SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of: December 2002 Commission File Number: 1-14830
GILDAN ACTIVEWEAR INC.
(Name of Registrant)
725 MONTEE DE LIESSE
VILLE SAINT-LAURENT, QUEBEC
CANADA H4T-1P5
(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F:
Form 20-F Form 40-F X
----- -----
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the SEC
pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
Yes No X
----- -----
If "Yes" is marked, indicate the file number assigned to the registrant in
connection with Rule 12g3-2(b): N/A
Page 1 of 10
[GILDAN ACTIVEWEAR LOGO]
PRESS RELEASE
-------------
Contact: Laurence G. Sellyn, Executive Vice President Finance
and Chief Financial Officer
Tel: (514) 343-8805
Email: lsellyn@gildan.com
Rick Leckner
Maison Brison
Tel : (514) 731-0000
Email : rick@maisonbrison.com
GILDAN ACTIVEWEAR ANNOUNCES 31% GROWTH IN EARNINGS PER SHARE FOR FISCAL 2002,
COMBINED WITH FREE CASH FLOW OF $111 MILLION
- WELL POSITIONED FOR CONTINUING SALES AND EARNINGS GROWTH
DUE TO NEW STRATEGIC MANUFACTURING INVESTMENTS -
MONTREAL, FRIDAY, DECEMBER 6, 2002 - Gildan Activewear Inc. (NYSE: GIL; TSX:
GIL.A) today released its financial results for its fourth quarter and fiscal
year ended September 29, 2002.
FOURTH QUARTER SALES AND EARNINGS
Net earnings for the fourth quarter of fiscal 2002 were $19.6 million or $0.66
per share on a diluted basis, compared with $6.7 million or $0.23 per diluted
share in the fourth quarter of fiscal 2001 before special charges and
adjustments. In the fourth quarter of fiscal 2001, the Company incurred a loss
of $38.8 million or $1.33 per diluted share, after reflecting special charges
and adjustments totaling $45.5 million, or $1.56 per share.
Earnings and earnings per share in the most recent quarter were both records for
the Company for the fourth quarter of any fiscal year. The significant increase
compared with fiscal 2001 was due to continuing growth in sales and higher gross
margins, partially offset by higher selling, general and administrative
expenses.
Page 2 of 10
Sales for the quarter were a fourth quarter record at $159.9 million, up 38.8%
from $115.2 million in the fourth quarter last year. The higher sales reflected
a 26.8% increase in unit shipments, combined with a higher value product-mix
compared with the fourth quarter of fiscal 2001. In the fourth quarter last
year, product mix included a higher proportion of lower-value white T-shirts as
a result of the surge in demand following the events of September 11, 2001.
Also, golf shirts and fleece accounted for a higher proportion of sales in the
fourth quarter of fiscal 2002 compared to the previous year.
According to the S.T.A.R.S. reports from ACNielsen Market Decisions, unit
shipments for the overall industry were slightly down for the fourth quarter of
fiscal 2002, primarily due to the impact in the prior year of September 11, as
well as continuing weak demand for golf shirts due to the downturn in the
corporate promotional market. In spite of the absence of overall industry
growth, unit sales for Gildan were up significantly from the fourth quarter of
last year, due to continuing market share penetration in all product categories.
In T-shirts, the Company further reinforced its No. 1 overall market share
position, with a share of 28.0% according to S.T.A.R.S., compared with 25.8% in
the fourth quarter of fiscal 2001. The Company's share in the golf shirt segment
increased to 15.0%, up from 8.8% in the fourth quarter of the prior year, while
Gildan's share in fleece increased to 11.7%, from 9.7% a year ago.
Gildan's sales in Europe increased by 77% compared with the fourth quarter of
last year, as the Company continued to achieve strong share penetration in this
market.
Gross margins for the fourth quarter were 28.1%, compared with 24.2% in the
fourth quarter last year, before reflecting the impact of the special charges in
the prior year. The increase in gross margins reflected significantly lower raw
material costs compared with a year ago, combined with the impact of favourable
manufacturing efficiencies, increased vertical integration in yarn spinning and
the higher valued product mix. Selling, general and administrative expenses for
the quarter were $15.5 million, up 23.6% from the fourth quarter of fiscal 2001,
before reflecting the special charges in the previous year. The increase was due
to provision for the Company's performance-based incentive plan and higher
variable distribution expenses. As a percentage of sales, selling, general and
administrative expenses declined to 9.7%, compared with 10.5% last year.
FULL YEAR SALES AND EARNINGS
Sales for the full fiscal year in 2002 were a record $600.7 million, up 19.0%
from $504.9 million a year ago. Net earnings were a record $66.5 million, an
increase of 32.2% over net earnings before special charges of $50.3 million in
fiscal 2001. Diluted earnings per share were a record, at $2.26, slightly above
the top end of the Company's guidance range, and up 31.4% from $1.72 per diluted
share last year before special charges. After special charges, net earnings in
fiscal 2001 were $0.8 million, or $0.03 per diluted share. Return on equity for
fiscal 2002 was 29.4%.
Page 3 of 10
CASH FLOW
The Company generated $53.2 million of free cash flow after capital expenditures
in the fourth quarter, due to the cash flow from its operating earnings and
continuing reduction of working capital. For the full 2002 fiscal year, Gildan
generated $111.1 million of free cash flow. Days sales outstanding in trade
accounts receivable at the year-end amounted to 44 days, compared to 92 days in
the fourth quarter of fiscal 2001. At September 29, 2002 inventories amounted to
$113.0 million, down $65.4 million from the prior year end.
Capital expenditures for fiscal 2002 totaled $65.8 million, including $18.0
million in the fourth quarter, as the Company accelerated spending on its
integrated textile manufacturing facility at Rio Nance, Honduras, and on its
yarn spinning facility in Long Sault, Ontario. In addition, in the fourth
quarter the Company completed the purchase of the building and property at which
its newly-acquired Montreal yarn spinning operation is located.
The Company ended the fiscal year with $70.9 million of cash and cash
equivalents. At the year end, the Company's $150 million revolving credit
facility was entirely unutilized and available, and net debt/ total
capitalization was 16%.
H. Greg Chamandy, Chairman and Chief Executive of Gildan Activewear, commented
that "We are pleased to have delivered on all of our key performance targets in
fiscal 2002. We have exceeded our market share and sales growth goals, we have
achieved in excess of 30% growth in earnings per share, we have continued to
lower our cost structure, and we have become a significant free cash flow
generator, while still maintaining a strong growth profile."
OUTLOOK
On November 13, 2002, the Company reiterated its earnings guidance for fiscal
2003, calling for earnings per diluted share in the range of $2.60 - $2.70.
Gildan expects to generate $25 to $35 million of free cash flow during the 2003
fiscal year, after capital expenditures. The Company continues to have an
objective of sustaining long-term average annual growth in earnings per diluted
share of 15 to 20%.
Mr. Chamandy concluded his comments on Gildan's results and outlook by stating
that "We are delighted with the successful execution of the Rio Nance start up
and excited about the impact this facility will have on our overall cost
structure, starting with the 2003 fiscal year. We believe this facility will
have the lowest delivered costs for the U.S. activewear market, against any
global competition. We are equally pleased with the results of our vertical
integration into yarn spinning, which also significantly lowers our cost
structure. These investments position us well for continuing profitable growth
in fiscal 2003 and beyond."
Page 4 of 10
"We have ended the year in a very strong capital position, and expect to
continue to generate free cash flow in fiscal 2003. During the year, one of our
key priorities will be to determine the optimal utilization of our surplus cash
balances. We believe we have significant growth opportunities available based on
capitalizing upon our core competency as a global low cost manufacturer of basic
circular knit apparel."
OTHER MATTERS
The Company announced that it intended, within the next week, to file for
approval by the Toronto Stock Exchange to make a normal course issue bid in
order to repurchase a maximum of 200,000 Class A Subordinate voting shares,
representing less than 1% of the total Class A shares issued and outstanding at
November 30, 2002. The repurchase program will be applicable for a period of one
year from the date of approval by the TSX, unless terminated earlier by the
Company.
As of November 30, 2002 there were 22,827,772 Class A subordinate shares and
6,094,000 Class B multiple voting shares issued and outstanding, along with
1,428,954 options outstanding.
The Company also indicated that Mr. Chamandy, and Laurence Sellyn, its Executive
Vice-President and Chief Financial Officer, would be certifying its year-end
financial statements when filed with U.S. regulatory authorities in early 2003.
PROFILE
Gildan Activewear is a vertically-integrated manufacturer and marketer of
premium quality branded basic activewear for sale principally in the wholesale
imprinted activewear segment of the Canadian, U.S., European and other
international apparel markets. The Company manufactures and sells premium
quality 100% cotton T-shirts, 50% cotton/50% polyester T-shirts, placket collar
golf shirts and premium quality fleece in a variety of weights, sizes, colours
and styles. The company sells its products as blanks, which are ultimately
decorated with designs and logos for sale to consumers.
(UNLESS OTHERWISE INDICATED, ALL AMOUNTS ARE EXPRESSED IN CANADIAN DOLLARS.)
CERTAIN STATEMENTS INCLUDED IN THIS PRESS RELEASE MAY CONSTITUTE
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE U.S. PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND
UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH COULD CAUSE ACTUAL RESULTS
TO DIFFER MATERIALLY FROM FUTURE RESULTS EXPRESSED OR IMPLIED BY SUCH
FORWARD-LOOKING STATEMENTS. WE REFER YOU TO THE COMPANY'S FILINGS WITH THE U.S.
SECURITIES AND EXCHANGE COMMISSION AND CANADIAN SECURITIES REGULATORY
AUTHORITIES FOR A DISCUSSION OF THE VARIOUS FACTORS THAT MAY AFFECT THE
COMPANY'S FUTURE RESULTS.
- 30 -
Page 5 of 10
INFORMATION FOR SHAREHOLDERS:
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 dialing
(888) 740-8770. The conference call can also be accessed via live webcast at
www.newswire.ca or www.q1234.com.
If you are unable to call in at this time, you may access a tape recording of
the meeting by calling 1-800-558-5253 and entering the passcode 21030398 on your
phone. This tape recording will be available on Friday, December 6 as of noon
until 11:00 PM on Friday, December 13, 2002.
Page 6 of 10
GILDAN ACTIVEWEAR INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands of Canadian dollars, except per share data)
THREE MONTHS ENDED YEAR ENDED
------------------------------------ ------------------------------------
September 29, September 30, (1) September 29, September 30, (1)
2002 2001 2002 2001
(unaudited) (unaudited) (audited) (audited)
------------------------------------ ------------------------------------
SALES $159,921 $115,208 $600,660 $504,867
Cost of sales 115,011 119,308 431,996 398,567
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GROSS MARGIN 44,910 (4,100) 168,664 106,300
Selling, general and administrative expenses 15,506 31,733 63,926 76,074
------------------------------------------------------------------------------
EARNINGS BEFORE INTEREST, INCOME TAXES,
DEPRECIATION AND AMORTIZATION 29,404 (35,833) 104,738 30,226
Depreciation and amortization 4,896 4,243 17,592 16,209
Interest expense 2,964 3,698 13,342 13,628
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EARNINGS (LOSS) BEFORE INCOME TAXES 21,544 (43,774) 73,804 389
Income taxes 1,982 (4,939) 7,312 (427)
------------------------------------------------------------------------------
NET EARNINGS (LOSS) $ 19,562 $(38,835) $ 66,492 $ 816
==============================================================================
BASIC EPS
Canadian $ $ 0.68 $ (1.38) $ 2.33 $ 0.03
US $ (2) $ 0.44 $ (0.89) $ 1.49 $ 0.02
DILUTED EPS
Canadian $ $ 0.66 $ (1.33) $ 2.26 $ 0.03
US $ (2) $ 0.43 $ (0.87) $ 1.45 $ 0.02
(1) Net earnings (loss) include special charges and other adjustments amounting
to $45.5 million on an after tax basis for the fourth quarter of 2001 and
$49.5 million on an after tax basis for the year ended September 30, 2001.
Supplementary measures of earnings per share do not have any standardized
meaning prescribed by generally accepted accounting principles and are
therefore unlikely to be comparable to similar measures presented by other
companies. The purpose of presenting a supplementary measure of earnings per
share is to show the earnings per share as adjusted for the impact of the
"special charges and other adjustments" on an after-tax basis.
THREE MONTHS ENDED YEAR ENDED
------------------------------------ ------------------------------------
September 29, September 30, September 29, September 30,
2002 2001 2002 2001
------------------------------------ ------------------------------------
BASIC EPS:
Canadian $ $ 0.68 $ 0.24 $ 2.33 $ 1.79
US $ $ 0.44 $ 0.16 $ 1.49 $ 1.19
DILUTED EPS:
Canadian $ $ 0.66 $ 0.23 $ 2.26 $ 1.72
US $ $ 0.43 $ 0.15 $ 1.45 $ 1.15
(2) The U.S. dollar earnings per share are based on the Canadian results on a
Canadian GAAP basis converted at the average exchange rates for the
respective periods.
(3) Certain prior period figures have been reclassified to conform with the
basis of presentation adopted in the current period.
Page 7 of 10
GILDAN ACTIVEWEAR INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of Canadian dollars)
THREE MONTHS ENDED YEAR ENDED
------------------------------------ ------------------------------------
September 29, September 30, September 29, September 30,
2002 2001 2002 2001
(unaudited) (unaudited) (audited) (audited)
------------------------------------ ------------------------------------
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD $ 24,580 $ - $ - $ 33,492
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) 19,562 (38,835) 66,492 816
Adjustments for:
Depreciation and amortization 4,896 4,243 17,592 16,209
Future income taxes 3,427 632 5,013 (268)
Other 3,374 (1,007) 4,542 (565)
------------------------------------------------------------------------------
31,259 (34,967) 93,639 16,192
Net changes in non-cash working capital balances:
Accounts receivable 18,905 39,072 38,170 (13,130)
Inventories 25,111 14,263 65,380 (56,636)
Prepaid expenses and deposits 1,679 1,278 599 (225)
Accounts payable and accrued liabilities (2,983) 12,768 (21,026) 39,545
Income taxes payable (1,254) (5,086) 1,488 1,755
------------------------------------------------------------------------------
72,717 27,328 178,250 (12,499)
CASH FLOWS FROM FINANCING ACTIVITIES:
(Decrease) increase in revolving bank loan - (17,915) (35,083) 35,083
Repayment of capital leases (2,358) (1,211) (5,120) (5,164)
Increase in unsecured debt 459 - 2,974 -
Repayment of other long-term debt (5,579) (503) (6,434) (2,210)
Proceeds from the issuance of shares 1,481 - 4,564 987
Increase in deferred charges (882) (677) (1,086) (406)
------------------------------------------------------------------------------
(6,879) (20,306) (40,185) 28,290
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets, net of disposals (17,996) (7,246) (65,765) (49,150)
(Increase) decrease in other assets (1,517) 224 (1,395) (133)
------------------------------------------------------------------------------
(19,513) (7,022) (67,160) (49,283)
------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 70,905 $ - $ 70,905 $ -
==============================================================================
Page 8 of 10
GILDAN ACTIVEWEAR INC.
CONSOLIDATED BALANCE SHEETS
(in thousands of Canadian dollars)
September 29, 2002 September 30, 2001
----------------------------------------
(audited) (audited)
CURRENT ASSETS:
Cash and cash equivalents $ 70,905 $ -
Accounts receivable 87,746 125,525
Inventories 112,971 178,351
Prepaid expenses and deposits 3,657 4,265
Future income taxes 5,028 6,915
----------------------------------------
280,307 315,056
FIXED ASSETS 209,247 153,572
FUTURE INCOME TAXES - 1,081
OTHER ASSETS 7,085 6,942
----------------------------------------
TOTAL ASSETS $496,639 $476,651
========================================
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 82,168 $ 98,198
Income taxes payable 3,063 2,312
Current portion of long-term debt 6,249 6,416
----------------------------------------
91,480 106,926
LONG-TERM DEBT:
Revolving bank loan - 35,083
U.S. senior notes 110,271 106,173
Capital leases 2,109 6,139
Other secured debt 34 5,530
Unsecured debt 2,452 300
----------------------------------------
114,866 153,225
FUTURE INCOME TAXES 20,385 17,646
SHAREHOLDERS' EQUITY:
Share capital 104,925 100,362
Contributed surplus 323 323
Retained earnings 164,660 98,169
----------------------------------------
269,908 198,854
----------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $496,639 $476,651
========================================
Page 9 of 10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GILDAN ACTIVEWEAR INC.
Date: December 6, 2002 By: /s/ Francois D. Ramsay
---------------------------------------
Name: Francois D. Ramsay
Title: Vice-President, General Counsel
and Corporate Secretary
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