Annual Report by a Canadian Issuer — Form 40-F — SEA’34 Filing Table of Contents
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2: EX-99.1 Miscellaneous Exhibit HTML 531K
3: EX-99.2 Miscellaneous Exhibit HTML 1.37M
4: EX-99.3 Miscellaneous Exhibit HTML 257K
5: EX-99.4 Miscellaneous Exhibit HTML 39K
6: EX-99.5 Miscellaneous Exhibit HTML 51K
7: EX-99.6 Miscellaneous Exhibit HTML 40K
14: R1 Document and Entity Information HTML 73K
15: R2 Consolidated Statements of Financial Position HTML 114K
16: R3 Consolidated Statements of Earnings and HTML 88K
Comprehensive Income
17: R4 Consolidated Statements of Changes in Equity HTML 92K
18: R5 Consolidated Statements of Cash Flows HTML 105K
19: R6 Reporting Entity HTML 39K
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34: R21 Supplementary Information Relating to the Nature HTML 59K
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43: R30 Disaggregation of Revenue HTML 51K
44: R31 Entity-Wide Disclosures HTML 54K
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49: R36 Inventories (Tables) HTML 44K
50: R37 Property, Plant and Equipment (Tables) HTML 140K
51: R38 Right-Of-Use Assets and Lease Obligations (Tables) HTML 56K
52: R39 Intangible Assets and Goodwill Intangible Assets HTML 158K
and Goodwill (Tables)
53: R40 Long-Term Debt (Tables) HTML 57K
54: R41 Other Non-Current Liabilities (Tables) HTML 67K
55: R42 Financial Instruments (Tables) HTML 270K
56: R43 Share-Based Compensation (Tables) HTML 135K
57: R44 Supplementary Information Relating to the Nature HTML 53K
of Expenses (Tables)
58: R45 Restructuring and Acquisition-Related Costs HTML 46K
(Tables)
59: R46 Income Taxes (Tables) HTML 102K
60: R47 Earnings Per Share (Tables) HTML 51K
61: R48 Depreciation and Amortization (Tables) HTML 237K
62: R49 Supplemental Cash Flow Disclosure (Tables) HTML 63K
63: R50 Related Party Transactions (Tables) HTML 48K
64: R51 Disaggregation of Revenue (Tables) HTML 50K
65: R52 Entity-Wide Disclosures Entity-Wide Disclosures HTML 56K
(Tables)
66: R53 Basis of Preparation Basis of Preparation HTML 66K
(Narrative) (Details)
67: R54 Significant Accounting Policies (Ownership HTML 78K
percentage of principal subsidiaries) (Details)
68: R55 Significant Accounting Policies (Property, plant HTML 49K
and equipment useful lives) (Details)
69: R56 Significant Accounting Policies (Intangible assets HTML 54K
useful lives) (Details)
70: R57 Significant Accounting Policies (Cotton and HTML 38K
cotton-based yarn procurements) (Details)
71: R58 Significant Accounting Policies Signigicant HTML 41K
Accounting Policies (Leases) (Details)
72: R59 Significant Accounting Policies Significant HTML 48K
Accounting Policies (Inventory valuation)
(Details)
73: R60 New Accounting Standards and Interpretations Not HTML 48K
Yet Applied (Details)
74: R61 Trade Accounts Receivable (Details) HTML 42K
75: R62 Trade Accounts Receivable (Narrative) (Details) HTML 44K
76: R63 Trade Accounts Receivable (Allowance for doubtful HTML 46K
accounts) (Details)
77: R64 Inventories (Details) HTML 45K
78: R65 Inventories (Narrative) (Details) HTML 49K
79: R66 Property, Plant and Equipment (Details) HTML 105K
80: R67 Property, Plant and Equipment (Narrative) HTML 51K
(Details)
81: R68 Right-Of-Use Assets and Lease Obligations - Rou HTML 49K
Assets (Details)
82: R69 Right-Of-Use Assets and Lease Obligations HTML 42K
Right-Of-Use Assets and Lease Obligations - Lease
Obligations (Details)
83: R70 Right-Of-Use Assets and Lease Obligations HTML 45K
(Details)
84: R71 Right-Of-Use Assets and Lease Obligations HTML 44K
RIGHT-OF-USE ASSETS AND LEASE OBLIGATIONS -
Maturity (Details)
85: R72 Intangible Assets and Goodwill (Intangible assets) HTML 106K
(Details)
86: R73 Intangible Assets and Goodwill (Narrative) HTML 58K
(Details)
87: R74 Intangible Assets and Goodwill (Goodwill) HTML 46K
(Details)
88: R75 Intangible Assets and Goodwill (Recoverability of HTML 60K
cash-generating units) (Details)
89: R76 Long-Term Debt (Details) HTML 109K
90: R77 Long-Term Debt Long-Term Debt (Narrative) HTML 76K
(Details)
91: R78 Other Non-Current Liabilities (Other non-current HTML 45K
liabilities) (Details)
92: R79 Other Non-Current Liabilities (Statutory severance HTML 50K
and pre-notice obligations) (Details)
93: R80 Other Non-Current Liabilities (Statutory severance HTML 63K
and pre-notice obligations Narrative) (Details)
94: R81 Other Non-Current Liabilities (Defined HTML 39K
contribution plan Narrative) (Details)
95: R82 Other Non-Current Liabilities (Provisions) HTML 45K
(Details)
96: R83 Equity (Share capital Narrative) (Details) HTML 47K
97: R84 Equity (Normal course issuer bid Narrative) HTML 54K
(Details)
98: R85 Financial Instruments (Carrying amounts and fair HTML 83K
values) (Details)
99: R86 Financial Instruments (Additional Information) HTML 57K
(Details)
100: R87 Financial Instruments (Commitments to buy and sell HTML 96K
foreign currencies) (Details)
101: R88 Financial Instruments (Commodity contracts HTML 66K
outstanding) (Details)
102: R89 Financial Instruments (Floating-to-fixed interest HTML 101K
rate swap contracts outstanding) (Details)
103: R90 Financial Instruments (Summary of hedged items) HTML 61K
(Details)
104: R91 Financial Instruments (Financial expenses, net) HTML 54K
(Details)
105: R92 Financial Instruments (Hedging components of other HTML 67K
comprehensive income) (Details)
106: R93 Share-Based Compensation (Stock options and HTML 88K
restricted share units Narrative) (Details)
107: R94 Share-Based Compensation (Outstanding stock HTML 63K
options) (Details)
108: R95 Share-Based Compensation (Black-Scholes option HTML 51K
pricing model for the stock option grants)
(Details)
109: R96 Share-Based Compensation Share-Based Compensation HTML 79K
(Stock options issued and outstanding and
exercisable) (Details)
110: R97 Share-Based Compensation (Outstanding Treasury HTML 55K
RSUs) (Details)
111: R98 Share-Based Compensation (Outstanding Non-Treasury HTML 68K
RSUs) (Details)
112: R99 Share-Based Compensation (Deferred share unit plan HTML 50K
Narrative) (Details)
113: R100 Share-Based Compensation Share-Based Compensation HTML 46K
(Outstanding DSUs) (Details)
114: R101 Share-Based Compensation (Employee share purchase HTML 52K
plans) (Details)
115: R102 Supplementary Information Relating to the Nature HTML 45K
of Expenses (Selling, general and administrative
expenses) (Details)
116: R103 Supplementary Information Relating to the Nature HTML 45K
of Expenses (Employee benefit expenses) (Details)
117: R104 Supplementary Information Relating to the Nature HTML 64K
of Expenses (Government assistance) (Details)
118: R105 Restructuring and Acquisition-Related Costs HTML 73K
(Details)
119: R106 Income Taxes (Reasons for difference and related HTML 60K
tax effects) (Details)
120: R107 Income Taxes (Details of income tax expense) HTML 57K
(Details)
121: R108 Income Taxes (Narrative) (Details) HTML 48K
122: R109 Income Taxes (Significant components of deferred HTML 67K
income tax assets and liabilities) (Details)
123: R110 Income Taxes (Changes to deferred income tax HTML 61K
assets and liabilities) (Details)
124: R111 Earnings Per Share (Details) HTML 53K
125: R112 Earnings Per Share (Narrative) (Details) HTML 42K
126: R113 Depreciation and Amortization (Details) HTML 50K
127: R114 Supplemental Cash Flow Disclosure (Adjustments to HTML 60K
reconcile net earnings to cash flows from
operating activities) (Details)
128: R115 Supplemental Cash Flow Disclosure (Variations in HTML 48K
non-cash transactions) (Details)
129: R116 Related Party Transactions (Compensation expense HTML 45K
recognized for key management personnel) (Details)
130: R117 Related Party Transactions (Details) HTML 44K
131: R118 Commitments, Guarantees and Contingent Liabilities HTML 49K
(Details)
132: R119 Capital Disclosures (Details) HTML 48K
133: R120 Disaggregation of Revenue (Net Sales) (Details) HTML 50K
134: R121 Entity-Wide Disclosures (Property, plant and HTML 52K
equipment, intangible assets, and goodwill by
geographic area) (Details)
135: R122 Entity-Wide Disclosures (Major customers as a HTML 44K
percentage of net sales) (Details)
136: R9999 Uncategorized Items - _IXDS HTML 47K
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(Name, address and telephone number of agent for service in the United States)
Securities registered pursuant to Section 12(b) of the Act:
Title
of each class
Trading Symbol
Name of each exchange on which registered
Common Shares
GIL
New York Stock Exchange
Rights to Purchase Common Shares
GIL
New York Stock Exchange
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:None
For
annual reports, indicate by check mark the information filed with this form:
þAnnual Information FormþAudited Annual Financial Statements
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
Common Shares:
i198,410,119
Indicate
by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.
Yes þ
No o
Indicate by check mark whether
the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
Yes þ
No o
Indicate
by check mark whether the Registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act.
Emerging Growth Company o
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised accounting standards† provided
pursuant to Section 13(a) of the Exchange Act o
†The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicated by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. þ
PRINCIPAL
DOCUMENTS
The following documents have been filed as part of the Annual Report on From 40-F:
A.Management's Discussion and Analysis of Gildan Activewear Inc. (the “Registrant”, “Company” or “us”) for the year ended January 3, 2021.
B. Audited comparative consolidated financial statements of the Registrant as at and for the year ended January 3, 2021.
A.Evaluation of disclosure controls and procedures
Our disclosure controls and procedures (as such term is defined in the Securities Exchange Act of 1934 (the “Exchange Act”), as amended, Rules 13a-15(e) and 15d-15(e)) are designed to ensure that information required to be disclosed in our reports filed with the SEC is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions
regarding required disclosure.
An evaluation was carried out under the supervision of, and with the participation of, our management, including our principal executive officer and our principal financial officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 40-F.
Based on that evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of the end of such period.
B.Management’s annual report on internal control over financial reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.
Our internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Under the supervision and with the participation of our principal executive officer
and our principal financial officer, management conducted an evaluation of the effectiveness of our internal control over financial reporting, as of January 3, 2021, based on the framework set forth inInternal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on that evaluation, our principal executive officer and our principal financial officer concluded that our internal control over financial reporting was effective as of that date.
C.Attestation of the registered public accounting firm.
KPMG LLP (“KPMG”), an independent registered public
accounting firm, that audited and reported on our financial statements attached as Exhibit 99.2 to this Annual Report on Form 40-F, has issued an attestation report on the effectiveness of our internal control over financial reporting as of January 3, 2021. The report is included on page 5 of the financial statements attached as Exhibit 99.2 to this Annual Report on Form 40-F.
D.Changes in internal controls over financial reporting.
There have been no changes that occurred during the period beginning on December 30, 2019 and ended on January 3,
2021 in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
The design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of certain events. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.
AUDIT COMMITTEE FINANCIAL EXPERT
The Registrant’s board of directors has determined that it has at least one (1) audit
committee financial expert serving on its Audit and Finance Committee. Mr. Russell Goodman has been determined to be such audit committee financial expert and is 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. Goodman as an audit committee financial expert does not make Mr. Goodman an “expert” for any purpose, impose any duties, obligations or liability on Mr. Goodman that are greater than those imposed on members of the Audit and Finance 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 and Finance Committee.
CODE OF ETHICS
The
Registrant adopted a Code of Ethics (the “Code of Ethics”) that applies to all employees and officers, including its principal executive officer, principal financial officer and principal accounting officer. The Code of Ethics is available at the Registrant’s website, http://www.gildancorp.com, and is available, without charge, in print to any shareholder who requests it.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
In addition to retaining 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 2020. The aggregate fees billed for professional services by KPMG for each of the last two (2) fiscal years, were as follows:
Audit Fees - The aggregate audit fees billed by KPMG were Cdn $2,578,750 for the fiscal year ended January 3, 2021 and Cdn $2,459,500 for the fiscal year ended December 29, 2019. These services consisted of professional services rendered for the annual audit of the Company’s consolidated financial
statements and the quarterly reviews of the Company’s interim financial statements, and services provided in connection with statutory and regulatory filings or engagements. The fees for the annual audit of the Company’s consolidated financial statements include fees relating to KPMG’s audit of the effectiveness of the Company’s internal control over financial reporting.
Audit-Related Fees - The aggregate audit-related fees billed by KPMG were Cdn $172,940 for fiscal 2020 and Cdn $180,500 for fiscal 2019. These services consisted of consultation concerning financial reporting and accounting standards, and translation services in both years.
Tax
Fees - The aggregate tax fees billed by KPMG were Cdn $695,750 for fiscal 2020 and Cdn $956,500 for fiscal 2019. These services consisted of tax compliance, including assistance with the preparation and review of tax returns, assistance regarding income, capital and sales tax audits, and the preparation of annual transfer pricing studies.
In accordance with the Code of Ethics of the Ordre des comptables professionnels agréés du Québec (CPA) independence standards for auditors, the Sarbanes-Oxley Act of 2002 and rules of the U.S. Securities and Exchange Commission, the Company is restricted from engaging its external auditor to provide certain non-audit services to the
Company and its subsidiaries, including bookkeeping or other services related to the accounting records or financial statements, information technology services, valuation services, actuarial services, internal audit services, corporate finance services, management functions, human resources functions, legal services and expert services unrelated to the audit. The Company does engage its external auditor from time to time to provide certain non-audit services other than the restricted services. All non-audit services must be specifically pre-approved by the Audit and Finance Committee.
In fiscal 2020 and fiscal 2019, the Company’s Audit and Finance Committee
did not approve any audit-related, tax or other services pursuant to paragraph (c) (7) (i) (C) of Rule 2-01 of Regulation S-X.
OFF BALANCE SHEET ARRANGEMENTS
Leases and Commitments
The Registrant has no commitments that are not reflected in its balance sheets except for purchase obligations, as well as minimum royalty payments, which are included in the table of contractual obligations on page 35 of its Management’s Discussion and Analysis (see Exhibit 99.1) under the caption “Off-balance
sheet arrangements and maturity analysis of contractual obligations”, which is incorporated by reference herein. As disclosed in Note 23(b) to the Registrant’s consolidated financial statements (see Exhibit 99.2), the Registrant has issued financial guarantees, irrevocable standby letters of credit and surety bonds amounting to $i54.6
million at January 3, 2021.
TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATION
See page 35 of Exhibit 99.1 under the caption “Off-balance sheet arrangements and maturity analysis of contractual obligations”, which is incorporated by reference herein.
CORPORATE GOVERNANCE PRACTICES
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, http://www1.gildan.com/corporate/IR/corporateGovernance.cfm, and are available in print to any shareholder who requests them. All references in this Annual Report on Form 40-F to websites are inactive textual references, and information contained in or otherwise accessible through the websites mentioned in this Annual Report
on Form 40-F does not form part of this Annual Report on From 40-F.
The Registrant is committed to adopting and adhering to corporate governance practices that either meet or exceed applicable Canadian and U.S. corporate governance standards. As a Canadian reporting issuer with securities listed on the Toronto Stock Exchange (“TSX”) and the New York Stock Exchange (“NYSE”), the Registrant complies with all applicable rules adopted by the Canadian Securities Administrators as well as the rules of the U.S. Securities and Exchange Commission giving effect to the provisions of the U.S. Sarbanes-Oxley Act of 2002.
Although many
of the NYSE Corporate Governance Standards (the “NYSE Standards”) do not apply to the Registrant, it nevertheless voluntarily complies with most of the NYSE Standards. In fact, the Registrant’s corporate governance practices differ significantly in only one respect from those required of U.S. domestic issuers under the NYSE Standards, which is with respect to the approval of equity compensation plans. The NYSE Standards require shareholder approval of all equity compensation plans and material revisions to such plans, regardless of whether the securities to be delivered under such plans are newly issued or purchased on the open market, subject to a few limited exceptions. The rules of the TSX (the “TSX Rules”),
however, do not require shareholder approval in all those circumstances. The Registrant complies with the TSX Rules in this respect, hence, only the creation or material amendments to equity compensation plans that provide for new issuances of securities are subject to shareholder approval. The Registrant has in place plans which did not require the approval of its shareholders under the TSX Rules but which could have required the approval of its shareholders under the NYSE Standards as applicable to U.S. domestic issuers.
IDENTIFICATION OF THE AUDIT COMMITTEE
The Registrant has a separately-designated
standing audit committee, known as the Audit and Finance Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The members of the Registrant's Audit and Finance Committee are Ms. Maryse Bertand, Mr. Marc Caira, Ms. Shirley Cunningham, Mr. Russell Goodman, Mr. Luc Jobin and Mr. Craig A. Leavitt. Please refer to the section of our Annual Information Form entitled "Audit and Finance Committee Disclosure", incorporated by reference herein, for additional information.
UNDERTAKING AND CONSENT TO SERVICE OF PROCESS
A. Undertaking
The
Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the staff of the 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 such 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 (now Common Shares).
SIGNATURES
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.
