 million, respectively, of the sold trade accounts receivable from continuing operations remained outstanding with the financial institutions under these agreements. As of September 2026 and December 2025, we recorded a deferred purchase price asset for sold accounts receivable from continuing operations of $3.7 million and $2.6 million, respectively.

The funding fees charged by the financial institutions for these programs are reflected in the Company's statements of operations within "other income (expense), net" and were $2.8 million and $6.9 million for the three and nine months ended September 2026, respectively, and $1.9 million and $6.0 million for the three and nine months ended September 2025, respectively. The Company's periodic collection of the deferred purchase price on accounts receivable sold with the financial institution under the 2025 Accounts Receivable Purchase Agreement are reported as investing cash inflows and were $20.1 million for the nine months ended September 2026 and there wereno settlements during the nine months ended September 2025. All other net proceeds of these programs are reflected as operating activities in the Company's statements of cash flows.

NOTE 7 —INVENTORIES

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

17 Kontoor Brands, Inc. Q3 FY26 Form 10-Q

NOTE 8 —INTANGIBLE ASSETS AND GOODWILL

Intangible Assets

The following tables present components of "intangible assets, net" recorded in the Company's balance sheets:

On March 3, 2026, we sold the Rock & Republic® brand and associated business, including the trademark which had a net carrying amount of $6.0 million as of December 2025.

Goodwill

The following table presents changes in "goodwill" recorded in the Company's balance sheets, summarized by reportable segment:

Goodwill associated with the Lee reporting unit is reflected in "other assets of discontinued operations" in the Company's balance sheets for all periods presented.

Refer to Note 11 to the Company's financial statements in this Form 10-Q for information on the related fair value considerations.

Kontoor Brands, Inc. Q3 FY26 Form 10-Q 18

NOTE 9 —SUPPLY CHAIN FINANCING

The Company facilitates voluntary Supply Chain Finance ("SCF") programs with its financial institutions that allow certain suppliers 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 2026, December 2025 and September 2025, accounts payable included total outstanding balances of $41.8 million, $21.5 million and $41.4 million, respectively, due to suppliers that participate in the SCF programs.

NOTE 10 —SHORT-TERM BORROWINGS AND LONG-TERM DEBT

Short-term Borrowings

At September 2026 and December 2025, the Company had availability of$18.2 million and $17.4 million under a committed international line of credit as a result of the Acquisition. There wereno outstanding balances at September 2026 and December 2025.

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 is party to a senior secured Credit Agreement, as amended and restated on April 8, 2025 (the "2025 Credit Agreement"), which provides 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. The net proceeds from the Initial Term Loan were used to repay all of the $340.0 million principal amount outstanding under the Company's previous 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. See Note 3 to the Company's financial statements in this Form 10-Q for additional information related to the Acquisition.

Term Loan A-1 had an outstanding principal amount of $695.6 million at September 2026, and $700.0 million at December 2025 and September 2025. Term Loan A-2 had outstanding principal amounts of $50.0 million at September 2026 and December 2025 and $250.0 million at September 2025. These balances are reported in the Company's balance sheets net of unamortized deferred financing costs. As of September 2026, interest expense on Term Loan A-1 and Term Loan A-2 was being recorded at an effective annual interest rate of 5.4% and 5.6%, 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 which began in September 2026 and which increases to quarterly installments of $8.8 million beginning in September 2027, with the remaining principal due at maturity. The remaining balance on Term Loan A-2 is scheduled to be repaid in full at maturity.

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 2026, the Company hadno outstanding borrowings under the Revolving Credit Facility and $6.7 million of outstanding standby letters of credit issued on behalf of the Company, leaving $493.3 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

19 Kontoor Brands, Inc. Q3 FY26 Form 10-Q 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 2026, the Company was in compliance with all covenants and expects to maintain compliance with the applicable covenants for at leastone 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 2026, December 2025 and September 2025, which is reported net of unamortized deferred financing costs. As of September 2026, 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 2026, the Company was in compliance with the Indenture and expects to maintain compliance with the applicable non-financial covenants for at leastone year from the issuance of these financial statements. In the event of a material asset disposition, the Indenture includes provisions requiring the Company to make payments to reduce indebtedness or invest in the business within 540 days following the receipt of the net cash proceeds of the asset disposition.

Refer to Note 12 in the Company's 2025 Annual Report on Form 10-K for additional information regarding the Company's debt obligations.

Total cash paid for interest was $39.6 million and $35.2 million during the nine months ended September 2026 and September 2025, respectively.

NOTE 11 —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.

Kontoor Brands, Inc. Q3 FY26 Form 10-Q 20

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 2026, the carrying value of the Company's long-term debt was $1.14 billion compared to a fair value of$1.11 billion. At December 2025, the carrying value of the Company's long-term debt was $1.14 billion compared to a fair value of $1.13 billion. 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 2026 and December 2025, their carrying values approximated fair value due to the short-term nature of these instruments.

21 Kontoor Brands, Inc. Q3 FY26 Form 10-Q

Nonrecurring Fair Value Measurements

During the three months ended March 2026, the Company commenced a sale process of the Lee® business which was a triggering event requiring impairment testing of goodwill, the indefinite-lived intangible asset and long-lived assets of the Lee reporting unit. The carrying values of the goodwill and indefinite-lived intangible asset as of March 2026, the testing date, were $79.9 million and $4.7 million, respectively. Management elected to perform a qualitative impairment analysis of both the Lee reporting unit and the intangible asset to determine whether it is more likely than not that the goodwill of the Lee reporting unit or the trademark intangible asset was impaired. Based on the results of testing, no impairment charges were required to be recorded for goodwill, indefinite-lived intangible asset or long-lived assets for the three months ended March 2026 and further quantitative testing was not considered necessary. Refer to Note 2 to the Company's financial statements in this Form 10-Q for additional details regarding the Lee® business.

As of May 2026, the Company performed an impairment assessment of the goodwill and trademarks associated with the Acquisition as required during the annual period following an acquisition. Management performed quantitative impairment assessments of goodwill and indefinite-lived trademarks by comparing the estimated fair value of the reporting unit and the indefinite-lived trademark to their respective carrying amounts.

The fair value of the reporting unit was estimated based on a combination of two valuation methods: an income approach and a market approach. The income approach was based on the present value of projected discounted cash flows for the reporting unit. The discount rate is based on the reporting unit's weighted average cost of capital that takes market participant assumptions into consideration. The market approach was based on the guideline company method, which analyzed market multiples of revenue and earnings before interest, taxes, depreciation and amortization for a group of comparable companies, as well as the similar transaction method. Based on results of the quantitative impairment assessment performed, the fair value of goodwill exceeded the carrying value for the reporting unit.

The Company used the income-based relief-from-royalty method to value the indefinite-lived trademark intangible assets. Under this method, revenues expected to be generated by the trademark are multiplied by a selected royalty rate. The royalty rate is selected based on consideration of (i) royalty rates included in active license agreements, if applicable, (ii) royalty rates received by market participants in the apparel industry, and (iii) the current performance of the reporting unit. The estimated after-tax royalty revenue stream is then discounted to present value using the reporting unit’s weighted average cost of capital adjusted, as appropriate, to factor in the risk of the intangible asset. Based on results of the quantitative impairment assessment performed, the fair value of the indefinite-lived trademarks exceeded their carrying values.

Refer to Note 3 to the Company's financial statements in this Form 10-Q for additional information related to the Acquisition.

NOTE 12 —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 $561.7 million at September 2026, $717.4 million at December 2025 and $704.7 million at September 2025, consisting primarily of contracts hedging exposures to the Norwegian krone, euro, Canadian dollar, Mexican peso, British pound, Polish zloty and the 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.

On September 9, 2024, the Company entered into "floating to fixed" interest rate swap agreements (the "2024 Swap Agreements") that mature on August 18, 2029. In April 2025, the Company entered into "floating to fixed" interest rate swap agreements (the "2025 Swap Agreements") that mature on March 18, 2027 and April 18, 2027. The notional amount of the 2024 Swap Agreements and the 2025 Swap Agreements was $400.0 million at September 2026 and $550.0 million at December 2025. The notional amount of the 2024 Swap Agreements was $650.0 million at September 2025.

The Company's outstanding derivative financial instruments 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 2026.

Kontoor Brands, Inc. Q3 FY26 Form 10-Q 22

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

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:

23 Kontoor Brands, Inc. Q3 FY26 Form 10-Q

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:

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 offset the purchase price of the Acquisition, which were not designated as hedges. Additionally, derivative contracts not designated as hedges include a limited number of cash flow hedges that were deemed ineffective and were de-designated during the nine months ended September 2026 and September 2025. Refer to Note 3 to the Company's financial statements in this Form 10-Q for additional information related to the Acquisition.

The Company executes balance sheet hedge contracts to mitigate foreign currency exchange risks related to intercompany loans. The notional amount of these outstanding foreign currency exchange contracts was $525.7 million and $87.5 million at September 2026 and December 2025, respectively.

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

Other Derivative Information

At September 2026, AOCL included $16.0 million of pre-tax net deferred gains 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.

Kontoor Brands, Inc. Q3 FY26 Form 10-Q 24

NOTE 13 —CAPITAL AND ACCUMULATED OTHER COMPREHENSIVE LOSS

Common Stock

On December 11, 2023, the Company announced that its Board of Directors approved a share repurchase program (the "2023 Repurchase Program"). The 2023 Repurchase Program authorized the repurchase of up to $300.0 million of the Company's outstanding Common Stock through open market or privately negotiated transactions. On May 6, 2026, the Company announced that its Board of Directors approved a new share repurchase program (the "2026 Repurchase Program") which replaced the 2023 Repurchase Program. The 2026 Repurchase Program authorizes the repurchase of up to $750.0 million of the Company's outstanding Common Stock through open market or privately negotiated transactions. The 2026 Repurchase Program does not have an expiration date but may be suspended, modified or terminated at any time without prior notice.

During the nine months ended September 2026, the Company repurchased 0.3 million shares of Common Stock for $25.0 million, including commissions, under the 2023 Repurchase Program, and 0.9 million shares of Common Stock for $70.0 million, including commissions, under the 2026 Repurchase Program. All shares reacquired in connection with the Company's repurchase programs are treated as authorized and unissued shares upon repurchase. As of September 2026, $680.0 million remained available for repurchase under the 2026 Repurchase Program.

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:

25 Kontoor Brands, Inc. Q3 FY26 Form 10-Q

The following table presents reclassifications out of AOCL:

NOTE 14 —INCOME TAXES

The effective income tax rate for the nine months ended September 2026 was 65.4% compared to 22.5% in the 2025 period. The nine months ended September 2026 included a net discrete tax expense primarily related to the one-time tax impact arising from an intercompany transfer of certain intellectual property rights. The tax expense was primarily recorded as a deferred tax liability in the period of the transaction and reflects the difference between the book and tax basis of the transferred intellectual property, measured using applicable enacted tax rates. The net impact of discrete tax items increased the effective income tax rate by 45.8% for the nine months ended September 2026. 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 0.7%.

The effective tax rate without discrete items for the nine months ended September 2026 was 19.6% compared to 23.2% in the 2025 period. The decrease was primarily due to changes in our jurisdictional mix of earnings and an increase in foreign tax credits.

Kontoor Brands, Inc. Q3 FY26 Form 10-Q 26

During the nine months ended September 2026, the amount of net unrecognized tax benefits and associated interest increased by $0.7 million to $13.2 million. Management believes that the amount of unrecognized tax benefits may decrease by $5.0 million within the next 12 months due to the expiration of statutes of limitations, which would reduce income tax expense.

NOTE 15 —EARNINGS PER SHARE

The calculations of basic and diluted earnings per share ("EPS") are based on income from continuing operations 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 from continuing operations:

For the nine months ended September 2026 and the three and nine months ended September 2025, an immaterial 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 months ended September 2026, due to the loss in the period, potential common shares of 0.4 million were excluded from the computation of diluted earnings per share because the effect would be anti-dilutive.

For the three and nine months ended September 2026, a total of 0.9 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. 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.

NOTE 16 —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 right-of-use operating lease assets obtained in the Helly Hansen Acquisition during the nine months ended September 2025.

27 Kontoor Brands, Inc. Q3 FY26 Form 10-Q

NOTE 17 —RESTRUCTURING

Restructuring charges relate to costs associated with exit or disposal activities. During the three and nine months ended September 2026 and September 2025, the Company incurred restructuring and transformation charges as part of Project Jeanius related to the closure and sale of a manufacturing facility. During the nine months ended September 2026, we sold the manufacturing facility for a gain of $15.4 million included in "cost of goods sold" in the Company's statements of operations and as part of "corporate and other" in the Company's business segment information.

The following table summarizes the restructuring charges (gains) recorded during the three and nine months ended September 2026 and September 2025:

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

The following table presents these restructuring costs by business segment:

Kontoor Brands, Inc. Q3 FY26 Form 10-Q 28

The following table presents activity in the restructuring accrual for the nine-month period ended September 2026:

(1)For the nine months ended September 2026, in addition to the $5.3 million in charges recorded to the restructuring accrual, the Company recorded approximately $2.0 million of non-cash and other charges related to the closure of a manufacturing facility and streamlining and transferring select production within our internal manufacturing network offset by a gain related to the sale of the manufacturing facility of $15.4 million.

All of the $3.9 million restructuring accrual reported in the Company's balance sheet at September 2026 is expected to be paid out within the next 12 months and is classified within "accrued and other current liabilities." Of the $8.5 million restructuring accrual reported in the Company's balance sheet at December 2025, $8.2 million was classified within "accrued and other current liabilities," and the remaining $0.3 million was classified within "other liabilities."

NOTE 18 —SUBSEQUENT EVENTS

On October 22, 2026, the Board of Directors declared a regular quarterly cash dividend of $0.54 per share of the Company's Common Stock. The cash dividend will be payable on December 18, 2026, to shareholders of record at the close of business on December 8, 2026.

On November 2, 2026, the Company completed the sale of the global Lee® business, as discussed in Note 2. Net cash proceeds received were approximately $698.2 million, subject to customary adjustments including for cash, indebtedness and working capital as set forth in the Purchase Agreement. In connection with the sale, the Company finalized transition services agreements to provide certain post-closing accounting, tax, treasury, technology and supply chain services on a transitional basis for periods initially extending up to 12 months, with options for the Buyer to request an extension of certain services.

On November 5, 2026, the Company announced it anticipates entering into accelerated share repurchase agreements (the "ASR Agreements") with multiple financial institutions to repurchase an aggregate of $400 million of the Company's shares of Common Stock as part of its 2026 Repurchase Program, commencing in the fourth quarter of 2026. The Company expects the final settlement of the transactions under the ASR Agreements to occur during the first half of 2027.

29 Kontoor Brands, Inc. Q3 FY26 Form 10-Q