For the month of: December, 2003	Commission File Number: 1-14830
GILDAN ACTIVEWEAR INC.
(Translation of Registrant's name into English)
725 Montée de LiesseVille Saint-Laurent, Quebec Canada H4T 1P5
(Address of principal executive offices)

Form 20-F

Form 40-F    X

 

Yes

No   X

Montreal, Thursday, December 4, 2003 - Gildan Activewear Inc. (NYSE: GIL; TSX: GIL.A) today announced its results for its fourth fiscal quarter and full year ended October 5, 2003. The Company also announced that it had adopted the U.S. dollar as both its financial reporting and functional currency with effect from the beginning of its 2004 fiscal year.

The Company reported net earnings of $19.8 million, or $0.66 per diluted share, compared with $19.6 million or $0.66 per diluted share in the fourth quarter of fiscal 2002. The Company’s most recent fiscal 2003 guidance had reflected a range of $0.61-$0.66 for diluted EPS for the fourth quarter.

Compared to last year, the fourth quarter results reflected increased unit sales and higher gross margins, together with lower interest expense and a further reduction in the Company’s effective tax rate. The positive impact of these factors was offset by lower selling prices and the weaker U.S. dollar, as well as higher depreciation as a result of the Company’s recent major capital investment projects. The negative impact of the lower U.S. dollar on the Canadian dollar EPS for the quarter is estimated at approximately $0.15 per share. In U.S. dollars, net earnings for the fourth quarter amounted to U.S. $14.2 million, or U.S. $0.48 per diluted share, up respectively 11.8% and 11.6% from the fourth quarter of fiscal 2002.

Sales in the quarter were $150.8 million, down 5.7% from $159.9 million in the fourth quarter of fiscal 2002. The lower sales were due to lower selling prices and the significant decline in the value of the U.S. dollar, largely offset by a 10.1% increase in unit shipments. The higher unit sales reflected 10.4% growth in overall industry shipments of T-shirts in the U.S. wholesale distributor market combined with continuing market share increases achieved by Gildan, compared with the fourth quarter of last year. Gildan maintained its market leadership position in the overall T-shirt category, with a share of 29.6% versus 28.0% in the fourth quarter a year ago. Gildan continued to achieve significant penetration in the sport shirt segment. Although overall industry shipments in the sport shirt segment through the U.S. distributor channel declined by 12.6%, the Company’s market share increased to 20.7% from 15.0% in the fourth quarter of fiscal 2002. Gildan’s unit shipments in this category grew by 24.5% compared with the fourth quarter of last year. Gildan’s share in the fleece category also increased significantly in the fourth quarter to 16.9%, compared with 11.7% a year ago, as the Company expanded its offering of fleece products. Industry demand in this segment increased by 11.8% versus the fourth quarter of last year. All U.S. market and market share data is based on the S.T.A.R.S. Report produced by ACNielsen Market Decisions. Unit shipments to Europe increased by 11.1% compared with the fourth quarter of last year.

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The lower tax rate in the quarter compared with the fourth quarter of 2002 reflected the higher growth of sales to the U.S. and Europe compared with Canada, combined with a higher proportion of production from Honduras as the Company continued to ramp up the Rio Nance facility towards full capacity.

Full Year Earnings

Net earnings for the full year ended October 5, 2003 were a record $77.3 million or $2.60 per diluted share, up respectively 16.2% and 15.0% from $66.5 million or $2.26 per diluted share. The impact of the weaker U.S. dollar on full year earnings in fiscal 2003 compared with fiscal 2002 is estimated at approximately $0.65 per diluted share. In U.S. dollars, net earnings for fiscal 2003 were $53.2 million, or U.S. $1.79 per diluted share, up respectively 25.5% and 23.4% from fiscal 2002. Fiscal 2003 comprised of 53 weeks instead of the normal 52 weeks for a fiscal year due to the Company's floating year-end date. The extra week was included in third quarter of fiscal 2003.

Functional Currency

The Company has historically measured and presented its financial statements in Canadian dollars. The Company has determined that it will adopt the U.S. dollar as both its financial reporting as well as its functional currency, with effect from the beginning of its 2004 fiscal year. The Company will continue to prepare its financial statements in accordance with Canadian GAAP. The decision to change functional and reporting currency reflects the high proportion of the Company’s sales, costs, capital expenditures and long-term debt which are denominated in U.S. dollars. Consequently, the change in functional currency is expected to minimize the impact of fluctuations in foreign exchange rates on the Company’s earnings. Historical financial information in U.S. dollars has been provided in the investor relations section of the Company’s website, which can be accessed at www.gildan.com.

 

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As a result of adopting the U.S. dollar as its functional currency, both Canadian and U.S. GAAP require that all opening assets and liabilities are translated into U.S. dollars at the exchange rate prevailing at the time of giving effect to the change in functional currency. Using the October 6, 2003 exchange rate, the translated value of opening inventories and fixed assets is approximately U.S. $23 million higher than the amount that would have resulted from the application of exchange rates prevailing at the dates these assets were manufactured or acquired. Accordingly, a one-time currency gain of U.S. $23 million resulting from the upward revaluation of inventories and fixed assets has been reflected directly in the balance sheet as part of a separate component of shareholders’ equity. The increase in these opening asset values will have a corresponding offsetting negative impact on future earnings as opening inventories are consumed and fixed assets are depreciated. The upward revaluation of opening inventories will result in lower gross margins in the first half of fiscal 2004 only, as opening inventories are consumed in cost of sales, with an adverse effect on EPS in the first and second fiscal quarters of U.S. $0.06 and U.S. $0.04 respectively. Also, the significant increase in values for opening fixed assets in U.S. dollars will result in higher annual depreciation expense on an ongoing basis. In fiscal 2004, depreciation will be increased by U.S. $1.8 million after tax, or U.S. $0.06 per share. The combined impact of these factors will be to reduce EPS in fiscal 2004 by approximately U.S. $0.16 per share.

As of November 30, 2003 there were 23,427,335 Class A subordinate shares and 6,094,000 Class B multiple voting shares issued and outstanding along with 837,309 options outstanding.

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Profile

Gildan Activewear Inc. will hold a conference call to discuss these results today at 10:00 AM Eastern Time. Interested parties can join the call by dialling 1-800-474-8920. The conference call can also be accessed via live webcast at www.gildan.com

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Gildan Activewear Inc.
Consolidated Statements of Earnings
(In thousands of Canadian dollars, except per share data)

			Three months ended						Twelve months ended
			October 5, 2003			September 29, 2002			October 5, 2003			September 29, 2002
			(unaudited)			(unaudited)			(audited)			(audited)
Sales			$	150,764		$	159,921		$	630,139		$	600,660
Cost of sales				104,865			115,011			440,294			431,996
Gross profit				45,899			44,910			189,845			168,664
Selling, general and administrative expenses				15,817			15,506			71,153			63,926
Earnings before interest, income taxes,
depreciation and amortization (EBITDA)				30,082			29,404			118,692			104,738
Depreciation and amortization				6,587			4,896			23,615			17,592
Interest expense				2,106			2,964			9,463			13,342
Earnings before income taxes				21,389			21,544			85,614			73,804
Income taxes				1,625			1,982			8,342			7,312
Net earnings			$	19,764		$	19,562		$	77,272		$	66,492
Basic EPS
Canadian $			$	0.67		$	0.68		$	2.64		$	2.33
US $ (1)			$	0.48		$	0.44		$	1.82		$	1.49
Diluted EPS
Canadian $			$	0.66		$	0.66		$	2.60		$	2.26
US $ (1)			$	0.48		$	0.43		$	1.79		$	1.45
Weighted average number of shares outstanding (in thousands)
Basic				29,478			28,807			29,242			28,491
Diluted				29,808			29,540			29,726			29,362

(1) The U.S. dollar earnings per share are based on the Canadian GAAP results converted at the average exchange rates for the respective periods.

(2) Certain prior period figures have been reclassified to conform with the basis of presentation adopted in the current period.

 

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			Three months ended						Twelve months ended
			October 5, 2003			September 29, 2002			October 5, 2003			September 29, 2002
			(unaudited)			(unaudited)			(audited)			(audited)
Cash flows from operating activities:
Net earnings				19,764			19,562			77,272			66,492
Adjustments for:
Depreciation and amortization				6,587			4,896			23,615			17,592
Future income taxes				1,671			3,427			6,116			5,013
Other				(1,053	)		2,411			277			4,392
				26,969			30,296			107,280			93,489
Net changes in non-cash working capital balances:
Accounts receivable				16,299			18,905			(11,224	)		38,170
Inventories				(12,734	)		25,111			(25,640	)		65,380
Prepaid expenses and deposits				795			1,679			(1,649	)		599
Accounts payable and accrued liabilities				5,309			(2,983	)		19,073			(21,026	)
Income taxes payable				(136	)		(1,254	)		2,295			1,488
				36,502			71,754			90,135			178,100
Cash flows from financing activities:
Decrease in revolving bank loan				--			--			--			(35,083	)
Repayment of capital leases and other long-term
debt				(1,577	)		(7,937	)		(6,419	)		(11,554	)
Increase in unsecured debt				240			459			391			2,974
Proceeds from the issuance of shares				1,602			1,481			6,639			4,564
Increase in deferred financing charges				--			(882	)		(41	)		(1,086	)
				265			(6,879	)		570			(40,185	)
Cash flows from investing activities:
Purchase of fixed assets, net of disposals				(12,460	)		(17,996	)		(58,577	)		(65,765	)
(Increase) decrease in other assets				(380	)		(1,517	)		6			(1,395	)
				(12,840	)		(19,513	)		(58,571	)		(67,160	)
Effect of exchange rate changes on cash
and cash equivalents				426			963			(10,179	)		150
Net increase in cash and cash equivalents
during the period				24,353			46,325			21,955			70,905
Cash and cash equivalents, beginning of period			$	68,507		$	24,580		$	70,905		$	--
Cash and cash equivalents, end of period			$	92,860		$	70,905		$	92,860		$	70,905

 

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				October 5, 2003			September 29, 2002
				(audited)			(audited)
Current assets:
Cash and cash equivalents			$	92,860		$	70,905
Accounts receivable				86,057			87,746
Inventories				138,611			112,971
Prepaid expenses and deposits				5,155			3,657
Future income taxes				6,270			5,028
				328,953			280,307
Fixed assets				241,524			209,247
Other assets				4,928			7,085
Total assets			$	575,405		$	496,639
Current liabilities:
Accounts payable and accrued liabilities			$	90,098		$	82,168
Income taxes payable				5,235			3,063
Current portion of long-term debt				26,089			6,249
				121,422			91,480
Long-term debt				72,421			114,866
Future income taxes				27,743			20,385
Shareholders' equity:
Share capital				111,564			104,925
Contributed surplus				323			323
Retained earnings				241,932			164,660
				353,819			269,908
Total liabilities and shareholders' equity			$	575,405		$	496,639

 

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SIGNATURE

     Pursuant to the requirements of the Securitiecs Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.