FORM 40-F

|         |	Registration statement pursuant to Section 12 of the Securities Exchange Act of 1934
or
|   Ö   |	Annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934

For Fiscal year ended: October 5, 2003

Commission File number: 01-14830

|   Ö   |            Annual Information Form

|   Ö   |          Audited Annual Financial Statements

Indicate by check mark whether the registrant by filing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule12g3-2(b) under the Securities Exchange Act of 1934 (the “Exchange Act”). If “Yes” is marked, indicate the file number assigned to the registrant in connection with such rule.

Yes             |      |

No             |   Ö   |

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13(d) or 15(d) of the Exchange Act during the preceding  12 months (or for such shorter period that the registrant has been required to file such reports); and (2) has been subject to such filing requirements in the past 90 days.

Yes             |  Ö   |

No             |      |

 

 

GILDAN ACTIVEWEAR INC.

 

 

 

ANNUAL INFORMATION FORM

for the year ended October 5, 2003

 

 

February 20, 2004

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GILDAN ACTIVEWEAR INC.

TABLE OF CONTENTS TO ANNUAL INFORMATION FORM

     

		Page
ITEM 1 — COVER PAGE
ITEM 2 — CORPORATE STRUCTURE			1
A — NAME AND INCORPORATION			1
B — INTERCORPORATE RELATIONSHIPS			1
ITEM 3 — GENERAL DEVELOPMENT OF THE BUSINESS			3
A — THREE YEAR HISTORY			3
B — SIGNIFICANT ACQUISITIONS AND SIGNIFICANT DISPOSITIONS			4
C — TRENDS			4
ITEM 4 — NARRATIVE DESCRIPTION OF THE BUSINESS			4
A — BUSINESS OVERVIEW			4
B — PROPERTY, PLANTS AND EQUIPMENT			12
C — RISK FACTORS			14
D — EMPLOYEES			16
ITEM 5 — SELECTED CONSOLIDATED FINANCIAL INFORMATION			16
A — ANNUAL INFORMATION			16
B — QUARTERLY INFORMATION			18
C — DIVIDENDS			18
ITEM 6 — MANAGEMENT'S DISCUSSION AND ANALYSIS			19
ITEM 7 — MARKET FOR SECURITIES			19
ITEM 8 — DIRECTORS AND OFFICERS			20
ITEM 9 — ADDITIONAL INFORMATION			25
A — MEMORANDUM AND ARTICLES OF ASSOCIATION			25
B — RELATED PARTY TRANSACTIONS			29
C — EXCHANGE CONTROLS			30
D — TAXATION			31
E — OTHER SOURCES OF ADDITIONAL INFORMATION			33

 

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          Except as otherwise indicated, the information contained herein is given as of January 31, 2004, and all dollar amounts set forth herein are expressed in Canadian dollars.

          In this annual information form, "Gildan", the "Corporation", or the words "we", "our" and "us" refer, depending on the context, either to Gildan Activewear Inc. or to Gildan Activewear Inc. together with its subsidiaries.

          The information appearing in the relevant extracts of the documents listed below is incorporated herein by reference:

          — 2003 Annual Report; and

          — 2003 Notice of Annual and Special Meeting of Shareholders and Management Proxy Circular (the “Circular”).

           This Annual Information Form contains certain forward-looking statements, which are based on Gildan’s current expectations, estimates, projections and assumptions and were made by Gildan in light of its experience and its perception of historical trends. All statements that address expectations or projections about the future, including statements about Gildan’s strategy for growth, commodity prices, costs, operating or financial results, are forward-looking statements. Some of the forward-looking statements may be identified by words like “expects”, “anticipates”, “plans”, “intends”, “believes”, “projects”, “could” and similar expressions. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. Gildan’s actual results may differ materially from those expressed or implied by its forward-looking statements as a result of known and unknown risks, uncertainties and other factors.

           In March 1995, we changed our name to Gildan Activewear Inc./Les Vêtements de Sports Gildan Inc. In June 1998, in conjunction with our initial public offering, we filed Articles of Amendment to, among other things, remove the private company restrictions contained in our charter documents and change the structure of our authorized share capital. In February 2001, we filed Articles of Amendment to amend the attributes of the Class B Multiple Voting Shares. In February 2002, we filed Articles of Amendment to increase the maximum number of directors from 11 to 15.

           Our principal executive offices are located at 725 Montée de Liesse, Montreal, Québec, Canada H4T 1P5, and our telephone number at that address is (514) 735-2023.

           B  —  Intercorporate Relationships

            We have eighteen directly or indirectly wholly-owned subsidiaries:

•	Gildan Activewear SRL, a Barbados corporation, which is responsible for all of our non-Canadian sales and related activities, such as contract manufacturing, warehousing, distribution, marketing and customer service;

•	Gildan Activewear Properties (BVI) Inc., a British Virgin Islands corporation, which owns the facility in Barbados that houses the executive offices of Gildan Activewear SRL;

 

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           Over the past three fiscal years, we have continued the expansion of our manufacturing capacity and invested in the acquisition of modern, automated equipment for all aspects of our manufacturing process to maximize production and achieve high efficiency rates, while also continuing to vertically integrate our operations. In this context, we have spent approximately $187 million in the last three fiscal years on such improvements. For changes in our business that are expected to occur during fiscal 2004, see “Item 4 – Business Overview – Growth Strategy.”

           In fiscal 2001, we invested an aggregate amount of $8.6 million in a yarn spinning plant in Long Sault, Ontario which we acquired in June 2001. We invested an additional $22.1 million in new equipment for this facility in fiscal 2002 and a further $8.6 million in fiscal 2003. In fiscal 2002, we purchased a second yarn spinning plant in Montreal, Québec for an aggregate cost of $12.8 million. We invested an additional $4.3 million in new equipment for this facility in fiscal 2003. The two Canadian plants provided virtually all of the commodity yarn requirements of the Canadian textile manufacturing facilities during fiscal 2003.

Textile Manufacturing

           In fiscal 2001, we spent $13.2 million to purchase our knitting facility in Montreal, Québec and to modernize it as well as our dyeing and finishing facilities, mostly in Valleyfield, Québec. See “Item 9 – Additional Information – Related Party Transaction – Purchase of Ville Saint-Laurent Facility”.

           In fiscal 2001, we spent $7.5 million in sewing equipment and completed the construction of our sewing facility in Castaños, Mexico, which began production in February 2001. During fiscal 2003, we began production in a new sewing facility located in Port-au-Prince, Haiti. We spent $3.1 in new equipment for this facility in fiscal 2003.

           In May 2003, we closed our Montreal sewing plant, which at the time provided approximately 2% of our overall sewing requirements, as this plant was no longer cost competitive or economically viable in relation to a global competitive environment.

           In April and November 2003 and January 2004 respectively, we opened three new distribution centers in Bletchley, United Kingdom, Brisbane, Australia and Meer, Belgium, through third party agreements.

 

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           B  —  Significant Acquisitions and Significant Dispositions

           We are a rapidly growing, vertically-integrated manufacturer and marketer of premium quality basic activewear for sale principally into the wholesale imprinted activewear market in the Canadian, United States, European and other international apparel markets. Until fiscal 2000, our sales were exclusively in Canada and in the United States. During the past four years we established a strong base for future growth in Europe, where, as of January 31, 2004, we have set up a network of 37 distributors in 19 countries. We have also recently entered the Australian market, where we opened a new distribution center operated by a third party in November 2003. We manufacture and sell premium quality 100% cotton T-shirts and 50% cotton/50% polyester T-shirts, placket collar sport shirts and premium quality fleece products in a variety of weights, sizes, colors and styles. We sell our products as “blanks”, which are ultimately decorated with designs and logos for sale to customers.

           Our sales growth was supported by the continuing expansion of our manufacturing capacity. In fiscal 2003, our sales increased to 22.6 million dozen, compared with 19.4 million dozen in the previous fiscal year. Moreover, we are expanding our capacity to accommodate annual production of 40 million dozen by 2008, principally through the development of a second integrated regional manufacturing hub in the Dominican Republic and in Haiti. The Corporation has acquired sufficient land to implement further major capacity expansion in the Dominican Republic, in order to have additional capacity in place by the end of 2008. All of our new capacity is being added at the low end of the cost curve, reflecting our commitment to grow using the latest state-of-the-art manufacturing technology. Our mission is to constantly reinforce our position as the low-cost producer and leading marketer of premium quality basic activewear in all the geographical markets which we serve.

Operating Strategy

           Emphasis on Premium Quality Products.  We offer our products in a wide variety of weights, sizes, colors and styles. All of our products are made with pre-shrunk fabric, feature premium details such as topstitched seamless collars and double stitched hems, and are quarter-turned to eliminate the center crease. To ensure the premium quality of our products, we apply stringent quality control procedures at all stages of the production process, both at our facilities and those of our contractors.

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           Competitive Pricing and Low-Cost Operations.  We believe that our combination of competitive prices and premium quality products provides superior value to our customers. We are able to price our products competitively because of our success in maintaining low production and operating costs. We accomplish this by:

           The new capacity in the Dominican Republic/Haiti and Honduras/Nicaragua is expected to be utilized primarily to support Gildan’s continuing sales growth and market share targets in its existing products and its existing market channels, as well as to further reduce its overall manufacturing cost structure.

           The activewear market is characterized by low fashion risk compared to many other apparel markets. While opportunity exists for product innovations and differentiation, basic garment styles generally are not driven by trends or fads. The activewear industry is also characterized by significant barriers to entry, including:

•	substantial capital expenditures required for vertically-integrated production;
•	large investments in inventories and working capital;
•	strong supplier relationships; and
•	established customer relationships.

Products

           Our marketing strategy concentrates primarily on the wholesale distribution channel catering to screenprinters, embroiderers and advertising specialty distributors. We promote ourselves through appearances at tradeshows and trade magazine advertising. We also engage in various forms of co-operative advertising with our major customers, including print advertising, catalogues and mailings. We believe that we have been innovative in maximizing the impact of our marketing to create a strong awareness of our products in the markets we serve.

           In fiscal 2003, we sold our products in Canada and internationally, which accounted for 9.3% and 90.7% of total sales, respectively. For a breakdown of the Corporation’s total sales by geographic market for each of the last three financial years, reference is made to Note 14 to the Consolidated Financial Statements of the Corporation included in our 2003 Annual Report, which is incorporated herein by reference. We currently sell our products to approximately 140 customers. Our customer mix is highly diverse. In fiscal 2003, our top two customers accounted for 27.5% of total sales, with the balance of our top ten customers accounting for approximately 33.5% of total sales.

           NAFTA may be expanded in the future to include other countries. Canada, Mexico and the United States have each implemented separate bilateral free trade agreements with Chile. The United States has also implemented bilateral free trade agreements with Singapore, Israel, and Jordan, and has recently concluded negotiations for a Central America Free Trade Agreement (“CAFTA”), to be presented to Congress for implementation in 2004.

           In 2000, the United States extended preferential trade treatment to the Caribbean Basin Initiative, or CBI countries, by enacting the Caribbean Basin Trade Partnership Act (“CBTPA”). The CBTPA eliminates U.S. duty on garments assembled in those countries from fabric wholly formed in the United States from yarn wholly formed in the United States. It also provides duty free treatment for limited quantities of knit garments produced in those countries from yarn wholly formed in the United States.

           Yarn.  Our Long Sault, Ontario and Montreal, Québec plants provided virtually all of the commodity yarn requirements of the Canadian textile manufacturing facilities during fiscal 2003.

           Knitting.  We currently conduct knitting operations at our knitting facility in Montreal, Québec. We operate circular and flat knitting machines at this facility, producing jersey, piqué, fleece and ribbing in body-sized fabrics in tubular form using cotton and cotton/polyester yarns. During fiscal 2003, we continued the ramp-up of our knitting operations in our new integrated facility in Rio Nance, Honduras, which benefits from the duty relief provisions established under U.S. trade liberalization legislation. See “Item 4  —  Narrative Description of the Business  —  Business Overview  —  Other Trade Agreements”. We are also planning to conduct knitting operations in the Dominican Republic once the construction of our new integrated textile facility is completed.

Properties

           C — Risk Factors

           The wholesale imprinted activewear segment of the North American apparel market includes a number of significant competitors. Our primary competitors are the major U.S.-based manufacturers of basic branded activewear for the wholesale and retail channels. These manufacturers include the Hanes and Outer Banks divisions of Sara Lee Corporation, the Jerzees division of Russell Corporation, Fruit of the Loom, Inc. and Anvil Knitwear, Inc.

           Our ability to remain competitive in the areas of quality, price, marketing, product development, manufacturing, distribution and order processing will, in large part, determine our future success. We cannot assure you that we will continue to compete successfully.

Our Industry is Subject to Pricing Pressures

           In the future, our financial performance may be negatively affected by these pricing pressures:

           The textile and apparel industries in both Canada and the United States have historically received a relatively higher degree of trade protection than some other industries. However, this protection is diminishing as a result of the implementation of trade agreements reached in the last ten years. The ultimate effect of the changes in quotas, duties and tariffs on our business is uncertain.

           In 1995, the Agreement on Textiles and Clothing came into effect, requiring importing countries, including Canada, the United States and countries in Western Europe, to eliminate quotas on imports of textiles and apparel from WTO member exporting countries by 2005. This could result in increased competition from developing countries which have lower labor costs and reliable infrastructures, such as China, India and Pakistan. Increased competition from such countries could adversely affect our business.

Unanticipated Changes in Tax Laws may Raise our Effective Tax Rate

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treaties between various countries in which we operate. We have taken great care to ensure that our structure is in compliance with all applicable laws and income tax treaties. Also, we conduct annual transfer pricing studies to substantiate the transactions between the Corporation and its various subsidiaries. Any unanticipated changes to the current domestic laws in the countries in which we operate or in the income tax treaties which we currently rely on, or any government taxation authority adopting a position that our structure is not in compliance with applicable laws and income tax treaties, may potentially have a material impact on our effective tax rate for prior, current and future years.

We Rely on a Relatively Small Number of Significant Customers

           We do not have formal contracts with our wholesale distributor customers whereby they must purchase a minimum quantity of our products. Although we have maintained long-term relationships with many of our wholesale distributor customers, we cannot assure you that historic levels of business from any of our customers will continue or increase in the future.

           Cotton and polyester fibers are the principal raw materials we use in the manufacture of our products. The price of cotton has fluctuated substantially over the past several years. We generally enter into futures contracts to cover the price of our anticipated cotton requirements for each fiscal year. Consequently, we may not be able to benefit from price decreases which might occur during the given fiscal year, and in the event that we have not sufficiently covered our cotton needs, we will not be protected against price increases.

           We operate as an international business and our financial results are exposed to the effects of changes in financial markets and economic conditions.

           We enter into forward contracts as we deem appropriate to hedge some or all of our anticipated net currency exposures. Gains and losses resulting from designated hedge contracts are recognized in income in the same period that the hedged exposure is recognized.

           In fiscal 2003, approximately 98% of our products were sewn in Mexico, Central America and the Caribbean Basin. Some of the countries where we sew our products have experienced political, social and economic instability in the past. We cannot predict the future political, social or economic stability of these countries or the impact on our business of changes, if any, in the political, social or economic conditions in these countries.

Our Industry is Subject to Fluctuations in Sales Demand

 

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If, after producing and storing inventory in anticipation of deliveries, demand is significantly less than expected, we may have to hold inventory for extended periods of time, or sell excess inventory at reduced prices. In either case, our profits would be reduced. Excess inventory could also result in slower production, lower plant and equipment utilization and lower fixed operating cost absorption, all of which would have a negative impact on our business. See “Item 4 — Narrative Description of the Business — Business Overview — Seasonality”.

Our Operations are Subject to Environmental Regulation

(3)	Total debt consists of total bank debt, current liabilities, other loans payable, secured and unsecured long-term debt, including capitalized leases and future income taxes.

(4)	Total long-term liabilities consist of long-term debt and future income taxes.

           B — Quarterly Information

           The Class A Subordinate Voting Shares are listed on the New York Stock Exchange (the “NYSE”) and the Toronto Stock Exchange (the “TSX”), under the symbol “GIL” on the NYSE and “GIL.A” on the TSX. The Class A Subordinate Voting Shares, which were issued at an offering price of $5.145 (US$3.50), began trading on the TSX, the Montreal Exchange (the “ME”) and the American Stock Exchange (“AMEX”) on June 17, 1998. Prior to that date, there was no public market for the Class A Subordinate Voting Shares. On September 1, 1999, the Class A Subordinate Voting Shares commenced trading on the NYSE. We delisted such shares from the AMEX on August 31, 1999. As a result of a restructuring of Canada’s stock exchanges which took effect on December 7, 1999, we are no longer listed on the ME.

           Listed below is certain information about the current directors of Gildan. The directors have served in their respective capacities since their election and/or appointment and will continue to serve until the next annual meeting of shareholders or until a successor is duly elected.

Name and Municipality of Residence	Age	Principal Occupation	Director Since
Robert M. Baylis (1)(2)(3)(4)
Darien, Connecticut, United States	65	Corporate Director	February 1999
Glenn J. Chamandy
Montreal, Québec, Canada	42	President, Co-Chief Executive Officer and Chief Operating Officer of the Corporation	May 1984
H. Greg Chamandy
Montreal, Québec, Canada	45	Chairman of the Board, Chairman of the Executive Committee and Co-Chief Executive Officer of the Corporation	May 1984
William H. Houston, III (2)(3)
Memphis, Tennessee, United States	69	President, World Trade Link (an international business consulting firm)	November 1997
Pierre Robitaille (1)(2)
St-Lambert, Québec, Canada	60	Business Advisor and Corporate Director	February 2003
Gerald H.B. Ross (1)(3)
Montreal, Québec, Canada	59	Dean, Faculty of Management, McGill University	February 2003
Richard P. Strubel (1)(3)
Chicago, Illinois, United States	64	President, Chief Operating Officer and Director, UNext (a provider of advanced education over the Internet)	February 1999
Edwin B. Tisch
Montreal, Québec, Canada	65	Executive Vice-President, Manufacturing of the Corporation	April 1996

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           Gregg Thomassin was appointed to the position of Executive Vice-President, Corporate Controller and Chief Information Officer of the Corporation in November 2003. He joined Gildan as Corporate Controller in February 1999. He previously held the position of Vice-President, Finance and Administration with various manufacturing companies. Mr. Thomassin is a Canadian Chartered Accountant.

           Garry Bell has been with Gildan since 1996 when he joined as Sales Manager. He became Vice-President, Sales and Marketing in December 1998. In October 2002, he was appointed General Manager, Canadian Apparel Division while maintaining his responsibility as Vice-President, Marketing. Mr. Bell worked for the Hanes Canada division of Sara Lee Corporation for the four years prior to joining Gildan in the capacity of Eastern Canada Account Executive.

           Ghyslain Bouchard joined Gildan in August 2001 as Vice-President, Spinning and Knitting Operations. Prior to joining Gildan, Mr. Bouchard was a professor of textile manufacturing at the CEGEP of St. Hyacinthe, and a consultant in textile manufacturing.

           Benito Masi has been involved in apparel manufacturing in North America for the past 25 years. He joined Gildan in 1986, where he held various positions until February 2001, when he was appointed Vice-President, Apparel Manufacturing. In September 2003, his title was changed to Vice-President, Corporate Apparel Operations.

           Jose Maria Tainta Villanueva joined Gildan in September 2000 and became Director of Apparel, Gildan Activewear Mexico in November 2002. Prior to joining Gildan, Mr. Tainta Villanueva was Operations Manager and Chief Accountant for Banco Central Hispanoamericano since 1992.

           Officers and directors of the Corporation as a group own 111,950 Class A Subordinate Voting Shares, which represents 0.48% of the voting rights attached to all Class A Subordinate Voting Shares, and 6,094,000 Class B Multiple Voting Shares, which represents 100% of the Class B Multiple Voting Shares.

           Our authorized share capital currently consists of an unlimited number of First Preferred Shares, issuable in series, an unlimited number of Second Preferred Shares, issuable in series (collectively, the “Preferred Shares”), an unlimited number of Class A Subordinate Voting Shares and an unlimited number of Class B Multiple Voting Shares, all of which are without par value. As of the date of this annual information form, only Class A Subordinate Voting Shares and Class B Multiple Voting Shares are issued and outstanding. The following is a summary of the material terms of our authorized share capital as set forth in the Articles of the Corporation. This summary is qualified in its entirety by reference to, and is subject to, the detailed provisions of the Articles, as amended, and the Trust Agreement.

           On February 3, 2004, Gildan announced that H. Greg Chamandy and Glenn J. Chamandy, who control 100% of the voting rights attached to the Class B Multiple Voting Shares through their respective holding companies, had indicated to the Board of Directors their intention to convert their Class B Multiple Voting Shares into Class A Subordinate Voting Shares on a 1:1 basis.

Issuance in Series

Second Preferred Shares

           The Second Preferred Shares are issuable in series and the Board of Directors has the right, from time to time, to fix the number of, and to determine the designation, rights, privileges, restrictions and conditions attaching to, the Second Preferred Shares of each series subject to the limitations, if any, set out in the Articles of the Corporation.

           The Second Preferred Shares are subject and subordinate to the rights, privileges, restrictions and conditions attaching to the First Preferred Shares. The Second Preferred Shares rank senior to the Equity Shares with respect to payment of dividends, return of capital and distribution of assets in the event of the liquidation, dissolution or winding-up of Gildan. The Second Preferred Shares in each series rank equally with the Second Preferred Shares of any other series.

           Unless the Articles otherwise provide with respect to any series of the Second Preferred Shares, the holders of the Second Preferred Shares are not entitled to receive any notice of or attend any meeting of the shareholders of Gildan and are not entitled to vote at any such meeting.

           Except as described herein, the Class A Subordinate Voting Shares and the Class B Multiple Voting Shares are equal in all respects and will be treated as if they were shares of one class only.

           The Equity Shares rank junior to the First Preferred Shares and the Second Preferred Shares with respect to the payment of dividends, return of capital and distribution of assets in the event of the liquidation, dissolution or winding-up of Gildan.

           The holders of outstanding Equity Shares are entitled to receive dividends on a share-for-share basis out of assets legally available therefor at such times and in such amounts as the Board of Directors may from time to time determine without preference or distinction among or between the Class A Subordinate Voting Shares and the Class B Multiple Voting Shares.

           Except as set forth in the third succeeding paragraph, the Class A Subordinate Voting Shares carry one vote per share and the Class B Multiple Voting Shares carry eight votes per share. There is no cumulative voting. The holders of Class A Subordinate Voting Shares and the holders of Class B Multiple Voting Shares are entitled to receive notice of any meeting of our shareholders and to attend and vote at such meeting as a single class on all matters to be voted on by our shareholders, except for the election and the removal of directors as described below and as otherwise required by applicable law.

 

Conversion

           No stock dividend may be declared and paid by Gildan on the Class B Multiple Voting Shares or the Class A Subordinate Voting Shares unless a stock dividend is declared and paid by Gildan on a pro rata basis on the Equity Shares. No Class B Multiple Voting Shares may be issued in connection with a transaction unless the issuance is made by way of a distribution to all holders of Class A Subordinate Voting Shares of Gildan on a pro rata basis. In case of a stock split, consolidation or stock dividend, all share calculations provided for herein will be adjusted accordingly.

           Gildan may not issue Class B Multiple Voting Shares without the prior approval of the holders of the Class A Subordinate Voting Shares. Approval must be given by a special resolution of the holders of the Class A Subordinate Voting Shares at a meeting of shareholders. However, approval is not required in connection with a subdivision or a stock dividend made on a pro rata basis as between the Class A Subordinate Voting Shares and the Class B Multiple Voting Shares as set forth in the paragraph above and as permitted under the Articles of the Corporation.

           The Equity Shares are not redeemable. Upon the liquidation, dissolution or winding-up of Gildan, the holders of Class B Multiple Voting Shares and Class A Subordinate Voting Shares are entitled to participate equally, share-for-share, in the remaining property and assets of Gildan available for distribution to the holders of Equity Shares.

           On December 1, 2000, the Corporation purchased the facility containing its executive offices and knitting operations in Ville Saint-Laurent (which now forms part of Montreal) from Harco at fair market value, namely $6.8 million, based on valuations provided to the independent members of the Board. The purchase price was satisfied by the assumption of the mortgage on the building, as well as the cancellation of indebtedness of Harco towards the Corporation. Prior to December 1, 2000, the Corporation leased that facility from Harco, and paid rent of approximately $123,656 in fiscal 2001 to Harco pursuant to this lease. The Corporation believes that the terms of this lease were no less favorable to the Corporation than could have been obtained if the lease had been entered into with an unaffiliated third party.

           The Principal Shareholders (as holders of Class B Multiple Voting Shares) and the Fund, the H. Greg Chamandy Family Trust, the Glenn J. Chamandy Family Trust, the Shirley Chamandy Family Trust and the Tisch Family Trust (as holders of Class A Subordinate Voting Shares) (collectively, the “Holders”) are parties to a registration rights agreement with Gildan pursuant to which they each have the right, subject to certain conditions, to require us to register the Class A Subordinate Voting Shares or the Class B Multiple Voting Shares (upon their conversion to Class A Subordinate Voting Shares), as the case may be, held by them under the United States Securities Act of 1933, as amended (the “Securities Act”). Pursuant to the registration rights agreement, the Holders are granted an unlimited number of demand and piggy-back registration rights, except that no demand registration may be effected within one year after any other demand registration. We have agreed to pay all expenses incurred in connection with all piggy-back registrations and with the first five demand registrations, and will share expenses ratably with the Holders in connection with any additional demand registrations. The registration rights agreement provides for indemnities between us and the Holders for certain liabilities arising under the Securities Act.

           There are currently no laws, decrees or regulations in Canada imposing restrictions on the import or export of capital or that affect remittances of dividends on our Class A Subordinate Voting Shares.

           The Investment Act requires a non-Canadian making an investment to acquire control, directly or indirectly, of a Canadian business, the gross assets of which exceed certain defined threshold levels, to file an application for review with the Director of Investments, the federal government official responsible for the administration of the Investment Act. As a result of the Canada-United States Free Trade Agreement, the Investment Act was amended to provide distinct threshold levels for citizens of the United States who acquire control of a Canadian business. With the implementation of NAFTA, Mexico was accorded the same treatment as the United States and, in 1994, in implementing the agreements establishing the World Trade Organization, Canada extended the distinct threshold levels to investors from all members of the World Trade Organization.

           A foreign investment will be reviewable under the Investment Act only if the value of the assets of the Canadian business being acquired is $5 million or more in the case of a “direct” acquisition (or where the Canadian assets acquired constitute more than 50% of the value of all entities acquired) or $50 million or more in the case of an “indirect” acquisition. When an investment is subject to review, it can only be implemented if found to be of net benefit to Canada.

           These increased thresholds do not apply to acquisitions of Canadian businesses engaged in certain sensitive areas such as uranium production, financial services, transportation services or cultural businesses (such as radio, television, cable and satellite services, and the publication, distribution or sale of books, newspapers, periodicals, films, music recordings or videos). Foreign investments in those sensitive areas are all subject to review and approval by Investment Canada under the Investment Act, regardless of the size of the investment.

           D — Taxation

           The following discussion is intended to be a general description of the Canadian federal income tax considerations material to an investment in the Class A Subordinate Voting Shares and is not intended to be, nor should it be construed to be, legal or tax advice to any prospective investors, and no opinion or representation with respect to the income tax consequences to any such prospective investor is made. The discussion does not deal with all possible tax consequences relating to an investment in the Class A Subordinate Voting Shares and does not purport to deal with the tax consequences applicable to all categories of investors, some of which (such as dealers in securities, insurance companies and tax-exempt entities) may be subject to special rules. In particular, the discussion does not address the tax consequences under state, provincial, local and other national (e.g., non-United States, non-Canadian) tax laws. Accordingly, a holder of Class A Subordinate Voting Shares should consult its own tax advisors regarding the particular tax consequences to it of the holding of the Class A Subordinate Voting Shares.

 

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           Dividends paid or credited (or deemed to be paid or credited) by Gildan to a U.S. Holder that beneficially owns such dividends generally would be subject to Canadian withholding tax at the rate of (i) 15% of the gross amount of such dividends, or (ii) where the U.S. Holder is a company that owns at least 10% of our voting stock, 5% of the gross amount of such dividends. Such withholding tax would be withheld at source by Gildan on any such dividends paid or credited (or deemed to be paid or credited) to a U.S. Holder. We would assume responsibility to remit the amount withheld at source to the Canadian tax authorities.

Taxation of Sale or Other Disposition

Other Canadian Taxes

 

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           E — Other Sources of Additional Information

           In addition, the following documents may be obtained, upon request, from the Secretary of Gildan:

(a)	when the securities of Gildan are in the course of a distribution under a preliminary short form prospectus or a short form prospectus,
	(i)	one copy of the Annual Information Form of Gildan, together with one copy of any document, or the pertinent pages of any document, incorporated by reference in the Annual Information Form,
	(ii)	one copy of the comparative financial statements of Gildan for its most recently completed financial year for which financial statements have been filed together with the accompanying report of the auditor and one copy of the most recent interim financial statements of Gildan that have been filed, if any, for any period after the end of its most recently completed financial year,
	(iii)	one copy of Gildan’s management proxy circular in respect of its most recent annual meeting of shareholders that involved the election of directors, and
	(iv)	one copy of any other documents that are incorporated by reference into the preliminary short form prospectus or the short form prospectus and are not required to be provided under clauses (i), (ii) or (iii), or
(b)	at any other time, one copy of any documents referred to in clauses (a)(i), (ii) and (iii).

           We reserve the right to request a fee for the transmission of the information set forth above, except if the request is made by a shareholder of Gildan or during the course of a distribution of our securities by means of a prospectus. In such cases, the transmission of information will be made free of charge.

           725 Montée de Liesse
           Montreal, Québec
           H4T 1P5

 

 

33

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A.      Undertaking

          Gildan Activewear Inc. (the “Registrant”) undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the staff of the Securities and Exchange Commission (“SEC”), and to furnish promptly, when requested to do so by the SEC staff, information relating to the securities in relation to which the obligation to file an annual report on Form 40-F arises or transactions in said securities.

B.      Consent to Service of Process

          The Registrant has previously filed with the SEC a written irrevocable consent and power of attorney on Form F-X in connection with the Class A Subordinate Voting Shares.

C.      Disclosure Controls and Procedures

          The Registrant’s Chairman of the Board and Co-Chief Executive Officer and the Registrant’s Executive Vice-President, Finance and Chief Financial Officer, after evaluating the effectiveness of the Registrant’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15d-14(c)) as of October 5, 2003, have concluded that, as of such date, the Registrant disclosure controls and procedures were adequate and effective to ensure that material information relating to the Registrant and its consolidated subsidiaries would be made known to them by others within those entities.

D.      Changes in Internal Control over Financial Reporting

          There were no significant changes in the Registrant’s internal controls over financial reporting or in other factors that could significantly affect the Registrant’s internal controls over financial reporting subsequent to the date of their evaluation, nor were there any significant deficiencies or material weaknesses in the Registrant’s internal controls. As a result, no corrective actions were required or undertaken.

E.      Audit Committee Financial Experts

          The Registrant’s board of directors has determined that it has at least two audit committee financial experts serving on its audit committee. Mr. Robert M. Baylis and Mr.  Pierre Robitaille have been determined to be such audit committee financial experts and are independent, as that term is defined by the New York Stock Exchange’s listing standards applicable to the Registrant. The SEC has indicated that the designation of Mr. Baylis and Mr.  Robitaille as audit committee financial experts does not make Mr. Baylis and Mr. Robitaille “experts” for any purpose, impose any duties, obligations or liability on Mr. Baylis and Mr. Robitaille that are greater than those imposed on members of the audit committee and board of directors who do not carry this designation or affect the duties, obligations or liability of any other member of the audit committee.

F.      Code of Ethics

          The Registrant has adopted a Code of Ethics and Business Conduct (the “Code of Conduct”) that applies to all employees and officers, including its principal executive officer, principal financial officer and principal accounting officer. The Code of Conduct is available at the Registrant’s Internet website, www.gildan.com.

          In addition to retaining KPMG LLP (“KPMG”) to report upon the annual consolidated financial statements of the Registrant, the Registrant retained KPMG to provide various audit-related and non-audit services in fiscal 2003. The aggregate fees billed for professional services by KPMG for each of the last two fiscal years were as follows:

Audit Fees — The aggregate audit fees billed by KPMG for professional services rendered for the annual audit of the Registrant’s consolidated financial statements, the quarterly reviews of the financial statements and services provided in connection with statutory and regulatory filings or engagements were $557,400 for fiscal year ended October 5, 2003 and $490,114 for fiscal year ended September 29, 2002.

Audit-Related Fees — The aggregate audit-related fees billed by KPMG were $104,856 for fiscal 2003 and $74,581 for fiscal 2002. These services consisted of: an audit of the United Kingdom subsidiary, miscellaneous assurance services as well as technical accounting consultations.

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Tax Fees — The aggregate tax fees billed by KPMG were $353,269 for fiscal 2003 and $184,280 for 2002. These services consisted of: tax compliance including the review of tax returns, assistance regarding income, capital and sales tax audits, the preparation of employee tax returns under the Registrant’s expatriate tax service program and the preparation of annual transfer pricing studies and tax planning and advisory services relating to domestic and international taxation (i.e., income tax, capital tax, Goods and Services Tax and Value added Tax, and customs and duties).

All Other Fees — The aggregate fees billed by KPMG for professional services rendered for products and services associated with a foreign currency hedging study were $88,000 for fiscal 2003 . There were no “Other Fees” in fiscal 2002.

All fees billed to the Registrant by KPMG in fiscal 2003 were pre-approved by the Registrant’s Audit and Finance Committee pursuant to the procedures and policies set forth in the Audit and Finance Committee mandate and pursuant to applicable legislation. The mandate of the Audit and Finance Committee is available at the Registrant's Internet website, www.gildan.com.

See page 30 of Exhibit 2.

               The Registrant has adopted Corporate Governance Guidelines as well as mandates for its Board of directors and each of its three committees which are available at the Registrant’s Internet website, www.gildan.com, and are available in print to any shareholder who requests them.

 

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          Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereto duly authorized.

          DATED: February 20, 2004