Gerber Childrenswear Inc – IPO: ‘424B4’ on 6/11/98

As of:  Thursday, 6/11/98   ·   Accession #:  950123-98-5892   ·   File #:  333-47327

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Initial Public Offering (IPO):  Prospectus   —   Rule 424(b)(4)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B4       Gerber Childrenswear, Inc.                           131    765K 

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                                                Filed Pursuant to Rule 424(B)(4)
                                          Registration No. 333-47327

PROSPECTUS                                                                    

GERBER LOGO 

3,600,000 SHARES

GERBER CHILDRENSWEAR, INC.

COMMON STOCK
------------------------

    All of the 3,600,000 shares of Common Stock, par value $.01 per share (the
"Common Stock"), offered hereby are being sold by Gerber Childrenswear, Inc.    
(the "Company").                                                                
    The Company has two classes of authorized capital stock: (i) Common Stock,
which is being offered hereby, and (ii) Class B Common Stock, which is not being
offered hereby. The two classes of capital stock are substantially identical    
except that the shares of Class B Common Stock are non-voting and are           
convertible at any time at the holder's option into shares of Common Stock on a 
one-for-one basis. See "Description of Capital Stock."                          
  Prior to this offering (the "Offering"), there has been no public market
for the Common Stock. For a discussion relating to the factors considered in    
determining the initial public offering price, see "Underwriting." The Common   
Stock has been approved for listing on the New York Stock Exchange under the    
symbol "GCW," subject to official notice of issuance. No listing application has
been made for the Class B Common Stock.                                         
     SEE "RISK FACTORS" BEGINNING ON PAGE 11 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED 
HEREBY.                                                                         
------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES  
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS   
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES  
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS   
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS   
A CRIMINAL OFFENSE.   

                                                        [Enlarge/Download Table]

===========================================================================================================================
                                             PRICE TO                    UNDERWRITING                  PROCEEDS TO         
                                              PUBLIC                     DISCOUNT(1)                    COMPANY(2)         
---------------------------------------------------------------------------------------------------------------------------
                                                                                                                           
Per Share........................             $13.00                         $.91                         $12.09           
---------------------------------------------------------------------------------------------------------------------------
Total(3).........................          $46,800,000                    $3,276,000                   $43,524,000         
===========================================================================================================================

(1) The Company has agreed to indemnify the several Underwriters against certain
    liabilities, including certain liabilities under the Securities Act of 1933,
as amended. See "Underwriting."                                         
(2) Before deducting expenses payable by the Company estimated at $1,000,000.   
(3) The Company has granted the Underwriters an option to purchase up to an     
   additional 540,000 shares of Common Stock, exercisable within 30 days after
   the date hereof, solely to cover over-allotments, if any. If such option is
exercised in full, the total Price to Public, Underwriting Discount and 
Proceeds to Company will be $53,820,000, $3,767,400 and $50,052,600,    
respectively. See "Underwriting."                                       
------------------------

     The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if issued to and accepted by them, subject to       
approval of certain legal matters by counsel for the Underwriters and certain   
other conditions. It is expected that delivery of the shares of Common Stock    
will be made in New York, New York on or about June 16, 1998.                   

------------------------

MERRILL LYNCH & CO.                                                             
BEAR, STEARNS & CO. INC.    
                                                     LEHMAN BROTHERS

FURMAN SELZ                                 WASSERSTEIN PERELLA SECURITIES, INC.
------------------------
The date of this Prospectus is June 10, 1998. 

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LOGOS AND PICTURES INCLUDE THE FOLLOWING
LOGOS AND PRODUCTS BEARING SUCH LOGOS: GERBER, ALWAYS BABY BY GERBER, CURITY, 
BABY LOONEY TUNES, WILSON, CONVERSE, COCA-COLA AND DUNLOP. ALL OF SUCH
PRODUCTS ARE PRODUCED AND DISTRIBUTED BY THE COMPANY. 

  Certain persons participating in the Offering may engage in transactions
that stabilize, maintain or otherwise affect the price of the Common Stock. Such
transactions may include stabilizing, the purchase of Common Stock to cover     
syndicate short positions and the imposition of penalty bids. For a description 
of these activities, see "Underwriting."                                        

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PROSPECTUS SUMMARY

     The following summary is qualified in its entirety by reference to the more
detailed information and the financial statements (including the Notes thereto) 
appearing elsewhere in this Prospectus. Unless the context otherwise requires,  
the information set forth in this Prospectus gives effect to the transactions   
described herein under "Certain Relationships and Related Transactions -- The   
Reorganization." References in this Prospectus to the "Company" shall, as the   
context requires, refer to Gerber Childrenswear, Inc. (and its predecessor),    
together with its wholly-owned direct and indirect subsidiaries. References in  
this Prospectus to "Gerber" refer to Gerber Childrenswear, Inc. References in   
this Prospectus to "Auburn" shall, as the context requires, collectively refer  
to Auburn Holdings, Inc., Auburn Hosiery Mills, Inc., GCI Spainco., S.L. (a     
Spanish corporation formed on March 24, 1998), Sport Socks Co. (UK) Limited (a  
wholly-owned subsidiary of Auburn Hosiery Mills, Inc.) and Sport Socks Co.      
(Ireland) Limited, each a wholly-owned direct or indirect subsidiary of Gerber  
Childrenswear, Inc. Data included in this Prospectus regarding the size, growth 
and factors affecting the markets for infant and toddler apparel and for        
hosiery, the Company's market position, demographic trends, market share and    
other similar matters are approximations based upon data from The NPD Group,    
Inc. and beliefs of the Company. Such beliefs are based upon industry studies in
which the Company participates, specific studies commissioned by the Company and
management's discussions with customers, collective experience, knowledge of the
industry and attendance at industry conferences. Unless otherwise indicated, the
information set forth in this Prospectus does not give effect to the exercise of
the Underwriters' overallotment option.                                         

THE COMPANY 

Gerber Childrenswear, Inc. is a leading marketer of infant and toddler
apparel and related products, offering products under its flagship brand,       
Gerber, as well as the Baby Looney Tunes and Curity brand names and the Onesies 
trademark. The Gerber name and baby head logo are among the best recognized in  
the infant and toddler industry. The Company believes that Gerber is the leading
provider of infant and toddler apparel and related products, based on dollar    
volume and breadth of product offering, to volume retailers, which constitute   
the fastest growing segment of the retail industry. The Company also distributes
products to mid-tier department stores and specialty retailers. Gerber holds a  
leading market share, based on dollar volume, in its distribution channels in   
the underwear, blanket sleeper and cloth diaper categories. The Company believes
that these leading positions in addition to strong consumer recognition of its  
brands provide opportunities for Gerber to leverage its brands into other       
product categories including sleep 'n play, bed & bath, playwear, bibs, hosiery 
and gift sets where Gerber has a growing presence. See "Business -- Gerber --   
Products."                                                                      

   In addition, in order to build upon the Company's expertise as a low-cost
supplier of branded merchandise to volume retailers, the Company acquired all of
the capital stock of Auburn in December 1997 (the "Recent Acquisition") for     
approximately $40.0 million in cash. Auburn manufactures, markets and sells     
branded sport socks for men, women and children under established brand names   
such as Wilson, Coca-Cola and Converse in the U.S., Europe and other            
international territories and under the Dunlop brand name in Europe. Auburn     
markets to a diversified customer base in the U.S. and Europe, including volume 
retailers, department stores, wholesale clubs and major sporting goods chains.  
As a result of the Recent Acquisition, the Company markets products in over 25  
countries. The Company believes that Auburn's expertise in hosiery will position
it to capitalize on growth opportunities and the Recent Acquisition will provide
opportunities to achieve certain economies of scale and efficiencies in the     
areas of purchasing (e.g. yarn), data processing, and selling, general and      
administrative expenses (e.g. property and casualty insurance). See "Business --
Auburn." In 1997, pro forma for the Recent Acquisition, the Company's net sales 
and income from continuing operations were $270.1 million and $6.6 million,     
respectively.                                                                   

In January 1996, Gerber Childrenswear, Inc. was acquired from Gerber  
Products Company ("GPC") by a group of investors led by Edward Kittredge, the   
Company's Chairman, President and Chief Executive Officer, who assembled        
Gerber's current management team (the "Original Acquisition"). Since the        
Original Acquisition, GPC has not owned any capital stock of the Company, nor   
have GPC and the Company shared                                                 

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common directors, officers or employees. The new management team, under the     
direction of Mr. Kittredge, developed a series of initiatives to strengthen     
Gerber's financial results and improve its operations. To achieve cost          
efficiencies, Gerber consolidated manufacturing facilities, established a       
flexible production strategy including domestic and offshore manufacturing and  
sourcing components, extended the payment terms of certain supply arrangements, 
centralized finished product purchasing across all product categories and       
enhanced its compensation system. See "Business -- The Company."                

    The U.S. retail market for infant and toddler apparel and related products
is estimated at $7.0 billion in 1997, and has grown in dollar volume at a       
compound annual rate of 8.0% since 1991. The Company believes that this classic 
niche market is well-insulated from major changes in fashion trends and is less 
sensitive to general economic cycles due to the consistent level of infant      
births in the U.S., at slightly less than 4 million annually from 1989 to 1997  
(based on U.S. Census data as reported by the National Center for Health        
Statistics), and the high consumption rate for apparel products as infants      
experience frequent size changes. Annual apparel spending per infant increased  
to $329 in 1996 from $250 in 1993 according to U.S. Census data, representing   
compound annual growth of 9.6%. The Company believes the market offers continued
growth prospects due to demographic factors including (i) more women having     
children at an older age and returning to work thereafter, resulting in greater 
disposable income for expenditures on children; and (ii) an increasing number of
grandparents, who represent a key consumer segment for infant and toddler       
products. Within the infant and toddler industry, greater emphasis on value has 
shifted consumer purchases away from traditional department stores and toward   
more value-conscious retail channels, including volume retailers and mid-tier   
department stores. Additionally, the industry is highly fragmented and services 
volume retailers who are interested in limiting their purchases to a smaller    
number of well-capitalized vendors with a broad base of branded products. The   
Company believes that its strong brand names, leading market positions, broad   
product offerings and strong customer relationships with volume retailers and   
mid-tier department stores position it to benefit from industry trends. See     
"Business -- The Company."                                                      

COMPETITIVE STRENGTHS 

The following factors serve as the Company's competitive strengths and
distinguishing characteristics:                                                 

    STRONG BRAND NAME RECOGNITION.  The Company believes that Gerber is one of
the most recognized brands in the infant and toddler apparel industry with a    
reputation for consistently delivering high quality products with innovative    
design features at competitive prices. The Gerber brand name was first          
introduced for baby food in 1928 by GPC, which holds an approximately 65% market
share in the baby food industry. In addition, the Company believes that its     
popular Baby Looney Tunes brand name (used on products at slightly higher price 
points) is recognized for its use of characters, bright colors and higher       
fashion content. The Company also benefits from the strong recognition of its   
Onesies trademark (developed for its line of infant underwear). See             
"Business -- Gerber -- Brands" and "Business -- Licensing and Trademarks."      
Additionally, as a result of the Acquisition, the Company offers sport socks    
under the Wilson, Converse, Coca-Cola and Dunlop brand names licensed by Auburn.
See "Business -- Auburn" and "Business -- Licensing and Trademarks."            

    LEADING MARKET POSITIONS IN CORE PRODUCT CATEGORIES.  The Company believes
it is the leading provider of infant and toddler apparel and related products to
volume retailers, which constitute the fastest growing segment of the retail    
industry. The Company also distributes products to mid-tier department stores   
and specialty retailers. Gerber holds a leading market share in its distribution
channels in the underwear, blanket sleeper and cloth diaper categories.         
Management's strategy is to leverage these competitive advantages to further    
penetrate other product categories, whether acquired or internally developed.   
See "Business -- Competitive Strengths" and "Business -- Gerber."               

HIGH QUALITY, INNOVATIVE PRODUCTS.  The Company believes that it has  
developed a reputation for high quality and innovative products and that this   
has played a critical role in its long-standing strong market positions. In     
1982, Gerber designed and developed Onesies, an innovative one-piece underwear  
garment, which resulted in a new category of infant apparel which Gerber        
believes consumers identify with the Onesies                                    

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trademark. Most recently, Gerber introduced the Swim-per, a swim diaper, and Nap
'N Go, a portable daycare mat. See "Business -- Gerber."                        

LOW-COST SUPPLIER.  The Company actively manages the manufacturing and
sourcing of its products to optimize efficiencies. Of the products manufactured 
and sourced offshore, the majority were through manufacturing operations that   
are owned or dedicated exclusively to the Company's products. See               
"Business -- Gerber -- Manufacturing and Sourcing -- Raw Materials Sourcing." In
addition, the Company believes that its centralized planning, purchasing and    
distribution systems have enhanced its cost competitiveness through reduced     
distribution costs, minimization of product delays and economies of scale.      

    LONG-TERM CUSTOMER RELATIONSHIPS AND EMPHASIS ON CUSTOMER SERVICE.  Gerber
enjoys well-established, long-term relationships with its customers, many of    
which have been maintained at multiple levels from sales to senior management.  
In certain cases, members of Gerber's senior management and sales force have    
maintained relationships with Gerber's customers for over 30 years. Moreover,   
the Company believes its broad product offerings, emphasis on customer service  
and proven reliability provide a competitive advantage as retailers consolidate 
and seek a smaller number of well-capitalized vendors with a broad base of      
branded products. Gerber works closely with its principal customers to assist in
the management of their inventories and has invested in warehousing and         
distribution facilities and information systems development, including an       
electronic data interchange ("EDI") system and a vendor managed inventory       
("VMI") program. See "Business -- Management Information Systems." In addition, 
Gerber's information systems enable it to provide customized merchandising and  
space allocation recommendations and other category management services to its  
retail customers. Gerber currently provides such customized services for        
Wal-Mart Stores, Inc. ("Wal-Mart") in certain product categories. See           
"Business -- Competitive Strengths," "Business -- Gerber" and "Business --      
Customers."                                                                     

  DEVELOPMENT OF MANAGEMENT AND OPERATING INFORMATION SYSTEMS.  Gerber has
made significant investments in the development of management information       
systems ("MIS") and plans to make additional capital expenditures to further    
refine such systems. Gerber believes that it will continue to benefit from these
systems through its ability to effectively manage inventory, improve sales and  
reduce operating costs. Gerber currently serves all major volume retailers      
through its EDI system, which allows customers to send orders to Gerber more    
quickly and efficiently. See "Management's Discussion and Analysis of Financial 
Condition and Results of Operations -- Liquidity and Capital Resources."        

   EXPERIENCED MANAGEMENT TEAM WITH A SIGNIFICANT STAKE IN THE COMPANY.  The
Company's Chairman, President and Chief Executive Officer, Edward Kittredge, has
had over 35 years of diverse experience in the textile and apparel industry and 
the Company's top five senior managers average more than 25 years of experience 
in the apparel industry. The sales and merchandising team has been strengthened 
with the recent additions of Robert P. Robertson as Senior Vice President of    
Sales and Marketing and Mary-beth Boughton as Vice President of Merchandising   
(focused on mid-tier department stores). After giving effect to the             
Reorganization and the Offering, management will own approximately 12.9% of the 
total outstanding capital stock of the Company on a diluted basis (including the
shares of Class B Common Stock issuable upon the exercise of the warrant). See  
"Management."                                                                   

BUSINESS STRATEGY 

  The key elements of the Company's business strategy to remain a low-cost
supplier of high quality, branded products to volume retailers include:         

ENHANCE OFFERING OF HIGH QUALITY, INNOVATIVE PRODUCTS.  The Company's 
strategy is to leverage the Gerber, Baby Looney Tunes and Curity brands into    
additional products, including product segments in which the Company is         
under-represented. For example, the Company is under-represented in the         
approximately $1.8 billion playwear market and in the approximately $600 million
fleece/outerwear market, in each case based on retail sales. In order to grow   
its market share in these product lines, Gerber recently enhanced its line of   
Baby Looney Tunes playwear and introduced a new line of Gerber fleecewear. The  
Company believes that these categories present significant growth opportunities.

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EXPAND INTO NEW AND STRENGTHEN EXISTING DISTRIBUTION CHANNELS.  The   
Company's plan is to continue to leverage its strong brand names to expand into 
new distribution channels in the U.S. and abroad. Gerber recently targeted the  
mid-tier department store channel with product lines such as Always Baby by     
Gerber. Gerber's strategy is to emphasize marketing efforts to increase product 
breadth in existing distribution channels in which it believes some of its      
product lines are under-represented. In addition, management believes that the  
Gerber, Baby-Looney Tunes and Curity lines of products have growth opportunities
in the food and drug, variety, off-price apparel, catalog, dollar store,        
wholesale club and mid-tier department store distribution channels.             

     FURTHER PENETRATE INTERNATIONAL MARKETS.  Gerber currently has an exclusive
license to use the Gerber brand name on certain infant and toddler apparel and  
textile products in the U.S., Canada and the Caribbean and a right of first     
refusal to use the Gerber name in Central and South America. Gerber branded     
products are currently being shipped in the U.S. and to Canada and the          
Caribbean. The Company's plan is to leverage the Gerber brand name to expand its
presence in international markets in which the Gerber brand name is established 
for baby food, and believes that such markets represent expansion opportunities.

    MAXIMIZE OPERATING EFFICIENCIES.  The Company's strategy is to continue to
improve operating efficiencies and productivity in order to offer its customers 
high quality products at competitive prices. The Company's plan is to continue  
to optimize product sourcing to achieve economies of scale and to eliminate     
certain duplicative operations in connection with the acquisition of Auburn.    

    LEVERAGE EXPERTISE THROUGH SELECTIVE ACQUISITIONS.  The Company intends to
grow by acquisition and, consistent with such strategy, regularly evaluates     
acquisition candidates and engages in discussions from time to time regarding   
potential acquisitions. The Company believes that numerous acquisition          
candidates exist within the infant and toddler apparel industry. In addition,   
the Company believes that other acquisition opportunities exist in similar high 
volume, basic branded apparel businesses where the Company can leverage its core
competencies. The Company is neither currently negotiating nor has any current  
or pending plans, arrangements, understandings or agreements with respect to any
acquisitions.                                                                   

RECENT ACQUISITION

  The Company acquired all of the capital stock of Auburn in December 1997
for approximately $40.0 million in cash. Auburn manufactures, markets and sells 
branded sport socks for men, women and children under established brand names   
such as Wilson, Coca-Cola and Converse in the U.S. and internationally and under
the Dunlop brand name in Europe. Auburn has operations in the United States and 
Ireland. Auburn markets to a diversified customer base in the U.S. and Europe,  
including volume retailers, department stores, wholesale clubs and major        
sporting good chains. These strong brand names and Auburn's long-term reputation
for quality facilitate a multi-channel distribution strategy. Auburn competes   
effectively in these distribution channels by offering its branded products at  
competitive prices, acting as a low-cost producer with the ability to service   
customers with quick turnaround, and maintaining strong customer relations. In  
addition, with its acquisition by Gerber, Auburn has added to these core        
competencies the ability to access capital for future growth and investment in  
operations. For the year ended December 31, 1997, Auburn had net sales of       
approximately $69.6 million. See "Business -- Auburn."                          

Auburn competes in the highly fragmented hosiery industry, which has  
significant branded and private label components. Competition within the        
industry is generally based on price, quality, service, brand recognition and   
style. The Company believes that advances in technology in hosiery manufacturing
will result in a smaller number of well-capitalized hosiery manufacturers. The  
Company believes that Auburn is well positioned to benefit from such            
consolidation due to its strong brands, established channels of distribution,   
strong customer service, low-cost manufacturing capabilities and access to      
capital. The Company also believes that significant growth opportunities exist  
through taking market share from private label producers, which comprise a      
significant portion of the hosiery industry. In addition, the Company believes  
that Auburn's European manufacturing facility allows it to be more responsive to
the European market, where the Company believes significant opportunity for     
expansion exists. See "Business -- Auburn -- Manufacturing and                  
Sourcing -- Distribution and Inventory Management."                             

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The Company plans to continue to operate Auburn as a wholly-owned     
subsidiary. The Company believes that the Acquisition will provide certain      
economies of scale and efficiencies in the areas of purchasing (e.g. yarn), data
processing and selling, general and administrative expenses (e.g. property and  
casualty insurance). In addition, the Company believes that the acquisition of  
Auburn will provide Gerber with opportunities to further expand its business in 
international markets through Auburn's solid customer relationships and         
reputation in Europe.                                                           

REORGANIZATION

   Gerber Childrenswear, Inc. was acquired by GCIH, Inc. ("GCIH") in January
1996 from GPC for approximately $61.5 million in cash (subject to purchase price
adjustments) and a $12.5 million promissory note. Since the Original            
Acquisition, GPC has not owned any capital stock of the Company, nor have GPC   
and the Company shared common directors, officers or employees. In connection   
with such acquisition and related financing, Citicorp Venture Capital, Ltd.     
("CVC"), management, directors and others purchased the equity of GCIH.         

Immediately prior to and in connection with the consummation of the   
Offering, GCIH and Gerber will consummate a series of transactions pursuant to  
which GCIH will be recapitalized and reorganized and Gerber will be merged into 
GCIH (the "Reorganization"). The principal transactions comprising the          
Reorganization that will occur prior to or in connection with the consummation  
of the Offering are: (i) the conversion of all of the outstanding shares of     
preferred stock of GCIH into either common stock of GCIH or the right to receive
cash, (ii) the merger of Gerber into and with GCIH, with GCIH being the         
surviving entity of such merger, and (iii) in connection with such merger, the  
amendment of the certificate of incorporation of GCIH to provide for (a) the    
reclassification and exchange of all of the outstanding shares of all classes of
common stock and warrants to purchase common stock of GCIH for shares of Common 
Stock, Class B Common Stock or warrants to purchase Class B Common Stock of GCIH
and (b) a change of the corporate name of GCIH, from GCIH to "Gerber            
Childrenswear, Inc." See "Certain Relationships and Related Transactions -- The 
Reorganization." Consummation of the Offering is contingent on the completion of
the above-described transactions.                                               

    The Company is a Delaware corporation. The Company's principal offices are
located at 7005 Pelham Road, Suite D, Greenville, SC 29615, and its telephone   
number is (864) 987-5200.                                                       

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THE OFFERING

                                                        [Enlarge/Download Table]
                                                                                                    
Common Stock Offered by the Company.................. 3,600,000 shares                              
Common Stock to be outstanding after the Offering:                                                  
  Common Stock....................................... 7,647,520 shares(a)                           
  Class B Common Stock............................... 8,877,115 shares(b)                           
     Total........................................... 16,524,635 shares                             
Total Common Stock, Class B Common Stock and Class B                                                
  Common Stock issuable upon the exercise of an                                                     
  outstanding warrant(c)............................. 19,482,998                                    
Voting Rights........................................ Each share of Common Stock is entitled to one 
                                                      vote per share. Shares of Class B Common Stock
                                                      are not entitled to any votes.                
Use of Proceeds...................................... The net proceeds to be received by the Company
                                                      from the Offering will be used to repay       
                                                      certain indebtedness of the Company and to    
                                                      redeem certain shares of GCIH's preferred     
                                                      stock in connection with the Reorganization.  
                                                      See "Use of Proceeds."                        
Proposed New York Stock Exchange Symbol.............. "GCW"                                         

---------------                                                                 

(a) Based on the number of shares outstanding as of June 10, 1998. Includes     
2,520,173 shares of Common Stock issued to the Company's management,    
   including 1,366,096 vested shares and 1,154,077 unvested shares (as of June
    10, 1998). Excludes 750,000 shares reserved for issuance under the Incentive
Plan of which options to purchase up to 20,000 shares will be granted in
   connection with the Offering, at the initial public offering price. Assumes
the Underwriters' over-allotment option is not exercised.               

(b) Shares of Class B Common Stock are convertible at any time at the holder's  
    option into shares of Common Stock on a one-for-one basis. Shares of Class B
    Common Stock may not be transferred to anyone other than an affiliate of the
  holder, unless such Class B Common Stock is first converted by such holder
into Common Stock. See "Description of Capital Stock."                  

(c) Includes 2,958,510 shares of Class B Common Stock, which may be issued upon 
the exercise of a warrant, net of treasury stock method of 147 shares.  

RISK FACTORS

  Purchasers of the Common Stock in the Offering should carefully consider
the risk factors set forth under the caption "Risk Factors" and the other       
information included in this Prospectus prior to making an investment decision. 
The risk factors set forth under the caption "Risk Factors" include (i)         
Dependence on Material Licenses, (ii) Dependence on Sales to a Limited Number of
Large Customers, (iii) Competition, (iv) Recent Acquisition, (v) Dependence on  
Key Personnel, (vi) Risks of Third Party Manufacturing and Sourcing, (vii) Costs
of Raw Materials and Supplier Relationships, (viii) Risks Associated with       
Foreign Operations and Import Restrictions, (ix) Risks Associated with          
Fluctuations in Foreign Currency Exchange Rates, (x) Seasonal Business, (xi)    
Cost of Environmental Compliance, (xii) Control by Executive Officers and       
Current Stockholders, (xiii) Shares Eligible for Future Sale; Registration      
Rights, (xiv) Absence of Dividends; Restrictions on Payment of Dividends, (xv)  
Certain Anti-Takeover Provisions, (xvi) Dilution, and (xvii) No Prior Public    
Market; Potential Volatility of Stock Price. See "Risk Factors."                

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SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA) 

  The following table presents (i) summary historical consolidated financial
information of the Company's Predecessor (the "Predecessor Company") for the    
year ended December 31, 1995, (ii) summary historical consolidated financial    
information of the Company for the period from January 22, 1996 to December 31, 
1996, the year ended December 31, 1997, the first quarter ended March 29, 1997  
and the first quarter ended April 4, 1998, and (iii) summary pro forma as       
adjusted information of the Company for the year ended December 31, 1997 and the
first quarter ended April 4, 1998, after giving effect to the Recent            
Acquisition, the Reorganization and the Offering and the application of the     
estimated net proceeds therefrom. The historical consolidated financial         
information of the Predecessor Company for the year ended December 31, 1995 and 
the Company for the period from January 22, 1996 to December 31, 1996 and the   
year ended December 31, 1997, have been derived from the financial statements of
the Predecessor Company and the Company, respectively, which have been audited  
by Ernst & Young LLP. The financial data for the three month periods ended April
4, 1998 and March 29, 1997 are derived from unaudited financial statements. The 
unaudited financial statements include all adjustments, consisting of normal    
recurring accruals, which the Company considers necessary for a fair            
presentation of the financial position and the results of operations for these  
periods. Operating results for the three months ended April 4, 1998 are not     
necessarily indicative of the results that may be expected for the entire year  
ending December 31, 1998. The summary pro forma as adjusted information does not
purport to represent what the Company's results would have been if such events  
had occurred at the date indicated, nor does such information purport to project
the results of the Company for any future period. The summary financial         
information should be read in conjunction with "Management's Discussion and     
Analysis of Financial Condition and Results of Operations," the financial       
statements and notes thereto and the Unaudited Pro Forma Condensed Consolidated 
Statement of Operations and notes thereto included elsewhere in this Prospectus.

                                                        [Enlarge/Download Table]

                                                                                        COMPANY                          
                                                 PREDECESSOR   ----------------------------------------------------------
                                                 Company (a)   PERIOD FROM                                               
                                                 ------------  JANUARY 22,                        FIRST QUARTER ENDED    
                                                  YEAR ENDED     1996 TO       YEAR ENDED     ---------------------------
                                                 DECEMBER 31,  DECEMBER 31,   DECEMBER 31,     MARCH 29,       APRIL 4,  
                                                     1995        1996 (b)       1997 (c)          1997           1998    
                                                 ------------  ------------   ------------    ------------   ------------
                                                                                                                         
STATEMENT OF OPERATIONS DATA:                                                                                            
  Net sales.....................................   $197,401      $185,223       $202,037        $45,350        $64,647   
  Cost of sales.................................    156,434       138,608        146,294         32,654         47,212   
                                                   --------      --------       --------        -------        -------   
  Gross margin..................................     40,967        46,615         55,743         12,696         17,435   
  Selling, general and administrative                                                                                    
    expenses....................................     24,633        23,894         27,766          6,718          9,614   
  Stock compensation(d).........................     --            --              9,465         --             --       
  Other.........................................     --               689            231            514         --       
                                                   --------      --------       --------        -------        -------   
  Total operating expenses......................     24,633        24,583         37,462          7,232          9,614   
                                                   --------      --------       --------        -------        -------   
  Income before interest and income taxes.......     16,334        22,032         18,281          5,464          7,821   
  Interest expense, net.........................     --             6,308          5,798          1,326          2,262   
                                                   --------      --------       --------        -------        -------   
  Income before income taxes and extraordinary                                                                           
    item, net...................................     16,334        15,724         12,483          4,138          5,559   
  Provision for income taxes....................      6,270         6,244          4,764          1,614          2,139   
                                                   --------      --------       --------        -------        -------   
  Income before extraordinary item, net.........     10,064         9,480          7,719          2,524          3,420   
  Extraordinary item, net(e)....................     --            --               (708)        --             --       
  Less preferred stock dividends................     --            (1,328)        (1,637)          (383)          (452)  
                                                   --------      --------       --------        -------        -------   
  Net income available to common shareholders...   $ 10,064      $  8,152       $  5,374        $ 2,141        $ 2,968   
                                                   ========      ========       ========        =======        =======   

                                                        [Enlarge/Download Table]

                                                              YEAR ENDED     FIRST QUARTER  
                                                             DECEMBER 31,        ENDED      
                                                               1997(f)      APRIL 4, 1998(g)
                                                             ------------   ----------------
                                                                                            
PRO FORMA STATEMENT OF OPERATIONS, AS ADJUSTED(h):                                          
  Net sales.................................................   $270,100         $64,647     
  Income before interest and income taxes...................     19,960           7,821     
  Interest expense, net.....................................      4,230           1,015     
  Income from continuing operations.........................      9,743           4,187     
  Income from continuing operations per basic share.........       0.61(i)         0.26(i)  
  Income from continuing operations per diluted share.......       0.50(i)         0.22(i)  

                                                        [Enlarge/Download Table]

                                                                         AT APRIL 4, 1998             
                                                             -----------------------------------------
                                                                                           AS FURTHER 
                                                              ACTUAL     AS ADJUSTED(j)    ADJUSTED(k)
                                                             --------    --------------    -----------
                                                                                                      
BALANCE SHEET DATA:                                                                                   
  Working capital........................................... $ 68,187       $ 67,821        $ 75,187  
  Total assets..............................................  178,442        178,442         178,442  
  Total debt................................................   94,437         94,437          52,279  
  Preferred stock including accrued dividends...............   15,062        --               --      
  Shareholders' equity......................................   22,237         36,933          79,457  

                                                   (footnotes on following page)

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---------------                                                                 
(footnotes to table on previous page)                                           

(a) The Predecessor Company operated as a wholly-owned subsidiary of GPC until  
being divested by GPC on January 22, 1996. The financial data for the   
    Predecessor Company is not entirely comparable to that of the Company due to
certain factors including the following:                                

   (i) The Predecessor Company did not incur any royalty expense for the use
   of the Gerber name and baby head logo. During the period from January 22,
     1996 to December 31, 1996, and for fiscal year ended December 31, 1997, the
 royalty expense to GPC was $1.9 million and $3.5 million, respectively.

 (ii) The Predecessor Company's net sales in 1995 included approximately
  $8.3 million of net sales at cost to GPC that generated no gross margin.
Net sales to GPC in 1996 and 1997 of approximately $6.2 million and   
   approximately $4.3 million, respectively, generated gross margins in 1996
and 1997 of approximately $950 and $598, respectively.                

(iii) The Predecessor Company was included in various self-insurance  
     programs provided by GPC, including medical, dental, workers' compensation,
     comprehensive general and excess liability and property damage and business
interruption. GPC also provided management information services to the
     Predecessor Company and allocated a portion of the expenses incurred to the
   Predecessor Company. In addition, the Predecessor Company was allocated a
    portion of legal and professional costs for services directly attributable
to the Predecessor Company. Certain services were provided by GPC's   
   corporate staff, for which no charge was made to the Predecessor Company.
  Management believes the aggregate cost of these unallocated services was
  insignificant. The Predecessor Company was charged for all outside legal
and professional expenses directly attributable to it.                

 (iv) In 1995, the Predecessor Company had no long term debt and was not
charged any interest expense as a subsidiary of GPC.                  

   (v) The provision for income taxes of the Predecessor Company essentially
results from applying the Federal and state statutory rates to the    
operations of a stand-alone company.                                  

(b) Excludes the Predecessor Company's unaudited operations for the period      
January 1, 1996 through January 21, 1996. See Note (b) to Selected      
Consolidated Financial Data.                                            

(c) Includes operating results for Auburn Hosiery Mills, Inc. and Sport Socks   
 Company (Ireland) Limited ("Sport Socks Ireland") for the period December
 17, 1997 through December 31, 1997. See Note (c) to Selected Consolidated
Financial Data.                                                         

(d) Represents expense related to stock compensation incurred in connection with
   the sale of capital stock to executives and management of the Company below
 fair market value. See "Certain Relationships and Related Transactions --
Transactions with Management and Directors."                            

(e) Represents unamortized loan costs and prepayment penalty totaling $708 (net 
of an income tax benefit of $452) expensed in connection with the       
  replacement of the Company's then existing credit facility with the Credit
Agreement (as defined herein).                                          

(f) As adjusted for the Recent Acquisition, the Reorganization, the Offering and
    the application of the estimated net proceeds therefrom, assuming completion
of such events as of January 1, 1997.                                   

(g) As adjusted for the Reorganization, the Offering and the application of the 
  estimated net proceeds therefrom, assuming completion of such events as of
January 1, 1998.                                                        

(h) Includes $9.5 million of stock compensation expense ($5.8 million after-tax)
    in the year ended December 31, 1997. See Note (d) above. If further adjusted
   to exclude such expense, income before interest and income taxes would have
    been $29,425, income from continuing operations would have been $15,785, and
 income from continuing operations per basic and diluted shares would have
   been $0.99 and $0.81 respectively, in each case for the year ended December
31, 1997.                                                               

(i) Weighted average shares outstanding used for the computation of income from 
    continuing operations per basic share and for the computation of income from
 continuing operations per diluted share was (i) 15,884,946 and 19,497,685
shares, respectively, for the year ended December 31, 1997, and (ii)    
   15,806,617 and 19,365,497 shares, respectively, for the quarter ended April
4, 1998.                                                                

(j) As adjusted for the Reorganization, assuming completion thereof as of April 
4, 1998.                                                                

(k) As adjusted for the Reorganization and the Offering and the application of  
the estimated net proceeds therefrom, assuming completion of both as of 
 April 4, 1998. In connection with the Reorganization, net proceeds of the
 Offering will be used to redeem certain shares of GCIH's preferred stock,
   including accrued dividends, with a book value of $366 as of April 4, 1998.
    Actual redemption will be in the amount of $374, representing the book value
of such shares, including accrued dividends, as of June 10, 1998. As a  
   result, net proceeds applied to repay debt will total $42,150. See "Certain
  Relationships and Related Transactions -- Transactions with Management and
Directors."                                                             

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RISK FACTORS

  The following risk factors should be considered carefully in addition to
the other information contained in this Prospectus before purchasing the Common 
Stock offered hereby. This Prospectus contains forward-looking statements that  
involve risks and uncertainties. Actual results could differ materially from    
those discussed herein. Factors that could cause or contribute to such          
differences include, but are not limited to, those discussed below and in the   
section entitled "Management's Discussion and Analysis of Financial Condition   
and Results of Operations," as well as those discussed elsewhere in this        
Prospectus.                                                                     

DEPENDENCE ON MATERIAL LICENSES                                                 

  The Company is largely dependent on the use of the Gerber name. In 1997,
approximately 70% of Gerber's products were sold under the Gerber brand name.   
The Gerber name and trademark are exclusively licensed to the Company from GPC  
for use on certain clothing and textile products in the infant and toddler      
apparel market sold in the United States, Canada and the Caribbean. The product 
categories covered by the Gerber license include infant and toddler shoes,      
underwear, sleepwear (including blanket sleepers, pajamas and sleep 'n play),   
playwear, bed and bath products, reusable cloth diapers and diaper liners, bibs,
hosiery, swimwear and gift sets and layette incorporating the above articles, in
each case targeted to infants and toddlers of specific sizes. The terms and     
conditions for use of the Gerber name for other product categories and          
geographic areas must be negotiated by the Company on an individual basis. The  
Gerber license extends through 2006, after which there are two five-year renewal
periods. See "Business -- Licensing and Trademarks." The loss or limitation of  
the right to use the Gerber name would have a material adverse effect on the    
Company's results of operations. GPC retains the rights under the license to    
produce, distribute, advertise and sell, and to authorize others to produce,    
distribute, advertise and sell, products under the Gerber name other than       
clothing and textile products. Negative publicity related to the Gerber name    
caused by actions not related to the Company or the Company's products could    
have a material adverse effect on the Company's results of operations. The      
Company is not required to pay royalty fees to GPC until 2002 (although the     
Company is recording royalty expense to reflect such fees). The initiation of   
such royalty payments may adversely affect the Company's cash flow. See         
"Management's Discussion and Analysis of Financial Condition and Results of     
Operations -- Liquidity and Capital Resources."                                 

    The Company also licenses the Baby Looney Tunes brand name from the Warner
Brothers division of Time-Warner, Inc. ("Warner Brothers") and the Curity brand 
name from The Kendall Company. In 1997, approximately 16% and 2% of Gerber's    
products were sold under the Baby Looney Tunes and Curity brand names,          
respectively. The Company is licensed to use the Baby Looney Tunes brand name in
the U.S. and the Curity brand name in the U.S. and internationally. The Baby    
Looney Tunes and Curity licenses are limited to certain product categories,     
including, in the case of Baby Looney Tunes, bath products, bedding, sleepwear, 
underwear, footwear, socks, layettes and infant and toddler playwear, and in the
case of Curity, cloth diapers and diaper liners, underwear, hosiery, sleepwear  
(including blanket sleepers and sleep 'n play), linens, bedding and certain     
other products (such as infant car seat covers), in each case to be worn or used
for infants and toddlers. The Curity license automatically renews for periods of
ten years. The Baby Looney Tunes license has recently been renewed and extends  
through December 31, 2000. The Company owns the Onesies trademark. The loss or  
limitation of the right to use either of these names could have a material      
adverse effect on the Company's financial condition and results of operations.  

    Auburn also licenses properties from different companies for its products.
The license from Wilson Sporting Goods Co. ("Wilson") expires in 2002 with a    
five year renewal period if certain sales targets are exceeded. Auburn has held 
this license since 1982. The license from Wilson can be terminated by Wilson if 
the employment of either Kevin K. Angliss or Donald J. Murphy with Auburn       
terminates. The license from Converse Inc. ("Converse") expires on December 31, 
2001 with an obligation to enter into good faith discussions in 2001 with       
respect to a new three year contract. This license can be terminated by Converse
if Kevin K. Angliss and Timothy Graham are no longer the principal managers of  
Auburn's Converse-brand product line. Messrs. Angliss, Murphy and Graham have   
not entered into employment agreements with Auburn. The Coca-Cola Company       
("Coca-Cola") license expires on December 31, 1998 (with a three-year renewal   
period). The license from Dunlop Slazenger International Ltd. ("Dunlop") expires
in 2001 (with a                                                                 

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five year renewal period if certain sales targets are exceeded). All of these   
licenses have particular geographic and other limitations, and the Company      
negotiates the terms and conditions for the use of such trademarks outside such 
limitations on an individual basis. The products covered by the licenses include
(i) sport socks in the case of Wilson, (ii) men's, women's and youth's hosiery  
in all color combinations and styles in the case of Converse, (iii) athletic and
casual socks in the case of Coca-Cola, and (iv) sport and casual socks in the   
case of Dunlop. In 1997, sales of Wilson-brand products accounted for 83% of    
Auburn's total sales. The loss or limitation of the right to use the Wilson     
license would have a material adverse effect on the Company's financial         
condition and results of operations. The loss or limitation of the right to use 
any of the Coca-Cola, Converse or Dunlop names could have an adverse effect on  
the Company's financial condition and results of operations.                    

  There are risks associated with the financial condition of the Company's
licensors which are beyond the control of the Company. In the event that a case 
under the Federal bankruptcy laws is commenced by or against any licensor in the
future, the trustee in the bankruptcy case or the licensor, as                  
debtor-in-possession, may have the right to reject such licensor's license      
agreement. While the Company is not aware of any facts which would make such    
termination or rejection reasonably likely to occur, in the event of any such   
termination or rejection, the Company would lose its right to use the licensed  
intellectual property, which loss would have an adverse effect on the Company's 
financial condition and results of operations.                                  

   The Company believes that its trademarks and other proprietary rights are
material to its success and its competitive position. Accordingly, the Company  
and its licensors devote substantial resources to the establishment and         
protection of their trademarks on a worldwide basis. There can be no assurance  
that the actions taken by the Company and its licensors to establish and protect
their trademarks and other proprietary rights will be adequate to protect the   
Company's intellectual property or to prevent imitation of its products by      
others. Moreover, no assurance can be given that others will not assert rights  
in, or ownership of, trademarks and other proprietary rights of the Company or  
that the Company will be able to successfully resolve such conflicts. In        
addition, the laws of certain foreign countries may not protect proprietary     
rights to the same extent as do the laws of the United States. The Company has  
not experienced any proprietary license infringements or legal actions that have
had a material impact on its financial condition or results of operations. See  
"Business -- Licensing and Trademarks."                                         

DEPENDENCE ON SALES TO A LIMITED NUMBER OF LARGE CUSTOMERS                      

Certain of the Company's volume retailer and mid-tier department store
customers account for significant portions of the Company's net sales. Gerber   
directly services approximately 1,100 retail accounts, with the Company's top 10
customers representing approximately 83% of total 1997 sales. Sales to Wal-Mart,
which accounted for a significant percentage of the net sales of infant and     
toddler apparel in the U.S. in 1997, constituted approximately 44% of Gerber's  
sales during 1997. Sales to Wal-Mart constituted approximately 48% of Auburn's  
sales during 1997 (including sales after the Recent Acquisition). No other      
customer accounted for more than 10% of the Company's 1997 sales on a pro forma 
basis. A decision by any significant customer or group of stores, whether       
motivated by competitive conditions, financial difficulties or otherwise, to    
decrease the amount of merchandise purchased from the Company, or to change its 
manner of doing business, could have a material adverse effect on the Company's 
financial condition and results of operations. See "Business -- Customers."     

The Company generally does not enter into long-term or other purchase 
agreements with its customers. Customer orders are received by the Company      
through one of two methods. With the exception of fashion-oriented and seasonal 
products, most customer orders are tied to a planogram, which is established by 
customers for setting up displays within their stores. Generally planograms are 
revised annually in these merchandise categories. The Company's customers, based
on sales data captured at cash registers, generate orders for replenishment     
goods which are transmitted to the Company through its EDI systems.             
Replenishment orders for planogram merchandise are generally filled within three
days. Under the second program, customer orders for fashion-oriented and        
seasonal products (e.g., blanket sleepers) are received on a purchase order     
basis and such orders are filled without an in-season reorder expectation.      

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In recent years, the retail industry has experienced consolidation and
other ownership changes. In addition, some of the Company's customers have      
operated and currently operate under the protection of the federal bankruptcy   
laws. In the future, retailers in the U.S. and in foreign markets may           
consolidate, undergo restructurings or reorganizations, or realign their        
affiliations, any of which could decrease the number of stores that carry the   
Company's products or increase the ownership concentration within the retail    
industry. While such changes in the retail industry to date have not had a      
material adverse effect on the Company's business or financial condition, there 
can be no assurance as to the future effect of such changes.                    

COMPETITION                                                                     

   The infant and toddler apparel market is highly competitive. Both branded
and private label manufacturers compete in the infant and toddler apparel       
markets. Competition generally is based upon product quality, brand name        
recognition, price, selection, service and convenience. Gerber's primary        
competitors include Fruit of the Loom, Inc. ("Fruit of the Loom"), the Hanes    
subsidiary of the Sara Lee Corporation ("Hanes"), The William Carter Company    
("Carter's"), licensed products and firms using character licenses from Walt    
Disney Company, Inc. ("Disney") and others. Gerber also competes with certain   
retailers, including several which are customers of the Company, which have     
significant private label products offerings. Certain of Gerber's competitors   
have greater financial resources than the Company. Gerber's ability to compete  
depends, in substantial part, on the continued high regard for the Gerber brand 
name and the ability of Gerber to continue to offer high-quality garments at    
competitive prices.                                                             

   The hosiery industry is highly fragmented and has significant branded and
private label components. Competition is generally in terms of price, quality,  
service, brand recognition and style. Auburn's primary competitors include      
Hanes, which has the largest share of the market, Renfro Corporation ("Renfro"),
Neuville Industries, Inc. ("Neuville") and the Russell Corporation ("Russell"). 
Auburn also competes with certain retailers, including several which are        
customers of the Company, which have significant private label product          
offerings. In addition, Auburn competes with private label manufacturers,       
including small, local manufacturers and large, public companies that have      
greater financial resources than the Company and larger customer bases. See     
"Business -- Competition."                                                      

RECENT ACQUISITION                                                              

The Company acquired the capital stock of Auburn in December 1997. The
ability of the Company to achieve its objectives in connection with the Recent  
Acquisition are, as with any acquisition, subject to certain risks including,   
among others, the possible inability to retain certain Auburn personnel,        
potential negative effects of diverting management resources and the possible   
failure to retain Auburn's customers. None of Auburn's executive officers have  
entered or are expected to enter into employment agreements with the Company. In
connection with the Offering, however, these executives shall receive stock     
options which shall be subject to vesting and forfeiture provisions. Moreover,  
under the terms of Auburn's license with Wilson, Auburn and Gerber are not      
permitted to consolidate their top management team, sales force, distributors,  
customer service and manufacturing functions and are not permitted to commingle 
product lines. As a result, there can be no assurance that the expected benefits
from the Auburn acquisition will be achieved on a timely basis or at all. The   
Company believes, however, that because (i) it acquired Auburn to be a separate,
stand-alone business through which it could leverage management expertise to    
create increased revenues and earnings, (ii) it did not expect the acquisition  
to create substantial economies or efficiencies of scale, and (iii) it does not 
intend to integrate Auburn with Gerber (in fact, the Wilson license prohibits   
full integration), the failure to integrate Auburn with Gerber will not         
adversely effect the Company's financial condition or operating results. See    
"Business."                                                                     

DEPENDENCE ON KEY PERSONNEL                                                     

The Company is dependent to a large extent on its ability to attract, 
motivate and retain an adequate labor force, including management, sales,       
design, art, manufacturing, merchandising and other personnel. The Company is   
also dependent to a significant extent upon the continued efforts of its senior 
management team, including its Chairman, President and Chief Executive Officer, 
Edward Kittredge, its Senior Vice President,                                    
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Richard L. Solar and its Vice President of Finance, Secretary and Treasurer,    
David E. Uren. The Company has entered into employment agreements with the      
above-named executive officers which expire in 2001. If, for any reason, such   
executives do not continue to be active in management, the Company's operations 
could be materially adversely affected. The Company does not maintain key-man   
life insurance policies on any of its executive officers or key employees. After
the consummation of the Offering, the Company's management will own 12.9% of the
total outstanding capital stock of the Company on a diluted basis (including    
shares of Class B Common Stock issuable upon the exercise of an outstanding     
warrant). See "Management" and "Principal Stockholders."                        

RISKS OF THIRD PARTY MANUFACTURING AND SOURCING                                 

    The Company manufactures its products both in the U.S. and abroad and also
purchases certain products manufactured by independent manufacturers. In 1997,  
approximately 60% of Gerber's products, based on total product cost, were       
manufactured or sourced outside of the United States. The Dominican Republic,   
Guatemala and Estonia accounted for approximately 42%, 22% and 11% of offshore  
production, respectively, with Mexico, Taiwan, Hong Kong, Thailand, Russia,     
China and South Korea accounting for the balance. None of such other countries  
accounted for 10% or more of offshore production. During 1997, pro forma for the
Acquisition, approximately 30% of Gerber's products, based on cost, were        
manufactured by third party independent manufacturers (including some           
manufacturers located outside of the United States). The Company generally has  
no long-term contracts with its independent manufacturing sources and competes  
with other companies for production facilities and import quota capacity. Such  
third party manufacturing is typically done on a purchase order basis, pursuant 
to Contract Service Agreements, which outline responsibilities of the parties.  
The Company has entered into production agreements with certain independent     
manufacturers in the United States, Estonia, Guatemala and Mexico, the material 
terms of which are believed by management, based on discussions with suppliers  
and management's experience, to be consistent with industry standards. These    
agreements are generally for terms of one year, payment is due within 30 days,  
the contractors must provide labor and conduct hiring practices consistent with 
certain U.S. laws, and pricing terms are negotiated on an item by item basis. No
single independent manufacturer engaged by the Company accounted for more than  
5% of the Company's pro forma total production in 1997. Although the Company    
believes that it has established close relationships with its principal         
manufacturing sources, the Company's future success will depend in some measure 
on its ability to maintain such relationships. The inability of an independent  
manufacturer to ship orders of the Company's products in a timely manner or to  
meet the Company's quality standards could cause the Company to miss the        
delivery date requirements of its customers for those items, which could result 
in cancellation of orders, refusal to accept deliveries or a reduction in       
purchase prices, any of which could have a material adverse effect on the       
Company's financial condition and results of operations. See                    
"Business -- Gerber -- Manufacturing and Sourcing."                             

     The Company requires its independent manufacturers to operate in compliance
with applicable laws and regulations, including laws and regulations governing  
the fire retardancy of certain of the Company's products. The Company monitors  
the independent manufacturers' compliance with the Company's quality assurance  
guidelines and other applicable regulations through both internal and external  
quality assurance inspectors. Additionally, all of the Company's licensors have 
the right to, and may from time to time, perform independent inspections of     
facilities utilized by the Company. While the Company's purchasing guidelines   
promote ethical business practices, the Company does not control such           
manufacturers or their labor practices. The violation of labor or other laws by 
an independent manufacturer of the Company, or the divergence of an independent 
manufacturer's labor practices from those generally accepted as ethical in the  
United States, could have a material adverse effect on the Company. See         
"Business -- Gerber -- Manufacturing and Sourcing."                             

COSTS OF RAW MATERIALS AND SUPPLIER RELATIONSHIPS                               

The Company depends on certain raw materials such as yarn for the     
manufacturing of its products. In order to hedge against price increases of     
yarn, the Company actively manages its cost through contracts with its yarn     
suppliers with terms of up to one year. This practice generally has enabled the 
Company to                                                                      

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successfully manage the effect of price fluctuations; however, no assurance can 
be given that the Company will continue to be successful in managing such price 
fluctuations or that future price fluctuations in yarn and other raw materials  
will not have a material adverse effect on the Company. With the exception of   
suppliers located in Ireland, the United Kingdom, Spain, Italy and Germany which
provide yarn to the Company's Irish subsidiary, all of the Company's yarn       
suppliers are located in the U.S. None of such foreign suppliers, either        
individually or in the aggregate, provide material quantities of yarn to the    
Company. The Company's primary yarn supplier provides approximately 29.5% of the
Company's yarn. Two other suppliers each provide slightly more than 10% of the  
Company's yarn. Management believes, however, that none of these suppliers are  
material and that there are many alternate sources from which yarn may be       
readily obtained. Although the Company has not experienced any difficulty in    
obtaining yarn and other raw materials, there can be no assurance that any of   
such supplier relationships will not be terminated in the future. Any sustained 
interruption in the Company's receipt of adequate supplies could have a material
adverse effect on the Company.                                                  

RISKS ASSOCIATED WITH FOREIGN OPERATIONS AND IMPORT RESTRICTIONS                

     A significant percentage of the Company's products are manufactured outside
of the United States, both by the Company in the Dominican Republic and Ireland 
and by independent manufacturers in a number of other foreign countries,        
including the Dominican Republic, Guatemala, Estonia, Mexico, Taiwan, Hong Kong,
Thailand, Russia, China and South Korea. The Company is therefore subject to the
risks generally associated with manufacturing or purchasing products in foreign 
countries, such as foreign governmental regulations, changes in existing tax    
laws, social, political or economic instability, currency and exchange risks,   
disruptions or delays in shipments, restrictions on the transfer of funds and   
changes in economic conditions in countries in which the Company's manufacturing
sources are located, including any risks associated with the loss of China's    
most favored nation status.                                                     

In addition, the Company depends on exporters to obtain certain raw   
materials and products. Many of these exporters finance their working capital by
obtaining "packing" loans which are backed by letters of credit. As a result of 
the recent financial and economic instability in Southeast Asia, some exporters 
have experienced difficulty obtaining such loans and, consequently, have been   
forced to discontinue operations. None of the Company's exporters have ceased   
operations at this time. Although the Company's operations could be disrupted if
one or more of the Company's larger exporters are forced to terminate their     
exporting activities, management believes that the Company's flexible sourcing  
capability would prevent such disruption from materially impacting the Company's
results of operations and financial condition. See "Business --                 
Gerber -- Manufacturing and Sourcing."                                          

 The Company is subject to United States regulations and the risk of the
imposition of additional regulatory burdens relating to apparel imports,        
including quotas on the amounts and types of merchandise which may be imported  
into the United States from other countries, duties or taxes and other charges  
on imports. Any of such duties, taxes and other charges are, and will continue  
to be, reflected in the Company's costs. In addition, although the Company does 
not know of any currently pending regulatory changes that would have a harmful  
effect on its business, it is possible that future regulatory changes could have
an adverse effect on the Company's financial condition and results of           
operations. Although management believes that the Company is currently in       
compliance with these regulations, failure to comply in the future with these   
regulations could result in a delay in clearing shipments through customs, which
could have an adverse effect on the Company's operations. A failure to comply   
with such regulations could result in penalties, fines and processing delays in 
the future. The Company has adopted procedures designed to ensure compliance    
with customs regulations and has retained an outside consultant to regularly    
review such procedures and the Company's customs filings for accuracy and       
completeness. See "Business -- Gerber -- Manufacturing and Sourcing -- Quality  
Control."                                                                       

The Company's import operations are subject to constraints imposed by 
bilateral textile agreements between the United States and a number of foreign  
countries. These agreements, which have been negotiated bilaterally either under
the framework established by the Arrangement Regarding International Trade in   
Textiles, known as the Multifiber Agreement, or other applicable statutes,      
impose quotas on the amounts and                                                

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types of merchandise which may be imported into the United States from these    
countries. These agreements also allow the signatories to adjust the quantity of
imports for categories of merchandise that, under the terms of the agreements,  
are not currently subject to specific limits. The Company's imported products   
are also subject to United States customs duties which comprise a meaningful    
portion of the cost of the merchandise.                                         

The Company, through its Irish subsidiary, is implementing new systems
necessary to offer its products for sale in both national currencies and the new
European currency. The promulgation of a single currency will reduce trade      
barriers and could subject the Company to increased competition. Some of these  
competitors may have greater financial resources than the Company. Although the 
eventual effects of the single European currency are not currently known, the   
introduction of a single currency could adversely effect the Company. See       
"Business -- Management Information Systems."                                   

RISK OF FLUCTUATION IN FOREIGN CURRENCY EXCHANGE RATES                          

    Gerber generally conducts transactions in U.S. dollars. However, a portion
of Auburn's sales and costs are transacted in British pounds, French francs,    
German marks, Irish pounds and Belgian francs. As such, the sales and costs of  
these products may be affected by changes in the value of the relevant foreign  
currencies. During 1997, on a pro forma basis, approximately 7% of the Company's
revenues and 8% of the Company's expenses were denominated in currencies other  
than U.S. dollars. The Company's exposure to changes in foreign currency        
exchange rates results from the operations of and investment in Auburn's Irish  
subsidiary. With respect to such subsidiary, changes in currency exchange rates 
may also affect the relative prices at which the Irish subsidiary and foreign   
competitors sell their products in the same market. Following the Acquisition,  
the Company adopted a foreign exchange policy which will be implemented in      
Auburn's Irish subsidiary for the purpose of managing its day-to-day exposure.  
The policy mandates a short-term hedging program for its existing and potential 
exposures to changes in foreign currency exchange rates. There are currently    
foreign exchange contracts in place covering amounts in excess of the Company's 
policy, which the Company expects will be reduced to current policy levels by   
the end of the second quarter of 1998. There can be no assurance that foreign   
currency fluctuations will not have a material adverse effect on Auburn's       
financial condition and results of operations, which, in turn, could have a     
material adverse effect on the Company. The Company views its investment in the 
Irish subsidiary as long term and, therefore, has not hedged against either its 
investment or future earnings. See "Management's Discussion and Analysis of     
Financial Condition and Results of Operations -- Fluctuation of Foreign Currency
Exchange Rates."                                                                

SEASONAL BUSINESS                                                               

    In Gerber's segments of the apparel industry, sales are typically somewhat
higher in the third and fourth quarters due to the seasonal nature of some of   
its products (such as blanket sleepers). With the acquisition of Auburn, which  
experiences higher sales in the second quarter, the Company will continue to    
experience seasonality, with the third quarter expected to represent the highest
volume shipping quarter for the Company. See "Management's Discussion and       
Analysis of Financial Condition and Results of Operation -- Selected Quarterly  
Results of Operations" and "Business -- Backlog and Seasonality."               

COST OF ENVIRONMENTAL COMPLIANCE                                                

The Company's manufacturing facilities and operations are subject to  
certain federal, state, local and foreign laws and regulations relating to      
environmental protection and occupational health and safety, including those    
governing wastewater discharges, air emissions, the management and disposal of  
solid and hazardous wastes, and the remediation of contamination associated with
the release of hazardous substances. Prior to the Recent Acquisition, Auburn was
cited for discharging contaminants (dyes and solids) into the sewer system from 
its facility in Auburn, Kentucky in excess of the amounts allowed under its     
permits. The condition underlying such violations was fully remediated at an    
immaterial cost. Gerber and, other than the above, Auburn have never been cited,
fined or otherwise held liable for violations of environmental statutes or      
regulations. In addition, the Company believes that it is in substantial        
compliance with such requirements, and does not currently anticipate any        
material capital expenditures for environmental control facilities for the      
current or succeeding fiscal year. Nonetheless, there can be no assurance that  
such requirements will not                                                      

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become more stringent or be interpreted and applied more stringently. Such      
future changes or interpretations or the identification of adverse environmental
conditions previously unknown to the Company could result in additional         
compliance costs or in remediation costs to the Company. The Company's older    
facilities contain asbestos materials and lead-based paint in inactive areas    
utilized for the storage of records, machine parts and obsolete supplies, where 
the potential for worker exposure to such materials is minimal. If the Company  
were to elect to utilize such areas as active manufacturing or distribution     
facilities such that the potential for worker exposure would be increased, as a 
matter of policy the Company would undertake to remediate or encapsulate such   
materials. The cost of removing or encapsulating such materials in the Company's
Pelzer, South Carolina facilities would be a material expenditure. See          
"Business -- Environmental and Other Regulatory Matters."                       

CONTROL BY EXECUTIVE OFFICERS AND CURRENT STOCKHOLDERS                          

   Following consummation of the Offering and the Reorganization, management
will hold approximately 12.9% of the outstanding capital stock on a diluted     
basis. CVC and its affiliates will hold approximately 19% of the outstanding    
shares of Common Stock. CVC and its affiliates will also hold shares of Class B 
Common Stock (including a currently exercisable warrant to purchase such stock) 
convertible at the holder's option into shares of Common Stock, which, if       
converted into Common Stock, would result in an increase in CVC's and its       
affiliates' beneficial ownership on a diluted basis by an additional 49% of the 
outstanding Common Stock. As a result, if CVC and its affiliates convert their  
shares of Class B Common Stock into shares of Common Stock, CVC and its         
affiliates will have sufficient voting power to elect the Company's board of    
directors and determine the results of other matters submitted to a vote of     
stockholders. Due to certain regulatory limitations affecting CVC, CVC may not  
own 20% or more of the voting securities of the Company without meeting certain 
regulatory requirements. Accordingly, the Company believes, based on discussions
with CVC, that CVC will maintain most of its equity interest in the Company in  
Class B Common Stock and will not convert such stock in the foreseeable future. 
See "Description of Capital Stock -- Class B Common Stock."                     

    In addition, Mr. Kittredge's employment agreement provides that he will be
the Chairman of the Board and Chief Executive Officer of the Company. The       
concentration of ownership may have the effect of delaying or preventing a      
change of control of the Company. In addition, there can be no assurance that in
any transfer of a controlling interest in the Company any other holders of      
Common Stock will be allowed to participate in any such transaction or will     
realize any premium with respect to their shares. See "Principal Stockholders." 

SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS                            

Sales of a substantial number of shares of Common Stock in the public 
market or the perception that such sales could occur could adversely affect     
prevailing market prices for the Common Stock. Upon completion of the Offering, 
the Company will have 7,647,520 shares of Common Stock outstanding and 8,877,115
shares of Class B Common Stock outstanding, and 2,958,510 shares of Class B     
Common Stock will be subject to issuance upon the exercise of a warrant. Of such
shares, the 3,600,000 shares of Common Stock being sold in the Offering         
(together with any shares sold upon exercise of the Underwriters' over-allotment
option) will be immediately eligible for sale in the public market without      
restriction, except for shares purchased by or issued to any affiliate of the   
Company. CVC and its affiliates have certain demand registration rights with    
respect to the Common Stock and Class B Common Stock of the Company held by     
them. All stockholders of the Company immediately prior to the Offering have    
piggyback rights with respect to sales of stock by the Company, and in the case 
of holders other than CVC and its affiliates, piggyback rights with respect to  
sales by CVC or its affiliates.                                                 

In connection with the Offering, the Company's executive officers and 
directors and CVC and all of the Company's shareholders have agreed not to      
dispose of any shares of Common Stock for a period of 180 days from the date of 
this Prospectus, or to make any demand for or exercise any right with respect to
the registration of the shares for such 180 day period, and the Company has     
agreed not to dispose of any shares (other than issuances by the Company of     
certain employee stock options and shares covered thereby) for a period of 180  
days from the date of this Prospectus, without the prior written consent of     
Merrill Lynch, Pierce,                                                          

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Fenner & Smith Incorporated, on behalf of the Underwriters. All existing        
stockholders have also waived all rights to register securities owned by them in
connection with the Offering.                                                   

  Upon expiration of the 180-day lockup period, 4,047,520 shares of Common
Stock will be eligible for sale subject to certain volume and other limitations 
imposed by Rule 144 under the Securities Act. In addition, 8,877,115 shares of  
Class B Common Stock will be outstanding and convertible at the holder's option 
into shares of Common Stock, and 2,958,510 shares of Class B Common Stock will  
be subject to issuance upon the exercise of a warrant. The sale of a substantial
number of shares held by the existing stockholders, whether pursuant to a       
subsequent public offering or otherwise, or the perception that such sales could
occur, could adversely affect the market price of the Common Stock and could    
materially impair the Company's future ability to raise capital through an      
offering of equity securities. See "Shares Eligible for Future Sale,"           
"Description of Capital Stock" and "Underwriting."                              

ABSENCE OF DIVIDENDS; RESTRICTION ON PAYMENT OF DIVIDENDS                       

  The Company does not expect to pay dividends for the foreseeable future.
The Company's Credit Agreement restricts the ability of the Company to pay      
dividends on the Common Stock. See "Dividend Policy" and "Description of Certain
Indebtedness."                                                                  

CERTAIN ANTI-TAKEOVER PROVISIONS                                                

The Company's certificate of incorporation and bylaws contain certain 
provisions that could make more difficult the acquisition of the Company by     
means of tender offer, a proxy contest or otherwise. The Company's charter      
establishes an advance notice procedure for stockholder nominations of persons  
for election to the board of directors in advance of an annual meeting of       
stockholders of the Company. Stockholders at an annual meeting may only consider
nominations specified in the notice of meeting or brought before the meeting by 
or at the direction of the board of directors, or by a stockholder who was a    
stockholder of record on the record date for the meeting, who is entitled to    
vote at the meeting, and who has given to the Company's Secretary timely written
notice, in proper form, of the stockholder's intention to make such nomination  
before the annual meeting. An amendment to this provision would require approval
by an affirmative vote of holders of 66 2/3% of the shares of voting stock of   
the Company. The Company's charter provides for cumulative voting in the        
election of directors. See "Description of Capital Stock -- Certain Provisions  
of the Company's Amended and Restated Certificate of Incorporation."            

DILUTION                                                                        

     The initial public offering price will be substantially higher than the net
tangible book value per share of Common Stock. Investors purchasing shares of   
Common Stock will therefore incur immediate and substantial dilution. See       
"Dilution."                                                                     

NO PRIOR PUBLIC MARKET; POTENTIAL VOLATILITY OF STOCK PRICE                     

Prior to the Offering, there has been no public market for the Common 
Stock. Although the Common Stock has been approved for listing on the New York  
Stock Exchange subject to official notice of issuance, there can be no assurance
that an active trading market for the Common Stock will develop or be sustained 
following the Offering or that the market price of the Common Stock will not    
decline below the initial public offering price. The initial public offering    
price of the Common Stock offered hereby was determined by negotiations between 
the Company and the Underwriters and may not be indicative of future market     
prices. The price at which the Common Stock will trade will depend upon a number
of factors, including, but not limited to, the Company's historical and         
anticipated quarterly and annual operating results, variations between such     
results and analyst and investor expectations, investor perceptions of the      
Company and comparable public companies, changes in the industries in which the 
Company operates or in the industries of the Company's significant customers,   
and general market and economic conditions, some of which factors are beyond the
Company's control. The stock market has from time to time experienced extreme   
price and volume fluctuations. See "Underwriting."                              

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USE OF PROCEEDS 

     The net proceeds to the Company from the sale of 3,600,000 shares of Common
Stock offered hereby are approximately $42.5 million, after deducting the       
estimated underwriting discount and offering expenses payable by the Company    
($49.1 million if the Underwriters' over-allotment option is exercised in full).
The Company intends to use such net proceeds: (i) to repay a senior subordinated
note in the aggregate principal amount of $22.5 million held by Citicorp        
Mezzanine Partners, L.P. ("CMP") (the "CMP Senior Note"), (ii) to repay a junior
subordinated note (the "GPC Junior Note") in the aggregate principal amount of  
$11.0 million held by GPC (the "GPC Junior Note"), (iii) to repay certain of the
term loan portion of the Credit Agreement of the Company in the aggregate       
principal amount of $8.7 million and (iv) to redeem certain shares of GCIH's    
preferred stock in connection with the Reorganization in the aggregate amount of
$374,000. See "Description of Certain Indebtedness" and "Certain Relationships  
and Related Transactions -- The Reorganization -- Exchange of GCIH Stock." The  
Company will use any net proceeds received upon the exercise of the             
Underwriters' over-allotment option for general corporate purposes, which may   
include the repayment of additional indebtedness.                               

The CMP Senior Note bears interest at a rate of 12.00% payable        
semi-annually on January 15 and July 15, matures in equal installments on       
January 22, 2003 and January 22, 2004 and was originally issued in connection   
with the Original Acquisition. The GPC Note bears interest at a rate of 12.00%  
payable annually in arrears, matures on January 22, 2006 and was originally     
issued in connection with the Original Acquisition. Dividends on the Preferred  
Stock accrue at a rate of 12.00% per annum of the "Liquidation Value." For such 
purposes, "Liquidation Value" is equal to $100 plus any accrued and unpaid      
dividends thereon. The preferred stock is redeemable by the Company on January  
31, 2007 or any time prior thereto, in whole or in part, at a price per share   
equal to the Liquidation Value plus accrued and unpaid dividends thereon. The   
term loan portion of the Credit Agreement bears interest at a rate equal to     
either (a) the Base Rate plus the Applicable Percentage or (b) the Eurodollar   
Rate plus the Applicable Percentage (each such term as defined in the Credit    
Agreement). The rate used is determined by the Borrower and was 7.19% as of     
April 4, 1998. The term loan portion of the Credit Agreement matures on         
September 30, 2002 and was originally incurred in connection with the           
Acquisition.                                                                    

DIVIDEND POLICY 

  The Company has not paid any dividends with respect to the Common Stock.
The Company presently intends to retain future earnings to finance its growth   
and development and therefore does not expect to pay any cash dividends in the  
foreseeable future. In addition, the Credit Agreement restricts the payment of  
cash dividends by the Company (subject to certain limited exceptions), and the  
Company may in the future enter into loan or other agreements or issue debt     
securities or preferred stock that restrict the payment of dividends. The       
declaration and payment of dividends by the Company are subject to the          
discretion of the Board of Directors of the Company (the "Board"). Any future   
determination to pay dividends will depend on the Company's results of          
operations, financial condition, capital requirements, contractual restrictions 
and other factors deemed appropriate by the Board.                              

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CAPITALIZATION

The following table sets forth the capitalization of the Company as of
April 4, 1998 (i) as adjusted to give effect to the Reorganization and (ii) as  
further adjusted to reflect the Offering and the application of the estimated   
net proceeds therefrom as described in "Use of Proceeds." This table should be  
read in conjunction with the "Selected Consolidated Financial Data," the        
Unaudited Pro Forma Condensed Consolidated Statement of Operations and the      
audited consolidated financial statements and related notes thereto included    
elsewhere in this Prospectus.                                                   

                                                        [Enlarge/Download Table]

                                                                       AT APRIL 4, 1998          
                                                             ------------------------------------
                                                                 ADJUSTED FOR          PRO FORMA 
                                                               REORGANIZATION(a)      ADJUSTED(b)
                                                             ---------------------    -----------
                                                              (IN THOUSANDS, EXCEPT SHARE DATA)  
                                                                                                 
Current debt:                                                                                    
  Revolving credit loans (c)................................       $ 18,840            $ 18,840  
  Current portion of long-term debt.........................          8,075               1,075  
                                                                   --------            --------  
          Total current debt................................       $ 26,915            $ 19,915  
                                                                   ========            ========  
Long-term debt, net of current portion:                                                          
  Term loan portion of Credit Agreement.....................       $ 30,000            $ 28,342  
  Senior subordinated note payable..........................         22,500              --      
  Junior subordinated note payable..........................         11,000              --      
  Other long-term debt......................................          4,022               4,022  
                                                                   --------            --------  
          Total long-term debt..............................         67,522              32,364  
Shareholder's equity:                                                                            
  Common Stock, par value $.01 per share, 20,774 shares                                          
     authorized; 4,048 shares outstanding, as adjusted for                                       
     Reorganization; 7,648 shares outstanding pro forma                                          
     adjusted...............................................             40                  76  
  Common Stock, Class B, par value $.01 per share, 11,842                                        
     shares authorized; 8,877 shares outstanding, as                                             
     adjusted for Reorganization; 8,877 shares outstanding                                       
     pro forma adjusted.....................................             89                  89  
Detachable stock warrants...................................            189                 189  
Additional paid-in-capital..................................         21,029              63,517  
Retained earnings...........................................         16,306              16,306  
                                                                   --------            --------  
Less unearned compensation under restricted stock plan......          (720)               (720)  
                                                                   --------            --------  
  Total shareholders' equity................................         36,933              79,457  
                                                                   --------            --------  
          Total capitalization..............................       $104,455            $111,821  
                                                                   ========            ========  

---------------                                                                 

(a) See "Certain Relationships and Related Transactions -- The Reorganization." 

(b) Additionally, in connection with the Reorganization, net proceeds of the    
 Offering will be used to redeem certain shares of GCIH's preferred stock,
   including accrued dividends, with a book value of $366 as of April 4, 1998.
    Actual redemption will be in the amount of $374, representing the book value
of such shares, including accrued dividends, as of June 10, 1998. As a  
   result, net proceeds applied to repay debt will total $42,150. See "Certain
  Relationships and Related Transactions -- Transactions with Management and
Directors."                                                             

(c) The Company had approximately $30,180 outstanding under the revolving credit
portion of the Credit Agreement at April 4, 1998, of which $11,340      
    represented letters of credit, for both the purchase of inventory and credit
support, and of which $18,840 were revolving credit loans.              

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DILUTION

     As of April 4, 1998, the Company had a pro forma net tangible book value of
approximately $13.3 million, or $1.03 per share of Common Stock. Pro forma net  
tangible book value per share of Common Stock represents the difference between 
the net tangible assets and the liabilities of the Company, on a consolidated   
basis, divided by the total number of shares of Common Stock outstanding (on a  
pro forma basis after giving effect to the Reorganization). Without taking into 
account any changes in the net tangible book value after April 4, 1998, other   
than to give effect to the Offering and the application of the estimated net    
proceeds therefrom, the pro forma net tangible book value of the Company at     
April 4, 1998 after the Offering would have been approximately $55.8 million, or
$3.38 per share. This represents an immediate increase in net tangible book     
value of $2.35 per share of Common Stock to existing stockholders and an        
immediate dilution of $9.62 per share to new investors. The following table     
illustrates this per share dilution:                                            

                                                                [Download Table]

                                                                                  
Initial public offering price per share.....................          $13.00      
  Pro forma net tangible book value per share before the                          
     Offering...............................................  $ 1.03              
  Increase in net tangible book value per share attributable                      
     to the Offering........................................    2.35              
                                                              ------              
Pro forma net tangible book value per share after the                             
  Offering..................................................            3.38      
                                                                      ------      
Immediate dilution per share to new investors in the                              
  Offering..................................................          $ 9.62(a)(b)
                                                                      ======      

---------------                                                                 
(a) If the Underwriters' over-allotment option is exercised in full, dilution to
new investors will be $9.34 per share.                                  

(b) The foregoing computations assume no exercise of stock options and warrants 
  after April 4, 1998. As of April 4, 1998, there was an outstanding warrant
  to purchase an aggregate of 2,958,510 shares of Common Stock at a weighted
average exercise price of approximately $0.0006 per share. If all of the
foregoing warrants had been exercised at April 4, 1998, pro forma net   
tangible book value per share would have been $2.87, representing an    
immediate dilution to new investors of $10.13 per share and an immediate
  increase in net tangible book value of $1.84 per share attributable to the
Offering.                                                               

   The following table summarizes, on a pro forma basis as of April 4, 1998,
the number of shares of Common Stock purchased from the Company, the estimated  
value of the total consideration or value paid or deemed attributable thereto   
and the average price per share paid by or attributable to existing stockholders
and the new investors purchasing shares in the Offering.                        

                                                        [Enlarge/Download Table]

                                                                           AVERAGE PRICE
                                   SHARES           TOTAL CONSIDERATION    PER SHARE OF 
                            ---------------------  ----------------------     COMMON    
                              NUMBER      PERCENT    AMOUNT       PERCENT      STOCK    
                            ----------    -------  -----------    -------  -------------
                                                                                        
Current stockholders....... 12,898,680(a)   78.2%  $15,402,417      24.8%     $ 1.19    
New investors..............  3,600,000      21.8    46,800,000      75.2       13.00    
                            ----------     -----   -----------     -----                
          Total(b)......... 16,498,680     100.0%   62,202,417     100.0%               
                            ==========     =====   ===========     =====                

---------------                                                                 
(a) Excludes 2,958,510 shares of Class B Common Stock which may be issued upon  
  the exercise of a warrant which was issued in connection with the Original
Acquisition.                                                            

(b) Excludes 750,000 shares of Common Stock reserved for issuance under the     
Incentive Plan.                                                         

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    SELECTED CONSOLIDATED FINANCIAL DATA

   The following table presents (i) selected historical consolidated financial
data of the Predecessor Company as of and for the year ended March 31, 1994, as 
of and for the nine months ended December 31, 1994 and as of and for the year   
ended December 31, 1995 and (ii) selected historical consolidated financial     
information of the Company at December 31, 1996 and for the period from January 
22, 1996 to December 31, 1996, as of and for the year ended December 31, 1997,  
the first quarter ended March 29, 1997, the first quarter ended April 4, 1998   
and at April 4, 1998. The selected consolidated financial data of the           
Predecessor have been derived from the financial statements of the Predecessor  
for the year ended December 31, 1995, and the selected financial data of the    
Company for the period from January 22, 1996 to December 31, 1996 and the year  
ended December 31, 1997 have been derived from the financial statements of the  
Company, each of which have been audited by Ernst & Young LLP. The selected     
consolidated financial data as of and for the year ended March 31, 1994, as of  
and for the nine months ended December 31, 1994, and the three month periods    
ended April 4, 1998 and March 29, 1997, are derived from unaudited financial    
statements. The unaudited financial statements include all adjustments,         
consisting of normal recurring accruals, which the Company and the Predecessor  
Company considered necessary for a fair presentation of the financial position  
and the results of operations for these periods. Operating results for the three
months ended April 4, 1998 are not necessarily indicative of the results that   
may be expected for the entire year ending December 31, 1998. The selected      
consolidated financial data should be read in conjunction with "Management's    
Discussion and Analysis of Financial Condition and Results of Operations," the  
financial statements and notes thereto included elsewhere in this Prospectus.   

                                                        [Enlarge/Download Table]

                                         PREDECESSOR                                           COMPANY                         
                                           COMPANY                    ---------------------------------------------------------
                          ------------------------------------------  PERIOD FROM                                              
                                         NINE MONTHS                  JANUARY 22,                       FIRST QUARTER ENDED    
                           YEAR ENDED       ENDED        YEAR ENDED     1996 TO       YEAR ENDED    ---------------------------
                           MARCH 31,     DECEMBER 31,   DECEMBER 31,  DECEMBER 31,   DECEMBER 31,    MARCH 29,       APRIL 4,  
                              1994           1994         1995(A)       1996 (B)       1997 (C)         1997           1998    
                          ------------   ------------   ------------  ------------   ------------   ------------   ------------
                                                                                                                               
STATEMENT OF OPERATIONS                                                                                                        
 DATA:                                                                                                                         
 Net sales...............   $170,750       $144,130       $197,401      $185,223       $202,037       $ 45,350       $ 64,647  
 Cost of sales...........    136,075        113,116        156,434       138,608        146,294         32,654         47,212  
                            --------       --------       --------      --------       --------       --------       --------  
 Gross margin............     34,675         31,014         40,967        46,615         55,743         12,696         17,435  
 Selling, general and                                                                                                          
   administrative                                                                                                              
   expenses..............     22,734         19,149         24,633        23,894         27,766          6,718          9,614  
 Stock compensation(d)...     --             --             --            --              9,465         --             --      
 Other...................       (674)           500         --               689            231            514         --      
                            --------       --------       --------      --------       --------       --------       --------  
 Total operating                                                                                                               
   expenses..............     22,060         19,649         24,633        24,583         37,462          7,232          9,614  
                            --------       --------       --------      --------       --------       --------       --------  
 Income before interest                                                                                                        
   and income taxes......     12,615         11,365         16,334        22,032         18,281          5,464          7,821  
 Interest expense, net...      1,085            684         --             6,308          5,798          1,326          2,262  
                            --------       --------       --------      --------       --------       --------       --------  
 Income before income                                                                                                          
   taxes and                                                                                                                   
   extraordinary item,                                                                                                         
   net...................     11,530         10,681         16,334        15,724         12,483          4,138          5,559  
 Provision for income                                                                                                          
   taxes.................      4,385          4,140          6,270         6,244          4,764          1,614          2,139  
                            --------       --------       --------      --------       --------       --------       --------  
 Income before                                                                                                                 
   extraordinary item,                                                                                                         
   net...................      7,145          6,541         10,064         9,480          7,719          2,524          3,420  
 Extraordinary item,                                                                                                           
   net(e)................     --             --             --            --               (708)        --             --      
 Less preferred stock                                                                                                          
   dividends.............     --             --             --            (1,328)        (1,637)          (383)          (452) 
                            --------       --------       --------      --------       --------       --------       --------  
 Net income available to                                                                                                       
   common shareholders...   $  7,145       $  6,541       $ 10,064      $  8,152       $  5,374       $  2,141       $  2,968  
                            ========       ========       ========      ========       ========       ========       ========  
 Earnings per common                                                                                                           
   share.................                                                  11.11           7.48           2.93           4.18  
 Earnings per common                                                                                                           
   share -- assuming                                                                                                           
   dilution..............                                                   8.15           5.65           2.20           3.16  

                                                        [Enlarge/Download Table]

                        AT MARCH 31,                       AT DECEMBER 31,                       AT APRIL 4, 
                        ------------  ---------------------------------------------------------  ------------
                            1994          1994           1995           1996           1997          1998    
                        ------------  ------------   ------------   ------------   ------------  ------------
                                                            (IN THOUSANDS)                                   
                                                                                                             
BALANCE SHEET DATA:                                                                                          
  Working capital......   $ 77,122      $ 63,262       $ 69,591       $ 56,205       $ 65,877      $ 68,187  
  Total assets.........    122,070       110,258        103,196        106,060        163,891       178,442  
  Total debt...........         80            --             --         43,436         77,010        94,437  
  Preferred stock                                                                                            
    including accrued                                                                                        
    dividends..........         --            --             --         13,068         14,610        15,062  
  Investment by GPC....    100,778        81,570         79,129             --             --            --  
  Shareholders'                                                                                              
    equity.............         --            --             --          9,101         19,419        22,237  

                                                   (footnotes on following page)

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---------------                                                                 
(footnotes to table on previous page)                                           

(a) The Predecessor Company operated as a wholly-owned subsidiary of GPC until  
being divested by GPC on January 22, 1996. The financial data for the   
    Predecessor Company is not entirely comparable to that of the Company due to
certain factors including the following:                                

   (i) The Predecessor Company did not incur any royalty expense for the use
   of the Gerber name and baby head logo. During the period from January 22,
     1996 to December 31, 1996, and for fiscal year ended December 31, 1997, the
 royalty expense to GPC was $1.9 million and $3.5 million, respectively.

 (ii) The Predecessor Company's net sales in 1995 included approximately
  $8.3 million of net sales at cost to GPC that generated no gross margin.
Net sales to GPC in 1996 and 1997 of approximately $6.2 million and   
   approximately $4.3 million, respectively, generated gross margins in 1996
and 1997 of approximately $950 and $598, respectively.                

(iii) The Predecessor Company was included in various self-insurance  
     programs provided by GPC, including medical, dental, workers' compensation,
     comprehensive general and excess liability and property damage and business
interruption. GPC also provided management information services to the
     Predecessor Company and allocated a portion of the expenses incurred to the
   Predecessor Company. In addition, the Predecessor Company was allocated a
    portion of legal and professional costs for services directly attributable
to the Predecessor Company. Certain services were provided by GPC's   
   corporate staff, for which no charge was made to the Predecessor Company.
  Management believes the aggregate cost of these unallocated services was
  insignificant. The Predecessor Company was charged for all outside legal
and professional expenses directly attributable to it.                

 (iv) In 1995, the Predecessor Company had no long term debt and was not
charged any interest expense as a subsidiary of GPC.                  

   (v) The provision for income taxes of the Predecessor Company essentially
results from applying the Federal and state statutory rates to the    
operations of a stand-alone company.                                  

(b) Excludes the Predecessor Company's unaudited operations summarized below for
the period January 1, 1996 through January 21, 1996.                    

                                                                [Download Table]
                                                       
Net sales.....................................  $6,657 
Gross margin..................................   1,070 
SG&A expenses.................................   1,386 
Loss before interest and income taxes.........    (316)
Net loss......................................    (196)

(c) Includes the following operating results for Auburn and Sport Socks Ireland 
for the period December 17, 1997 through December 31, 1997.             

                                                                [Download Table]
                                                       
Net sales.....................................  $1,511 
Gross margin..................................     184 
SG&A expenses.................................     225 
Loss before interest and income taxes.........     (41)
Net loss......................................     (28)

(d) Represents expense related to stock compensation incurred in connection with
   the sale of capital stock to executives and management of the Company below
 fair market value. See "Certain Relationships and Related Transactions --
Transactions with Management and Directors."                            

(e) Represents unamortized loan costs and prepayment penalty totaling $708 (net 
of an income tax benefit of $452) expensed in connection with the       
  replacement of the Company's then-existing credit facility with the Credit
Agreement.                                                              

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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 

    The Unaudited Pro Forma Condensed Consolidated Statement of Operations for
the year ended December 31, 1997 gives effect to (a) the Acquisition which      
occurred as of December 17, 1997 and (b) the Reorganization and the Offering, as
if such events had occurred on January 1, 1997.                                 

  The unaudited pro forma consolidated financial information is based upon
the historical consolidated financial statements of each of the Company, Auburn 
Hosiery Mills, Inc. (which includes the results of its consolidated subsidiary, 
Sport Socks Co. (UK) Limited, for all periods hereunder) and Sport Socks Ireland
and should be read in conjunction with the financial statements and the related 
notes thereto included elsewhere in this Prospectus. The historical financial   
information of Auburn and Sport Socks Ireland set forth below covers the period 
from January 1, 1997 through December 16, 1997. The historical financial        
information of Sport Socks Ireland has been adjusted for inclusion in the       
Unaudited Pro Forma Condensed Consolidated Financial Information to conform to  
U.S. generally accepted accounting principles and has been translated into U.S. 
dollars based upon the average exchange rate of U.S. dollars/Irish pounds for   
the period January 1, 1997 through December 16, 1997 of U.S. $1.52 to L1.00. The
Company's historical results of operations for the year ended December 31, 1997 
include the results of operations of Auburn Hosiery Mills, Inc. and Sport Socks 
Ireland since December 17, 1997, the effective date of the Acquisition.         

The pro forma financial information presented does not purport to be  
indicative of the financial position or operating results which would have been 
achieved had the transactions described above taken place at the dates indicated
and are not necessarily indicative of the Company's financial position or       
results of operations for any future date or period.                            

                                                        [Enlarge/Download Table]

                                                                 YEAR ENDED DECEMBER 31, 1997                                  
                                -----------------------------------------------------------------------------------------------
                                           HISTORICAL                                                                          
                                --------------------------------                                                               
                                           AUBURN                  ACQUISI-                  REORGANIZATION                    
                                           HOSIERY    SPORT          TION           PRO           AND            PRO FORMA     
                                           MILLS,     SOCKS        ADJUST-         FORMA        OFFERING            AS         
                                 GERBER     INC.     IRELAND        MENTS         COMBINED    ADJUSTMENTS        ADJUSTED      
                                --------   -------   -------       --------       --------   --------------     -----------    
                                                                                                                               
Net sales.....................  $202,037   $49,033   $19,030                      $270,100                      $   270,100    
Cost of sales.................   146,294    39,019    13,974 (a)       (90)(b)     199,197                          199,197    
                                --------   -------   -------       -------        --------      -------         -----------    
Gross margin..................    55,743    10,014     5,056            90          70,903                           70,903    
Operating expenses:                                                                                                            
  Selling, general and                                                                                                         
    administrative                                                                                                             
    expenses..................    27,997     7,393     4,024 (a)     1,022 (c)      40,436                           40,436    
  Foreign exchange loss (d)...        --        --     1,042                         1,042                            1,042    
  Stock compensation (e)......     9,465        --        --                         9,465                            9,465    
                                --------   -------   -------       -------        --------      -------         -----------    
    Total operating                                                                                                            
      expenses................    37,462     7,393     5,066         1,022          50,943                           50,943    
                                --------   -------   -------       -------        --------      -------         -----------    
Income (loss) before interest                                                                                                  
  and income taxes............    18,281     2,621       (10)         (932)         19,960                           19,960    
Interest expense..............     5,798       151        71         3,022 (f)       9,219       (4,989)(g)           4,230    
                                                                       177 (h)          --                                     
                                --------   -------   -------       -------        --------      -------         -----------    
Income (loss) before income                                                                                                    
  taxes.......................    12,483     2,470       (81)       (4,131)         10,741       (4,989)             15,730    
Provision (benefit) for income                                                                                                 
  taxes.......................     4,764       939       (38)       (1,549)(i)       4,116        1,871(i)            5,987    
                                --------   -------   -------       -------        --------      -------         -----------    
Income (loss) from continuing                                                                                                  
  operations (j)..............  $  7,719   $ 1,531   $   (43)      $(2,582)       $ 6,625       $ 3,118         $     9,743    
                                ========   =======   =======       =======        ========      =======         ===========    
Income from continuing                                                                                                         
  operations per basic                                                                                                         
  share.......................                                                                                  $      0.61 (k)
                                                                                                                ===========    
Income from continuing                                                                                                         
  operations per diluted                                                                                                       
  share.......................                                                                                  $      0.50 (k)
                                                                                                                ===========    
Weighted average shares                                                                                                        
  outstanding - basic.........                                                                                   15,884,946    
                                                                                                                ===========    
Weighted average shares                                                                                                        
  outstanding - diluted.......                                                                                   19,497,685    
                                                                                                                ===========    

See Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations 
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NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS 
(IN THOUSANDS)

(a)  Reflects reclassification of royalty expense from selling, general and     
   administrative expenses to cost of sales in conformity with the Company's
reporting practices.                                                  

(b)  Reflects a reduction in the cost of goods sold arising from a reduction in 
  depreciation expense related to net adjustments to net carrying value of
certain fixed assets of the acquired companies.                       

(c)  Reflects the amortization of goodwill resulting from the Acquisition based 
 upon a 20 year estimated period of benefit. The goodwill was derived as
follows:                                                              

                                                                [Download Table]
                                                             
Purchase price.....................................  $40,000 
Assets acquired....................................  (35,870)
Liabilities assumed................................   15,895 
Acquisition costs..................................      417 
                                                     ------- 
Total Goodwill.....................................  $20,442 
                                                     ======= 

(d)  In connection with the acquisition of Sport Socks Ireland, the Company     
 adopted an accounting policy to mark to market forward foreign exchange
  contracts which do not qualify for hedge transactions. This adoption was
required to conform Irish GAAP to U.S. GAAP and resulted in a $46     
 adjustment to Sport Socks Ireland's statement of operations. The $1,088
loss was the result of unrealized losses in respect of forward foreign
currency contracts relating to future transactions. See the Company's 
consolidated financial statements and the notes thereto.              

(e)  Represents expense related to stock compensation incurred in connection    
    with the sale of capital stock to executives and management of the Company
below fair market value. See "Certain Relationships and Related       
Transactions -- Transactions with Management and Directors."          

(f)  Reflects interest adjustments in connection with the Acquisition detailed  
as follows:                                                           

                                                                [Download Table]
                                                                    
Interest expense related to deferred financing cost                 
  amortization associated with the new Credit Agreement.....  $  208
Interest expense resulting from $40.0 million term loan             
  under the Credit Agreement assuming scheduled quarterly           
  principal amortization of $1.5 million with a rate of             
  7.5%......................................................   2,814
                                                              ------
     Adjustment.............................................  $3,022
                                                              ======

(g)  Reflects adjustments to interest expense as a result of the Offering:      

                                                                [Download Table]
                                                                    
Interest on the $22.5 million Senior Subordinated Note              
  Payable, one-half of the principal due January 2003 and           
  balance due January 2004 at an interest rate of 12.00%....  $2,738
Interest on the $11.0 million Junior Subordinated Note              
  Payable, due January 2006 at an interest rate of 12.00%...   1,338
Interest on $8.7 million outstanding under the Credit               
  Agreement at an estimated interest rate of 8.75%..........     768
Amortization of deferred financing costs on the retired             
  debt......................................................     113
Amortization of discount on the $22.5 million Senior                
  Subordinated Note Payable.................................      32
                                                              ------
     Adjustment.............................................  $4,989
                                                              ======

(h)  Reflects adjustment to decrease interest income by $177, in connection with
     the settlement of certain intercompany receivables with the previous owner.

(i)   Reflects adjustment for Federal and state income taxes based on statutory 
   rates adjusted for permanent differences such as non-deductible expenses.

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NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS 
(CONTINUED) 
(IN THOUSANDS)

(j)   Excludes extraordinary item related to unamortized loan costs and         
   prepayment penalty totaling $708 (net of an income tax benefit of $452)
     expensed in connection with the prepayment of the Company's then-existing
credit facility with the Credit Agreement.                          

(k)  Calculated using the weighted average number of shares of Common Stock     
    outstanding during the period assuming that (i) a 15.4693 to 1 stock split
will occur prior to or contemporaneously with the Offering, (ii) the  
  majority of the preferred stock issued and outstanding, plus accrued and
  unpaid dividends, will be converted into Class B Common Stock at the per
share offering price, minus underwriters' discount, with the remainder
being converted into the right to receive cash equal to $355 in the   
   aggregate, and (iii) the Offering will generate estimated net proceeds of
     approximately $42,524 as a result of the sale of 3,600,000 shares of Common
Stock issued upon consummation of the Offering (as if such shares were
 outstanding as of the beginning of the period), which proceeds shall be
used as described above in "Use of Proceeds."                         

  In connection with the Offering, the deferred financing costs associated
    with the subordinated debt to be repaid with the Offering proceeds will be
   written off along with the unamortized discount associated with such debt
   as an extraordinary item in 1998. This extraordinary item is estimated to
    be approximately $309 (net of a tax benefit of $185), and is excluded from
the pro forma, as adjusted income from continuing operations.         

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF 
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 

  The following discussion and analysis should be read in conjunction with
"Selected Consolidated Financial Data" and the Company's consolidated financial 
statements and notes thereto included elsewhere in this Prospectus. Except for  
the historical information contained herein, the discussion in this Prospectus  
contains forward-looking statements that involve risks and uncertainties, such  
as statements of the Company's plans, objectives, expectations and intentions.  
The cautionary statements made in this Prospectus should be read as being       
applicable to all related forward-looking statements wherever they appear in    
this Prospectus. The Company's actual results could differ materially from those
discussed here. Factors that could cause or contribute to such differences      
include, but are not limited to, those discussed below and in the section       
entitled "Risk Factors," as well as those discussed elsewhere in this           
Prospectus.                                                                     

OVERVIEW                                                                        

In January 1996, Gerber Childrenswear, Inc. was acquired from GPC by a
group of investors led by Edward Kittredge, the Company's Chairman, President   
and Chief Executive Officer, who assembled the Company's current management     
team. Since the Original Acquisition, GPC has not owned any capital stock of the
Company, nor have GPC and the Company shared common directors, officers or      
employees. The new management team, under the direction of Mr. Kittredge,       
developed a series of initiatives to strengthen the Company's financial         
operations and improve its operations. To achieve cost efficiencies, Gerber     
consolidated manufacturing facilities, established a flexible production        
strategy including domestic and offshore manufacturing and sourcing components  
and centralized finished product purchasing across all categories. In addition, 
Gerber has extended the payment terms of the majority of its yarn supply        
arrangements from 30 to 60 days, and the Company is seeking to extend Auburn's  
payment terms as well. See "Business." Furthermore, Gerber renewed its emphasis 
on production quality, reducing the percentage of irregular products produced in
certain of the Company's principal factories to approximately 3% from           
approximately 7%. Gerber also encouraged a more entrepreneurial culture by      
enhancing its incentive-based compensation program for executive, managerial and
professional employees and by installing an equity ownership program for        
employees. As a result, management believes that the Company is well positioned 
to implement its strategy to remain a low cost producer of high quality branded 
products to volume retailers.                                                   

   In addition, in order to build upon the Company's expertise as a low-cost
supplier of branded merchandise to volume retailers, the Company acquired all of
the outstanding capital stock of Auburn in December 1997 for approximately $40.0
million in cash. Auburn manufactures, markets and sells branded sport socks for 
men, women and children under established brand names such as Wilson, Coca-Cola 
and Converse in the U.S. and internationally and under the Dunlop brand name in 
Europe. Auburn markets to a diversified customer base in the U.S. and Europe,   
including volume retailers, department stores, wholesale clubs and major        
sporting good chains. As a result of the Recent Acquisition, the Company markets
products in over 25 countries. The Company believes that Auburn's expertise in  
hosiery will position it to capitalize on growth opportunities and the Recent   
Acquisition will provide opportunities to achieve certain economies of scale and
efficiencies in the areas of purchasing (e.g. yarn), data processing and        
selling, general and administrative expenses (e.g. property and casualty        
insurance). In 1997, pro forma for the Recent Acquisition, the Company's net    
sales and income from continuing operations were $270.1 million and $6.6        
million, respectively.                                                          

RESULTS OF OPERATIONS                                                           

The following discussion and analysis compares the operations of the  
Predecessor Company for 1995, a shortened period of the Company for 1996        
(January 22, 1996 through December 31, 1996), and a full year of the Company for
1997 (including the operations of two acquired companies for the period December
17, 1997 to December 31, 1997). The operations of the Company for 1996 and 1997 
reflect the accrual by the Company of a portion of future licensing royalty fees
that will become payable to GPC in years 2002 through 2005. The Company is      
recording charges against earnings for the straight line effect of the          
anticipated total royalty expense expected to be incurred over the initial ten  
year term of the licensing agreement                                            

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with GPC. No licensing fees are required to be paid during the first six years  
of the agreement. The amount of such licensing royalty fees accrued in 1996 and 
1997 were $1.9 million and $3.5 million, respectively.                          

    The Predecessor Company operated as a wholly-owned subsidiary of GPC until
being divested by GPC on January 22, 1996. The financial data for the           
Predecessor Company is not entirely comparable to that of the Company due to    
certain factors including the following:                                        

   (i) The Predecessor Company did not incur any royalty expense for the use
   of the Gerber name and baby head logo. During the period from January 22,
     1996 to December 31, 1996, and for fiscal year ended December 31, 1997, the
 royalty expense to GPC was $1.9 million and $3.5 million, respectively.

 (ii) The Predecessor Company's net sales in 1995 included approximately
  $8.3 million of net sales at cost to GPC that generated no gross margin.
Net sales to GPC in 1996 and 1997 of approximately $6.2 million and   
   approximately $4.3 million, respectively, generated gross margins in 1996
and 1997 of approximately $950,000 and $598,000, respectively.        

(iii) The Predecessor Company was included in various self-insurance  
     programs provided by GPC, including medical, dental, workers' compensation,
     comprehensive general and excess liability and property damage and business
interruption. GPC also provided management information services to the
     Predecessor Company and allocated a portion of the expenses incurred to the
   Predecessor Company. In addition, the Predecessor Company was allocated a
    portion of legal and professional costs for services directly attributable
to the Predecessor Company. Certain services were provided by GPC's   
   corporate staff, for which no charge was made to the Predecessor Company.
  Management believes the aggregate cost of these unallocated services was
  insignificant. The Predecessor Company was charged for all outside legal
and professional expenses directly attributable to it.                

 (iv) In 1995, the Predecessor Company had no long-term debt and was not
charged any interest expense as a subsidiary of GPC.                  

   (v) The provision for income taxes of the Predecessor Company essentially
results from applying the Federal and state statutory rates to the    
operations of a stand-alone company.                                  

 The increase in the 1997 net inventory over 1996 net inventory included
$8.5 million associated with the purchase of Auburn. Excluding Auburn in 1997,  
the inventory turnover rates in 1997 and 1996 were 2.6 times and 2.7 times,     
respectively.                                                                   

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     The following table sets forth, for the periods indicated, income statement
data expressed as a percentage of revenue. Any trends reflected by the following
table may not be indicative of future results.                                  

                                                        [Enlarge/Download Table]

                                                        PERCENTAGE OF NET SALES                                 
                        ----------------------------------------------------------------------------------------
                        PREDECESSOR COMPANY                                COMPANY                              
                        -------------------   ------------------------------------------------------------------
                                                PERIOD FROM                                                     
                            YEAR ENDED        JANUARY 22, 1996    YEAR ENDED     FIRST QUARTER    FIRST QUARTER 
                           DECEMBER 31,       TO DECEMBER 31,    DECEMBER 31,   ENDED MARCH 29,   ENDED APRIL 4,
                               1995                 1996             1997            1997              1998     
                        -------------------   ----------------   ------------   ---------------   --------------
                                                                                                                
Net sales..............        100.0%              100.0%           100.0%           100.0%           100.0%    
Cost of sales..........         79.3                74.8             72.4             72.0             73.0     
                               -----               -----            -----            -----            -----     
Gross margin...........         20.7                25.2             27.6             28.0             27.0     
Selling, general &                                                                                              
  administrative                                                                                                
  expenses.............         12.4                12.9             13.7             14.8             14.9     
Stock compensation.....           --                  --              4.7               --               --     
Other..................           --                 0.4              0.1              1.2               --     
                               -----               -----            -----            -----            -----     
Income before interest                                                                                          
  and income taxes.....          8.3                11.9              9.1             12.0             12.1     
Interest expense,                                                                                               
  net..................           --                 3.4              2.9              2.9              3.5     
                               -----               -----            -----            -----            -----     
Income before income                                                                                            
  taxes and                                                                                                     
  extraordinary item,                                                                                           
  net..................          8.3                 8.5              6.2              9.1              8.6     
Provision for income                                                                                            
  taxes................          3.2                 3.4              2.4              3.6              3.3     
                               -----               -----            -----            -----            -----     
Income before                                                                                                   
  extraordinary item,                                                                                           
  net..................          5.1                 5.1              3.8              5.5              5.3     
Extraordinary item,                                                                                             
  net..................           --                  --             (0.3)              --               --     
                               -----               -----            -----            -----            -----     
Net income.............          5.1%                5.1%             3.5%             5.5%             5.3%    
                               =====               =====            =====            =====            =====     

FIRST QUARTER ENDED APRIL 4, 1998 COMPARED TO FIRST QUARTER ENDED MARCH 29, 1997

  The Company's first three quarters always end on the Saturday closest to
the quarter end. The fourth quarter ends on December 31 of the applicable year. 
The Company believes that these cutoffs have no significant impact on the       
Company's financial results.                                                    

    Net sales.  Net sales were $64.6 million for the first quarter ended April
4, 1998, an increase of $19.3 million or 42.6% over net sales of $45.3 million  
for the first quarter of 1997. Of this increase, $14.5 million represented net  
sales by Auburn, which was acquired on December 17, 1997. Excluding the Auburn  
acquisition, net sales increased $4.8 million or 10.6% over first quarter 1997  
due to increased unit sales to existing customers in core categories. Because of
the introduction of a new program to Auburn's major customer in the first       
quarter of 1997, as well as the deterioration of the Irish currency compared to 
the U.S. dollar in 1998, Auburn's net sales for the first quarter of 1997 were  
higher than its net sales for the first quarter of 1998.                        

Gross margin.  Gross margin as a percentage of net sales declined from
28.0% in the first quarter of 1997 to 27.0% in the first quarter of 1998. The   
decrease in margin was due to the inclusion of Auburn sales, which typically    
have lower gross margins than Gerber, offset in part by improved margins on     
Gerber sales driven by a more favorable product mix.                            

Selling general & administrative expenses.  Selling, general and      
administrative expenses as a percentage of net sales increased slightly to 14.9%
in the first quarter of 1998, from 14.8% in the first quarter of 1997. The      
increase is primarily related to increased selling and administrative expenses  
associated with Auburn, and is somewhat offset by a reduction in advertising    
expense as a percentage of net sales.                                           

    Other.  Other represents the cost of closing and realignment of facilities
aggregating $0.5 million in 1997.                                               

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     Income before interest and income taxes.  Income before interest and income
taxes as a percentage of net sales was 12.1% in the first quarter of 1998 versus
12.0% in the first quarter of 1997.                                             

Interest expense, net.  Interest expense was $2.3 million in the first
quarter of 1998 versus $1.3 million in the first quarter of 1997. The increase  
in interest expense reflects the higher debt levels associated with the         
borrowings incurred to pay the purchase price of Auburn.                        

     Provision for income taxes.  Provision for income taxes was $2.1 million in
the first quarter of 1998, compared to $1.6 million in the first quarter of     
1997. The effective tax rate was 38.5% for 1998 as compared to 39.0% for 1997.  

  Net income.  As a result of the above, first quarter net income was $3.4
million in 1998, a 35.5% increase over the $2.5 million in the first quarter of 
1997.                                                                           

YEAR ENDED DECEMBER 31, 1997 COMPARED TO PERIOD FROM JANUARY 22, 1996 TO        
DECEMBER 31, 1996                                                               

 Net sales.  Net sales were $202.0 million in 1997, an increase of $16.8
million, or 9.1%, from net sales of $185.2 million for the period January 22,   
1996 to December 31, 1996. The revenue in 1997 included three weeks of          
additional results compared to 1996 and also included $1.5 million relating to  
Auburn sales following its acquisition on December 17, 1997. Excluding Auburn   
results in 1997 and including the Predecessor Company's results for the period  
January 1, 1996 through January 21, 1996, the increase in net sales was $9.0    
million, primarily resulting from increases in unit sales to existing customers 
in core categories. The growth in unit sales was primarily due to a greater     
emphasis on developing new product categories and the introduction of new       
displays offering promotional buying advantages for the consumer.               

     Gross margin.  Gross margin as a percentage of net sales increased to 27.6%
in 1997 from 25.2% in 1996. Gross margin is determined after accruing royalty   
expense under the Gerber license agreement of $3.5 million in 1997 versus $1.9  
million in 1996. The principal reasons for the improved gross margin as a       
percentage of net sales were lower manufacturing costs resulting from improved  
operating efficiency, increased production in owned facilities and a greater    
percentage of products made offshore.                                           

Selling, general & administrative expenses, excluding stock           
compensation.  Selling, general and administrative expenses (excluding stock    
compensation) as a percentage of net sales were 13.7% in 1997, versus 12.9% in  
1996. The increase was principally due to expanding the Company's merchandising 
and selling efforts to support sales growth, plus the cost in 1997 to relocate  
central distribution activities into a lower cost facility in another state.    

Stock compensation.  In 1997, stock compensation of $9.5 million was  
incurred in connection with the sale of stock to certain executives and managers
of the Company below its fair market value.                                     

 Other.  Other represents the cost of closing and realignment of certain
facilities in the amount of $0.2 million in 1997 and $0.7 million in 1996.      

     Income before interest and income taxes.  Income before interest and income
taxes was $18.3 million in 1997, compared to $22.0 million in 1996. Excluding   
stock compensation, 1997 income before interest and income taxes would have been
$27.7 million, or 13.7% of net sales compared to 11.9% in 1996. The improvement 
resulted from the increased sales and improved gross margin percentage.         

  Interest expense, net.  Interest expense, net, was $5.8 million for 1997
compared to $6.3 million for 1996. This decrease was primarily due to decreased 
average debt outstanding and a more favorable rate structure for 1997 as        
compared to 1996.                                                               

     Provision for income taxes.  Provision for income taxes was $4.8 million in
1997, compared to $6.2 million in 1996. The effective tax rate was 38.2% for    
1997 as compared to 39.7% for 1996. The higher effective tax rate in 1996 was   
primarily due to permanent non-deductible items associated with GCIH's          
acquisition of the Company.                                                     

    Extraordinary item.  In connection with the Acquisition, the senior credit
facility was replaced. The deferred financing costs associated with this old    
facility were written off and charged to operations in 1997. This expense, along
with the associated prepayment penalties, was approximately $0.7 million (net of
a tax benefit of $0.5 million) in 1997.                                         

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     Net income.  As a result of the above, net income was $7.0 million for 1997
and $9.5 million for 1996. Excluding the impact of the stock compensation, net  
income for 1997 would have been $12.9 million, a 36% increase over 1996.        

PERIOD FROM JANUARY 22, 1996 TO DECEMBER 31, 1996 OF THE COMPANY COMPARED TO    
YEAR ENDED DECEMBER 31, 1995 OF THE PREDECESSOR COMPANY                         

Net sales.  Net sales in 1996 were $185.2 million for the period from 
January 22, 1996 to December 31, 1996, compared to 1995's net sales of $197.4   
million. Including the $6.7 million of net sales of the Predecessor Company for 
the period January 1, 1996 to January 21, 1996 in the Company's 1996 period, net
sales declined 2.8% or $5.5 million compared to 1995. The Company believes the  
decline was primarily due to the Predecessor Company management's focus in 1995 
on the sale of Gerber which resulted in less resources being directed towards   
developing new products for sale in 1996.                                       

     Gross margin.  Gross margin as a percentage of net sales increased to 25.2%
in 1996 from 20.7% in 1995. The increase in gross margin was due to (i) reduced 
cost of sales due to greater offshore sourcing and offshore manufacturing by the
Company, (ii) a more favorable product mix, (iii) margin enhancement in 1996 as 
compared to 1995 on sales of products to GPC, resulting in an approximately 0.4%
margin increase, offset in part by (iv) an accrual of $1.9 million in 1996 for  
Gerber licensing royalty expense (which charge was not borne by the Predecessor 
Company).                                                                       

Selling, general & administrative expenses.  Selling, general and     
administrative expenses were $23.9 million, or 12.9% of net sales in 1996, a    
decrease of $739,000 from $24.6 million, or 12.4% of net sales, in 1995. While  
the dollar amount of expense declined, the increase in such expense as a        
percentage of net sales was due to (i) a one-time severance charge incurred in  
1996, (ii) enhancement of the management incentive program, (iii) an increase in
insurance costs associated with a stand-alone entity, offset in part by (iv)    
reductions in distribution expense and employee benefit costs.                  

    Other.  Other represents the cost of closing and realignment of facilities
aggregating $0.7 million in 1996.                                               

     Income before interest and income taxes.  As a result of the foregoing, the
Company had income before interest and income taxes of $22.0 million in 1996    
compared to $16.3 million in 1995. The income before interest and income taxes  
as a percentage of net sales was 11.9% in 1996 versus 8.3% in 1995.             

  Interest expense, net.  Interest expense, net was $6.3 million for 1996,
resulting from the debt incurred to acquire the Company and to support working  
capital needs. In 1995, the Predecessor Company had no long-term debt and was   
not charged any interest expense as a subsidiary of GPC.                        

  Provision for income taxes.  Provision for income taxes was $6.2 million
for 1996, compared to $6.3 million for 1995. The Company's effective tax rate   
was 39.7% for 1996, compared to 38.4% for 1995. The higher effective tax rate in
1996 was primarily due to non-recurring non-deductible items associated with    
GCIH's acquisition of the Company. The provision for income taxes of the        
Predecessor Company essentially resulted from applying the Federal and state    
statutory rates to the operations of a stand-alone company.                     

     Net income.  As a result of the above, net income was $9.5 million for 1996
and $10.1 million for 1995.                                                     

LIQUIDITY AND CAPITAL RESOURCES                                                 

     The Company's primary cash needs are working capital, capital expenditures,
and debt service. The Company has financed its working capital, capital         
expenditures and debt service requirements primarily through internally         
generated cash flow, in addition to funds borrowed under the Company's Credit   
Agreement. The Company intends to use the net proceeds from the Offering to     
repay subordinated notes payable of $33.5 million, to repay certain other       
indebtedness of the Company and to redeem certain shares of GCIH's Preferred    
Stock in connection with the Reorganization in the aggregate amount of $374,000.
Upon consummation of the Reorganization and the Offering, the Company's cash    
flow requirements for debt service will be substantially reduced. See           
"Description of Certain Indebtedness" and "Unaudited Pro Forma Condensed        
Consolidated Statement of Operations."                                          

   Net cash used in operating activities for the first quarters ending April
4, 1998 and March 29, 1997 was $15.4 million and $11.9 million, respectively.   
The primary components of cash used in operating activities in the first        
quarters of 1998 and 1997 were increases in accounts receivable ($6.3 million   
and $7.6 million,                                                               

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respectively) and inventories ($10.4 million and $5.4 million, respectively).   
The increase in accounts receivable in the first quarters of 1998 and 1997 is   
due to differences in the timing of shipments and receipts between the first and
fourth quarters. Shipments in the first quarter traditionally occur later during
the quarter, compared to the fourth quarter when shipment times can vary,       
resulting in higher accounts receivable balances at the end of the fourth       
quarter. The increase in inventory for the first quarters of 1998 and 1997      
reflects the seasonality of the Company's business. To support the third and    
fourth quarter sales volumes of certain seasonal products (such as blanket      
sleepers), the Company builds inventory in the first six months of each year.   
The decrease in cash used for other assets and liabilities, net for the first   
quarter ending April 4, 1998 compared to the first quarter ending March 29,     
1997, is due to the Company overpaying its 1997 taxes resulting in a $4.6       
million income tax receivable at December 31, 1997. This receivable was         
subsequently collected and/or applied to the estimated payment for the first    
quarter ending April 4, 1998.                                                   

Capital expenditures were $0.7 million and $0.8 million for the first 
quarters ending April 4, 1998 and March 29, 1997, respectively. These           
expenditures consisted primarily of normal replacement of manufacturing         
equipment, purchases of office equipment and upgrades of information systems. In
addition, for the first quarter ending March 29, 1997, the Company sold its     
Maine facility for approximately $0.4 million.                                  

    The net cash provided by financing activities for the first quarter ending
April 4, 1998 was $17.2 million compared to net cash used in financing          
activities of $1.1 million for the first quarter ending March 29, 1997. The     
increase in cash provided by financing activities in 1998 consisted principally 
of borrowings under the Company's revolving credit agreement to fund the        
increased working capital needs.                                                

    Net cash used in operating activities for the year ended December 31, 1997
was $5.0 million compared to net cash provided by operating activities of $32.3 
million and $13.4 million for the periods ended December 31, 1996 and December  
31, 1995, respectively. The decrease in net cash provided by operating          
activities from 1996 to 1997 is primarily due to (i) an increase in inventory of
$15.0 million, primarily representing higher levels of safety stocks maintained 
on hand in 1997 to minimize delivery time and properly service customers in the 
first quarter of 1998 to limit disruptions to customers during the transition to
a new warehouse in 1997, and as a result of the need to keep more inventory on  
hand due to increased reliance on offshore sourcing, (ii) an increase in        
accounts receivable of $8.5 million, primarily due to the timing of collections 
and (iii) a decrease in income tax payable of $10.2 million, primarily related  
to differences in the timing of payments between 1996 and 1997, due in part to  
the tax impact of stock compensation late in 1997. The increase in accounts     
receivable at December 31, 1997 compared to December 31, 1996 was due to (i)    
shipments being made earlier in the fourth quarter of 1996, as compared to later
in the fourth quarter of 1997, (ii) the inclusion of $7.5 million of accounts   
receivable by Auburn at December 31, 1997 due to the December 1997 acquisition  
of Auburn and (iii) the shipping by the Company of certain orders later in      
December 1997 than typical, and increased shipments during December 1997,       
resulting in higher receivables balances at December 31, 1997. The increase in  
net cash provided by operating activities from January 22, 1996 to December 31, 
1996 is primarily due to (i) a $10.5 million decrease in inventory due to a     
corporate focus on decreasing slow moving inventories, (ii) an increase of $10.3
million in 1996 in accrued expenses and accounts payable, and (iii) a $6.0      
million increase in 1996 in income tax payable.                                 

    For Gerber, working capital requirements vary throughout the year. Working
capital increases during the first half of the year as inventory, primarily     
blanket sleepers, builds to support peak shipping periods. The Auburn business  
is less seasonal, and as such, while working capital tends to increase slightly 
during the second half of the year, the variation is small. See "Description of 
Certain Indebtedness."                                                          

 Under the terms of a ten-year license agreement between the Company and
GPC, the initial term of which expires in 2006, the Company is not required to  
pay royalty fees to GPC until the year 2002. Commencing in 2002, the Company is 
required to pay an escalating royalty fee as a percentage of net sales of       
Gerber-licensed products throughout the term of the license agreement and in    
each year of the two consecutive five-year renewal terms if such renewal terms  
are negotiated. The Company is recording charges against earnings in accordance 
with generally accepted accounting principles in order to ensure a straight-line
effect of the total royalty expense expected to be incurred over the initial ten
year license term. The charges recorded prior to 2002 represent non-current     
liabilities that will begin to be paid to GPC in 2002. The                      

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initiation of such royalty payments in year 2002 may adversely affect the       
Company's cash flow. See "Risk Factors -- Dependence on Material Licenses" and  
"Business -- Licenses and Trademarks."                                          

  In connection with the Offering, the deferred financing costs associated
with the subordinated debt to be repaid with the Offering proceeds will be      
written off along with the unamortized discount associated with such debt as an 
extraordinary item in 1998. This extraordinary item is estimated to be          
approximately $309 (net of a tax benefit of $185).                              

   In connection with the acquisition of Auburn, the Company's then-existing
senior credit facility was refinanced. Indebtedness under the Credit Agreement  
consists of a $40.0 million term loan to finance the Acquisition and a $60.0    
million revolving facility to fund current working capital requirements. The    
term loan portion of the Credit Agreement will mature on September 30, 2002 and 
requires quarterly principal payments totaling $1.5 million in 1997, $6.5       
million in 1998, $8.1 million in 1999, $8.5 million in 2000, $8.6 million in    
2001 and $6.8 million in 2002. The revolving credit portion of the Credit       
Agreement will mature on October 31, 2002 and has no scheduled interim          
amortization but does require mandatory principal prepayments annually based on 
excess cash flow commencing December 31, 1998. The Company also incurred debt   
issuance costs of $1.0 million in 1997. The Company had approximately $30.2     
million outstanding under the revolving credit portion of the Credit Agreement  
at April 4, 1998. The Credit Agreement subjects the Company to standard         
covenants and events of default. As of April 4, 1998, the Company was in        
compliance with all such covenants and was not in default. See "Description of  
Certain Indebtedness."                                                          

    In connection with the Acquisition, the Company assumed approximately $2.6
million of Auburn's indebtedness. Auburn's Irish subsidiary maintains a IRL3.0  
million loan facility (U.S. $4.1 million as of April 4, 1998) with the National 
Irish Bank consisting of a combined term loan, overdraft, guarantee and foreign 
exchange line. This facility is subject to annual review. The overdraft facility
and foreign exchange line are available at the Company's discretion with each   
term loan draw down subject to the National Irish Bank's approval. At present,  
the Irish subsidiary has drawn down two term loans under the available loan     
facility and has drawn down on the foreign exchange line. The term loans had an 
aggregate balance of IRL468,890 (U.S. $636,987 as of April 4, 1998) outstanding 
as of April 4, 1998 and are repayable in quarterly installments of interest and 
principal, the final payment for which is due in September 1999. The Irish      
subsidiary is not currently using its overdraft facility. In addition, the Irish
subsidiary has received capital and employment grants from the Industrial       
Development Authority (the "IDA") which could become repayable to the IDA in the
aggregate amount of up to IRL1,815,799 (U.S. $2,466,763) as of April 4, 1998.   
Repayment of the capital grants would be triggered if the Company (i) relocates 
its Irish Facility, (ii) liquidates or (iii) ceases to use the assets purchased 
with proceeds from such capital grants. Repayment of the employment grants would
be triggered in each of cases (i) and (ii) above or if the Company eliminated   
jobs created with proceeds from such employment grants. The Company believes    
that none of such repayment events will occur in the foreseeable future. In     
addition, the Company's repayment obligations under the IDA grants terminate on 
various dates beginning in March 2000 and ending in April 2011. Auburn is a     
party to two loan agreements with the County of Logan, Kentucky related to the  
issuance in 1989 of two series of industrial revenue bonds of which             
approximately $2.3 million remained outstanding at April 4, 1998. Auburn's two  
principal Kentucky facilities are mortgaged in connection with such financing.  
See "Description of Certain Indebtedness."                                      

     The Company invested $4.2 million, $1.0 million and $1.5 million in capital
expenditures during 1997, 1996 and 1995, respectively. These expenditures       
consisted primarily of normal replacement of manufacturing equipment, purchases 
of office equipment and upgrades to information systems. In addition, the       
Company relocated its distribution center in 1997 resulting in a one-time       
capital expenditure of $2.0 million. The Company is budgeting an aggregate of   
$5.7 million for capital expenditures in 1998 including $3.0 million to replace 
or upgrade manufacturing equipment, $2.0 million to upgrade MIS systems and $0.3
million for building improvements. Gerber's portion, $3.9 million, includes     
approximately $1.7 million for MIS systems upgrades which the Company believes, 
if fully implemented, could provide efficiencies in the areas of product        
development, forecasting and planning. Management believes that except for as   
described above, there will be no other material capital commitments for the    
next 12 months. The Company will continue to make capital expenditures as       
required to facilitate the growth of each of its businesses. The amounts        
allocated to Gerber                                                             

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and Auburn will vary from year to year based upon a number of factors including 
expected return on investment, legal compliance needs and the specific needs of 
each business. The Company does not allocate its capital expenditure budget     
between Gerber and Auburn based upon a constant percentage allocation.          

 The Company believes that cash generated from operations, together with
amounts available under the Credit Agreement and the Irish subsidiary's loan    
facility with the National Irish Bank, will be adequate to meet its working     
capital, capital expenditures, and debt service requirements for the next 12    
months.                                                                         

SELECTED QUARTERLY RESULTS OF OPERATIONS                                        

 The following table sets forth certain unaudited quarterly statement of
operations data for the period from January 22, 1996 to December 31, 1996, for  
fiscal year ended December 31, 1997 and for the first quarter ended April 4,    
1998 as well as such data expressed as a percentage of the Company's net sales  
for the period indicated. This data has been derived from unaudited financial   
statements that, in the opinion of the Company, include all adjustments         
necessary for fair presentation of such information when read in conjunction    
with the Company's financial statements and notes thereto. Income before        
interest and income taxes in 1997 has been adjusted to exclude the stock        
compensation charge (dollars in millions).                                      

                                                        [Enlarge/Download Table]

                                                                QUARTER ENDED                                    
                            -------------------------------------------------------------------------------------
                             MAR. 31      JUNE 30      SEPT. 30     DEC. 31     MAR. 31     JUNE 30     SEPT. 30 
                            ----------   ----------   ----------   ---------   ---------   ---------   ----------
                                                  1996                                        1997               
                            ------------------------------------------------   ----------------------------------
                                                                                                                 
Net sales..................   $36.6        $39.0        $58.3        $51.2       $45.3       $40.2       $60.3   
Gross margin...............     9.4         10.6         15.5         11.1        12.7        12.1        16.8   
Income before interest and                                                                                       
  income taxes.............     3.8          3.4          9.0          5.8         5.7         4.9         9.6   
PERCENTAGE OF NET SALES                                                                                          
Net sales..................   100.0%       100.0%       100.0%       100.0%      100.0%      100.0%      100.0%  
Gross margin...............    25.7         27.2         26.6         21.6        28.0        30.1        27.9   
Income before interest and                                                                                       
  income taxes.............    10.4          8.7         15.4         11.3        12.6        12.2        15.8   


                               QUARTER ENDED                                                                     
                            -------------------                                                                  
                             DEC. 31    APRIL 4                                                                  
                            ---------   -------                                                                  
                              1997       1998                                                                    
                            ---------   -------                                                                  
                                                                                                                 
Net sales..................   $56.2      $64.6                                                                   
Gross margin...............    14.1       17.4                                                                   
Income before interest and                                                                                       
  income taxes.............     7.6        7.8                                                                   
PERCENTAGE OF NET SALES                                                                                          
Net sales..................   100.0%     100.0%                                                                  
Gross margin...............    25.1       27.0                                                                   
Income before interest and                                                                                       
  income taxes.............    13.5       12.1                                                                   

     In Gerber's segments of the apparel industry, sales are typically higher in
the third and fourth quarters due to the seasonal nature of some of its         
products. With the acquisition of Auburn, which experiences higher sales in the 
second quarter, the Company will continue to experience seasonality, with the   
third quarter expected to represent the highest volume shipping quarter for the 
Company. See "Business -- Backlog and Seasonality."                             

FLUCTUATION OF FOREIGN CURRENCY EXCHANGE RATES                                  

Inventory purchases from contract manufacturers in the Far East are   
primarily denominated in U.S. dollars; however, purchase prices for the         
Company's products may be affected by fluctuations in the exchange rate between 
the U.S. dollar and the local currencies of the contract manufacturers, which   
may have the effect of increasing the Company's cost of goods sold in the       
future. During the last two fiscal years, exchange rate fluctuations have not   
had a material effect on the Company's inventory cost.                          

  Following the Acquisition, the Company adopted a foreign exchange policy
which has been implemented in Auburn's Irish subsidiary for the purpose of      
managing its day-to-day exposure. There are currently foreign exchange contracts
in place covering amounts in excess of the Company's policy, which the Company  
expects will be reduced to current policy levels by the end of the second       
quarter of 1998. During 1997, Auburn's Irish subsidiary recorded a charge of    
approximately $1.1 million related to its foreign currency exposure prior to its
acquisition by the Company. During the first three months of 1998, the Company  
recorded an additional charge of approximately $0.4 million related to this     
foreign currency exposure. There can be no assurance that the Company will not  
incur additional losses in the second quarter. See "Risk Factors -- Risk of     
Fluctuation in Foreign Currency Exchange Rates."                                

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ACCOUNTING STANDARDS                                                            

    In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 123, Accounting for Stock-Based  
Compensation. With respect to the Company, this Statement will be effective in  
fiscal 1998 upon the establishment of the Company's Long-Term Incentive Plan.   
See "Management -- Long-Term Incentive Plan." The Company will adopt only the   
disclosure provision of SFAS No. 123 and account for stock based compensation in
accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees, which recognizes compensation cost based on the intrinsic  
value of the equity instrument awarded.                                         

The Financial Accounting Standards Board has issued SFAS No. 130,     
"Reporting Comprehensive Income," which is effective for financial statements   
for fiscal years ending after December 31, 1997. This standard establishes      
standards for the reporting and display of comprehensive income which is defined
under SFAS No. 130 as "the change in equity (net assets) during a period from   
transactions and other events and circumstances from nonowner sources." Under   
SFAS No. 130, the Company has several choices in the disclosure of the          
components of other comprehensive income. The Company implemented SFAS No. 130  
in the first quarter of fiscal year 1998.                                       

     In June 1997, the FASB released Statement of Financial Accounting Standards
No. 131, "Disclosures about Segments of an Enterprise and Related Information"  
("FAS 131"). FAS 131 will change the way companies report selected segment      
information in annual financial statements and also requires those companies to 
report selected segment information in interim financial reports to             
shareholders. FAS 131 is effective for fiscal years beginning after December 15,
1997. The Company has evaluated the impact of the application of the new rules  
on the Company's consolidated financial statements and does not expect the new  
rules to change the way it presently presents its segments.                     

INFLATION                                                                       

  Results of operations have not been significantly affected by inflation.
The Company, in the normal course of business, has been able to offset the      
impact of increased costs through operating efficiencies and selected price     
increases.                                                                      

FORWARD LOOKING STATEMENTS                                                      

   This Prospectus includes forward-looking statements, including statements
regarding, among other items, (i) the Company's anticipated growth strategies   
and intention to consider future acquisitions, (ii) the Company's intention to  
introduce new products, introduce product line extensions, and enter new        
distribution channels, (iii) anticipated trends in the Company's businesses,    
(iv) future expenditures for capital projects (including MIS expenditures) and  
any benefits expected to be derived therefrom, (v) the Company's ability to     
reduce its interest expenses and debt service obligations and (vi) the Company's
ability to continue to control costs and maintain quality. These forward-looking
statements are based largely on the Company's expectations and are subject to a 
number of risks and uncertainties, certain of which are beyond the Company's    
control. Actual results could differ materially from these forward-looking      
statements as a result of the factors described in "Risk Factors" including,    
among others, (i) changes in the competitive marketplace, including the         
introduction of new products, technologies or pricing changes by the Company's  
competitors, and (ii) changes in the trends in the market for infant and toddler
apparel and related products. The Company undertakes no obligation to publicly  
update or revise any forward-looking statements, whether as a result of new     
information, future events or otherwise. In light of these risks and            
uncertainties, there can be no assurance that the forward-looking information   
contained in this Prospectus will in fact transpire.                            

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BUSINESS

THE COMPANY                                                                     

Gerber Childrenswear, Inc. is a leading marketer of infant and toddler
apparel and related products, offering products under its flagship brand,       
Gerber, as well as the Baby Looney Tunes and Curity brand names and the Onesies 
trademark. The Gerber name and baby head logo are among the best recognized in  
the infant and toddler industry. The Company believes that Gerber is the leading
provider of infant and toddler apparel and related products, based on dollar    
volume and breadth of product offering, to volume retailers, which constitute   
the fastest growing segment of the retail industry. The Company also distributes
products to mid-tier department stores and specialty retailers. Gerber holds a  
leading market share, based on dollar volume, in its distribution channels in   
the underwear, blanket sleeper and cloth diaper categories. The Company believes
that these leading positions in addition to strong consumer recognition of its  
brands provide opportunities for Gerber to leverage its brands into other       
product categories including sleep 'n play, bed & bath, playwear, bibs, hosiery 
and gift sets where Gerber has a growing presence. See                          
"Business -- Gerber -- Products."                                               

   In addition, in order to build upon the Company's expertise as a low-cost
supplier of branded merchandise to volume retailers, the Company acquired all of
the capital stock of Auburn in December 1997 for approximately $40.0 million in 
cash. Auburn manufactures, markets and sells branded sport socks for men, women 
and children under established brand names such as Wilson, Coca-Cola and        
Converse in the U.S., Europe and other international territories and under the  
Dunlop brand name in Europe. Auburn markets to a diversified customer base in   
the U.S. and Europe, including volume retailers, department stores, wholesale   
clubs and major sporting goods chains. As a result of the Recent Acquisition,   
the Company markets products in over 25 countries. The Company believes that    
Auburn's expertise in hosiery will position it to capitalize on growth          
opportunities and the Recent Acquisition will provide opportunities to achieve  
certain economies of scale and efficiencies in the areas of purchasing (e.g.    
yarn), data processing, and selling, general and administrative expenses (e.g.  
property and casualty insurance). In 1997, pro forma for the Recent Acquisition,
the Company's net sales and income from continuing operations were $270.1       
million and $6.6 million, respectively.                                         

In January 1996, Gerber Childrenswear, Inc. was acquired from GPC by a
group of investors led by Edward Kittredge, the Company's Chairman, President   
and Chief Executive Officer, who assembled Gerber's current management team.    
Since the Original Acquisition, GPC has not owned any capital stock of the      
Company, nor have GPC and the Company shared common directors, officers or      
employees. The new management team, under the direction of Mr. Kittredge,       
developed a series of initiatives to strengthen Gerber's financial results and  
improve its operations. To achieve cost efficiencies, Gerber consolidated       
manufacturing facilities, established a flexible production strategy including  
domestic and offshore manufacturing and sourcing components, centralized        
finished product purchasing across all product categories and enhanced its      
compensation system. In addition, Gerber extended the payment terms of the      
majority of its yarn supply arrangements from 30 to 60 days, and the Company is 
seeking to extend Auburn's payment terms as well. Such extensions have the      
effect of increasing accounts payable, reducing the need for short-term         
borrowing and improving liquidity.                                              

    The U.S. retail market for infant and toddler apparel and related products
is estimated at $7.0 billion in 1997, and has grown in dollar volume at a       
compound annual rate of 8.0% since 1991. The Company believes that this classic 
niche market is well-insulated from major changes in fashion trends and is less 
sensitive to general economic cycles due to the consistent level of infant      
births in the U.S., at slightly less than 4 million annually from 1989 to 1997  
(based on U.S. Census data as reported by the National Center for Health        
Statistics), and the high consumption rate for apparel products as infants      
experience frequent size changes. Annual apparel spending per infant increased  
to $329 in 1996 from $250 in 1993 according to U.S. Census data, representing   
compound annual growth of 9.6%. The Company believes the market offers continued
growth prospects due to demographic factors including (i) more women having     
children at an older age and returning to work thereafter, resulting in greater 
disposable income for expenditures on children; and (ii) an increasing number of
grandparents, who represent a key consumer segment for infant and toddler       
products. Within the infant and toddler industry, greater emphasis on value has 
shifted consumer purchases away from                                            
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traditional department stores and toward more value-conscious retail channels,  
including volume retailers and mid-tier department stores. Additionally, the    
industry is highly fragmented and services volume retailers who are interested  
in limiting their purchases to a smaller number of well-capitalized vendors with
a broad base of branded products. The Company believes that its strong brand    
names, leading market positions, broad product offerings and strong customer    
relationships with volume retailers and mid-tier department stores position it  
to benefit from industry trends.                                                

COMPETITIVE STRENGTHS                                                           

    The Company's business philosophy is to pursue growth and profitability by
maintaining and enhancing its strong brand name recognition and reputation for  
quality while continuing to strengthen its customer relationships. The following
factors serve as the Company's competitive strengths and distinguishing         
characteristics:                                                                

   STRONG BRAND NAME RECOGNITION. The Company believes that Gerber is one of
the most recognized brands in the infant and toddler apparel industry with a    
reputation for consistently delivering high quality products with innovative    
design features at competitive prices. The Gerber brand name was first          
introduced for baby food in 1928 by GPC, which holds an approximately 65% market
share in the baby food industry. The Company markets and sells infant and       
toddler's apparel and related products using the well established Gerber brand  
name and baby head logo. In 1997, the Company sold over 80 million items under  
the Gerber brand name. In addition, the Company believes that its popular Baby  
Looney Tunes brand name (used on products at slightly higher price points) is   
recognized for its use of characters, bright colors and higher fashion content. 
The Company also benefits from the strong recognition of its Onesies trademark  
(developed for its line of infant underwear) and the Curity brand name (used on 
products which are targeted towards more value-conscious consumers). See        
"Business -- Gerber -- Brands." Additionally, as a result of the Recent         
Acquisition, the Company offers sport socks under the Wilson, Converse,         
Coca-Cola and Dunlop brand names licensed by Auburn.                            

   LEADING MARKET POSITIONS IN CORE PRODUCT CATEGORIES. The Company believes
it is the leading provider of infant and toddler apparel and related products to
volume retailers, which constitute the fastest growing segment of the retail    
industry. The Company also distributes products to mid-tier department stores   
and specialty retailers. Gerber holds a leading market share in its distribution
channels in the underwear, blanket sleeper and cloth diaper categories. The     
Company believes that its leading market shares provide significant competitive 
advantages in serving its customers, through production and purchasing          
efficiencies and greater product development and marketing resources.           
Management's strategy is to leverage these competitive advantages to further    
penetrate other product categories, whether acquired or internally developed.   

HIGH QUALITY, INNOVATIVE PRODUCTS. The Company believes that it has   
developed a reputation for high quality and innovative products and that this   
has played a critical role in its long-standing strong market positions. In     
1982, Gerber designed and developed Onesies, an innovative one-piece underwear  
garment, which resulted in a new category of infant apparel which Gerber        
believes consumers identify with the Onesies trademark. Most recently, Gerber   
introduced the Swim-per, a swim diaper, and Nap 'N Go, a portable daycare mat.  

   LOW-COST SUPPLIER. The Company believes that its reputation for providing
high quality products at attractive prices has established it as one of the top 
infant and toddler's apparel suppliers among value-conscious volume retailers.  
The Company actively manages the manufacturing and sourcing of its products to  
optimize efficiencies. Of the products manufactured and sourced offshore, the   
majority were through manufacturing operations that are owned or dedicated      
exclusively to the Company's products. The Company believes that such           
diversification has enabled it to enhance operating efficiencies through        
production flexibility and expanded capacity without significant capital        
investment, while at the same time enabling it to control more efficiently the  
delivery and quality of its products. All of these factors have helped the      
Company to become a low-cost supplier. See "Business -- Gerber -- Manufacturing 
and Sourcing." In addition, the Company believes that its centralized purchasing
and distribution systems have enhanced its cost competitiveness through reduced 
distribution costs, minimization of product delays and economies of scale.      

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   LONG-TERM CUSTOMER RELATIONSHIPS AND EMPHASIS ON CUSTOMER SERVICE. Gerber
enjoys well-established, long-term relationships with its customers, many of    
which have been maintained at multiple levels from sales to senior management.  
In certain cases, members of Gerber's senior management and sales force have    
maintained relationships with Gerber's customers for over 30 years. Moreover,   
the Company believes its broad product offerings, emphasis on customer service  
and proven reliability provide a competitive advantage as retailers consolidate 
and seek a smaller number of well-capitalized vendors with a broad base of      
branded products. Gerber works closely with its principal customers to assist in
the management of their inventories and has invested in warehousing and         
distribution facilities and information systems development, including an EDI   
system and a VMI program. In addition, Gerber's information systems enable it to
provide customized merchandising and space allocation recommendations and other 
category management services to its retail customers. Gerber currently provides 
such customized services for Wal-Mart in certain product categories. Gerber has 
been recognized for its accomplishments by many retailers and in 1997 received  
the "Supplier Performance Award by Retail Category" from Discount Store News on 
behalf of discounters, the highest award a company can receive from such        
retailers (the "Suppliers Performance Award"). As the first place winner for    
infant and toddler softlines, the Company was selected to receive the Suppliers 
Performance Award by buyers and merchandise managers from the top 100 volume    
retailers in the U.S. based on advertising support, distribution flexibility and
on-time delivery record. In addition, the Company has received a number of      
awards from its customers, including the 1995 Vendor/Partner Award and the 3rd  
Quarter of 1996 Vendor/ Partner Award of Excellence from Wal-Mart, the 1996     
Platinum Circle Award from Sears, the 1996 Rainbow Award (Top Volume Clothing)  
from Baby Superstore (currently the "Babies "R" Us" division of Toys "R" Us) and
the 1996 Vendor of the Year Award from Toys "R" Us, which marked the first time 
Toys "R" Us ever presented such award to a non-toy vendor.                      

 DEVELOPMENT OF MANAGEMENT AND OPERATING INFORMATION SYSTEMS. Gerber has
made significant investments in the development of MIS and plans to make        
additional capital expenditures to further refine such systems. Gerber believes 
that it will continue to benefit from these systems through its ability to      
effectively manage inventory, improve sales and reduce operating costs. The     
Company currently serves all major domestic volume retailers through its EDI    
system, which allows customers to send orders to the Company more quickly and   
efficiently. See "Management's Discussion and Analysis of Financial Condition   
and Results of Operations -- Liquidity and Capital Resources."                  

  EXPERIENCED MANAGEMENT TEAM WITH A SIGNIFICANT STAKE IN THE COMPANY. The
Company's Chairman, President and Chief Executive Officer, Edward Kittredge, has
had over 35 years of diverse experience in the textile and apparel industry and 
the Company's top five senior managers average more than 25 years of experience 
in the apparel industry. The sales and merchandising team has been strengthened 
with the recent additions of Robert P. Robertson as Senior Vice President of    
Sales and Marketing and Mary-beth Boughton as Vice President of Merchandising   
(focused on mid-tier department stores). After giving effect to the             
Reorganization and the Offering, management will own approximately 12.9% of the 
total outstanding capital stock of the Company on a diluted basis (including    
shares of Class B Common Stock issuable upon the exercise of an outstanding     
warrant). See "Management."                                                     

BUSINESS STRATEGY                                                               

  The key elements of the Company's business strategy to remain a low-cost
supplier of high quality, branded products to volume retailers include:         

    ENHANCE OFFERING OF HIGH QUALITY, INNOVATIVE PRODUCTS. The Company intends
to continue to enhance its product offerings through new product initiatives and
product extensions. The Company's strategy is to leverage the Gerber, Baby      
Looney Tunes and Curity brands into additional products, including product      
segments in which the Company is under-represented. For example, the Company is 
under-represented in the approximately $1.8 billion playwear market and in the  
approximately $600 million fleece/outerwear market, in each case based on retail
sales. In order to grow its market share in these product lines, Gerber recently
enhanced the Baby Looney Tunes playwear offering and introduced a new line of   
Gerber fleecewear. The Company believes that these categories present           
significant growth opportunities.                                               

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EXPAND INTO NEW AND STRENGTHEN EXISTING DISTRIBUTION CHANNELS. The    
Company's plan is to continue to leverage its strong brand names to expand into 
new distribution channels in the U.S. and abroad. Gerber recently targeted the  
midtier department store channel with product lines such as Always Baby by      
Gerber, which are specially designed, packaged and priced for mid-tier          
department store customers. Gerber's strategy is to emphasize marketing efforts 
to increase product breadth in existing distribution channels in which it       
believes some of its product lines are under-represented. In addition,          
management believes that the Gerber, Baby-Looney Tunes and Curity lines of      
products have growth opportunities in the food and drug, variety, off-price     
apparel, catalog, dollar store, wholesale club and mid-tier department store    
distribution channels.                                                          

    FURTHER PENETRATE INTERNATIONAL MARKETS. Gerber currently has an exclusive
license to use the Gerber brand name on certain infant and toddler apparel and  
textile products in the U.S., Canada and the Caribbean and a right of first     
refusal to use the Gerber name in Central and South America. Gerber branded     
products are currently being shipped in the U.S. and to Canada and the          
Caribbean. The Company believes that its offshore manufacturing and sourcing    
capabilities give it a competitive advantage to further increase its presence in
the international markets. Gerber plans to increase the distribution of its     
Gerber line of products in Canada by offering a broader product mix in such     
market. The Company's plan is to leverage the Gerber brand name to expand its   
presence in international markets in which the Gerber brand name is established 
for baby food, and believes that such markets represent expansion opportunities.

   MAXIMIZE OPERATING EFFICIENCIES. The Company's strategy is to continue to
improve operating efficiencies and productivity in order to offer its customers 
high quality products at competitive prices. The Company's plan is to continue  
to optimize product sourcing to achieve economies of scale and to eliminate     
certain duplicative operations in connection with the acquisition of Auburn.    

   LEVERAGE EXPERTISE THROUGH SELECTIVE ACQUISITIONS. The Company intends to
grow by acquisition and, consistent with such strategy, regularly evaluates     
acquisition candidates and engages in discussions from time to time regarding   
potential acquisitions. Future strategic acquisitions may be undertaken to      
broaden the Company's product lines, increase sourcing diversity and strengthen 
its presence within various channels of distribution. The Company believes that 
numerous acquisition candidates exist within the infant and toddler apparel     
industry. In addition, the Company believes that other acquisition opportunities
exist in similar high volume, basic branded apparel businesses where the Company
can leverage its core competencies. The Company is neither currently negotiating
nor has any current or pending plans, arrangements, understandings or agreements
with respect to any acquisitions.                                               

GERBER                                                                          

BRANDS                                                                

    The Company, through Gerber, offers infant and toddler apparel and related
products under the key brands of Gerber, Baby Looney Tunes and Curity and under 
its Onesies trademark, as well as under private labels. In 1997, approximately  
70% of Gerber's products were sold under the Gerber brand name, and             
approximately 16% of Gerber's products were sold under the Baby Looney Tunes    
brand name. The Curity brand name and private label sales accounted for         
approximately 2% and 12% of Gerber's total sales, respectively. Products sold   
under the Gerber and Curity brand names and private labels are produced in both 
basic styles and more design oriented styles. Products sold under the Baby      
Looney Tunes brand name are primarily design oriented. The Onesies trademark was
created and developed by Gerber, which resulted in a new category of infant     
apparel which the Company believes consumers identify with the Onesies          
trademark.                                                                      

   GERBER. The Company's primary brand, Gerber, was first introduced in 1928
by GPC, and has been long associated with infant and toddler care products. The 
Company believes that many consumers today associate the "Gerber baby" as "every
baby." Gerber infant and toddler apparel was first introduced in 1963 with a    
line of cloth diapers, and the Company currently offers products under the      
Gerber name in all of its nine principal product categories. Gerber products are
distributed primarily through volume retailers and mid-tier department stores.  

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BABY LOONEY TUNES. Gerber markets higher-end, more fashion oriented   
products such as playwear and bibs under the Baby Looney Tunes brand name. The  
Baby Looney Tunes characters include Baby Tweety, Baby Bugs Bunny, Baby         
Tasmanian Devil, Baby Daffy Duck, Baby Wile E. Coyote, Baby Road Runner and Baby
Sylvester on infant and toddler bath products, bedding, sleepwear, underwear,   
footwear, socks, layettes, and infant and toddler playwear. The adult characters
of Bugs Bunny, Wile E. Coyote, Marvin the Martian, Foghorn Leghorn, Porky Pig,  
Elmer Fudd, Tweety and Sylvester Jr. are also applied to infant and toddler     
bedding. Baby Looney Tunes products are distributed through volume retailers,   
mid-tier department stores, and food and drug stores.                           

   CURITY. The Curity brand was reintroduced by Gerber in 1994 to provide an
opening price point to Gerber's portfolio of brands. Products under this brand  
are targeted towards more value oriented consumers. Curity brand products are   
currently limited to the categories of underwear, cloth diapers, blanket        
sleepers and certain other products and are distributed almost exclusively      
through volume retailers.                                                       

PRIVATE LABEL. Gerber's private label products are generally for large
volume retailers and mid-tier department stores and include products in the     
underwear, cloth diaper and sleep n' play categories.                           

PRODUCTS                                                              

    Within Gerber's nine product categories, Gerber offers an extensive number
of SKUs in order to provide large volume retailers with a full product line. Of 
its nine product categories, its most well-developed categories are underwear,  
blanket sleepers and cloth diapers. The Company expects growth in these         
categories and the remaining six categories in which it is placing an increasing
emphasis. Apparel product sizes range from newborn through size 4T which are    
generally for children up to three years of age. The majority of Gerber's sales 
are in the newborn and infant size ranges which are typically for children up to
two years of age.                                                               

    The following table summarizes Gerber's nine principal product categories:

                                                                [Download Table]

PRODUCT CATEGORY               PRINCIPAL BRANDS               RETAIL PRICE RANGE 
----------------               ----------------               -------------------
                                                                                 
Underwear         Gerber, Curity, Baby Looney Tunes, Private         $2-11       
                  label                                                          
Blanket Sleepers  Gerber, Curity, Baby Looney Tunes, Private         $4-12       
                  label                                                          
Cloth Diapers     Gerber, Curity, Private label                   $5-10/pack     
Sleep 'N Play     Gerber, Curity, Private label                      $5-12       
Bed & Bath        Gerber, Baby Looney Tunes                      $3-100 (Bed)    
                                                                  $1-8 (Bath)    
Playwear          Gerber, Baby Looney Tunes                          $7-15       
Bibs              Gerber, Baby Looney Tunes                          $1-3        
Hosiery           Gerber, Baby Looney Tunes                          $1-2        
Gift Sets         Gerber, Baby Looney Tunes                         $10-30       

UNDERWEAR.  Gerber's products in the underwear category are led by the
Company-owned trademark Onesies (an underpant and T-shirt combination garment   
for infants) and also include unionsuits, shirts and training pants. Created,   
designed and developed by Gerber, the Onesies product line has resulted in a new
category of infant apparel with the distinguishing feature of a seamless garment
body, which Gerber believes makes the product more comfortable for babies. The  
Gerber brand is Gerber's main brand in this product category. The Company       
believes it has achieved a leading market position in the underwear category,   
estimating that Gerber's products constitute over 50% market share of           
distribution to volume retailers. Gerber currently is the primary supplier of   
infant underwear to many of its customers, including Gerber, Baby Looney Tunes  
and Curity products. Management believes that growth in this product category   
will occur as a result of further gains in market share, in part due to         
consolidation of suppliers to volume retailers.                                 

     BLANKET SLEEPERS.  Blanket sleepers are one-piece, footed garments in which
infants sleep during the winter months. Gerber's key brand in this product      
category is Gerber. The Company believes that Gerber is the market leader in    
blanket sleepers with over 50% market share of distribution to volume retailers.
The                                                                             

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Company believes that growth in this product category will occur as a result of 
further gains in market share, in part due to consolidation of suppliers.       

   CLOTH DIAPERS.  The cloth diaper category includes both traditional cloth
diapers, used as diapers, lap pads and burp cloths, and other products including
vinyl pants and the recently introduced Swim-per, a swim diaper. The Gerber     
brand of cloth diaper is marketed to both volume retailers and mid-tier         
department stores. Although cloth diaper sales have decreased over the last     
several years, management believes that cloth diaper sales have stabilized as   
consumers increasingly have come to rely on them for a wide range of uses       
including use as a burp cloth, to clean up spills in the nursery, or to wipe a  
child's face. The Company expects growth within the cloth diaper category to    
come with the development of new, innovative products such as the Swim-per.     

   SLEEP 'N PLAY.  Sleep 'N Play products include both pajamas and one piece
outfits called "stretchies." The key brands in this product category include the
Gerber brand and private label, which are distributed primarily to volume       
retailers. The Company's strategy is to achieve growth in this product category 
through (i) increased offerings of new designs, (ii) increased distribution to  
mid-tier department stores including products under the Always Baby by Gerber   
brand, and (iii) the introduction of 100% cotton sleepwear for infants up to 9  
months old, products now permitted under amended Federal regulations.           

    BED & BATH.  Bed products include quilted products (such as comforters and
bumpers), crib skirts, sheets, and waterproof products such as mattress and     
changing table protectors. Bath products include washcloths and towels and      
products such as Lil' Hoodlums, which are hooded towels in the shape of animals.
The Gerber and Baby Looney Tunes brands are the key brands within this product  
category. Gerber distributes bed and bath products to volume retailers and      
mid-tier department stores, and believes the mid-tier distribution channel      
represents a strong area for growth.                                            

   PLAYWEAR.  Gerber is placing a greater emphasis on "Playwear", a category
whose products include coordinated sets, jumpers, overalls and fleece products. 
Gerber offers both fall and spring lines of playwear and provides a variety of  
styles for each season. The Company believes the playwear category is more      
design oriented than underwear or sleepwear. In 1997, Gerber offered its entire 
playwear line exclusively under the Baby Looney Tunes brand. In 1998, Gerber    
intends to continue its playwear line under the Baby Looney Tunes brand and also
introduce a basic line under the Gerber brand. Management believes that the     
playwear market, estimated at $1.8 billion at retail, represents a significant  
area of potential growth.                                                       

BIBS.  Gerber sells bibs under the Gerber and Baby Looney Tunes brands
through volume retailers and food and drug stores. Historically, GPC's Baby Care
Division was responsible for distribution of bibs, among other products, in the 
food and drug store distribution channel. As of January 1, 1998, Gerber assumed 
the marketing function for bibs to this channel and believes it to be an area   
for growth.                                                                     

HOSIERY.  Gerber's hosiery products include crew socks, tights, ankle 
socks, booties, bootie sets and bobby socks. The infant and toddler hosiery     
market is estimated to be over $500 million at retail, based on dollar volume,  
and management believes it can grow the category through offering its hosiery in
an expanded number of distribution channels. Additionally, Gerber expects to    
gain further expertise in the hosiery market as a result of its acquisition of  
Auburn.                                                                         

    GIFT SETS.  Gerber recently introduced a line of gift sets, which includes
selected Company products under the Gerber and Baby Looney Tunes brands, as well
as other accessories acquired from other manufacturers (i.e. diaper baskets).   
Gift sets are generally comprised of items relating to common themes such as new
baby, nursery products and infant "sports" themes, and are often packaged in    
decorative baskets and other unique packaging which can serve additional        
purposes. Gift sets represent the most recent example of Gerber's ability to    
leverage its strong brand names to develop a presence in new product categories.

SALES                                                                 

     Gerber's sales force is comprised of approximately 15 sales representatives
and four telemarketers. The Company believes that Gerber's sales force          
distinguishes itself through its extensive experience in the infant and toddler 
apparel industry, long tenure and thorough understanding of its retail accounts.
Gerber's sales                                                                  

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strategy is to have highly qualified personnel handling all product lines for a 
small number of retail accounts, which it believes efficiently serves existing  
customers and attracts new ones. Gerber's sales representatives work closely    
with customers to develop marketing plans, including merchandise space          
allocation and other merchandising strategies. The four-person telemarketing    
sales organization is based at Gerber's headquarters in Greenville, South       
Carolina and handles marketing efforts directed towards smaller stores and in   
connection with Gerber's sales to diaper services. In addition, the Company     
believes that Gerber's senior management team has established strong            
relationships with the senior management of its customers which has resulted in 
solid customer relationships.                                                   

    In fiscal 1997, $4.3 million of Gerber's products, or 2.1% of Gerber's net
sales, were sold through GPC's Baby Care Division to food and drug channels in  
the U.S. and to volume retailers in Canada. Beginning in 1998, Gerber commenced 
distribution to food and drug channels in the U.S. directly rather than through 
GPC. Additionally, the Company is working with GPC in Canada to broaden the     
Company's distribution to Canadian retailers.                                   

DESIGN AND MERCHANDISING                                              

The Company believes that Gerber has developed a reputation for       
consistently delivering high-quality, value-priced products, largely due to its 
strong merchandising team. Gerber's merchandisers are experienced and have a    
proven ability to interpret fashion direction and convert design ideas into both
basic and fashion-oriented products with a value image. Each product category   
has its own experienced merchandising group. Merchandisers oversee and manage   
the entire design and merchandising process for each product line from the      
initial market research to final delivery of the product. The Company believes  
that this integrated process has allowed Gerber to become a leading producer of 
high quality, basic products while also enabling it to market fashion-enriched  
products at several price points.                                               

  The Company has developed an extensive network of information and design
idea sources, which it believes maintains a healthy flow of ideas to its        
merchandising, design and art teams to help keep products fresh. The key        
merchandising personnel responsible for line direction routinely travel to      
several international markets for design and product innovations. After         
analyzing market trends and obtaining input from key buyers in the field        
regarding design and fashion movements, the merchandising design and artist     
teams develop a coherent merchandising strategy that will unify that season's   
individual line components. Samples are then produced for presentations to      
select major accounts. This interaction with "barometer accounts" provides the  
Company with additional input as to final line content and an initial indication
of demand which is used to adjust earlier production estimates. The Company's   
licensors also review each new design and product at various stages of          
production pursuant to their licensing arrangements. The sales force uses sample
lines and supporting story boards to make presentations and complete bookings.  
Throughout the year, the merchandising, design and art teams create fresh       
product designs for basic and fashion lines.                                    

MANUFACTURING AND SOURCING                                            

  MANUFACTURING OPERATIONS.  Gerber actively manages the manufacturing and
sourcing of its products to optimize efficiencies, and in 1997, manufactured and
sourced approximately 60% of its products offshore based on total product cost. 
The Dominican Republic, Guatemala and Estonia accounted for approximately 42%,  
22% and 11% of offshore production, respectively, with other countries including
Guatemala, Mexico, Taiwan, Hong Kong, Thailand, Russia, China and South Korea   
accounting for the balance. None of such the other countries accounted for 10%  
or more of offshore production. Gerber has seven manufacturing operations,      
including one in each of South Carolina and Texas, two locations in North       
Carolina and three "9802" facilities in the Dominican Republic. In "9802"       
facilities, U.S. components are shipped abroad, assembled, packaged and         
re-imported with duty charges assessed only on the value added abroad. In       
addition, the Company utilizes third party manufacturers (both domestically and 
offshore), and has entered into production agreements with certain contractors  
in the United States, Estonia, Guatemala and Mexico, the material terms of which
are believed by management, based on discussions with suppliers and management's
experience, to be consistent with industry standards. These agreements are      
generally for terms of one year, payment is due within 30 days, the contractors 
must provide labor and conduct hiring practices consistent with certain U.S.    
laws, and pricing                                                               

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terms are negotiated on an item by item basis. See "Risk Factors -- Risk of     
Third Party Manufacturing and Sourcing."                                        

     Through its own and third party manufacturing operations, Gerber is able to
control the knitting, cutting, sewing, embroidering and packaging of its        
products. Over the last several years, Gerber has focused its operations on its 
manufacturing strengths such as knitting, cutting and sewing, and has           
discontinued its inefficient manufacturing operations such as spinning yarn and 
dyeing fabric. The Company believes that the combination of domestic and foreign
production helps Gerber maintain competitive pricing by keeping costs low while 
fulfilling customer demand for fast turnaround on orders.                       

   The Company believes that Gerber's integrated use of domestic and foreign
production provides tangible competitive advantages and cost benefits by        
securing more predictable timing in the production process which facilitates the
achievement of the Company's high standards with respect to product quality,    
timely deliveries and customer service. The ability to accurately forecast the  
completion of production allows the Company to offer narrow and dependable      
delivery windows to retailers. As retail buyers continue to consolidate         
suppliers, the Company believes that they favor those resources which offer     
quality products along with reliable and timely deliveries. By increasing the   
service demands on suppliers, retailers can minimize inventory levels, limit    
markdowns and utilize their open-to-buy dollars most efficiently.               

 RAW MATERIALS SOURCING.  Gerber buys yarn from proven, reliable sources
with which it has good relationships and generally enters into contracts for    
terms of up to one year with its yarn suppliers. Management believes, based upon
the Company's regular working relationships with its suppliers and management's 
experience, that the material terms of such contracts are consistent with       
industry standards. To date, Gerber has not experienced any difficulty in       
obtaining yarn. See "Risk Factors -- Costs of Raw Materials and Supplier        
Relationships." The Company intends to look for opportunities to consolidate    
buying between Gerber and Auburn to ensure efficiencies in purchasing (to the   
extent permitted under current contractual arrangements).                       

   QUALITY CONTROL.  Gerber maintains quality control processes in a variety
of ways. On an internal level, its domestic and offshore production in          
Gerber-controlled facilities is under the direction of a senior officer and the 
management of each plant is trained and held responsible for the quality of its 
own production. Gerber's director of quality control periodically visits each   
plant to train management personnel and inspect for quality. Representatives of 
the Company's merchandising and engineering staffs also visit the facilities    
from time-to-time to inspect for quality. In addition, in the Far East,         
employees and agents of the Company visit contractors' facilities to ensure     
compliance with specifications on-line including qualitative tests and an       
independent testing service is utilized to ensure compliance of garments with   
U.S. government regulations. On an external level, all of Gerber's licensors    
have the right to, and may from time to time, perform inspections of facilities 
utilized by the company. In addition, Gerber's customers perform third-party    
quality inspections either through unscheduled visits to Gerber facilities or   
through their own internal inspection of delivered final merchandise. The       
Company (and its competitors) are also required to provide the U.S. Consumer    
Products Safety Commission a continuing guarantee that products conform to U.S. 
flammability standards.                                                         

  DISTRIBUTION AND INVENTORY MANAGEMENT.  Gerber currently distributes the
majority of its products through distribution facilities located in Evergreen,  
Alabama. Gerber's Bed & Bath products are warehoused at its Pelzer, South       
Carolina facility and its blanket sleeper products are primarily warehoused and 
shipped from its Ballinger, Texas facility. In December 1997, Gerber relocated  
its distribution operations to the Alabama facility, which is approximately     
255,000 square feet and is adequate for Gerber's current needs with             
opportunities for expansion in capacity. The Company anticipates that the       
relocation will create cost savings during the 1998 fiscal year.                

   Under the Company's inventory management program, Gerber offers retailers
the ability to reorder certain of its products for immediate shipment. Gerber   
keeps an inventory of products covered by the program and accepts replenishment 
orders through its EDI system. See "Business -- Management Information Systems."
The Company can typically fill such orders within 72 hours of receipt. While the
program requires                                                                

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an increased investment in inventories, the Company believes that its ability to
offer this service to its customers is a significant competitive advantage.     

AUBURN                                                                          

   Auburn manufactures, markets and sells branded sport socks for men, women
and children under established brand names such as Wilson, Coca-Cola and        
Converse in the U.S. and internationally and under the Dunlop brand name in     
Europe. Auburn has operations in the United States and Ireland. Auburn markets  
to a diversified customer base in the U.S. and Europe, including volume         
retailers, department stores, wholesale clubs, major sporting good chains and   
food and drug stores. The strong brand name recognition and a long term         
reputation for quality facilitate a multi-channel distribution strategy. Auburn 
competes effectively in these distribution channels by offering its branded     
products at competitive prices, acting as a low-cost producer with the ability  
to service customers with quick turnaround, and maintaining strong customer     
relations. In addition, with its acquisition by Gerber, Auburn has added to     
these core competencies the ability to access capital for future growth and     
investment in operations. For the year ended December 31, 1997, Auburn had sales
of approximately $69.6 million.                                                 

Auburn competes in the highly fragmented hosiery industry, which has  
significant branded, control brand and private label components. Competition    
within the industry is generally based on price, quality, service, brand        
recognition and style. The Company believes that advances in technology in      
hosiery manufacturing will result in a smaller number of well-capitalized       
hosiery manufacturers. The Company believes that Auburn is well positioned to   
benefit from such consolidation due to its strong brands, established channels  
of distribution, strong customer service, low cost manufacturing capabilities   
and access to capital. The Company believes that significant growth             
opportunities exist through taking market share from private label producers,   
which comprise a substantial portion of the hosiery industry. In addition,      
management believes that Auburn's European manufacturing facility allows it to  
be more responsive to the European market, where management believes significant
opportunity for expansion exists.                                               

BRANDS                                                                

    The Company believes, based on discussions with Wilson, that Auburn is the
second largest licensee of the Wilson brand name in the U.S. and the third      
largest in the world, in each case based on royalty income. Sales of            
Wilson-branded products accounted for approximately 83% of Auburn's business in 
1997. The Wilson brand name enjoys strong customer recognition, and a quality   
reputation with its end consumers. Auburn also produces sports socks under the  
Coca-Cola and Converse brands domestically and internationally and under the    
Dunlop brand name in Europe.                                                    

PRODUCTS                                                              

     Auburn offers a variety of product features and packaging designed to serve
its varied distribution channels. Although Auburn's primary products are white  
sports socks for men, women and children, which represent a substantial portion 
of Auburn's net sales, Auburn has tailored its product mix to meet consumer     
tastes and demands, such as the European demand for darker colors. Auburn's     
products vary based on sole cushion, length of sock, foot size, color, placement
of logo and thread content. Auburn also offers a line of high performance sports
socks featuring performance fibers such as Duraspun and Coolmax. The Company    
believes that Auburn, driven by technologically advanced knitting and sewing    
machinery, has established itself as a market innovator through design          
innovations such as the welted-top.                                             

  The European market has shown an interest in sport socks in dark colors,
including heather grey, black and navy. The Company believes that the darker    
colors have increased end usage in Europe, because many customers tend to wear  
sport socks for dress wear as well as sport uses due to the low price and the   
high comfort factor of a sport sock. This trend is beginning in the United      
States and the Company is well positioned to take advantage of it.              

    Auburn has developed a strong reputation for packaging flexibility and can
deliver packaged products to suit and meet its customers' individual needs. The 
Company believes that the ability to service its customers'                     

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individual packaging and merchandising needs give Auburn a competitive advantage
over many of its competitors.                                                   

MANUFACTURING AND SOURCING                                            

MANUFACTURING OPERATIONS.  The hosiery business utilizes a capital    
intensive manufacturing process through which the sock is knit in the greige,   
the toe is closed, the sock is bleached or dyed and then packaged for           
distribution. In the U.S., Auburn conducts knitting and toe closing operations  
out of its manufacturing facility in Adairville, Kentucky. From time to time,   
Auburn also employs outside contractors to knit socks on a purchase order basis.
The amount of socks knitted by such outside contractors is not material. The    
Adairville facility houses technologically advanced knitting and sewing         
equipment. The oldest knitting machines are four years old. Auburn is           
implementing a computerized monitoring system of this machinery which increases 
efficiency, usage rates and productivity. Auburn's bleaching, dying, packaging  
and shipping operations are conducted out of its distribution facility in       
Auburn, Kentucky. Technological advances and other control mechanisms at both   
the Adairville and Auburn facilities allow Auburn to maximize productivity. The 
Company intends to invest in further technological advances as they become      
available.                                                                      

    Outside the U.S., Auburn operates a facility in Cahirciveen, County Kerry,
Ireland which conducts knitting, sewing, bleaching, packaging and shipping      
functions using machinery, processes and technology identical to those of the   
U.S. facilities. The Ireland facility primarily supplies the European market    
(including Western Europe and Eastern Europe west of Russia) with the same      
branded American-style sports socks. In addition, the Company has recently      
installed in the Ireland facility a computerized monitoring system similar to   
that which Auburn is currently implementing in its Adairville facility. Now     
fully operational in Ireland, the system has significantly increased efficiency 
and productivity at that facility. The Company believes that Auburn's ability to
offer high quality, branded socks at competitive prices has been recognized by  
value-conscious Europeans, and that the low levels of similar product offerings 
at this time offer an opportunity to develop brand recognition in these markets.
See "Business -- Auburn -- Distribution and Inventory Management."              

   QUALITY CONTROL.  Auburn maintains quality control processes in a variety
of ways. Internally, quality control inspectors monitor work in progress at each
step of the manufacturing process. A record of each operator's performance is   
recorded and updated regularly. On an external level, all of Auburn's licensors 
have the right to, and may, from time to time, perform inspections of Auburn's  
facilities. Customers also perform third-party quality inspections either       
through unscheduled visits to the Auburn facility, or through their own internal
inspection of delivered final merchandise.                                      

     DISTRIBUTION AND INVENTORY MANAGEMENT.  In the U.S., Auburn distributes its
products through the volume retailers, mid-tier department stores, wholesale    
clubs, major sporting good chains and food and drug store distribution channels 
from its facility in Auburn, Kentucky. In Europe, Auburn distributes its        
products to volume retailers, mid-tier department stores, supermarkets,         
wholesale clubs, major sporting goods chains and specialty retailers within the 
sporting goods category from its facility in Ireland. Both facilities are able  
to ship orders within 72 hours of their receipt. Management believes that this  
ability provides a significant competitive advantage over many of Auburn's U.S. 
competitors who lack fully-integrated European facilities and, therefore, are   
unable to respond quickly to European customers' individual demands. Management 
also believes that this ability coupled with Auburn's strong brand names has    
made Auburn a leading producer.                                                 

MANAGEMENT INFORMATION SYSTEMS                                                  

Gerber's MIS system provides, among other things, comprehensive order 
processing, production, accounting and management information for the marketing,
manufacturing, importing and distributing functions of Gerber's business. Gerber
has purchased and implemented a software program that enables Gerber to track,  
among other things, orders, manufacturing schedules, inventory, sales and       
mark-downs of its products. Gerber's MIS staff, based in Greenville, South      
Carolina, supports all computer systems and programs used to run Gerber's       
business. Gerber believes that its programmers play a critical role at Gerber in
supporting these systems and in developing programs to maximize product flow    
through the different                                                           

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manufacturing functions at each facility and correctly staffing each function.  
Gerber continuously upgrades its MIS system to attempt to optimize inventory    
management and provide management with more timely information. In addition,    
Gerber has made expenditures with respect to the millennium problem and expects 
to be year 2000 compliant by the end of 1998. The Company believes that future  
expenditures related to year 2000 issues will not be material. In addition, to  
support Gerber's replenishment program, Gerber maintains and fully utilizes its 
EDI and VMI capabilities. Gerber has made significant investments in the        
development of such MIS systems and plans to make additional capital            
expenditures to improve such systems, including the development of a fully      
integrated production system.                                                   

   Auburn's MIS system provides a full range of functions. Auburn's domestic
EDI system is available for all customers and is completely integrated with     
Auburn's manufacturing, production, order entry, shipping, accounting and       
packaging functions. The system links all three of Auburn's domestic facilities 
and can interface with Gerber's financial functions. Management expects that    
Auburn's domestic EDI system will be year 2000 compliant by the end of 1998. The
Company believes that future expenditures related to year 2000 issues impacting 
Auburn's systems will not be material. The MIS system in the Ireland facility,  
which includes EDI capability, is a fully-integrated, real-time system and is   
able to interface with Auburn's New York sales office. The MIS system in the    
Ireland facility is currently year 2000 compliant.                              

   Auburn maintains EDI systems in both its domestic and Ireland facilities.
In addition, to prepare for the integration of a single European currency by    
European Union member states, Auburn is implementing the systems necessary to   
offer its products for sale in both national currencies and the new European    
currency. The systems provider has committed that such systems will be fully    
implemented by January 1, 1999. Auburn's systems are expected to include (i)    
dual bar coding on all products sold in Europe, (ii) dual billing, and (iii)    
multi-level currency conversion to allow for simplified billing and collection. 
Management believes that the promulgation of one European currency could        
materially affect the Company by providing potential new sources of revenue. It 
can also increase competition in the market. See "Risk Factors -- Risks         
Associated with Foreign Operations and Import Restrictions."                    

CUSTOMERS                                                                       

Gerber directly services approximately 1,100 retail accounts, with the
Company's top 10 customers representing approximately 83% of total 1997 sales.  
Sales to Wal-Mart, which accounted for a significant percentage of the net sales
of infant and toddler apparel in the U.S. in 1997, constituted approximately 44%
of Gerber's sales during 1997. Sales to Wal-Mart constituted approximately 48%  
of Auburn's sales during 1997 (including sales after the Recent Acquisition). No
other customer accounted for more than 10% of the Company's 1997 sales on a pro 
forma basis.                                                                    

     Gerber enjoys well-established, long-term relationships with its customers,
many of which have been maintained at multiple levels from sales to senior      
management. In certain cases, members of Gerber's senior management and sales   
force have maintained relationships with Gerber's customers for over 30 years.  
Approximately 90% of Gerber's customer orders, including all orders from volume 
retailers, currently come through the EDI system. This allows Gerber's customers
to receive the quick order turnaround of approximately 72 hours. Gerber has also
implemented a VMI program. Gerber's information systems enable it to provide    
customized merchandising and space allocation recommendations and other category
management services to its retail customers. Gerber currently provides such     
customized services for Wal-Mart in certain product categories. Gerber has been 
recognized for its accomplishments by many retailers and in 1997 received the   
Supplier Performance Award from Discount Store News on behalf of discounters,   
the highest award a company can receive from such retailers. In addition, the   
Company has received a number of awards from its customers, including the 1995  
Vendor/Partner of the Year Award and the 3rd Quarter of 1996 Vendor/Partner     
Award of Excellence from Wal-Mart, the 1996 Platinum Award from Sears, the 1996 
Rainbow Award (Top Volume Clothing) from Baby Superstore (currently the "Babies 
"R" Us" division of Toys "R" Us) and the 1996 Vendor of the Year Award from Toys
"R" Us, which marked the first time Toys "R" Us ever presented such award to a  
non-toy vendor.                                                                 

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BACKLOG AND SEASONALITY                                                         

     The Company delivers products throughout the year and generally experiences
busy cycles during the first and third quarters. The EDI system and VMI programs
have significantly reduced the average order period, which effectively reduces  
backlog. At December 31, 1997, the Company's backlog of orders for its products,
all of which were expected to be shipped during fiscal 1998, was approximately  
$20.2 million, as compared to approximately $18.2 million at December 31, 1996  
(including Auburn's backlog in 1996). Backlog as of any given date may not be   
indicative of backlog at a subsequent date. Therefore, a comparison of backlog  
from period to period is not necessarily an accurate indicator of eventual      
shipments.                                                                      

     In Gerber's segments of the apparel industry, sales are typically higher in
the third and fourth quarters. The Company believes that there are three main   
reasons for this trend in the third quarter: (i) sales of blanket sleepwear     
occur mostly during this period, (ii) a portion of the Company's underwear      
business is seasonal in that a product line for the fall season incorporates    
seasonal designs, prints, colors and fabric weight, and (iii) sales in general  
rise as retailers prepare for events such as back-to-school season (as consumers
visit stores to buy clothing for older children) and retailer-initiated         
promotions of baby apparel. In the fourth quarter, such trend is primarily due  
to greater sales of blanket sleepers in the early fourth quarter and increased  
sales of playwear in the late fourth quarter.                                   

     Auburn's business is generally non-seasonal but experiences somewhat higher
sales in the second and third quarters as a result of the seasonal use of the   
product and back to school sales. Auburn's business is also influenced by       
promotions instituted by its customers.                                         

COMPETITION                                                                     

   The infant and toddler apparel market is highly competitive. Both branded
and private label manufacturers compete in the infant and toddler apparel       
markets. Competition generally is based upon product quality, brand name        
recognition, price, selection, service and convenience. Gerber's primary        
competitors include Fruit of the Loom, Hanes, Carter's, licensed products and   
firms using character licenses from Disney and others. Gerber also competes with
certain retailers, including several which are customers of the Company, which  
have significant private label products offerings. Certain of Gerber's          
competitors have greater financial resources than the Company. Gerber's ability 
to compete depends, in substantial part, on the continued high regard for the   
Gerber brand name and the ability of Gerber to continue to offer high-quality   
garments at competitive prices.                                                 

The hosiery industry is highly fragmented and has significant branded,
control brand and private label components. Competition is generally in terms of
price, quality, service, brand recognition and style. Auburn's primary          
competitors include Hanes, which has the largest share of the market, Renfro,   
Neuville and Russell. Auburn also competes with certain retailers, including    
several which are customers of the Company, which have significant private label
products offerings. In addition, Auburn competes with private label             
manufacturers, including small, local manufacturers and large, public companies 
that have greater financial resources than the Company and larger customer      
bases.                                                                          

LICENSING AND TRADEMARKS                                                        

    GERBER LICENSE.  GPC has granted Gerber a ten year license that expires in
January 2006 (with two five year renewal periods) to use the Gerber brand name  
in the United States, Canada and the Caribbean. The five-year renewal periods   
are each subject to Gerber's meeting certain minimum target sales amounts, which
amounts management believes to be consistent with industry standards. Royalties 
are not payable under the license until 2002. However, the Company accrues for  
the projected average royalties to be paid pursuant to the license arrangement. 
Management believes that the amount of such royalties is consistent with        
industry standards, in which royalties typically range from 2-14% of sales and  
are determined by factors such as the trademark licensed, the relationship      
between the licensee and licensor, and the extent and nature of the advertising 
supporting the brand. The Company's knowledge of industry standards with respect
to royalties is based on management's knowledge of royalty rates offered by     
other manufacturers and experience with other                                   

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apparel companies and selected public disclosures. See "Management's Discussion 
and Analysis of Financial Condition and Results of Operations -- Liquidity and  
Capital Resources."                                                             

  The license permits use of the Gerber name for infant and toddler shoes,
underwear, sleepwear (including blanket sleepers, pajamas and sleep 'n play),   
playwear, bed and bath products typically used in a nursery to decorate or      
coordinate the nursery or bedding or to bathe a child, reusable cloth diapers   
and diapering apparel products, bibs, hosiery, swimwear and gift sets and       
layettes incorporating the above articles, in each case, targeted to infants and
toddlers of certain specific sizes. In the event that the licensor desires to   
license the Gerber name for the sale of licensed articles in any other country  
in Central or South America, Gerber has the right of first refusal to obtain    
such license on the same terms and conditions as the existing license. The      
licensor has granted a third party the right to use the Gerber name for products
which fall into the same general product category as one or more of the licensed
articles and which may be similar to but not the same as one or more of the     
licensed articles in terms of use, function or otherwise. Gerber is allowed to  
use the Gerber name in its corporate or business name during the term of the    
license. Under the terms of the license, Gerber is required to maintain certain 
levels of insurance.                                                            

  Products which utilize the Gerber name may not deviate from the quality,
design, material, construction, details, fabric, weight, workmanship and finish 
of the licensed articles approved by the licensor. Any new or altered products  
or advertising which use the Gerber name must be submitted to the licensor prior
to their use. The licensor can disapprove any proposed product or advertising   
which, in its sole view, would impair the value or goodwill associated with the 
Gerber name. The licensor can terminate the license if Gerber materially        
breaches the license agreement, fails to maintain required levels of insurance  
or sells products which were not approved by the licensor, or if certain        
bankruptcy events occur. The Company believes that it is currently in compliance
with all provisions of the Gerber license in all material respects and has no   
reason to believe that any events are likely to occur that would result in the  
early termination of such license. In the event that either party seeks         
termination of the license at any time prior to January 22, 2016, such party    
must give 2-years' notice to the non-terminating party. In the event such notice
is delivered by GPC, the royalty rate will be decreased by approximately 2% for 
the remainder of the term, and in the event that Gerber delivers notice to      
terminate the license, the royalty rate will be increased by approximately 2%   
for the remainder of such term. The Company may not sell, manufacture or        
distribute any item for use in association with licensed articles that compete  
in any area with any item, sold or manufactured by the licensor.                

 BABY LOONEY TUNES LICENSE.  Gerber currently holds a license to use the
Baby Looney Tunes name from Warner Brothers. The license was renewed on March   
12, 1998 and extends until December 31, 2000. Management believes the negotiated
royalty terms are consistent with industry standards. The license permits Gerber
to use the characters Baby Tweety, Baby Bugs Bunny, Baby Tasmanian Devil, Baby  
Daffy Duck, Baby Wile E. Coyote, Baby Road Runner and Baby Sylvester on infant  
bath products, bedding, sleepwear, underwear, footwear, socks, layettes, and    
infant and toddler playwear. The license also permits Gerber to use the adult   
characters Bugs Bunny, Wile E. Coyote, Marvin the Martian, Foghorn Leghorn,     
Porky Pig, Elmer Fudd, Tweety and Sylvester Jr. for toddler bedding. The license
is limited to the U.S. and its territories and possessions. The licensor is     
permitted to grant rights in the characters to (i) other parties for products   
other than those covered by the license; (ii) other parties for products covered
by the license for sale through catalogues produced by or on behalf of the      
licensor, for sale or distribution in any movie theaters, retail stores operated
by the licensor, or in any theme park operated by the licensor; and (iii) Six   
Flags Corporation for sale of similar products as Gerber's in its theme parks.  
Use of the characters is subject to review and approval by the licensor. The    
license may be terminated by the licensor (i) upon a material default under the 
license by Gerber; (ii) if Gerber fails to maintain certain insurance; (iii) if 
any government body finds that Gerber's products are harmful or defective in any
way, manner or form, or are being sold or made in violation of the law; (iv) if 
Gerber fails to make and sell at least 25 different products; (v) if Gerber     
manufactures, sells or distributes licensed products without approval by the    
licensor; or (vi) if Gerber sells licensed products outside the U.S. and its    
possessions.                                                                    

CURITY LICENSE.  The Kendall Company granted Gerber an exclusive,     
royalty-free license to use the Curity brand name until July 2006 with automatic
renewals for additional ten year terms. The license permits use of the Curity   
name for cloth diapers and diaper liners, underwear, hosiery, sleepwear         
(including blanket                                                              
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sleepers and sleep 'n play sets), linens, bedding and certain other products    
(such as infant car seat covers), in each case to be worn by or used for infants
and toddlers. The license permits such products to be sold in the U.S. and in   
more than 40 countries worldwide (and in more than 70 additional countries if   
the licensor verifies that the licensed trademarks may be licensable for the    
licensed products therein). The licensor must approve any product and all       
advertising which utilizes the Curity name. All products using the Curity name  
must be made pursuant to quality standards approved by the licensor. The        
licensor can cancel the license if during any five year period only token sales 
of products using the Curity name are made. The licensor can terminate the      
agreement upon an uncured breach of the license or upon the occurrence of       
certain bankruptcy events involving Gerber. In January 1996, Gerber returned to 
the licensor the worldwide rights to use the Curity name in outerwear and       
playwear and agreed that the licensor could retain the rights to the Curity     
trademark in hosiery, linens, bedding and certain other products if Gerber      
failed to "use in commerce" the Curity name on any licensed products for a      
period of six consecutive months.                                               

  WILSON LICENSE.  Since 1982, Auburn has held an exclusive license to use
the Wilson brand name for its sport socks in the fifty United States. Since     
1988, this license has allowed Auburn to use the Wilson name in Europe, as well.
During this long term relationship, the Company believes that Auburn has become 
the second biggest Wilson licensee in the U.S. and the third biggest worldwide. 
The current license expires on December 31, 2002 and is renewable for a five    
year term if Auburn meets certain sales targets for years 1998 through 2001. In 
1997, Auburn's sales greatly exceeded the targets set for each of the four years
comprising such period.                                                         

Under the current arrangement, Auburn and Gerber are not permitted to 
consolidate their top management team, sales force, distributors, customer      
service and manufacturing and are not permitted to commingle product lines.     
Auburn is not permitted to sell or distribute products which compete with       
Wilson's products, and Wilson can terminate its license if Auburn's operation   
under the Wilson license is not wholly separate and distinct from the operations
of any affiliated entity which makes or distributes socks or other sporting     
goods under a sports brand name, subject to certain exceptions. Wilson's        
distributors in a particular country in Europe may sell Wilson sport socks      
manufactured by parties other than Auburn if Auburn has not sold socks in such  
country in the prior year. Auburn is required to maintain a certain percentage  
of its sales in the sporting goods store trade channel. Wilson must approve     
Auburn's use of the Wilson logo on particular products prior to the sale of such
products. Royalty payments to Wilson are calculated as a percentage of net sales
value and minimum royalties are set for each year. Management believes the      
royalties payable under the Wilson license are consistent with industry         
standards. Wilson has the option to terminate the license if: (i) Auburn fails  
to meet its annual minimum sales goal (calculated both by volume and geographic 
area) in any given year or three-year period; (ii) a material change occurs in  
the overall management or ownership of Auburn, or the employment by Auburn of   
Kevin K. Angliss or Donald J. Murphy terminates; (iii) Auburn defaults on its   
obligations under the license; or (iv) Auburn is insolvent. Wilson consented to 
the sale of Auburn to the Company. In the event of its termination due to       
Auburn's failure to meet its annual minimum sales goals (for which notice from  
Wilson must be received within 60 days of receipt of financial statements       
evidencing such failure), Auburn would be required to pay to Wilson Guaranteed  
Royalties (as defined in the license agreement) which range from $1.4 million to
$1.9 million, depending on the year of termination. This sum would be payable   
over a period of nine months following such termination.                        

    CONVERSE LICENSE.  Converse granted Auburn an exclusive license to use the
Converse brand name for its men's, women's and youth's hosiery in the U.S., its 
possessions or territories, and in Europe until December 31, 2001. Converse and 
Auburn also agreed to enter into good faith discussions with respect to a new   
three-year contract beginning in 2002. Converse may remove Europe from the      
coverage of the license if Auburn does not achieve certain net sales minimum    
amounts in Europe during any contract year. The licensor must approve Auburn's  
use of the licensed trademarks on products or advertising material prior to use 
or sale. Royalty payments to the licensor are calculated as a percentage of net 
sales and minimum royalties are set for each year. The license may be terminated
by Converse in the event that Kevin Angliss and/or Tim Graham are not, at all   
times, the principal managers of the Converse-brand product line at Auburn.     
Converse can also terminate the license in the event of one or more of the      
following: (i) liquidation or discontinuance of the active operation of the     
enterprise of Auburn; (ii) default by Auburn on payments under the Converse     
license;                                                                        

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(iii) failure by Auburn to make timely periodic or minimum royalty payments;    
(iv) failure by Auburn to submit a marketing plan in accordance with the        
Converse license; and (v) default in the performance of any other obligation    
continuing for more than 30 days. Converse consented to the sale of Auburn to   
the Company. Management believes that the royalties payable under the Converse  
license are consistent with industry standards.                                 

    COCA-COLA LICENSE.  Coca-Cola granted Auburn exclusive licenses to use the
Coca-Cola brand name for its sport and casual socks in the U.S. and its         
possessions and Europe for a three year term until December 31, 1998. Auburn has
the option to extend the term of the license for three years commencing January 
1, 1999. The licensor may revoke Auburn's right in any country and declare the  
license to be nonexclusive if Auburn fails to maintain a bona fide commercial   
sales presence in any country within the territory for the licensed articles. In
addition, Coca-Cola is permitted to continue standard soft-drink promotional    
activities in the territory covered by the license, which may include the sale  
of goods identical to or similar to licensed articles, and the licensor's retail
stores may purchase goods from any source regardless of whether they are        
identical or similar to Auburn's products. Auburn is not permitted to deal in   
any merchandise which is identical or similar to any licensed article and which 
bears the trademarks of any non-alcoholic beverage product produced by any of   
Coca-Cola's competitors. Royalty payments to Coca-Cola are calculated as a      
percentage of net sales and minimum royalties are set for each year. Management 
believes that the royalties payable under the Coca-Cola license are consistent  
with industry standards. Coca-Cola may terminate the license at any time: (i) if
Auburn fails for a consecutive period in excess of six months to continue the   
bona fide distribution and sale of the licensed articles; (ii) Auburn fails to  
adequately advertise, promote or merchandise the licensed articles at a level   
consistent with accepted standards in Auburn's industry; (iii) if Auburn fails  
to make any payments due under the license agreement for more than 30 days; (iv)
if Auburn is unable to pay its obligations when due or is adjudicated bankrupt  
or insolvent; (v) if Auburn intentionally understates any royalty report; or    
(vi) if the quality of the licensed articles becomes materially lower on a      
consistent basis than those submitted for approval. Coca-Cola consented to the  
sale of Auburn to the Company.                                                  

  DUNLOP LICENSE.  Dunlop granted Auburn a license to use the Dunlop brand
name for its sport and casual socks in Europe (including Eastern Europe west of 
Russia) for a five year term until December 31, 2001. If the royalty amount in  
the year 2000 is in excess of the minimum guaranteed royalty for the year 2000, 
the license automatically will be renewed for five years commencing January 1,  
2002 and ending December 31, 2006. The licensor must approve Auburn's use of the
licensed trademarks on products or advertising material prior to use or sale.   
Royalty payments to the licensor are calculated as a percentage of net sales and
minimum royalties are set for each year. Management believes that the royalties 
payable under the Dunlop license are consistent with industry standards. Dunlop 
or Auburn may terminate this license if either commits a breach of this license 
or if either is unable to pay its debts or enters into voluntary or compulsory  
liquidation. Dunlop may terminate this license: (i) if any moneys payable by    
Auburn remain unpaid for more than 45 days; (ii) if the ultimate equity share   
voting control in Auburn changes; or (iii) if Auburn exercises its rights to    
seek a declaration or other order from a court that, by reason of acts or       
omissions, the registration of Dunlop registered trademarks is invalid. Dunlop  
consented to the sale of Auburn to the Company.                                 

    OTHER.  Gerber is the owner of the Onesies trademark in the United States.
Gerber also licenses certain patent rights related to its cloth diaper products 
from a third party. The Company regards the licenses of trademarks and its other
proprietary rights in and to the trademarks as valuable assets in the marketing 
of its products and, on a worldwide basis, seeks to protect them against        
infringement.                                                                   

EMPLOYEES                                                                       

 As of December 31, 1997, the Company had approximately 3,300 employees,
including approximately 2,000 in the United States and approximately 1,300 in   
foreign countries. None of the Company's employees are members of unions or are 
otherwise party to a collective bargaining agreement. Certain of the Company's  
employees in Ireland are subject to the national wage agreement in Ireland. The 
Company considers its relations with its employees to be good.                  

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PROPERTIES                                                                      

    The following table sets forth the principal real property owned or leased
by the Company and used as production, distribution, warehouse, manufacturing or
other facilities as of December 31, 1997:                                       

                                                                [Download Table]

                                                        OWNED                    
                                                          OR    APPROXIMATE FLOOR
                                       USE              LEASED   SPACE (SQ. FT.) 
        LOCATION                       ---              ------  -----------------
                                                                                 
Ballinger, TX............. Manufacturing                Owned         85,000     
Ballinger, TX............. Warehouse, Distribution      Leased        70,000     
Evergreen, AL............. Warehouse, Distribution      Leased       255,000     
Dominican Republic (3                                                            
   facilities)............ Production                   Leased        90,000     
Lumberton, NC (2                                                                 
   facilities)............ Manufacturing                Owned        183,000     
Pelzer, SC (2                                                                    
   facilities)............ Manufacturing, Distribution  Owned        804,000     
Adairville, KY............ Manufacturing                Owned         72,000     
Auburn, KY................ Manufacturing, Distribution  Owned        160,000     
                           and Administration                                    
Cahirciveen, Ireland (2                                                          
   facilities)............ Manufacturing, Distribution  Leased        62,000     
                           and Administration                                    

  In addition to the facilities described above, the Company leases 48,000
square feet for its headquarters in Greenville, South Carolina and approximately
16,000 square feet for its executive offices and showroom in New York, New York.
From time to time, the Company also uses storage space in a warehouse in        
Franklin, Kentucky. The Company holds a purchase option for the Evergreen,      
Alabama warehouse which is exercisable at any time during its 15 year term at a 
price of two dollars.                                                           

ENVIRONMENTAL AND OTHER REGULATORY MATTERS                                      

The Company's manufacturing facilities and operations are subject to  
certain federal, state, local and foreign laws and regulations relating to      
environmental protection and occupational health and safety, including those    
governing wastewater discharges, air emissions, the management and disposal of  
solid and hazardous wastes, and the remediation of contamination associated with
the release of hazardous substances. Prior to the Recent Acquisition, Auburn was
cited for discharging contaminants (dyes and solids) into the sewer system from 
its facility in Auburn, Kentucky in excess of the amounts allowed under its     
permits. The condition underlying such violations was fully remediated at an    
immaterial cost. Gerber and, other than the above, Auburn have never been cited,
fined or otherwise held liable for violations of environmental statutes or      
regulations. In addition, the Company is not aware of any noncompliance with    
such laws and regulations. The Company has incurred, and will continue to incur,
capital expenditures and operating expenses to comply with such requirements.   
However, the Company does not currently anticipate any material capital         
expenditures for environmental control facilities for the current or succeeding 
fiscal year. Nonetheless, there can be no assurance that such laws will not     
become more stringent or be interpreted and applied more stringently. Such      
future changes or interpretations or the identification of adverse environmental
conditions previously unknown to the Company could result in additional         
compliance costs or in remediation costs to the Company.                        

  The Company's older facilities contain asbestos materials and lead-based
paint in inactive areas utilized for the storage of records, machine parts and  
obsolete supplies, where the potential for worker exposure to such materials is 
minimal. If the Company were to elect to utilize such areas as active           
manufacturing or distribution facilities such that the potential for worker     
exposure would be increased, as a matter of policy the Company would undertake  
to remediate or encapsulate such materials. The cost of removing or             
encapsulating such materials from the Company's Pelzer, South Carolina          
facilities would be a material expenditure.                                     

   In connection with both the Original Acquisition and the Acquisition, the
Company obtained from the former owners of the businesses, indemnification for  
certain potential environmental liabilities. Most of the indemnities are subject
to limitations, including an indemnification period ending December 17, 1998 and
a                                                                               

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$1.0 million limit. To date, the Company has not made any claim under these     
indemnities, and there is no assurance that the former owners will have the     
ability to fulfill their indemnification obligations if called upon to do so by 
the Company. See "Risk Factors -- Cost of Environmental Compliance."            

LEGAL PROCEEDINGS                                                               

The Company is involved from time to time in various routine legal and
administrative proceedings and threatened legal and administrative proceedings  
incidental to the ordinary course of its business. The Company has been active  
in pursuing actions against counterfeiters and diverters of its products. In the
opinion of the Company's management, the resolution of such matters will not    
have a material adverse effect on the Company's business, financial condition or
results of operations.                                                          

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MANAGEMENT

EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES                                 

  Executive officers, directors and key employees of the Company and their
ages as of February 24, 1998 are as follows:                                    

                                                        [Enlarge/Download Table]

                NAME                 AGE                         POSITION                       
                ----                 ---                         --------                       
                                                                                                
Edward Kittredge.................... 60   Chairman of the Board, President, Chief Executive     
                                          Officer                                               
Richard L. Solar.................... 58   Senior Vice President and Director                    
David E. Uren....................... 54   Vice President of Finance, Secretary and Treasurer    
Lee M. Schaeffer.................... 51   Senior Vice President of Operations of Gerber         
Robert P. Robertson................. 51   Senior Vice President of Sales and Marketing of Gerber
Raymond R. McManus.................. 54   Vice President of Human Resources of Gerber           
Kevin K. Angliss.................... 46   President of Auburn                                   
Donald J. Murphy.................... 58   Senior Vice President of International Sales and      
                                          Marketing of Auburn                                   
W. Timothy Graham................... 45   Vice President of Sales of Auburn                     
Richard M. Cashin, Jr............... 45   Director                                              
Joseph Medalie...................... 75   Director                                              
John D. Weber....................... 34   Director                                              
Lawrence R. Glenn................... 59   Director                                              

EXECUTIVE OFFICERS AND DIRECTORS                                                

EDWARD KITTREDGE led a group of investors in the purchase of Gerber   
Childrenswear, Inc. from GPC in January 1996 and has served as Chairman of the  
Board, President and Chief Executive Officer of the Company since that time. Mr.
Kittredge served as Chairman and Chief Executive Officer of Denton Mills,       
manufacturer of Dr. Denton children's pajamas, from 1984 to 1990. From 1980 to  
1984, he was President of Royal Manufacturing Company, a privately owned men's  
underwear and active sportswear company. Prior to that, he served in a variety  
of senior sales and marketing management positions at Union Underwear Company   
(Fruit of the Loom), including national director of all Branded and Private     
Label Sales and as head of its BVD Division.                                    

RICHARD L. SOLAR has been Senior Vice President of the Company and a  
director since January 1996. Prior to joining the Company, Mr. Solar held       
various positions at Bankers Trust Company, including managing director         
positions. From 1971 to 1975, Mr. Solar also served as Treasurer of Val D'Or    
Industries Inc., a publicly held apparel company, and Diamondhead Corporation, a
publicly held real estate development company. He is also a director of Concord 
Fabrics, Inc.                                                                   

DAVID E. UREN has been Vice President of Finance of the Company or its
predecessor since 1987. He has been Secretary and Treasurer of the same since   
1990. Prior to joining the Company, he was Chief Financial Officer of Borg      
Textile Corporation and held various senior financial positions at Buster Brown 
Apparel, Inc. between 1972 and 1987. Mr. Uren also served at Ernst & Young from 
1967 to 1971, including as a certified public accountant from 1969 to 1971.     

    LEE M. SCHAEFFER has been Senior Vice President of Operations of Gerber or
its predecessor since September 1997 and was Vice President of Operations from  
1993 to 1997. He joined the Company in 1990 as Vice President of Marketing      
Services. Prior to joining the Company, he held various management positions    
with Milliken and Co., and Williamson-Dickie Manufacturing Co.                  

   ROBERT P. ROBERTSON has been Senior Vice President of Sales and Marketing
of Gerber since August 1997. Prior to joining the Company, he held various      
senior management positions with Sara Lee Knit Products (Hanes and Hanes Her    
Way), Stedman Corporation and Pannill Knitting Company, Inc.                    

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    RAYMOND R. MCMANUS has been Vice President of Human Resources of Gerber or
its predecessor since April 1995. Prior to joining the Company in 1986, Mr.     
McManus held various management positions at Boston Whalers, Inc., Acushnet     
Company, and Converse.                                                          

   RICHARD M. CASHIN, JR. has been a director since January 1996. Mr. Cashin
has been president of CVC since 1994. Prior to being appointed president, Mr.   
Cashin served as a Managing Director of CVC for more than four years. Mr. Cashin
is also a director of Levitz Furniture Inc., Delco Remy International, Inc.,    
LifeStyle Furnishings International Ltd., Fairchild Semiconductor Corporation,  
FFC Holdings, Inc., Cable Systems International, Euramax International, Plc.,   
Titan Wheel International, Inc., Hoover Group Inc., Thermal Engineering, JAC    
Holding Corporation, GVC Holdings, Ballantrae Corporation and Delta Commodities,
Inc.                                                                            

  JOSEPH MEDALIE has been a director since February 1997. Mr. Medalie is a
director of the Convention Center Corporation, a retired director and vice      
chairman of Fruit of the Loom and a retired director of Transfinancial Bank and 
Commonwealth Health Corporation.                                                

    JOHN D. WEBER has been a director since January 1996. Mr. Weber has been a
Vice President at CVC since 1994. Previously, Mr. Weber worked at Putnam        
Investments from 1992 through 1994. Mr. Weber is a director of Advanced Cast    
Products, Inc., Anvil Knitwear, Inc., Electrocal Designs, Inc., FFC Holding,    
Inc., Graphic Design Technologies, Marine Optical, Inc., Neenah Foundry Company,
Plainwell Paper Company, Sleepmaster, LLC, and Smith Alarm.                     

   LAWRENCE R. GLENN has been a director since January 1996. Mr. Glenn was a
Senior Corporate Officer of Citicorp from 1963 until 1995. Currently Mr. Glenn  
is the Chairman of J.W. Goddard & Co., a private investment bank.               

KEY EMPLOYEES                                                                   

  KEVIN K. ANGLISS has been President of Auburn since 1997 and the officer
responsible for the day-to-day operations of Auburn (while employed by J.P.     
Manning, Inc., an affiliate of Auburn) since 1986. Prior to joining Auburn in   
1983, he held a senior sales management position at Champion Products and was   
employed in various positions by J.C. Penney in the buying/merchandising        
departments.                                                                    

    DONALD J. MURPHY has been Senior Vice President of International Sales and
Marketing at Auburn since 1997. From 1995 to 1997, Mr. Murphy held such position
at J.P. Manning, Inc., an affiliate of Auburn. Prior to joining Auburn in 1990, 
he held several merchandising positions with J.C. Penney and a senior sales     
position at Pannill Knitting Company.                                           

  W. TIMOTHY GRAHAM has been Vice President of Sales of Auburn since 1997.
From 1986 to 1997, Mr. Graham held such position at J.P. Manning, Inc., an      
affiliate of Auburn. Prior to joining Auburn in 1983, he held a senior sales    
position at The Bibb Company and Judy Bond, Inc.                                

BOARD COMMITTEES                                                                

    AUDIT COMMITTEE.  In 1996, the Board established an audit committee, whose
members are directors who may also be employees of the Company. The audit       
committee makes recommendations concerning the engagement of independent public 
accountants, reviews with the independent public accountants the plans and      
results of the audit engagement, approves professional services provided by the 
independent public accountants, considers the range of audit and non-audit fees 
and reviews the adequacy of the Company's internal accounting controls. Messrs. 
Weber, Glenn and Solar currently serve on the audit committee.                  

COMPENSATION COMMITTEE.  In 1996, the Board established a compensation
committee, whose members are directors who may also be employees of the Company.
The compensation committee approves the salaries and other benefits of the      
executive officers of the Company and administers certain compensation plans of 
the Company. In addition, the compensation committee consults with the Company's
management regarding pension and other benefit plans and compensation policies  
and practices of the Company. Messrs. Kittredge, Cashin and Medalie currently   
serve on the compensation committee.                                            

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BOARD OF DIRECTORS                                                              

    There are currently six members of the Board. Directors are elected at the
annual meeting of stockholders. The Company expects to name two additional      
outside directors in the next year. The Company's Amended and Restated          
Certificate of Incorporation provides for cumulative voting in the election of  
directors. See "Description of Capital Stock -- Certain Provisions of the       
Company's Amended and Restated Certificate of Incorporation."                   

DIRECTOR COMPENSATION                                                           

 Messrs. Medalie and Glenn are the only members of the Board who receive
compensation for their services as directors. Both Messrs. Medalie and Glenn are
entitled to receive $2,500 for each Board meeting attended and reimbursement for
their reasonable out-of-pocket expenses incurred in connection with Board       
meetings.                                                                       

EXECUTIVE COMPENSATION                                                          

SUMMARY COMPENSATION TABLE

  The following summarizes the principal components of compensation of the
Company's Chairman and Chief Executive Officer and the four most highly         
compensated executive officers of the Company other than the Chief Executive    
Officer as of December 31, 1997 for services rendered in all capacities to the  
Company during fiscal 1997.                                                     

                                                        [Enlarge/Download Table]

                                                                                 LONG-TERM                  
                                              ANNUAL COMPENSATION               COMPENSATION                
                                   -----------------------------------------  ----------------   ALL OTHER  
                                                              OTHER ANNUAL    RESTRICTED STOCK  COMPENSATION
NAME AND PRINCIPAL POSITION  YEAR  SALARY ($)   BONUS ($)   COMPENSATION ($)     AWARDS ($)        ($)(A)   
---------------------------  ----  ----------   ---------   ----------------  ----------------  ------------
                                                                                                            
Edward Kittredge, Chairman,                                                                                 
  President and CEO........  1997   225,000      776,100         14,405(b)           0           6,379,468  
Richard L. Solar, Senior                                                                                    
  Vice President...........  1997   150,000      455,286          4,750(c)           0           2,392,301  
David E. Uren, Vice                                                                                         
  President of Finance,                                                                                     
  Secretary and                                                                                             
  Treasurer................  1997   150,450      158,614         10,750(c)           0                   0  
Lee M. Schaeffer, Senior                                                                                    
  Vice President,                                                                                           
  Operations...............  1997   136,335       75,000          2,850(c)           0              73,048  
Robert P. Robertson, Senior                                                                                 
  Vice President, Sales and                                                                                 
  Marketing................  1997    65,048       25,000              0              0             292,191  

---------------                                                                 

(a) Reflects stock compensation. See "Certain Relationships and Related         
Transactions -- Transactions with Management and Directors."            

(b) Company-paid 401(k) matching contributions ($4,750) and Company-paid        
premiums on a private life insurance contract ($9,655).                 

(c) Other annual compensation reflects Company-paid 401(k) matching             
contributions and, in the case of Mr. Uren, a car allowance.            

EMPLOYMENT AGREEMENTS                                                           

In connection with the Original Acquisition, the Company, GCIH and CVC
entered into employment agreements with each of Edward Kittredge, Richard Solar 
and David E. Uren (collectively, the "Executive Agreements") pursuant to which  
the Company employs Messrs. Kittredge, Solar and Uren as Chairman/              
President/Chief Executive Officer, Senior Vice President, and Vice President of 
Finance, respectively, through January 22, 2001. See "Management -- Executive   
Officers and Directors" and "Certain Relationships and Related                  
Transactions -- Transactions with Management and Directors." Mr. Uren is also   
party to a severance agreement dated as of March 18, 1995 between Mr. Uren, GPC 
and the Company (the "Uren Severance Agreement").                               

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 The Executive Agreements currently provide Messrs. Kittredge, Solar and
Uren with annual base salaries of $225,000, $150,000, and $150,450,             
respectively, plus annual incentive bonuses based upon the achievement of       
pre-determined objectives tied to the performance of the Company, including     
criteria related to growth and profitability. In the event that the Company     
terminates the employment of either of Messrs. Kittredge or Solar for cause,    
such executive shall not be entitled to any further compensation. In the event  
of either of Messrs. Kittredge or Solar's death, disability, or termination     
without cause, he shall be entitled to receive his base salary for eighteen     
months thereafter (the "Severance Payments"), and a pro rata portion of his     
bonus for the number of days employed during the termination year, and shall be 
restricted from competing with the Company or soliciting any of its employees   
for the eighteen-month period during which the Severance Payments are received. 

     In the event that the Company terminates the employment of Mr. Uren without
cause on or prior to January 22, 1999, the Uren Severance Agreement provides    
that Mr. Uren shall receive his base salary and benefits for eighteen months,   
and professional out placement assistance, in addition to a pro rata portion of 
his bonus for the number of days employed during the termination year to which  
Mr. Uren shall be entitled regardless of the reason for his termination. In the 
event that the Company terminates the employment of Mr. Uren after January 22,  
1999, Mr. Uren's Executive Agreement contains the same terms and conditions as  
those of Messrs. Kittredge and Solar. Upon termination of any of the executives,
the Executive Agreements also provide that the capital stock of GCIH is subject 
to repurchase by the Company and CVC. See also "Certain Relationships and       
Related Transactions -- Transactions with Management and Directors."            

LONG-TERM INCENTIVE PLAN                                                        

In connection with the Offering, the Company has adopted the Long-Term
Equity Incentive Plan (the "Incentive Plan"), designed to provide incentives to 
present and future executive, managerial, marketing, technical and other key    
employees, and consultants and advisors of the Company and its subsidiaries     
("Participants") as may be selected in the sole discretion of the Company's     
Board of Directors. The Incentive Plan provides for the granting to Participants
of the following types of incentive awards: stock options, stock appreciation   
rights ("SARs"), restricted stock, performance units, performance grants and    
other types of awards that the Compensation Committee of the Board (the         
"Committee") deems to be consistent with the purposes of the Incentive Plan. An 
aggregate of 750,000 shares of Common Stock have been reserved for issuance     
under the Incentive Plan. However, no more than 25,000 of such shares may be    
issued to any single participant in the plan in any calendar year. The Incentive
Plan affords the Company latitude in tailoring incentive compensation for the   
retention of key personnel, to support corporate and business objectives, and to
anticipate and respond to a changing business environment and competitive       
compensation practices.                                                         

     The Committee will have exclusive discretion to select the Participants and
to determine the type, size and terms of each award, to modify the terms of     
awards, to determine when awards will be granted and paid, and to make all other
determinations which it deems necessary or desirable in the interpretation and  
administration of the Incentive Plan. The Incentive Plan is scheduled to        
terminate ten years from the date that the Incentive Plan was initially approved
and adopted by the stockholders of the Company, unless extended for up to an    
additional five years by action of the Board of Directors. With limited         
exceptions, including termination of employment as a result of death, disability
or retirement, or except as otherwise determined by the Committee, rights to    
these forms of contingent compensation are forfeited if a recipient's employment
or performance of services terminates within a specified period following the   
award. Generally, a Participant's rights and interest under the Incentive Plan  
will not be transferable except by will or by the laws of descent and           
distribution or pursuant to a qualified domestic relations order.               

Options, which include nonqualified stock options and incentive stock 
options, are rights to purchase a specified number of shares of Common Stock at 
a price fixed by the Committee. The option price may be less than, equal to or  
greater than the fair market value of the underlying shares of Common Stock, but
in no event shall the exercise price of an incentive stock option be less than  
the fair market value on the date of grant. Options generally will expire not   
later than ten years after the date on which they are granted. Options will     
become exercisable at such times and in such installments as the Committee shall
determine. Payment of the                                                       

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option price must be made in full at the time of exercise in such form          
(including, but not limited to, cash or Common Stock of the Company) as the     
Committee may determine.                                                        

    An SAR may be granted alone, or in connection with the grant of an option,
either at the time of grant of the related option or by amendment thereafter to 
an outstanding option. SARs granted in connection with options shall be         
exercisable only when, to the extent and on the condition that any related      
option is exercisable. The exercise of an option shall result in an immediate   
forfeiture of any related SAR to the extent the option is exercised, and the    
exercise of an SAR shall cause an immediate forfeiture of any related option to 
the extent the SAR is exercised.                                                

Upon the exercise of an SAR, the Participant shall be entitled to a   
distribution in an amount equal to the difference between the fair market value 
of a share of Common Stock on the date of exercise and the exercise price of the
SAR or, in the case of SARs granted in tandem with options, any option to which 
the SAR is related, multiplied by the number of shares of Common Stock as to    
which the SAR is exercised. The Committee shall decide whether such distribution
shall be in cash, in shares of Common Stock having a fair market value equal to 
such amount, in other securities having a fair market value equal to such amount
or in a combination thereof.                                                    

    A restricted stock award is an award of a given number of shares of Common
Stock which are subject to a restriction against transfer and to a risk of      
forfeiture during a period set by the Committee. During the restriction period, 
the Participant generally has the right to vote and receive dividends on the    
shares. Dividends received while under restriction are treated as compensation. 

  Performance awards are those whose final value, if any, is determined by
the degree to which specified performance objectives have been achieved during  
an award period set by the Committee, subject to such adjustments as the        
Committee may approve based on relevant factors. Performance objectives are     
based on measures of Company, unit or Participant performance, or any           
combination of these and other factors, as the Committee may determine. The     
Committee may make such adjustments in the computation of any performance       
measure as it deems appropriate. The Committee shall determine the portion of   
each performance award that is earned by a participant on the basis of the      
Company's performance over the performance cycle in relation to the performance 
goals for such cycle. The earned portion of a performance award may be paid out 
in shares of Common Stock, cash, other securities of the Company, or any        
combination thereof, as the Committee may determine.                            

    Upon the liquidation or dissolution of the Company, all outstanding awards
under the Incentive Plan shall terminate immediately prior to the consummation  
of such liquidation or dissolution, unless otherwise provided by the Committee. 
In the event of a reorganization, recapitalization, stock split, stock dividend,
combination of shares, merger, consolidation, distribution of assets, or any    
other change in the corporate structure or shares of the Company, the Committee 
shall make such adjustment as it deems appropriate in the number and kind of    
shares or other property reserved for issuance under the Incentive Plan, in the 
number and kind of shares or other property covered by grants previously made   
under the Incentive Plan, and in the exercise price of outstanding options and  
SARs. In the event of any merger, consolidation or other reorganization in which
the Company is not the surviving or continuing entity or in which a change in   
control is to occur, all of the Company's obligations regarding options, SARs   
performance awards, and restricted stock that were granted hereunder and that   
are outstanding on the date of such event shall, on such terms as may be        
approved by the Committee prior to such event, be assumed by the surviving or   
continuing entity or canceled in exchange for property (including cash).        

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PENSION PLAN                                                                    

The following table represents monthly amounts estimated to be paid to
employees eligible for the Company's pension plan based upon years of service as
set forth below.                                                                

PENSION PLAN TABLE

                                                        [Enlarge/Download Table]

               REMUNERATION                                    YEARS OF SERVICE                     
               ------------                ---------------------------------------------------------
                                              15          20          25          30          35    
                                           ---------   ---------   ---------   ---------   ---------
                                                                                                    
$125,000.................................. $2,096.70   $2,795.60   $3,494.50   $4,193.40   $4,892.30
 150,000..................................  2,565.45    3,420.60    4,275.75    5,130.90    5,986.05
 175,000..................................  3,034.20    4,045.60    5,057.00    6,068.40    7,079.80
 200,000..................................  3,502.95    4,670.60    5,838.25    7,005.90    8,173.55
 225,000..................................  3,502.95    4,670.60    5,838.25    7,005.90    8,173.55
 250,000..................................  3,502.95    4,670.60    5,838.25    7,005.90    8,173.55
 300,000..................................  3,502.95    4,670.60    5,838.25    7,005.90    8,173.55
 400,000..................................  3,502.95    4,670.60    5,838.25    7,005.90    8,173.55
 450,000..................................  3,502.95    4,670.60    5,838.25    7,005.90    8,173.55
 500,000..................................  3,502.95    4,670.60    5,838.25    7,005.90    8,173.55

ESTIMATED CREDITED YEARS OF SERVICE 
FOR NAMED EXECUTIVE OFFICERS

                                                        [Enlarge/Download Table]

                                                             YEARS OF CREDITED SERVICE
                            NAME                             (YEARS OF PARTICIPATION) 
                            ----                             -------------------------
                                                                                      
Edward Kittredge............................................      2 years (2 years)   
Richard L. Solar............................................      2 years (2 years)   
David E. Uren...............................................    11 years (11 years)   
Lee M. Schaeffer............................................      7 years (7 years)   
Robert P. Robertson.........................................       0 years (0 year)   

  The Retirement Plan for Salaried Employees of Gerber Childrenswear, Inc.
(the "Retirement Plan") is a defined benefit pension plan qualified pursuant to 
Section 401(a) of the Internal Revenue Code. The Retirement Plan is administered
by the Company Benefits Plans Committee (the "Committee"), the members of which 
are appointed by the Board of Directors of the Company. All determinations of   
the Committee are made in accordance with the provisions of the Retirement Plan 
in a uniform and nondiscriminatory manner. The Retirement Plan covers           
substantially all salaried employees of the Company. Benefits under the         
Retirement Plan are administered through a trust arrangement providing benefits 
in the form of monthly payments.                                                

Generally, a participant in the Retirement Plan is eligible to receive
benefits upon such participant's Normal Retirement Age, which is the later of   
the Social Security retirement age or the fifth anniversary of the date the     
participant commenced participation in the Retirement Plan. A participant may   
elect an early retirement benefit when such participant reaches Early Retirement
Age, which is the later of ten years prior to such participant's Social Security
retirement age and the fifth anniversary of the date the participant commenced  
participation in the Retirement Plan. Early retirement benefits are reduced for 
those participants who retire more than three years prior to their Normal       
Retirement Age according to a formula established in the Retirement Plan based  
upon each full month that the participant's age is less than the Normal         
Retirement Age. If a participant who is vested terminates employment, such      
participant is entitled to a deferred, unreduced benefit payable within three   
years of such participant's Normal Retirement Age, or a reduced benefit, if     
requested earlier.                                                              

  The amount of a participant's Retirement Plan benefit is based upon such
participant's Final Average Pay (as defined below) and on his/her Years of      
Participation (as defined below). The annual amount of the participant's normal 
retirement benefit is derived, subject to certain limitations, by multiplying   
(i) and (ii), where (i) = 0.9% of Final Average Pay plus 0.6% of Final Average  
Pay in excess of Covered Compensation (as defined below); and (ii) = Years of   
Participation up to a maximum of 35 years. A participant's benefits may be      
offset by the amount of any workers' compensation or similar benefits payable   
because of an                                                                   

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employment-related injury or illness. The normal retirement benefit formula     
produces an annual benefit which is paid to the participant in equal monthly    
installments. The standard form of payment for a single participant is a monthly
benefit payable for the participant's life only. The standard form of payment   
for a married participant is a 50% joint and survivor benefit, which provides a 
reduced monthly benefit to the participant during his/her lifetime, and 50% of  
that benefit to the participant's spouse for his/her lifetime in the event of   
the participant's death. Other optional forms of payment are also provided,     
including a 100% survivorship annuity, a 50% survivorship annuity and a life and
period certain annuity option, but they require participant election. In        
addition, the Committee may elect to pay the benefit equivalent of a benefit    
payable at Normal Retirement Age in the form of a lump sum payment, if the lump 
sum payment does not exceed $3,500.                                             

 "Final Average Pay" is defined as the average of a participant's annual
compensation during the highest-paid five complete consecutive plan years within
the last ten years before such participant's retirement. For purposes of the    
Retirement Plan, compensation includes total earnings received for personal     
services to the Company. For the 1995 and 1996 calendar years, the total        
compensation that can be considered for any purpose under the Retirement Plan is
limited to $150,000, and for 1997, the limit is $160,000, pursuant to           
requirements imposed by the Internal Revenue Code. The Internal Revenue Code    
also places certain other limitations on the annual benefits that may be paid   
under the Plan. "Covered Compensation" is an average of the Social Security     
Taxable wage bases for the 35 calendar years ending with the year a participant 
reaches the Social Security retirement age. Any participant who is credited with
1,000 or more hours of service in a calendar year receives a "Year of Service", 
while any participant who is credited with 1,950 or more hours of service in a  
calendar year receives a "Year of Participation". Years of Service determine a  
participant's eligibility for benefits under the Retirement Plan, and the       
percentage vested in those benefits. Participants in any superseded plan earn   
Years of Service and Years of Participation pursuant to slightly different      
criteria for plan years beginning prior to January 1, 1989.                     

  The Retirement Plan is funded entirely by Company contributions that are
held by a trustee for the exclusive benefit of the participants. The Company    
voluntarily agreed to contribute the amounts necessary to provide the assets    
required to meet the future benefits payable to Retirement Plan participants.   
Under the Retirement Plan, contributions are not specifically allocated to      
individual participants. Although the Company intends to continue the Retirement
Plan indefinitely, it can terminate the plan at any time, upon which event all  
participants will become 100% vested in any benefit accrued to the extent funds 
are available in trust. In this circumstance, assets will be allocated to       
benefit categories in the order specified in the Retirement Plan.               

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION                     

     In 1997, Edward Kittredge, Richard M. Cashin, Jr. and Joseph Medalie served
as members of the Board's compensation committee. During the same period, Mr.   
Kittredge also served as the Company's Chairman, President and Chief Executive  
Officer. In addition, pursuant to an Executive Stock Purchase Agreement, dated  
January 22, 1996, by and among GCIH, the Company, CVC and Edward Kittredge, Mr. 
Kittredge purchased 26,161.9 shares of GCIH Class B Common at a price of $1.00  
per share, 50,000 shares of GCIH Class B Common for $.02 per share and 1,188.4  
shares of Series A Preferred Stock of GCIH at a price of $100.00 per share. Of  
such shares, 20,000 shares of GCIH Class B Common (the "Kittredge Vesting       
Stock") are subject to vesting at 20% per year over a five-year period. The     
Kittredge Vesting Stock is subject to repurchase by the Company and, if not     
repurchased by the Company, CVC, should Mr. Kittredge's employment with the     
Company terminate for any reason. The purchase price for unvested shares is     
$1.00 per share; the purchase price for vested shares (the "Kittredge Vested    
Shares") is book value, unless the executive is terminated for cause in which   
case the purchase price for the Kittredge Vested Shares is $1.00 per share.     
Further, on November 24, 1997, Mr. Kittredge purchased an additional 20,000     
shares of GCIH Class B Common at a price of $1.00 per share, which were fully   
vested upon purchase, but which are subject to repurchase on the terms described
above for the Kittredge Vested Shares, should Mr. Kittredge's employment with   
the Company terminate for any reason.                                           

Pursuant to a Director Stock Purchase Agreement by and between Joseph 
Medalie and GCIH, dated as of February 11, 1997, Mr. Medalie purchased from the 
Company 2,500 shares of GCIH Class B Common at a purchase price of $1.00 per    
share. Such stock is subject to repurchase by the Company at any time at its    
book value. See "Certain Relationships and Related Transactions -- Transactions 
with Management and Directors."                                                 

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

THE REORGANIZATION                                                              

Immediately prior to and in connection with the consummation of the   
Offering, the Company will consummate a series of transactions pursuant to which
GCIH will be reorganized and recapitalized and Gerber will be merged into GCIH. 
The principal transactions comprising the Reorganization are the following:     

  MERGER. Prior to the consummation of the Offering, Gerber will be merged
into GCIH, with GCIH as the surviving entity (the "Merger"). The Merger is      
intended to be treated as a tax-free liquidation of Gerber.                     

 AMENDMENT AND RESTATEMENT OF CERTIFICATE OF INCORPORATION. Under GCIH's
certificate of incorporation there are (i) four classes of common stock: (a)    
Class A Common Stock, par value $0.01 per share (which stock is held by CVC and 
its affiliates) (the "GCIH Class A Common"), (b) Class B Common Stock, par value
$0.01 per share (which stock is held by members of the Company's management)    
(the "GCIH Class B Common"), (c) Class C Common Stock, par value $0.01 per share
(which stock is held by a director of GCIH) (the "GCIH Class C Common"), and (d)
Class D Common Stock, par value $0.01 per share (none of which shares are       
outstanding, but which shares are purchasable pursuant to the exercise of       
warrants held by Citicorp Mezzanine Partners, L.P.) (the "GCIH Class D Common"),
and (ii) Series A Preferred Stock, par value $0.01 per share, (held by CVC, its 
affiliates, and members of management) (the "GCIH Series A Preferred"). In      
connection with the Merger and prior to the consummation of the Offering, GCIH's
certificate of incorporation will be amended and restated to provide for, among 
other things, the reclassification of its authorized common stock into two      
classes of common stock with different voting rights, with each share of Common 
Stock having one vote per share and each share of Class B Common Stock having no
voting rights (the "Recapitalization"). The certificate will further provide    
that (a) each share of Class B Common Stock will be convertible at the option of
the holder at any time into one share of Common Stock and (b) each share of     
Common Stock held by a holder of Class B Common Stock will be convertible at the
option of the holder at any time into one share of Class B Common Stock. CVC and
its affiliates will be the only holders of the Class B Common Stock (including a
currently exercisable warrant to purchase such stock) which, if converted into  
Common Stock, would result in an increase in CVC's and its affiliates'          
beneficial ownership on a diluted basis by an additional 49% of the outstanding 
Common Stock. The amendment of GCIH's certificate of incorporation will further 
provide for the change of GCIH's corporate name to "Gerber Childrenswear, Inc." 

EXCHANGE OF GCIH STOCK.  Upon consummation of the Merger and in the   
following sequence, (i) 113,623.6 shares of GCIH Series A Preferred Stock (held 
by CVC and its affiliates) will be converted into 1,241,537 shares of Common    
Stock, and 2,828.4 shares of GCIH Series A Preferred (held by members of        
management) will be converted into the right to receive cash equal to the       
liquidation value per share at the time of the Merger (including accrued and    
unpaid dividends) of $132.10 per share, or $374,000, in the aggregate (with     
$157,000 payable to Mr. Kittredge, $157,000 payable to Mr. Solar, and $60,000   
payable to Mr. Uren), (ii) all of the outstanding shares of GCIH Class A Common 
and GCIH Class C Common will be exchanged for shares of Class B Common Stock    
pursuant to a 15.4693 to 1 stock split, (iii) all of the outstanding shares of  
GCIH Class B Common will be exchanged for shares of Common Stock, and (iv) all  
of the outstanding warrants to purchase shares of GCIH Class D Common will be   
exchanged into a warrant to purchase 2,958,510 shares of the Class B Common     
Stock. In addition, upon consummation of the Merger, the ten shares of common   
stock of the Company held by GCIH prior to the Merger will be canceled.         

After giving effect to the foregoing transactions, as part of the     
Reorganization in connection with the consummation of the Offering, CVC and its 
affiliates will convert shares of Class B Common Stock into shares of Common    
Stock, representing approximately 19% of the combined voting power of the       
Company's outstanding capital stock. See "Risk Factors -- Control by Executive  
Officers and Current Stockholders." After giving effect to the Reorganization   
and the Offering (i) CVC and its affiliates will own shares of Common Stock     
representing approximately 19% of the outstanding Common Stock, and shares of   
Class B Common Stock (including warrants to purchase such stock) convertible    
into shares of Common Stock                                                     

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representing, in the aggregate, an additional 49% of the outstanding Common     
Stock, (ii) Messrs. Kittredge, Solar and Uren will own shares of Common Stock   
representing 7.6%, 2.5% and 1.2% of the outstanding Common Stock, and (iii)     
Messrs. Glenn, Medalie and other members of the Company's management, as a      
whole, will own shares of Common Stock representing 0.2%, 0.2% and 1.6% of the  
outstanding Common Stock, in each of cases (i)-(iii) assuming that all Class B  
Common Stock is converted into Common Stock pursuant to the terms thereof. See  
"-- Transactions with Management and Directors," "-- Transactions with CVC and  
its Affiliates" and "-- Transactions with Citicorp Mezzanine Partners, L.P."    

TRANSACTIONS WITH MANAGEMENT AND DIRECTORS                                      

    Pursuant to an Executive Stock Purchase Agreement, dated January 22, 1996,
by and among GCIH, the Company, CVC and Edward Kittredge (as amended), Mr.      
Kittredge purchased 26,161.9 shares of GCIH Class B Common at a price of $1.00  
per share, 50,000 shares of GCIH Class B Common for $.02 per share and 1,188.4  
shares of Series A Preferred Stock of GCIH at a price of $100.00 per share. Of  
such shares, 20,000 shares of GCIH Class B Common (the "Kittredge Vesting       
Stock") are subject to vesting at 20% per year over a five-year period. The     
Kittredge Vesting Stock is subject to repurchase by the Company and, if not     
repurchased by the Company, CVC, should Mr. Kittredge's employment with the     
Company terminate for any reason. The purchase price for unvested shares is     
$1.00 per share; the purchase price for vested shares (the "Kittredge Vested    
Shares") is fair market value, unless the executive is terminated for cause in  
which case the purchase price for the Kittredge Vested Shares is $1.00 per      
share. In addition, on November 24, 1997, Mr. Kittredge purchased an additional 
20,000 shares of GCIH Class B Common at a price of $1.00 per share, which were  
fully vested upon purchase but which are subject to repurchase on the terms     
described above for the Kittredge Vested Shares, should Mr. Kittredge's         
employment with the Company terminate for any reason.                           

   Pursuant to an Executive Stock Purchase Agreement, dated January 22, 1996
by and among GCIH, the Company, CVC and Richard Solar (as amended), Mr. Solar   
purchased 23,661.9 shares of GCIH Class B Common at a price of $1.00 per share  
and 1,188.4 shares of Series A Preferred Stock of GCIH at a price of $100.00 per
share. Of such shares, 17,500 shares of GCIH Class B Common (the "Solar Vesting 
Stock") are subject to vesting at 20% per year over a five-year period. The     
Solar Vesting Stock is subject to repurchase by the Company and, if not         
repurchased by the Company, CVC, should Mr. Solar's employment with the Company 
terminate for any reason. The purchase price for unvested shares is $1.00 per   
share; the purchase price for the vested shares (the "Solar Vested Shares") is  
fair market value, unless the executive is terminated for cause in which case   
the purchase price for the Solar Vested Shares is $1.00 per share. In addition, 
on September 30, 1997, Mr. Solar purchased an additional 7,500 shares of GCIH   
Class B Common at a price of $1.00 per share, which were fully vested upon      
purchase, but which are subject to repurchase on the terms described above for  
the Solar Vested Shares, should Mr. Solar's employment with the Company         
terminate for any reason.                                                       

   Pursuant to an Executive Stock Purchase Agreement, dated January 22, 1996
by and among GCIH, the Company, CVC and David Uren (as amended), Mr. Uren       
purchased 14,841.5 shares of GCIH Class B Common at a price of $1.00 per share  
and 451.6 shares of Series A Preferred of GCIH at a price of $100.00 per share. 
Of such shares, 12,500 shares of Class B Common (the "Uren Vesting Stock") are  
subject to vesting at 20% per year over a five-year period. The Uren Vesting    
Stock is subject to repurchase by the Company and, if not repurchased by the    
Company, CVC, should Mr. Uren's employment with the Company terminate for any   
reason. The purchase price for unvested shares is $1.00 per share; the purchase 
price for vested shares (the "Uren Vested Shares") is fair market value, unless 
the executive is terminated for cause in which case the purchase price for      
vested shares is $1.00 per share.                                               

   Pursuant to an Investor Stock Purchase Agreement, dated as of January 22,
1996 by and between GCIH and Lawrence R. Glenn, Mr. Glenn purchased 2,500 shares
of GCIH Class C Common for a purchase price of $1.00 per share. Such stock is   
subject to repurchase by the Company at any time at its book value.             

Pursuant to a Director Stock Purchase Agreement by and between Joseph 
Medalie and GCIH, dated as of February 11, 1997, Mr. Medalie purchased from the 
Company 2,500 shares of GCIH Class B Common at a                                

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purchase price of $1.00 per share. Such stock is subject to repurchase by the   
Company at any time at its book value.                                          

  Pursuant to certain Manager Securities Purchase Agreements, by and among
GCIH, CVC and certain members of management of the Company (other than Messrs.  
Solar, Kittredge, and Uren, described above), dated as of February 28, 1997,    
July 25, 1997 and November 25, 1997, certain members of management of the       
Company purchased, in the aggregate, 23,250 shares of GCIH Class B Common for a 
purchase price of $1.00 per share. Among such members of management are Mr. Lee 
M. Schaeffer who purchased 1,500 shares on February 28, 1997, Mr. Raymond R.    
McManus, who purchased 750 shares on February 28, 1997, and 250 shares on July  
25, 1997 and Mr. Robert P. Robertson, who purchased 1,000 shares on November 26,
1997. In all cases, such stock is subject to vesting at 20% per year over a     
five-year period. Such stock is subject to repurchase by the Company (and, if   
the Company elects not to purchase, CVC) should any of such employees'          
employment with the Company terminate for any reason. The purchase price for    
unvested shares is $1.00 per share; the purchase price for vested shares is book
value, unless the executive is terminated for cause in which case the purchase  
price for vested shares is $1.00 per share.                                     

    During 1997, certain executives and managers of the Company acquired stock
in the Company below its fair market value. The difference between the fair     
market value and the purchase consideration for the stock is reported as noncash
compensation to the affected executives and managers. The Company has           
"grossed-up" this noncash compensation to provide for the payment by the Company
of a significant portion of the related income and other payroll taxes          
associated with the transactions. These taxes ($4,446,000) are included in the  
amount identified as stock compensation of $9,465,000 in 1997.                  

TRANSACTIONS WITH CVC AND ITS AFFILIATES                                        

 Pursuant to a CVC Securities Purchase Agreement dated as of January 22,
1996 by and between GCIH and CVC, CVC purchased (a) 86,974.5 shares of Series A 
Preferred Stock of GCIH at a purchase price of $100.00 per share, and (b)       
523,476.0 shares of GCIH Class A Common at a purchase price of $0.01 per share. 
On February 28, 1997 and September 30, 1997, the Company repurchased, in the    
aggregate, 74,326.8 shares of GCIH Class A Common at a purchase price of $1.00  
for issuance (in the form of GCIH Class B Common) to members of management.     

 Pursuant to a Securities Purchase Agreement by and between GCIH and the
affiliates of CVC listed as purchasers on the signature pages thereto, dated as 
of January 22, 1996, such purchasers acquired, in the aggregate, 26,649.1 shares
of GCIH Series A Preferred for $100 per share and 138,179.1 shares of GCIH Class
A Common for $1.00 per share.                                                   

TRANSACTIONS WITH CITICORP MEZZANINE PARTNERS, L.P.                             

  In order to finance the Original Acquisition, the Company obtained $22.5
million in senior subordinated financing from Citicorp Mezzanine Partners, L.P.,
whose general partner is an affiliate of CVC. The agreement governing this      
indebtedness was amended and restated in December 1997. A portion of the        
proceeds of the Offering will be used to repay such indebtedness to CMP. In     
connection therewith, the Company sold a warrant to purchase 191,250 shares of  
GCIH Class D Common to CMP for $189,338. CMP may, at its option, exercise such  
warrant at any time on or before January 22, 2006 for a nominal exercise price. 
Upon consummation of the Reorganization, such warrant will be exercisable for   
2,958,510 shares of Class B Common Stock.                                       

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PRINCIPAL STOCKHOLDERS

The table below sets forth certain information regarding ownership of 
Common Stock and Class B Common Stock as of June 10, 1998, and as adjusted to   
reflect the Reorganization, assuming exercise of options or warrants exercisable
within sixty days of such date by (i) each person or entity who owns of record  
or beneficially 5% or more of any class of the Company's voting securities, (ii)
each director and named executive officer and (iii) all executive officers and  
directors as a group. Except as indicated, each of such stockholders is assumed 
to have sole voting and dispositive power as to the shares shown.               

                                                        [Enlarge/Download Table]

                                                                                                       PERCENTAGE OF
                                                                                                        NON-VOTING  
                                                                                                          CLASS B   
                                                                   PERCENTAGE OF         NON-VOTING       COMMON    
                                                                    COMMON STOCK       CLASS B COMMON      STOCK    
                                                 COMMON STOCK      OUTSTANDING(A)          STOCK        OUTSTANDING 
                                                 ------------  ----------------------  --------------   BEFORE AND  
                                                 BENEFICIALLY   BEFORE        AFTER     BENEFICIALLY     AFTER THE  
                     NAME                          OWNED(A)    OFFERING      OFFERING   OWNED(A)(B)      OFFERING   
                     ----                        ------------  --------      --------  --------------  -------------
                                                                                                                    
Citicorp Venture Capital, Ltd..................   1,108,990      27.4%         14.5%     6,789,400          76.5%   
  399 Park Avenue                                                                                                   
  New York, NY 10022                                                                                                
CCT III, L.P...................................     196,404       4.9           2.6      1,202,416          13.6    
  399 Park Avenue                                                                                                   
  New York, NY 10022                                                                                                
Citicorp Mezzanine Partners, L.P.(b)...........          --        --            --      2,958,510          25.0    
  399 Park Avenue                                                                                                   
  New York, NY 10022                                                                                                
Edward Kittredge...............................   1,487,560      36.8          19.5             --            --    
  c/o 7005 Pelham Rd.                                                                                               
  Suite D                                                                                                           
  Greenville, SC 29615                                                                                              
Richard L. Solar(c)............................     482,052      11.9           6.3             --            --    
David E. Uren..................................     229,588       5.7           3.0             --            --    
Lawrence R. Glenn..............................      38,673       1.0             *             --            --    
Joseph Medalie(d)..............................      38,673       1.0             *             --            --    
Richard Cashin(e)..............................   1,347,605      33.3          17.6      8,250,238          93.0    
John Weber(f)..................................   1,311,424      32.4          17.1      8,028,732          90.4    
Lee M. Schaeffer...............................      23,204         *             *                            *    
Robert P. Robertson............................      15,469         *             *             --             *    
Executive officers and directors as a group (10                                                                     
  persons)(g)..................................   3,684,323      91.0%         48.2%     8,287,154          93.4%   

---------------                                                                 

*  Represents less than 1%.                                                   

(a) The number of shares of Common Stock outstanding prior to the Offering was  
    4,047,520 and the number of shares of Common Stock which will be outstanding
after the Offering is 7,647,520. The number of shares of Class B Common 
  Stock before and after the Offering is 8,877,115 (excluding a warrant (see
(b) below) to purchase 2,958,510 shares of Class B Common Stock, net of 
treasury shares). Beneficial ownership is determined in accordance with 
 rules of the Securities and Exchange Commission (the "SEC"). In computing
the number of shares beneficially owned by a person and the percentage  
ownership of that person, shares of Common Stock subject to options or  
  warrants held by that person that are currently exercisable or exercisable
within 60 days of June 10, 1998 are deemed outstanding. Such shares,    
however, are not deemed outstanding for the purposes of computing the   
percentage ownership of each other person.                              

(b) Citicorp Mezzanine Partners, L.P. owns a warrant to purchase 2,958,510      
shares of Non-Voting Class B Common Stock. Class B Common Stock is      
convertible into Common Stock at the option of the holder. See "Certain 
Relationships -- Transactions with Citicorp Mezzanine Partners, L.P."   

(c) 46,408 of Mr. Solar's shares are held by immediate family members. Mr. Solar
disclaims beneficial ownership of such shares.                          

(d) All of Mr. Medalie's shares are held in a family trust.                     

(e) Includes 1,305,394 shares of Common Stock and 7,991,816 shares of Class B   
 Common Stock held by Citicorp Venture Capital, Ltd. and CCT III, L.P., in
each case, of which Mr. Cashin is an officer. Mr. Cashin disclaims      
beneficial ownership of such shares.                                    

(f) Includes 1,305,394 shares of Common Stock and 7,991,816 shares of Class B   
 Common Stock held by Citicorp Venture Capital, Ltd. and CCT III, L.P., in
   each case, of which Mr. Weber is an officer. Mr. Weber disclaims beneficial
ownership of such shares.                                               

(g) Includes 1,305,394 shares of Common Stock and 7,991,816 shares of Class B   
 Common Stock held by Citicorp Venture Capital, Ltd. and CCT III, L.P., in
each case, of which Messrs. Cashin and Weber are officers.              

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DESCRIPTION OF CERTAIN INDEBTEDNESS 

CREDIT AGREEMENT                                                                

In connection with the Acquisition, Gerber and Auburn entered into the
Credit Agreement by and among Gerber, Auburn, their domestic subsidiaries,      
Nationsbank, N.A., and certain other lenders, dated as of December 17, 1997 (the
"Credit Agreement") to finance the Acquisition, refinance the existing senior   
indebtedness incurred by the Company in connection with the Original Acquisition
and finance capital expenditures and working capital needs of the Borrowers.    

The amount available to the Borrowers under the Credit Agreement is   
$100,000,000, consisting of (a) the $40,000,000 Term Loan and (b) the           
$60,000,000 Revolving Credit Facility. The Term Loan and Revolving Credit       
Facility mature and terminate, respectively, on September 30, 2002 and October  
31, 2002. The Term Loan is subject to repayment, payable in quarterly           
installments, beginning on December 31, 1997, with aggregate principal amounts  
of $6.5 million, $8.1 million, $8.5 million, $8.6 million, and $6.8 million due 
during years 1998 through 2002, respectively. The amounts available under the   
Revolving Credit Facility are available in multiple drawings from time to time, 
and amounts borrowed and repaid may be reborrowed until October 31, 2002. The   
amount available under the Revolving Credit Facility is subject to (a) a $5.0   
million sub-limit for a swing-line facility and (b) a $20.0 million sub-limit   
for the issuance of letters of credit. Up to $10.0 million is available under   
the Revolving Credit Facility to finance acquisitions of businesses similar to  
or which are a logical extension of the business of the Company. A portion of   
the Revolving Credit Facility must be prepaid if the amount of revolving loans  
outstanding together with swing line loans and letter of credit obligations     
exceeds the lesser of $60 million and the borrowing base (which consists or     
certain accounts receivable, inventory and documentary letters of credit). Loans
under the Credit Agreement must be prepaid with the net cash proceeds of certain
asset dispositions, debt issuances and equity issuances and with a portion of   
Excess Cash Flow (as defined in the Credit Agreement) earned in the preceding   
fiscal year. As of April 4, 1998, the Company had approximately $30.2 million   
outstanding under the revolving credit portion of the Credit Agreement.         

    Each of the Term Loan and Revolving Credit Facility may be maintained from
time to time, at the Borrower's option, as (a) Base Rate Loans (as defined in   
the Credit Agreement) which bear interest at the Base Rate plus the Applicable  
Percentage (each as defined in the Credit Agreement) or (b) Eurodollar Loans (as
defined in the Credit Agreement) bearing interest at the Eurodollar Rate        
(adjusted for reserves) as determined by the administrative agent for the       
applicable interest period, plus the Applicable Percentage (as defined in the   
Credit Agreement). The initial Applicable Percentage for Eurodollar loans is a  
per annum rate equal to 1.5%, and the initial Applicable Percentage for Base    
Rate Loans is a per annum rate equal to .25%. The Applicable Percentage will be 
determined from time to time based on the Leverage Ratio (as defined in the     
Credit Agreement) at the end of each fiscal quarter. As of April 4, 1998, the   
interest rates applicable to the Term Loan and Revolving Credit Facility were   
7.19% and 8.75%, respectively.                                                  

   The Credit Agreement contains certain affirmative and negative covenants,
including without limitation, covenants that restrict, subject to specified     
exceptions: (i) the incurrence of additional indebtedness and other obligations 
and the granting of additional liens; (ii) mergers, acquisitions, investments   
and acquisitions and dispositions of assets; (iii) the incurrence of capitalized
lease obligations; (iv) the declaration of dividends or purchase or redemption  
of capital stock; (v) prepayments or repurchase of other indebtedness and       
amendments to certain agreements governing indebtedness, including indebtedness 
under the CMP Senior Notes and the GPC Junior Notes (each as defined below);    
(vi) engaging in transactions with affiliates and formation of subsidiaries;    
(vii) the creation or existence of consensual restrictions on the ability of    
subsidiaries to pay dividends, make loans or transfer property to other credit  
parties under the Credit Agreement; (viii) the use of proceeds of asset sales;  
and (ix) changes of lines of business. The Credit Agreement also requires that  
the Borrowers maintain compliance with certain specified financial covenants,   
including covenants relating to minimum fixed charge coverage, maximum leverage 
ratio, maximum capitalization ratio, minimum current ratio, and minimum tangible
net worth. The Company may not amend its license agreements with Gerber, Warner 
Brothers, Wilson, Converse and Coca-Cola in any manner that would materially    
affect the rights of                                                            

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the lenders under the Credit Agreement or amend its charter or bylaws in any    
manner that would reasonably be likely to adversely affect the rights of the    
lenders under the Credit Agreement. The Company's foreign subsidiaries may not  
own assets which constitute greater than 15% of the total assets of the Company 
at any one time. The Credit Agreement contains standard events of default,      
including a Change of Control (as defined in the Credit Agreement) of the       
Company. The Credit Agreement is secured by (a) a pledge of all of the capital  
stock of the Borrowers (other than the Company) and each of the domestic        
subsidiaries (direct and indirect) of the Borrowers (the "Guarantors"), and 65% 
of the capital stock of each direct foreign subsidiary of the Borrowers and the 
Guarantors, and (b) all other assets and properties of the Borrowers and their  
domestic subsidiaries.                                                          

OTHER                                                                           

    In connection with the Acquisition, the Company assumed approximately $2.6
million of Auburn's indebtedness. Auburn's Irish subsidiary maintains a IRL3.0  
million loan facility (U.S. $4.1 million as of April 4, 1998) with the National 
Irish Bank consisting of a combined term loan, overdraft, guarantee and foreign 
exchange line. This facility is subject to annual review. The overdraft facility
and foreign exchange line are available at the Company's discretion with each   
term loan draw down subject to the National Irish Bank's approval. At present,  
the Irish subsidiary has drawn down two term loans under the available loan     
facility and had drawn down on the foreign exchange line. The term loans had an 
aggregate balance of IRL468,890 (U.S. $636,987 as of April 4, 1998) outstanding 
as of April 4, 1998 and are repayable in quarterly installments of interest and 
principal, the final payment for which is due in September 1999. The Irish      
subsidiary is not currently using its overdraft facility. In addition, the Irish
subsidiary has received capital and employment grants from the IDA which could  
become repayable to the IDA in the aggregate amount of up to IRL1,815,799 (US   
$2,466,763) as of April 4, 1998. Repayment of the capital grants would be       
triggered if the Company (i) relocates its Irish facility, (ii) liquidates or   
(iii) ceases to use the assets purchased with proceeds from such capital grants.
Repayment of the employment grants would be triggered in each of cases (i) and  
(ii) above or if the Company eliminated jobs created with proceeds from such    
employment grants. The Company believes that none of such repayment events will 
occur in the foreseeable future. In addition, the Company's repayment           
obligations under the IDA grants terminate on various dates beginning in        
March 2000 and ending in April 2011. Auburn is a party to two loan agreements   
with the County of Logan, Kentucky related to the issuance in 1989 of two series
of industrial revenue bonds of which approximately $2.3 million remained        
outstanding at April 4, 1998. Auburn's two principal Kentucky facilities are    
mortgaged in connection with such financing.                                    

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DESCRIPTION OF CAPITAL STOCK

GENERAL                                                                         

Prior to the consummation of the Offering, the Company will amend its 
Certificate of Incorporation to change its authorized capital stock to          
20,774,000 shares of Common Stock, par value $0.01 per share, and 11,842,000    
shares of Class B Common Stock, par value $0.01 per share. Upon completion of   
the Offering, the Company will have outstanding 7,647,520 shares of Common Stock
(8,187,520 if the Underwriters' over-allotment option is exercised in full) and 
8,877,115 shares of Class B Common Stock. As of June 10, 1998, there are        
approximately sixty holders of Common Stock, and CVC and its affiliates will own
of record all of the outstanding shares of Class B Common Stock. See "Principal 
Stockholders."                                                                  

COMMON STOCK                                                                    

 The holders of Common Stock are generally entitled to one vote for each
share held on all matters voted upon by stockholders, including without         
limitation, the election of directors and any proposed amendment to the Amended 
and Restated Certificate of Incorporation. The holders of the Common Stock are  
entitled to such dividends as may be declared at the discretion of the Board of 
Directors out of funds legally available therefor. The holders of Common Stock  
are entitled to share ratably in the net assets of the Company upon liquidation 
after payment or provision for all liabilities. The holders of Common Stock have
no preemptive rights to purchase securities of the Company. Shares of Common    
Stock are not subject to any redemption provisions. Each share of Common Stock  
held by a holder of Class B Common Stock is convertible into a share of Class B 
Common Stock. All outstanding shares of Common Stock are, and the shares of     
Common Stock to be issued pursuant to the Offering will be upon payment         
therefor, fully paid and non-assessable.                                        

The Common Stock has been approved for listing on the New York Stock  
Exchange, subject to official notice of issuance.                               

CLASS B COMMON STOCK                                                            

     The rights of the holders of Class B Common Stock are identical and entitle
the holders thereof to the same rights, privileges, benefits and notices as the 
holders of Common Stock, except that (a) the holders of such shares are not     
entitled to vote on any matter voted upon by the stockholders, including,       
without limitation, in the election of directors of the Company and (b) a share 
of Class B Common Stock is convertible into a share of Common Stock at any time 
at the sole option of the holder. All outstanding shares of Class B Common Stock
are fully paid and non-assessable. Due to certain regulatory limitations        
affecting CVC, CVC may not own 20% or more of the voting securities of the      
Company without meeting certain regulatory requirements. Accordingly, the       
Company believes, based on discussions with CVC, that CVC will maintain most of 
its equity interest in the Company in Class B Common Stock and will not convert 
such stock in the foreseeable future.                                           

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT                              

   The Company and its stockholders will be parties to a registration rights
agreement, dated as of January 22, 1996, which will be amended and restated in  
its entirety prior to the consummation of this Offering, and in connection with 
the Reorganization (such agreement when executed by the parties, the "Amended   
and Restated Registration Rights Agreement"). Capitalized terms used but not    
defined herein have the meanings ascribed to such terms in the Amended and      
Restated Registration Rights Agreement. The following summary description of the
Amended and Restated Registration Rights Agreement does not purport to be       
complete and is qualified in its entirety by reference to the text of the       
Amended and Restated Registration Rights Agreement, which is filed as an exhibit
to the registration statement of which this Prospectus is a part.               

   Certain parties to the Amended and Restated Registration Rights Agreement
will have demand registration rights on the following terms: (a) CVC may at any 
time after the earlier of (i) January 22, 2001 or (ii) the six month anniversary
of the consummation of a Qualified Public Offering (as defined in the agreement)
make a demand for up to five long-form registrations, unlimited short-form      
registrations, and one                                                          

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registration under Section 415 of the Securities Act, in each case, of CVC      
Registrable Securities, and (b) CMP may at any time after the earlier of (i)    
January 22, 2001 or (ii) six months following the consummation of a Qualified   
Public Offering, make a demand for one long-form and unlimited short-form       
registrations of CMP Registrable Securities (such registrations referred to in  
clauses (a) and (b) above, collectively, "Demand Registrations.") Such Demand   
Registrations are subject to certain limitations, including: (x) no two demands 
may be made within any six-month period and (y) the amount which can be sold    
pursuant to any demand may be limited by the managing underwriter selected by   
the makers of such demand, and approved by the Company.                         

In the event that the Company proposes to register its stock under the
Securities Act other than pursuant to a Demand Registration, all holders of     
Registrable Securities, subject to CVC's approval in the initial primary public 
offering, will have the right to include such securities in such registration   
("Piggyback Registration"). The amount of shares which can be sold pursuant to a
Piggyback Registration are subject to limitation by the managing underwriter.   
The Amended and Restated Registration Rights Agreement also provides that       
certain holders of Registrable Securities and the Company may not effect a sale 
or distribution of equity securities of the Company for a 180-day period        
beginning on the effective date of any Demand Registration (other than pursuant 
to Section 415) or Piggyback Registration. The Company pays all expenses of     
Demand Registrations and Piggyback Registrations.                               

CERTAIN PROVISIONS OF THE COMPANY'S AMENDED AND RESTATED CERTIFICATE OF         
INCORPORATION                                                                   

The Company's charter establishes an advance notice procedure for     
stockholder nominations of persons for election to the board of directors in    
advance of an annual meeting of stockholders of the Company. Stockholders at an 
annual meeting may only consider nominations specified in the notice of meeting 
or brought before the meeting by or at the direction of the board of directors, 
or by a stockholder who was a stockholder of record on the record date for the  
meeting, who is entitled to vote at the meeting, and who has given to the       
Company's Secretary timely written notice, in proper form, of the stockholder's 
intention to make such nomination before the annual meeting. An amendment to    
this provision would require approval by an affirmative vote of holders of      
66 2/3% of the shares of voting stock of the Company.                           

  In addition, the Company's charter provides for cumulative voting in the
election of directors. The above two provisions may have the effect of          
discouraging or deferring a potential acquiror from conducting a solicitation of
proxies to elect its own slate of directors or otherwise attempting to obtain   
control of the Company.                                                         

LIMITATION ON OFFICER AND DIRECTOR LIABILITY                                    

    The Amended and Restated Certificate of Incorporation limits the liability
of directors to the fullest extent permitted by the Delaware General Corporation
Law. In addition, the Amended and Restated Certificate of Incorporation provides
that the Company shall indemnify directors and officers of the Company to the   
fullest extent permitted by such law. The Company agreed with GPC that until    
2003 it would not amend its charter or bylaws in any manner regarding           
exculpation or indemnification of former officers and directors.                

TRANSFER AGENT AND REGISTRAR                                                    

     The Transfer Agent and Registrar for the Common Stock is the American Stock
Transfer & Trust Company.                                                       

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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO NON-UNITED STATES
HOLDERS OF COMMON STOCK 

  The following is a general discussion of certain U.S. federal income and
estate tax consequences of the ownership and disposition of Common Stock by a   
beneficial owner thereof that is a "Non-U.S. Holder." A "Non-U.S. Holder" is a  
person or entity other than (i) a citizen or resident of the U.S., (ii) a       
corporation, partnership, limited liability company or other business entity    
created or organized in the U.S. or under the laws of the U.S. or of any state  
(other than any partnership treated as foreign under U.S. Treasury Regulations),
(iii) an estate whose income is includable in gross income for U.S. federal     
income tax purposes regardless of source, or (iv) a trust if (a) a court within 
the U.S. is able to exercise primary supervision over the administration of the 
trust and (b) one or more U.S. persons have the authority to control all        
substantial decisions of the trust.                                             

 This discussion is based on the Company's understanding of the Code and
administrative interpretations as of the date hereof, all of which are subject  
to change, including changes with retroactive effect. This discussion does not  
address all aspects of U.S. federal income and estate taxation that may be      
relevant to Non-U.S. Holders in light of their particular circumstances and does
not address any tax consequences arising under the laws of any state, local or  
foreign jurisdiction. Prospective holders should consult their tax advisors with
respect to the particular tax consequences to them of owning and disposing of   
Common Stock, including the consequences under the laws of any state, local or  
foreign jurisdiction.                                                           

DIVIDENDS                                                                       

Subject to the discussion below, dividends, if any, paid to a Non-U.S.
Holder of Common Stock will be subject to withholding tax at a rate of 30% of   
the gross amount of the dividend or such lower rate as may be specified by an   
applicable income tax treaty. For purposes of determining whether tax is to be  
withheld , in accordance with currently applicable U.S. Treasury regulations,   
the Company will presume that dividends paid to an address in a foreign country 
are paid to a resident of such country absent actual knowledge to the contrary. 
Under recently finalized U.S. Treasury regulations generally effective for      
payments made after December 31, 1999 (the "Final Regulations"), however, a     
Non-U.S. Holder of Common Stock who wishes to claim the benefit of an applicable
treaty rate generally will be required to satisfy applicable certification and  
other requirements. In addition, under the Final Regulations, in the case of    
Common Stock held by a foreign partnership, (x) the certification requirement   
will generally be applied to the partners of the partnership and (y) the        
partnership will be required to provide certain information, including a U.S.   
taxpayer identification number. The Final Regulations also provide look-through 
rules for tiered partnerships.                                                  

     Generally, there will be no withholding tax on dividends paid to a Non-U.S.
Holder if such dividends are effectively connected with the Non-U.S. Holder's   
conduct of a trade or business within the U.S. or, if an income tax treaty      
applies, attributable to a permanent establishment in the U.S. ("U.S. trade or  
business income"), if the Non-U.S. Holder files the appropriate U.S. Internal   
Revenue Service ("IRS") form with the payor (which form, under the Final        
Regulations, will require the Non-U.S. Holder to provide a U.S. taxpayer        
identification number). Instead, the effectively connected dividends will be    
subject to regular U.S. net income tax at graduated rates, in the same manner as
if the Non-U.S. Holder were a U.S. resident. In addition to the graduated tax   
described above, a non-U.S. corporation receiving effectively connected         
dividends may be subject to a "branch profits tax" which is imposed, under      
certain circumstances, at a rate of 30% (or such lower rate as may be specified 
by an applicable treaty) of such corporation's effectively connected earnings   
and profits, subject to certain adjustments.                                    

  A Non-U.S. Holder of Common Stock that is eligible for a reduced rate of
U.S. withholding tax pursuant to an income tax treaty may obtain a refund of any
excess amount withheld by filing an appropriate claim for a refund with the IRS.

GAIN ON DISPOSITION OF COMMON STOCK                                             

    A Non-U.S. Holder generally will not be subject to U.S. federal income tax
(and no tax will generally be withheld) with respect to gain realized on a sale 
or other disposition of Common Stock unless (i) the gain is                     

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U.S. trade or business income (in which case, the branch profits tax described  
above may also apply to a corporate Non-U.S. Holder), (ii) in the case of       
certain Non-U.S. Holders who are non-resident alien individuals and hold the    
Common Stock as a capital asset, such individuals are present in the U.S. for   
183 or more days in the taxable year of the disposition and certain other       
conditions are met, (iii) the Non-U.S. Holder is subject to tax pursuant to the 
provisions of the Code regarding the taxation of U.S. expatriates, or (iv) the  
Company is or has been a "U.S. real property holding corporation" for federal   
income tax purposes and the Non-U.S. Holder owned directly or indirectly more   
than 5% of the Company's Common Stock (assuming the Common Stock is regularly   
traded on an established securities market) at any time within the shorter of   
the five-year period preceding such disposition or such holder's holding period.
Generally, a corporation is a "U.S. real property holding corporation" if the   
fair market value of its "U.S. real property interest" equals or exceeds 50% of 
the sum of the fair market value of its worldwide real property interests plus  
its other assets used or held for use in a trade or business. The Company is    
not, and does not anticipate becoming, a "U.S. real property holding            
corporation" for U.S. federal income tax purposes.                              

INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING ON DISPOSITION OF     
COMMON STOCK                                                                    

     Generally, the Company must report to the U.S. Internal Revenue Service the
amount of dividends paid, the name and address of the recipient, and the amount,
if any, of tax withheld. A similar report is sent to the holder. Pursuant to tax
treaties or certain other agreements, the U.S. Internal Revenue Service may make
its reports available to tax authorities in the recipient's country of          
residence.                                                                      

  Under currently effective U.S. Treasury regulations, dividends paid to a
Non-U.S. Holder at an address within the U.S. may be subject to backup          
withholding imposed at a rate of 31% if the Non-U.S. Holder fails to establish  
that it is entitled to an exemption or to provide a correct taxpayer            
identification number and certain other information to the Company or its paying
agent. Under the Final Regulations, a Non-U.S. Holder of Common Stock that fails
to certify its Non-U.S. Holder status in accordance with the requirements of the
Final Regulations may be subject to U.S. backup withholding at a rate of 31% on 
payment of dividends.                                                           

     Under current U.S. Federal income tax law, information reporting and backup
withholding imposed at a rate of 31% will apply to the proceeds of a disposition
of Common Stock paid to or through a U.S. office of a broker unless the         
disposing holder certifies as to its non-U.S. status or otherwise establishes an
exemption. Generally, U.S. information reporting and backup withholding will not
apply to a payment of disposition proceeds if the payment is made outside the   
U.S. through a non-U.S. office of a non-U.S. broker. However, U.S. information  
reporting requirements (but not backup withholding) will apply to a payment of  
disposition proceeds outside the U.S. if the payment is made through an office  
outside the U.S. of a broker that is (i) a U.S. Person, (ii) a foreign person   
which derives 50% or more of its gross income for certain periods from the      
conduct of a trade or business in the U.S. or (iii) a "controlled foreign       
corporation" for U.S. federal income tax purposes, unless the broker maintains  
documentary evidence that the holder is a Non-U.S. Holder and that certain      
conditions are met, or that the holder otherwise is entitled to an exemption.   

   Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax      
withheld. If withholding results in an overpayment of taxes, a refund may be    
obtained, provided that the required information is furnished to the IRS.       

FEDERAL ESTATE TAX                                                              

   An individual Non-U.S. Holder who is treated as the owner of, or has made
certain lifetime transfers of, an interest in the Common Stock at the time of   
death will be required to include the value thereof in his gross estate for U.S.
Federal estate tax purposes, unless an applicable estate tax treaty provides    
otherwise. Such individual's estate may be subject to U.S. Federal estate tax on
the property includable in the gross estate for U.S. Federal estate tax         
purposes. Estates of non-resident aliens are generally allowed a statutory      
credit which has the effect of offsetting the U.S. Federal estate tax imposed on
the first $60,000 of the taxable estate.                                        

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SHARES ELIGIBLE FOR FUTURE SALE 

     Prior to the Offering, there has been no market for the Common Stock of the
Company. Future sales of substantial amounts of Common Stock in the public      
market could adversely affect market prices prevailing from time to time.       
Furthermore, since only a limited number of shares will be available for sale   
shortly after the Offering because of certain contractual and legal restrictions
on resale described below, sales of substantial amounts of Common Stock of the  
Company in the public market after the restrictions lapse could adversely affect
the prevailing market price and the ability of the Company to raise equity      
capital in the future.                                                          

Upon completion of the Offering and the Reorganization, there will be 
7,647,520 shares of Common Stock outstanding (19,482,998 shares assuming the    
conversion of all outstanding shares of Class B Common Stock and exercise of the
warrant), assuming no exercise of the Underwriters' over-allotment option and no
exercise of outstanding options and based upon the number of shares outstanding 
as of June 10, 1998. Of these shares, all of the 3,600,000 shares sold in the   
Offering will be freely tradable without restriction or further registration    
under the Securities Act, unless such shares are purchased by "affiliates" of   
the Company, as that term is defined in Rule 144 under the Securities Act       
("Affiliates"). The remaining 15,882,998 shares of Common Stock (including any  
Common Stock issued upon conversion of Class B Common Stock) will be deemed     
"restricted securities" as that term is defined in Rule 144 under the Securities
Act (the "Restricted Shares") and will be eligible for resale upon expiration of
the waiting period and lock-up described below. Restricted Shares may be sold in
the public market only if registered or if they qualify for an exemption from   
registration under Rules 144 or 701 promulgated under the Securities Act, which 
rules are summarized below.                                                     

  Except for the issuance by the Company of Common Stock to effectuate the
Reorganization, the Company, its executive officers, directors and all existing 
stockholders have agreed not to directly or indirectly (i) offer, pledge, sell, 
contract to sell, sell any option or contract to purchase, purchase any option  
or contract to sell, grant any option, right or warrant for the sale of or      
otherwise dispose of or transfer any shares of Common Stock or securities       
convertible into or exchangeable or exercisable for Common Stock, whether now   
owned or thereafter acquired by the person executing the agreement or with      
respect to which the person executing the agreement thereafter acquires the     
power of disposition, or file a registration statement under the Securities Act 
with respect to the foregoing or (ii) enter into any swap or other agreement    
that transfers, in whole or in part, the economic consequence of ownership of   
the Common Stock whether any such swap or transaction is to be settled by       
delivery of Common Stock or other securities, in cash or otherwise, without the 
prior written consent of Merrill Lynch on behalf of the Underwriters for a      
period of 180 days after the date of this Prospectus.                           

The shares of the Company's Class B Common Stock are convertible into 
shares of Common Stock and, in the event of conversion of such shares and       
expiration of the 180 day lock-up period described above, 8,877,115 of the      
aggregate shares of Common Stock issuable upon conversion of the Class B Common 
Stock would be immediately eligible for sale pursuant to Rule 144. No assurance 
can be given that holders of the Class B Common Stock will not decide, based    
upon then prevailing market and other conditions, to convert their Class B      
Common Stock to Common Stock and to dispose of all or a portion of such stock   
pursuant to the provisions of Rule 144 under the Securities Act or pursuant to  
the demand registration rights contained in the Registration Rights Agreement.  
See "Risk Factors -- Control by Executive Officers and Current Stockholders" and
"Description of Capital Stock -- Amended and Restated Registration Rights       
Agreement." In addition, upon consummation of the Offering, 2,958,510 shares of 
Class B Common Stock will be issuable upon exercise of an outstanding warrant,  
which shares may be converted into Common Stock at the option of the holder. All
of those shares are subject to these lock-up agreements. Upon expiration of     
these lock-up agreements, 2,958,510 shares subject to such warrant will be      
vested, and could be exercised and sold.                                        

    In general, under Rule 144, an Affiliate of the Company, or any person (or
persons whose shares are aggregated) who has beneficially owned Restricted      
Shares for at least one year, will be entitled to sell in any three-month period
a number of shares that does not exceed the greater of (i) one percent of the   
then outstanding shares of the Company's Common Stock or (ii) the average weekly
trading volume of the Company's Common Stock in the New York Stock Exchange     
during the four calendar weeks immediately preceding the date on which notice of
the sale is filed with the SEC. Sales pursuant to Rule 144 are subject to       

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certain requirements relating to manner of sale, notice and availability of     
current public information about the Company. A person (or person whose shares  
are aggregated) who is not deemed to have been an Affiliate of the Company at   
any time during the 90 days immediately preceding the sale and who has          
beneficially owned Restricted Shares for at least two years is entitled to sell 
such shares pursuant to Rule 144(k) without regard to the limitations described 
above. The Commission is currently considering amendments to Rule 144 which     
could modify among other things the volume and manner of sale requirements      
described above.                                                                

Any employee, officer or director of or consultant to the Company who 
purchased or was awarded shares or options to purchase shares pursuant to a     
written compensatory plan or contract is entitled to rely on the resale         
provisions of Rule 701 under the Securities Act, which permits Affiliates and   
non-Affiliates to sell their Rule 701 shares without having to comply with Rule 
144's holding period restrictions, in each case commencing 90 days after the    
date of this Prospectus. In addition, non-Affiliates may sell Rule 701 shares   
without complying with the public information, volume and notice provisions of  
Rule 144.                                                                       

   The Company intends to file a registration statement under the Securities
Act covering shares of Common Stock reserved for issuance under the Incentive   
Plan. Based on the number of options outstanding and shares reserved for        
issuance under the Incentive Plan at June 10, 1998, such registration statement 
would cover approximately 750,000 shares. Such registration statement is        
expected to be filed and to become effective as soon as practicable after the   
date of this Prospectus. Shares registered under such registration statement    
will, subject to Rule 144 volume limitations applicable to Affiliates, be       
available for sale in the open market, unless such shares are subject to vesting
restrictions with the Company or the lock-up agreements described above. See    
"Management."                                                                   

     The holders of all shares outstanding prior to the Offering are entitled to
certain registration rights with respect to their shares. See "Description of   
Capital Stock -- Amended and Restated Registration Rights Agreement."           

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UNDERWRITING

     Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), Bear,
Stearns & Co. Inc., Lehman Brothers Inc., Furman Selz LLC and Wasserstein       
Perella Securities, Inc. are acting as representatives (the "Representatives")  
of each of the Underwriters named below (the "Underwriters"). Subject to the    
terms and conditions set forth in a purchase agreement (the "Purchase           
Agreement") among the Company and the Underwriters, the Company has agreed to   
sell to the Underwriters, and each of the Underwriters severally and not jointly
has agreed to purchase from the Company, the number of shares of Common Stock   
set forth opposite its name below.                                              

                                                                [Download Table]

                                                              NUMBER OF
                        UNDERWRITER                            SHARES  
                        -----------                           ---------
                                                                       
Merrill Lynch, Pierce, Fenner & Smith                                  
             Incorporated...................................    600,000
Bear, Stearns & Co. Inc. ...................................    600,000
Lehman Brothers Inc. .......................................    600,000
Furman Selz LLC.............................................    600,000
Wasserstein Perella Securities, Inc. .......................    600,000
BT Alex. Brown Incorporated.................................    100,000
Chase Securities Inc. ......................................    100,000
Doft & Co., Inc. ...........................................    100,000
NationsBanc Montgomery Securities LLC.......................    100,000
William Blair & Company, L.L.C. ............................     50,000
The Buckingham Research Group Incorporated..................     50,000
Freimark Blair & Company, Inc. .............................     50,000
Ladenburg Thalmann & Co. Inc. ..............................     50,000
                                                              ---------
             Total..........................................  3,600,000
                                                              =========

    In the Purchase Agreement the several Underwriters have agreed, subject to
the terms and conditions set forth therein, to purchase all of the shares of    
Common Stock being sold pursuant to such agreement if any of the shares of      
Common Stock being sold pursuant to such agreement are purchased. Under certain 
circumstances, under the Purchase Agreement, the commitments of non-defaulting  
Underwriters may be increased.                                                  

    The Representatives have advised the Company that the Underwriters propose
initially to offer the shares of Common Stock to the public at the initial      
public offering price set forth on the cover page of this Prospectus, and to    
certain dealers at such price less a concession not in excess of $.54 per share 
of Common Stock. The Underwriters may allow, and such dealers may reallow, a    
discount not in excess of $.10 per share of Common Stock on sales to certain    
other dealers. After the initial public offering, the public offering price,    
concession and discount may be changed.                                         

 The Company has granted options to the Underwriters, exercisable for 30
days after the date of this Prospectus, to purchase up to an aggregate of       
540,000 additional shares of Common Stock at the initial public offering price  
set forth on the cover page of this Prospectus, less the underwriting discount. 
The Underwriters may exercise these options solely to cover over-allotments, if 
any, made on the sale of the Common Stock offered hereby. To the extent that the
Underwriters exercise these options, each Underwriter will be obligated, subject
to certain conditions, to purchase a number of additional shares of Common Stock
proportionate to such Underwriter's initial amount reflected in the foregoing   
table.                                                                          

    At the request of the Company, the Underwriters have reserved for sale, at
the initial public offering price, up to 5% of the shares offered to be sold to 
certain employees of the Company and other persons. The number of shares of     
Common Stock available for sale to the general public will be reduced to the    
extent such persons purchase such reserved shares. Any reserved shares which are
not orally confirmed for purchase within one day of the pricing of the Offering 
will be offered by the Underwriters to the general public on the same terms as  
the other shares offered hereby.                                                
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The Company, the Company's executive officers and directors and all   
existing stockholders have agreed, subject to certain exceptions, not to        
directly or indirectly (i) offer, pledge, sell, contract to sell, sell any      
option or contract to purchase, purchase any option or contract to sell, grant  
any option, right or warrant for the sale of or otherwise dispose of or transfer
any shares of Common Stock or securities convertible into or exchangeable or    
exercisable for Common Stock, whether now owned or thereafter acquired by the   
person executing the agreement or with respect to which the person executing the
agreement thereafter acquires the power of disposition, or file a registration  
statement under the Securities Act with respect to the foregoing or (ii) enter  
into any swap or other agreement that transfers, in whole or in part, the       
economic consequence of ownership of the Common Stock whether any such swap or  
transaction is to be settled by delivery of Common Stock or other securities, in
cash or otherwise, without the prior written consent of Merrill Lynch on behalf 
of the Underwriters for a period of 180 days after the date of this Prospectus. 
See "Shares Eligible for Future Sale."                                          

     Prior to the Offering, there has been no public market for the Common Stock
of the Company. The initial public offering price was determined through        
negotiations between the Company and the Representatives. The factors considered
in determining the initial public offering price, in addition to prevailing     
market conditions, were price-earnings ratios of publicly traded companies that 
the Representatives believe to be comparable to the Company, certain financial  
information of the Company, the history of, and the prospects for, the Company  
and the industry in which it competes, and an assessment of the Company's       
management, its past and present operations, the prospects for, and timing of,  
future revenues of the Company, the present state of the Company's development, 
and the above factors in relation to market values and various valuation        
measures of other companies engaged in activities similar to the Company. There 
can be no assurance that an active trading market will develop for the Common   
Stock or that the Common Stock will trade in the public market subsequent to the
Offering at or above the initial public offering price.                         

The Common Stock has been approved for listing on the New York Stock  
Exchange, subject to notice of issuance, under the symbol "GCW". In order to    
meet the requirements for listing of the Common Stock on that exchange, the     
Underwriters have undertaken to sell lots of 100 or more shares to a minimum of 
2,000 beneficial owners.                                                        

  The Underwriters do not expect sales of the Common Stock to any accounts
over which they exercise discretionary authority to exceed 5% of the number of  
shares being offered hereby.                                                    

The Company has agreed to indemnify the Underwriters against certain  
liabilities, including certain liabilities under the Securities Act, or to      
contribute to payments the Underwriters may be required to make in respect      
thereof.                                                                        

  More than ten percent of the net proceeds of the Offering may be used to
repay debt to affiliates of NASD members participating in the Offering.         
Accordingly, the Offering will be conducted in accordance with NASD Conduct Rule
2710(c)(8) which requires that the public offering price of the Common Stock be 
no higher than the price recommended by a Qualified Independent Underwriter     
which has participated in the preparation of the Registration Statement and     
performed its usual standard of due diligence with respect thereto. Merrill     
Lynch has agreed to act as Qualified Independent Underwriter for this Offering  
and the public offering price will be no higher than that recommended by Merrill
Lynch.                                                                          

Until the distribution of the Common Stock is completed, rules of the 
Securities and Exchange Commission may limit the ability of the Underwriters and
certain selling group members to bid for and purchase the Common Stock. As an   
exception to these rules, the Representatives are permitted to engage in certain
transactions that stabilize the price of the Common Stock. Such transactions    
consist of bids or purchases for the purpose of pegging, fixing or maintaining  
the price of the Common Stock.                                                  

If the Underwriters create a short position in the Common Stock in    
connection with the Offering, i.e., if they sell more shares of Common Stock    
than are set forth on the cover page of this Prospectus, the Representatives may
reduce that short position by purchasing Common Stock in the open market. The   
Representatives may also elect to reduce any short position by exercising all or
part of the over-allotment option described above.                              

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   The Representatives may also impose a penalty bid on certain Underwriters
and selling group members. This means that if the Representatives purchase      
shares of Common Stock in the open market to reduce the Underwriters' short     
position or to stabilize the price of the Common Stock, they may reclaim the    
amount of the selling concession from the Underwriters and selling group members
who sold those shares as part of the Offering.                                  

    In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than 
it might be in the absence of such purchases. The imposition of a penalty bid   
might also have an effect on the price of the Common Stock to the extent that it
discourages resales of the Common Stock.                                        

    Neither the Company nor any of the Underwriters make any representation or
prediction as to the direction or magnitude of any effect that the transactions 
described above may have on the price of the Common Stock. In addition, neither 
the Company nor any of the Underwriters makes any representation that the       
Representatives will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.                             

     Certain of the Representatives have provided investment banking and related
services for the Company and CVC from time to time for which they have received 
customary fees.                                                                 

LEGAL MATTERS 

Certain legal matters with respect to the validity of the Common Stock
being offered hereby will be passed upon for the Company by Kirkland & Ellis (a 
partnership which includes professional corporations), New York, New York.      
Certain legal matters relating to the Offering will be passed upon for the      
Underwriters by Fried, Frank, Harris, Shriver & Jacobson (a partnership         
including professional corporations), New York, New York.                       

EXPERTS 

The consolidated financial statements and schedule of GCIH, Inc. at   
December 31, 1997 and 1996, and for the year ended December 31, 1997, and for   
the period from January 22, 1996 to December 31, 1996, and the consolidated     
statements of operations and cash flows and schedule for the year ended December
31, 1995 of Gerber Childrenswear, Inc. ("Predecessor Company") appearing in this
Prospectus and Registration Statement, have been audited by Ernst & Young LLP,  
independent auditors, as set forth in their reports thereon appearing elsewhere 
herein, and are included in reliance upon such reports given upon the authority 
of such firm as experts in accounting and auditing.                             

     The consolidated statements of income and cash flows for the period January
1, 1997 through December 16, 1997 of Auburn Hosiery Mills, Inc. appearing in    
this Prospectus and Registration Statement, have been audited by J.C. Holland & 
Co., PSC, independent auditors, as set forth in their report thereon appearing  
elsewhere herein, and are included in reliance on such report given upon the    
authority of such firm as experts in accounting and auditing.                   

The profit and loss account and cash flow statement of Sport Socks Co.
(Ireland) Limited for the fifty weeks ended December 16, 1997 appearing in this 
Prospectus and Registration Statement, have been audited by Price Waterhouse,   
independent accountants, as set forth in their report thereon appearing         
elsewhere herein, and are included in reliance on such report given upon the    
authority of such firm as experts in accounting and auditing.                   

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ADDITIONAL INFORMATION

 The Company has filed with the SEC a Registration Statement on Form S-1
under the Securities Act with respect to the Common Stock offered hereby. This  
Prospectus does not contain all of the information set forth in the Registration
Statement, certain portions of which are omitted as permitted by the rules and  
regulations of the SEC. For further information pertaining to the Company and   
the Common Stock offered hereby, reference is made to the Registration          
Statement, including the exhibits thereto and the financial statements, notes   
and schedules filed as a part thereof. Statements contained in this Prospectus  
regarding the contents of any contract or other document referred to herein or  
therein are not necessarily complete, and in each instance reference is made to 
the copy of such contract or other document filed as an exhibit to the          
Registration Statement or such other document, each such statement being        
qualified in all respects by such reference.                                    

Upon completion of the Offering, the Company will be subject to the   
informational requirements of the Securities Exchange Act of 1934, as amended,  
and, in accordance therewith, will file reports, proxy statements and other     
information with the SEC. Such reports, proxy statements and other information, 
as well as the Registration Statement and the exhibits and schedules thereto,   
may be inspected, without charge, at the public reference facility maintained by
the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 
20549, and at the SEC's regional offices located at Seven World Trade Center,   
New York, New York 10048 and Northwestern Atrium Center, 500 West Madison       
Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such material may   
also be obtained from the Public Reference Section of the SEC at 450 Fifth      
Street, N.W., Washington, D.C. 20549, at prescribed rates. Such materials can   
also be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad 
Street, New York, New York 10005 or on the SEC's site on the Internet at        
http://www.sec.gov.                                                             

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

GCIH, INC. AND SUBSIDIARIES 

                                                                [Download Table]

                                                               PAGE 
                                                              NUMBER
                                                              ------
                                                                    
Condensed Consolidated Balance Sheet at April 4, 1998               
  (Unaudited) and December 31, 1997.........................     F-2
Condensed Consolidated Statements of Income and                     
  Comprehensive Income for the quarter ended April 4, 1998          
  and March 29, 1997 (Unaudited)............................     F-3
Condensed Consolidated Statements of Cash Flows for the             
  quarter ended April 4, 1998 and March 29, 1997                    
  (Unaudited)...............................................     F-4
Notes to Condensed Consolidated Financial Statements                
  (Unaudited)...............................................     F-5

Report of Independent Auditors..............................     F-8
Consolidated Balance Sheets at December 31, 1997 and 1996...     F-9
Consolidated Statements of Income, Changes in Shareholders'         
  Equity and Cash Flows for the year ended December 31, 1997        
  and the period from January 22, 1996 to December 31,              
  1996......................................................    F-10
Notes to Consolidated Financial Statements..................    F-13

GERBER CHILDRENSWEAR, INC. ("PREDECESSOR COMPANY")                  
Report of Independent Auditors..............................    F-29
Consolidated Statements of Income and Cash Flows for the            
  year ended December 31, 1995..............................    F-30
Notes to Consolidated Financial Statements..................    F-32

AUBURN HOSIERY MILLS, INC. AND SUBSIDIARY                           
Independent Auditors' Report................................    F-36
Consolidated Statements of Income and Cash Flows for the            
  Period January 1, 1997 through December 16, 1997..........    F-37
Notes to Consolidated Financial Statements..................    F-39

SPORT SOCKS CO. (IRELAND) LIMITED                                   
Independent Accountant's Report.............................    F-43
Profit and Loss Account and Cash Flow Statement for the             
  fifty weeks ended December 16, 1997.......................    F-44
Notes to Consolidated Financial Statements..................    F-46

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GCIH, INC.

CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                             APRIL 4,    DECEMBER 31,
                                                               1998          1997    
                                                             --------    ------------
                                                                  (IN THOUSANDS)     
                                                                                     
ASSETS                                                                               
Current Assets                                                                       
  Cash and cash equivalents................................. $  1,802      $    536  
  Accounts receivable, net..................................   40,600        34,506  
  Inventories...............................................   81,350        71,041  
  Income tax receivable.....................................      159         4,635  
  Other.....................................................    2,667         1,672  
                                                             --------      --------  
          Total current assets..............................  126,578       112,390  
                                                             --------      --------  
Property, Plant and Equipment...............................   28,456        27,867  
  Less accumulated depreciation.............................    4,366         3,219  
                                                             --------      --------  
                                                               24,090        24,648  
                                                             --------      --------  
Other Assets                                                                         
  Excess of cost over fair value of net assets acquired,                             
     net....................................................   21,548        22,257  
  Other.....................................................    6,226         4,596  
                                                             --------      --------  
          Total other assets................................   27,774        26,853  
                                                             --------      --------  
                                                             $178,442      $163,891  
                                                             ========      ========  
LIABILITIES AND SHAREHOLDERS' EQUITY                                                 
Current Liabilities                                                                  
  Accounts payable.......................................... $ 12,306      $ 14,759  
  Accrued expenses..........................................   17,151        24,099  
  Revolver..................................................   18,840           250  
  Current portion of long-term debt.........................    8,075         7,286  
  Other.....................................................    2,019           119  
                                                             --------      --------  
          Total current liabilities.........................   58,391        46,513  
                                                             --------      --------  
Noncurrent Liabilities                                                               
  Long-term debt............................................   67,522        69,474  
  Other non-current liabilities.............................   15,230        13,875  
                                                             --------      --------  
          Total noncurrent liabilities......................   82,752        83,349  
                                                             --------      --------  
Redeemable preferred stock, including accrued dividends of                           
  $3,417 and $2,965, respectively...........................   15,062        14,610  
                                                             --------      --------  
Shareholders' Equity........................................   22,237        19,419  
                                                             --------      --------  
                                                             $178,442      $163,891  
                                                             ========      ========  

See accompanying notes
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GCIH, INC.

CONDENSED CONSOLIDATED STATEMENTS 
OF INCOME AND COMPREHENSIVE INCOME
(UNAUDITED) 

                                                                [Download Table]

                                                             FOR THE QUARTER ENDED
                                                             ---------------------
                                                             APRIL 4,    MARCH 29,
                                                               1998        1997   
                                                             --------    ---------
                                                             (IN THOUSANDS, EXCEPT
                                                                PER SHARE DATA)   
                                                                                  
Net sales................................................... $64,647      $45,350 
Cost of sales...............................................  47,212       32,654 
                                                             -------      ------- 
  Gross margin..............................................  17,435       12,696 
Expenses:                                                                         
  Selling, general and administrative expenses..............   9,614        6,718 
  Other.....................................................       0          514 
                                                             -------      ------- 
                                                               9,614        7,232 
                                                             -------      ------- 
Income before interest and income taxes.....................   7,821        5,464 
Interest expense, net of interest income....................   2,262        1,326 
                                                             -------      ------- 
Income before income taxes..................................   5,559        4,138 
Income tax expense..........................................   2,139        1,614 
                                                             -------      ------- 
Net income..................................................   3,420        2,524 
  Foreign currency translation..............................    (188)           0 
                                                             -------      ------- 
Comprehensive income........................................ $ 3,232      $ 2,524 
                                                             =======      ======= 
Net income as reported above................................ $ 3,420      $ 2,524 
Less preferred stock dividends..............................    (452)        (383)
                                                             -------      ------- 
Net income available to common shareholders................. $ 2,968      $ 2,141 
                                                             =======      ======= 
Per Share amounts:                                                                
  Earnings per common share................................. $  4.18      $  2.93 
                                                             =======      ======= 
  Earnings per common share -- assuming dilution............ $  3.16      $  2.20 
                                                             =======      ======= 

See accompanying notes. 
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GCIH, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED) 

                                                                [Download Table]

                                                             FOR THE QUARTER ENDED
                                                             ---------------------
                                                             APRIL 4,    MARCH 29,
                                                               1998        1997   
                                                             --------    ---------
                                                                (IN THOUSANDS)    
                                                                                  
OPERATING ACTIVITIES                                                              
  Net income................................................ $  3,420    $  2,524 
  Adjustments to reconcile net income to net cash (used in)                       
     provided by operating activities:                                            
     Depreciation and amortization..........................    1,281         615 
     Other..................................................     (947)        238 
     Changes in assets and liabilities                                            
       Accounts receivable..................................   (6,278)     (7,600)
       Inventories..........................................  (10,413)     (5,443)
       Accounts payable.....................................   (1,620)      2,404 
       Other assets and liabilities, net....................     (859)     (4,631)
                                                             --------    -------- 
                                                              (15,416)    (11,893)
                                                             --------    -------- 
INVESTING ACTIVITIES                                                              
  Purchases of property, plant and equipment................     (722)       (797)
  Proceeds from sale of property, plant and equipment.......       --         412 
                                                             --------    -------- 
                                                                 (722)       (385)
                                                             --------    -------- 
FINANCING ACTIVITIES                                                              
  Borrowings under revolving credit agreement...............   32,240          -- 
  Repayments under revolving credit agreement...............  (13,650)         -- 
  Principal payments on long-term borrowings................   (1,629)       (975)
  Other.....................................................      262        (148)
                                                             --------    -------- 
                                                               17,223      (1,123)
                                                             --------    -------- 
  Effect of exchange rate changes on cash...................      181          -- 
Net increase (decrease) in cash and cash equivalents........    1,266     (13,401)
Cash and cash equivalents at beginning of period............      536      17,592 
                                                             --------    -------- 
Cash and cash equivalents at end of period.................. $  1,802    $  4,191 
                                                             ========    ======== 

See accompanying notes
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GCIH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) 

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                   

   The condensed consolidated financial statements included herein have been
prepared by GCIH, Inc. ("the Company") pursuant to the rules and regulations of 
the Securities and Exchange Commission. Certain information and disclosures     
normally included in financial statements prepared in accordance with generally 
accepted accounting principles have been condensed or omitted pursuant to such  
rules and regulations; however, the Company believes that the disclosures are   
adequate to make the information presented not misleading. The interim financial
statements are unaudited and, in the opinion of management, contain all         
adjustments necessary to present fairly the Company's financial position and the
results of its operations and cash flows for the interim periods presented. It  
is suggested that these interim financial statements be read in conjunction with
the annual financial statements and the notes thereto included elsewhere in this
Prospectus.                                                                     

2. CONSOLIDATED FINANCIAL STATEMENTS                                            

    The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries which are Gerber Childrenswear,   
Inc. and Auburn Holdings, Inc. Auburn Holdings, Inc., a wholly owned subsidiary 
of the Company, acquired Auburn Hosiery Mills, Inc. and Sport Socks Co.         
(Ireland) Limited on December 17, 1997. Sport Socks Co. (Limited) Ireland has   
been translated into U.S. dollars based upon the exchange rate of U.S.          
dollars/Irish pounds of U.S. $1.3755 to L1.00 and U.S. $1.3585 to L1.00 for the 
statement of income and the balance sheet, respectively. All significant        
intercompany balances have been eliminated in consolidation.                    

3. SEASONALITY OF BUSINESS                                                      

The results of operations for the interim periods presented are not   
necessarily indicative of the results to be expected for a full fiscal year, due
to the seasonal nature of the Company's operations.                             

4. USE OF ESTIMATES                                                             

The preparations of financial statements in conformity with generally 
accepted accounting principles requires management to make estimates and        
assumptions that affect the reported amounts of assets and liabilities and      
disclosure of contingent assets and liabilities at the date of the financial    
statements and the reported amounts of revenues and expenses during the         
reporting period. Actual results could differ from those estimates.             

5. INVENTORIES                                                                  

 A summary of inventories, by major classification, at April 4, 1998 and
December 31, 1997 is as follows (in thousands):                                 

                                                                [Download Table]

                                                        APRIL 4,    DECEMBER 31,
                                                          1998          1997    
                                                        --------    ------------
                                                                                
Raw materials.........................................  $14,720       $14,192   
Work in process.......................................   15,937        12,507   
Finished goods........................................   50,693        44,342   
                                                        -------       -------   
                                                        $81,350       $71,041   
                                                        =======       =======   

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GCIH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

6. COMPREHENSIVE INCOME                                                         

As of January 1, 1998, the Company adopted Statement of Financial     
Accounting Standard No. 130 ("SFAS 130"), "Reporting Comprehensive Income." SFAS
130 establishes new rules for the reporting and display of comprehensive income 
and its components; however, the adoption of SFAS 130 had no impact on the      
Company's net income or shareholders' equity. SFAS 130 requires the Company's   
foreign currency translation adjustments, which prior to adoption were reported 
separately in shareholders' equity, to be included in other comprehensive       
income.                                                                         

7. EARNINGS PER SHARE                                                           

The following table sets forth the computation of basic and diluted   
earnings per share for the three months ended:                                  

                                                                [Download Table]

                                                       APRIL 4,     MARCH 29,  
                                                         1998          1997    
                                                      ----------    ---------- 
                                                                               
Numerator:                                                                     
  Net income........................................  $3,420,000    $2,524,000 
  Preferred stock dividends.........................    (452,000)     (383,000)
                                                      ----------    ---------- 
Numerator for basic and diluted earnings per share--                           
  net income available to common shareholders.......  $2,968,000    $2,141,000 
                                                      ==========    ========== 
Denominator:                                                                   
  Denominator for basic earnings per share --                                  
     weighted-average shares........................   710,505.9     730,716.7 
  Effective of dilutive securities:                                            
     Warrants.......................................   191,239.1     191,239.1 
     Nonvested stock................................    38,821.2      51,226.0 
                                                      ----------    ---------- 
Denominator for diluted earnings per share --                                  
  adjusted weighted-average shares..................   940,566.2     973.181.8 
                                                      ==========    ========== 
Basic earnings per share............................       $4.18         $2.93 
                                                      ==========    ========== 
Diluted earnings per share..........................       $3.16         $2.20 
                                                      ==========    ========== 

8.  SUBSEQUENT EVENTS                                                           

   In connection with the Company's proposed public offering for the sale of
additional shares of its common stock, the Company filed a preliminary          
registration statement with the Securities and Exchange Commission on Form S-1  
(the "Offering"). The Company intends to use the proceeds from the Offering to  
repay certain indebtedness of the Company, to redeem certain shares of the      
Company's preferred stock and for other general corporate purposes.             

Immediately prior to and in connection with the consummation of the   
Offering, the Company and Gerber Childrenswear, Inc. ("Gerber") will consummate 
a series of transactions pursuant to which the Company and Gerber will be       
reorganized and recapitalized. The principal transactions are as follows:       

     Prior to the consummation of the Offering, the certificate of incorporation
of the Company will be amended and restated (the "Recapitalization") to provide 
for the reclassification of its authorized common stock into two classes of     
capital stock ("Common Stock and Class B Common Stock"). Each share of the      
Common Stock will have one vote per share and the Class B Common Stock will have
no voting rights. The amended certificate will also provide that each share of  
Class B Common Stock will be convertible at the option of the holder at any time
into one share of Common Stock and each share of Common Stock held by a         

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GCIH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

holder of Class B Common Stock will be convertible at the option of the holder  
at any time into one share of Class B Common Stock. In addition, the amended    
certificate will provide for change of the corporate name of the Company from   
"GCIH, Inc." to "Gerber Childrenswear, Inc."                                    

Prior to the consummation of the Offering and immediately after giving
effect to the Recapitalization, Gerber will be merged into the Company (the     
"Merger") with the Company as the surviving entity. The Merger is intended to be
treated as a tax-free liquidation of Gerber. Upon consummation of the Merger,   
113,623.6 shares of the Company's Redeemable Preferred Stock will be converted  
into shares of Class A Common Stock of the Company (at a conversion ratio to be 
determined at that date) and 2,828.4 shares will be converted into a right to   
receive cash equal to the liquidation value per share at the time of the Merger.
The Company will retire all shares held in the treasury. Then, all of the       
outstanding shares of the Company's Class A and Class C Common Stock will be    
exchanged for shares of Class B Common Stock (new Class B) pursuant to a stock  
split. All of the outstanding shares of the Company's Class B Common Stock (old 
Class B) of the Company will be exchanged for shares of the Company's Common    
Stock at a specified ratio. Finally, all of the outstanding warrants to purchase
shares of Class D Common Stock of the Company will be exchanged into warrants to
purchase shares of the Class B Common Stock (new Class B) of the Company.       

  The following pro forma information represents the historical amounts of
the Company adjusted to show the redemption and conversion of the Redeemable    
Preferred Stock at an assumed conversion price of $14 per share, the conversion 
of all classes of common stock of the Company into common stock of Gerber and a 
stock split at an assumed ratio of approximately 15.5 to 1. The pro forma per   
share amounts reflect the earnings per share as if the conversion of the        
Redeemable Preferred Stock and the stock split had occurred on January 1, 1997. 

                                                                [Download Table]

                                                             HISTORICAL           
                                                              AMOUNTS             
                                                              APRIL 4,   PRO FORMA
                                                                1998     ADJUSTED 
                                                             ----------  ---------
                                                                                  
Total assets................................................  $178,442   $178,442 
Total liabilities...........................................   141,143    141,509 
Redeemable preferred stock..................................    15,062         -- 
Shareholders' equity........................................    22,237     36,933 

                                                        [Enlarge/Download Table]

                                                               HISTORICAL     PRO FORMA  
                                                             --------------  ------------
                                                             1998     1997   1998    1997
                                                             -----    -----  ----    ----
                                                                                         
Per share amounts:                                                                       
  Earnings per common share................................. $4.18    $2.93  $.28    $.21
  Earnings per common share -- assuming dilution............  3.16     2.20   .22     .16

Also, in connection with the Offering, the Company plans to adopt a   
Long-Term Equity Incentive Plan (the "Incentive Plan") designed to provide      
incentives to present and future key employees of the Company and its           
subsidiaries as may be selected by the Compensation Committee of the Board of   
Directors (the "Committee"). The Incentive Plan will provide for the granting to
Participants the following types of incentive awards: stock options, stock      
appreciation rights, restricted stock, performance units, performance grants and
other awards deemed appropriate by the Committee. An aggregate of up to 750,000 
shares will be reserved for issuance under the Incentive Plan. The Incentive    
Plan affords the Company latitude in tailoring incentive compensation for the   
retention of key employees. This plan also limits the number of shares each     
participant in the plan shall be entitled to receive to no more than 25,000     
common shares in any calendar year and is scheduled to terminate ten years from 
the date the Incentive Plan is approved.                                        

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REPORT OF INDEPENDENT AUDITORS

Board of Directors                                                              
GCIH, Inc.                                                                      

    We have audited the accompanying consolidated balance sheets of GCIH, Inc.
as of December 31, 1997 and 1996, and the related consolidated statements of    
income, changes in shareholders' equity and cash flows for the year ended       
December 31, 1997 and the period from January 22, 1996 (inception) to December  
31, 1996. These financial statements are the responsibility of the Company's    
management. Our responsibility is to express an opinion on these financial      
statements based on our audits.                                                 

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain 
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting 
the amounts and disclosures in the financial statements. An audit also includes 
assessing the accounting principles used and significant estimates made by      
management, as well as evaluating the overall financial statement presentation. 
We believe that our audits provide a reasonable basis for our opinion.          

 In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
GCIH, Inc. at December 31, 1997 and 1996, and the consolidated results of its   
operations and its cash flows for the year ended December 31, 1997 and the      
period from January 22, 1996 (inception) to December 31, 1996 in conformity with
generally accepted accounting principles.                                       

                         /s/ ERNST & YOUNG LLP

Greenville, South Carolina                                                      
January 30, 1998                                                                

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GCIH, INC.

CONSOLIDATED BALANCE SHEETS 

                                                                [Download Table]

                                                                  DECEMBER 31     
                                                              --------------------
                                                                1997        1996  
                                                              --------    --------
                                                                 (IN THOUSANDS)   
                                                                                  
                                      ASSETS                                      
Current assets:                                                                   
  Cash and cash equivalents.................................  $    536    $ 17,592
  Accounts receivable, net of allowances for doubtful                             
    accounts of $2,510,000 (1997) and $1,798,000 (1996)                           
    (Note 8)................................................    34,506      17,979
  Income taxes receivable...................................     4,635          --
  Inventories (Notes 3 and 8)...............................    71,041      47,504
  Deferred income taxes (Note 5)............................       399       4,353
  Other.....................................................     1,273       3,083
                                                              --------    --------
    Total current assets....................................   112,390      90,511
Property, plant and equipment, net (Notes 4 and 8)..........    24,648       9,938
Deferred income taxes (Note 5)..............................     2,281       2,075
Excess of cost over fair value of net assets acquired,                            
  net.......................................................    22,257       1,606
Debt issuance costs, net....................................     1,381       1,775
Other.......................................................       934         155
                                                              --------    --------
                                                              $163,891    $106,060
                                                              ========    ========
                       LIABILITIES AND SHAREHOLDERS' EQUITY                       
Current liabilities:                                                              
  Accounts payable..........................................  $ 14,759    $ 10,078
  Accrued expenses (Note 6).................................    24,099      16,503
  Income taxes payable......................................        --       6,000
  Current portion of obligations under capital leases (Note                       
    9)......................................................       119          --
  Revolver (Note 8).........................................       250          --
  Current portion of long-term debt (Note 8)................     7,286       1,725
                                                              --------    --------
    Total current liabilities...............................    46,513      34,306
Accrued pension and postretirement benefit cost (Note 10)...     5,058       4,021
Other accrued liabilities (Note 7)..........................     8,713       3,853
Obligations under capital leases, less current portion (Note                      
  9)........................................................       104          --
Long-term debt, less current portion (Note 8)...............    69,474      41,711
Redeemable preferred stock, 12% non-voting, cumulative, par                       
  value $.01 per share, 117,402.7 shares authorized, 116,452                      
  outstanding (1997); 117,402.7 shares outstanding (1996)                         
  (liquidation and redemption value of $100 per share)                            
  including accrued dividends of $2,965,000 (1997) and                            
  $1,328,000 (1996) (Note 11)...............................    14,610      13,068
Shareholders' equity (Note 12):                                                   
  Common Stock, Class A, par value $.01 per share, 750,000.0                      
    shares authorized, 587,328.3 shares outstanding (1997);                       
    661,655.1 shares outstanding (1996).....................         7           7
  Common Stock, Class B, par value $.01 per share, 250,000                        
    shares authorized, 166,915.3 shares outstanding (1997);                       
    144,594.9 shares outstanding (1996).....................         2           1
  Common Stock, Class C with 225 votes per share, par value                       
    $.01 per share, 2,500 shares authorized and                                   
    outstanding.............................................        --          --
  Common Stock, non-voting Class D, par value $.01 per                            
    share, 191,250 shares authorized, none issued...........        --          --
Treasury stock..............................................       (75)         --
Detachable stock warrants...................................       189         189
Additional paid-in capital..................................     6,537         752
Retained earnings...........................................    13,526       8,152
                                                              --------    --------
                                                                20,186       9,101
  Less unearned compensation under restricted stock plan....       767          --
                                                              --------    --------
    Total shareholders' equity..............................    19,419       9,101
                                                              --------    --------
                                                              $163,891    $106,060
                                                              ========    ========

See accompanying notes. 
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GCIH, INC.

CONSOLIDATED STATEMENTS OF INCOME 

                                                        [Enlarge/Download Table]

                                                                             PERIOD FROM 
                                                                             JANUARY 22, 
                                                              YEAR ENDED       1996 TO   
                                                             DECEMBER 31,    DECEMBER 31,
                                                                 1997            1996    
                                                             ------------    ------------
                                                                (IN THOUSANDS, EXCEPT    
                                                                   PER SHARE DATA)       
                                                                                         
Net sales...................................................   $202,037        $185,223  
Cost of sales...............................................    146,294         138,608  
                                                               --------        --------  
Gross margin................................................     55,743          46,615  
Expenses:                                                                                
  Selling, general and administrative expenses, including                                
     $9,465,000 of compensation in 1997 for restricted                                   
     stock..................................................     37,231          23,894  
  Other.....................................................        231             689  
                                                               --------        --------  
                                                                 37,462          24,583  
                                                               --------        --------  
Income before interest and income taxes.....................     18,281          22,032  
Interest expense, net of interest income....................      5,798           6,308  
                                                               --------        --------  
Income before income taxes..................................     12,483          15,724  
Federal and state income taxes (Note 5):                                                 
  Current...................................................      1,303          11,635  
  Deferred..................................................      3,461          (5,391) 
                                                               --------        --------  
                                                                  4,764           6,244  
                                                               --------        --------  
Income before extraordinary item............................      7,719           9,480  
Extraordinary item -- loss on early extinguishment of debt                               
  (net of income tax benefit of $452,000)...................       (708)             --  
                                                               --------        --------  
Net income..................................................      7,011           9,480  
Less preferred stock dividends..............................     (1,637)         (1,328) 
                                                               --------        --------  
Net income available to common shareholders.................   $  5,374        $  8,152  
                                                               ========        ========  
Per share amounts:                                                                       
  Earnings per common share:                                                             
     Income before extraordinary item.......................   $   8.47        $  11.11  
     Extraordinary item.....................................       (.99)             --  
                                                               --------        --------  
  Net income................................................   $   7.48        $  11.11  
                                                               ========        ========  
  Earnings per common share -- assuming dilution:                                        
     Income before extraordinary item.......................   $   6.39        $   8.15  
     Extraordinary item.....................................       (.74)             --  
                                                               --------        --------  
  Net income................................................   $   5.65        $   8.15  
                                                               ========        ========  

See accompanying notes. 
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GCIH, INC.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY 
YEAR ENDED DECEMBER 31, 1997 AND PERIOD FROM
JANUARY 22, 1996 TO DECEMBER 31, 1996 
(IN THOUSANDS, EXCEPT SHARE DATA) 

                                                        [Enlarge/Download Table]

                                CLASS A    CLASS A    CLASS B    CLASS B   CLASS C   CLASS C   CLASS D  CLASS D            
                                COMMON     COMMON     COMMON     COMMON    COMMON    COMMON    COMMON   COMMON   TREASURY  
                                SHARES      STOCK     SHARES      STOCK    SHARES     STOCK    SHARES    STOCK    SHARES   
                               ---------   -------   ---------   -------   -------   -------   -------  -------  --------- 
                                                                                                                           
Balance at January 22, 1996... 661,655.1     $ 7     144,594.9     $ 1      2,500      $--       --       $--           -- 
 Net income...................        --      --            --      --         --       --       --        --           -- 
 Dividend on redeemable                                                                                                    
   preferred stock............        --      --            --      --         --       --       --        --           -- 
                               ---------     ---     ---------     ---      -----      ---       --       ---    --------- 
Balance at December 31,                                                                                                    
 1996......................... 661,655.1       7     144,594.9       1      2,500       --       --        --           -- 
 Repurchase of shares for                                                                                                  
   treasury................... (74,326.8)     --     (30,929.6)     --         --       --       --        --    105,256.4 
 Pursuant to restricted stock                                                                                              
   plan:                                                                                                                   
   Shares issued..............        --      --      53,250.0       1         --       --       --        --    (53,250.0)
   Amortization...............        --      --            --      --         --       --       --        --           -- 
   Forfeitures................        --      --            --      --         --       --       --        --           -- 
 Net income...................        --      --            --      --         --       --       --        --           -- 
 Dividend on redeemable                                                                                                    
   preferred stock............        --      --            --      --         --       --       --        --           -- 
                               ---------     ---     ---------     ---      -----      ---       --       ---    --------- 
Balance at December 31,                                                                                                    
 1997......................... 587,328.3     $ 7     166,915.3     $ 2      2,500      $--       --       $--     52,006.4 
                               =========     ===     =========     ===      =====      ===       ==       ===    ========= 


                                          DETACHABLE   ADDITIONAL                                                          
                               TREASURY     STOCK       PAID-IN     RETAINED     UNEARNED                                  
                                STOCK      WARRANTS     CAPITAL     EARNINGS   COMPENSATION    TOTAL                       
                               --------   ----------   ----------   --------   ------------   -------                      
                                                                                                                           
Balance at January 22, 1996...  $  --        $189        $  752     $    --      $    --      $   949                      
 Net income...................     --          --            --       9,480           --        9,480                      
 Dividend on redeemable                                                                                                    
   preferred stock............     --          --            --      (1,328)          --       (1,328)                     
                                -----        ----        ------     -------      -------      -------                      
Balance at December 31,                                                                                                    
 1996.........................     --         189           752       8,152           --        9,101                      
 Repurchase of shares for                                                                                                  
   treasury...................   (128)         --            --          --           --         (128)                     
 Pursuant to restricted stock                                                                                              
   plan:                                                                                                                   
   Shares issued..............     53          --         5,857          --       (1,000)       4,911                      
   Amortization...............     --          --            --          --          161          161                      
   Forfeitures................     --          --           (72)         --           72           --                      
 Net income...................     --          --            --       7,011           --        7,011                      
 Dividend on redeemable                                                                                                    
   preferred stock............     --          --            --      (1,637)          --       (1,637)                     
                                -----        ----        ------     -------      -------      -------                      
Balance at December 31,                                                                                                    
 1997.........................  $ (75)       $189        $6,537     $13,526      $  (767)     $19,419                      
                                =====        ====        ======     =======      =======      =======                      

See accompanying notes. 

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GCIH, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS 

                                                        [Enlarge/Download Table]

                                                                              PERIOD FROM 
                                                                              JANUARY 22, 
                                                               YEAR ENDED       1996 TO   
                                                              DECEMBER 31,    DECEMBER 31,
                                                                  1997            1996    
                                                              ------------    ------------
                                                                     (IN THOUSANDS)       
                                                                                          
OPERATING ACTIVITIES                                                                      
Net income..................................................    $  7,011       $   9,480  
Adjustments to reconcile net income to net cash (used in)                                 
  provided by operating activities:                                                       
  Depreciation..............................................       1,976           1,339  
  Amortization of goodwill..................................          84              83  
  Amortization of debt issuance costs.......................         478             412  
  Provision for allowance for doubtful accounts.............         712           1,798  
  Provision for deferred income taxes.......................       3,461          (5,391) 
  Compensation expense pursuant to restricted stock plan                                  
    (noncash)...............................................       4,858              --  
  Amortization pursuant to restricted stock plan............         161              --  
  (Gain) on disposal of assets..............................          (2)             --  
  Extraordinary item........................................         708              --  
  Changes in operating assets and liabilities:                                            
    Inventories.............................................     (15,048)         10,487  
    Accounts receivable.....................................      (8,511)         (3,296) 
    Other assets............................................         538            (500) 
    Accounts payable........................................         253           3,668  
    Accrued expenses........................................       3,824           6,627  
    Income taxes payable....................................     (10,204)          6,000  
    Other accrued liabilities...............................       3,628             510  
    Accrued pension and postretirement benefit cost.........       1,037           1,034  
                                                                --------       ---------  
Net cash (used in) provided by operating activities.........      (5,036)         32,251  
INVESTING ACTIVITIES                                                                      
Collections on notes receivable.............................         207           3,226  
Purchases of property, plant and equipment..................      (4,180)         (1,047) 
Proceeds from sale of property, plant and equipment.........         445              --  
Purchase of Auburn Holdings, Inc., net of cash acquired and                               
  seller receivables........................................     (38,840)             --  
                                                                --------       ---------  
Net cash (used in) provided by investing activities.........     (42,368)          2,179  
FINANCING ACTIVITIES                                                                      
Borrowings under revolving credit agreement.................    $ 88,824       $ 162,903  
Repayments under revolving credit agreement.................     (88,574)       (177,755) 
Proceeds from long-term borrowings..........................      41,600              --  
Principal payments on long-term borrowings..................     (10,205)         (2,875) 
Principal payments on capital leases........................         (88)             --  
Repurchase of common stock..................................        (128)             --  
Repurchase of preferred stock...............................         (95)             --  
Proceeds from sale of restricted stock......................          53              --  
Debt issuance costs.........................................      (1,039)             --  
                                                                --------       ---------  
Net cash provided by (used in) financing activities.........      30,348         (17,727) 
                                                                --------       ---------  
Net (decrease) increase in cash and cash equivalents........     (17,056)         16,703  
Cash and cash equivalents at beginning of period............      17,592             889  
                                                                --------       ---------  
Cash and cash equivalents at end of period..................    $    536       $  17,592  
                                                                ========       =========  
Supplemental Disclosure of Cash Flow Information:                                         
  Noncash items:                                                                          
    Reduction of notes payable, offset by reduction of notes                              
      receivable............................................    $  1,500              --  

See accompanying notes. 
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GCIH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997 

1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                 

Organization                                                                

  GCIH, Inc. ("the Company") was formed to acquire 100% of the outstanding
stock of Gerber Childrenswear, Inc. from Gerber Products Company. The           
acquisition was effective as of the start of business on January 22, 1996 and   
was accounted for as a purchase. The purchase price was allocated to the net    
assets acquired based on their respective fair values and the balance was       
treated as excess of cost over fair value of net assets acquired. The total cost
of the acquisition was approximately $74 million. The excess of the cost over   
fair value of net assets acquired is being amortized over twenty years on a     
straight-line basis.                                                            

The acquisition was funded in part by long-term borrowings and a note 
payable to the seller. The stock purchase agreement provided for the adjustment 
of the $74 million purchase price based on net working capital, as defined, at  
January 22, 1996. Calculated net working capital as defined resulted in a       
reduction of the purchase price by $4.7 million. This was collected through cash
receipt of $3.2 million in 1996 and a $1.5 million reduction in the junior      
subordinated note payable to Gerber Products Company in 1997.                   

Principles of Consolidation                                                 

   The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries which are Gerber Childrenswear, Inc. and      
Auburn Holdings, Inc. All material intercompany balances and transactions have  
been eliminated in consolidation.                                               

Earnings Per Common Share                                                   

Earnings per common share are calculated by dividing net income by the
weighted average shares outstanding in accordance with Statement of Financial   
Accounting Standards No. 128, "Earnings Per Share."                             

Revenue Recognition                                                         

Substantially all revenue is recognized when products are shipped to  
customers.                                                                      

Royalty Expense Recognition                                                 

    The Company has certain royalty agreements and recognizes royalty expenses
for products sold under such agreements over the life and terms of the specific 
royalty agreements on an accrual basis.                                         

     One such ten-year royalty agreement with Gerber Products Company contains a
"royalty-free" period for the first six years and escalating royalty rates for  
the last four years of the agreement. The Company has estimated the total       
royalties to be paid over the life of the agreement based on estimated sales    
during the last four years and is recording current charges to operations for   
these royalties on a straight line basis over the ten-year term of the          
agreement.                                                                      

Concentration of Credit Risk                                                

 The Company manufactures infant apparel and products that are primarily
sold to retail entities throughout the United States. The Company's primary     
customers are mass merchants and discount stores. Sales to three customers      
represented approximately 44%, 11% and 10% of 1997 net sales, respectively, and 
44%, 6% and 10% of 1996 net sales, respectively. The Company performs periodic  
credit evaluations of their customers and generally does not require collateral 
for credit sales.                                                               

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GCIH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

Cash Equivalents                                                            

The Company considers all highly liquid investments with an original  
maturity of three months or less when purchased to be cash equivalents. At      
certain times, the amount of cash deposited at a bank may exceed the limit on   
insured deposits.                                                               

  Undesignated cash is invested each night through participation in a bank
investment plan and bears interest at a variable rate. Under this agreement, the
bank sells securities that are direct obligations of or are fully guaranteed by 
the United States government to the Company each night and repurchases the      
investments the next business day.                                              

Inventories                                                                 

   Inventories are stated at the lower of cost or market. Cost is determined
by the first-in, first-out (FIFO) method.                                       

Debt Issuance Costs                                                         

     Debt issuance costs are being amortized over the lives of the related debt.
Accumulated amortization amounted to $224,000 and $412,000 at December 31, 1997 
and 1996, respectively. Amortization expense is included in interest expense in 
the accompanying statements of income.                                          

Advertising                                                                 

 Advertising costs of approximately $5,071,000 and $3,250,000 for fiscal
years 1997 and 1996, respectively, were expensed as incurred.                   

Property, Plant and Equipment                                               

     Property, plant and equipment are stated at cost. Depreciation of property,
plant and equipment is computed by the straight-line method over the estimated  
useful lives of the assets for financial reporting purposes and computed based  
upon "Modified Accelerated Cost Recovery System" guidelines for income tax      
reporting purposes.                                                             

Income Taxes                                                                

The Company accounts for its income taxes under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes". Deferred income    
taxes are recognized for the tax consequences of "temporary differences" by     
applying enacted statutory tax rates applicable to future years to differences  
between the financial statement carrying amounts and the tax bases of existing  
assets and liabilities.                                                         

Fair Value of Financial Instruments                                         

     Statement of Financial Accounting Standards No. 107, "Disclosure about Fair
Value of Financial Instruments", requires disclosure of fair value information  
about financial instruments for which it is practicable to estimate that value. 
The carrying amounts reported in the balance sheet for cash and long-term debt  
approximate their fair value. The carrying amounts of variable-rate debt        
approximate fair value due to interest rates adjusting to market rates.         

New Accounting Standards                                                    

The Financial Accounting Standards Board has issued SFAS No. 130,     
"Reporting Comprehensive Income," which is effective for financial statements   
for fiscal years ending after December 31, 1997. This standard establishes      
standards for the reporting and display of comprehensive income which is defined
under                                                                           
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GCIH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

SFAS No. 130 as "the change in equity (net assets) during a period from         
transactions and other events and circumstances from nonowner sources." Under   
SFAS No. 130, the Company has several choices in the disclosure of the          
components of other comprehensive income. The Company plans to implement SFAS   
No. 130 during the first quarter of fiscal year 1998.                           

    In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards Number 131 (SFAS 131) "Disclosures about Segments
of an Enterprise and Related Information" which is effective for years beginning
after December 15, 1997. SFAS 131 establishes standards for the way that        
business enterprises report information about operating segments in annual      
financial statements and requires that those enterprises report selected        
information about operating segments in interim financial reports. It also      
establishes standards for related disclosures about products and services,      
geographic areas, and major customers. The Company will adopt the new           
requirements retroactively in 1998. Management has not completed its review of  
SFAS 131, but does not anticipate that the adoption of this statement will have 
a significant effect on the Company's reported segments.                        

Excess of Cost Over Net Assets of Businesses Acquired                       

   The excess of investments in consolidated subsidiaries over the net asset
value at acquisition ("goodwill") is being amortized on a straight-line basis   
over periods not exceeding twenty years. On an annual basis the Company reviews 
the recoverability of goodwill based primarily upon an analysis of undiscounted 
cash flows from the acquired businesses. Accumulated amortization amounted to   
$167,000 and $83,000 at December 31, 1997 and 1996, respectively.               

Forward Exchange Contracts                                                  

  The Company uses forward foreign currency exchange contracts to minimize
currency exchange risk. Unrealized gains or losses resulting from changes in    
currency exchange rates are recognized currently.                               

Use of Estimates                                                            

The preparation of financial statements in conformity with generally  
accepted accounting principles requires management to make estimates and        
assumptions that affect the amounts reported in the financial statements and    
accompanying notes. Actual results could differ from those estimates.           

2.  ACQUISITIONS                                                                

On December 17, 1997, the Company acquired Auburn Hosiery Mills, Inc. 
("Auburn") and Sport Socks Co. (Ireland) Limited ("Sport Socks") for $28 million
and $12 million in cash, respectively. Both companies are engaged in the        
production and sale of various styles of socks to retail chain stores. The      
acquisitions were financed through a term loan of $40 million. The acquisitions 
have been recorded using the purchase method of accounting. Accordingly, the    
purchase price has been allocated to assets and liabilities of the acquired     
companies based on their estimated fair values as of the effective date of      
acquisition. The purchase price exceeded the fair value of net assets acquired  
by approximately $20 million, which is being amortized on a straight-line basis 
over twenty years. The results of operations of Auburn and Sport Socks are      
included in the accompanying consolidated financial statements from the date of 
acquisition.                                                                    

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GCIH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

    The following summarized unaudited pro forma financial information assumes
the acquisitions had occurred on January 1 of each year:                        

                                                                [Download Table]

                                                           1997         1996   
                                                         ---------    ---------
                                                         (IN THOUSANDS, EXCEPT 
                                                            PER SHARE DATA)    
                                                                               
Net sales..............................................  $270,100     $246,921 
Income before extraordinary item.......................     6,625       10,856 
Net earnings...........................................     5,917       10,856 
Basic earnings per share...............................      5.96        12.99 
Diluted earnings per share.............................      4.50         9.53 

  The amounts are based upon certain assumptions and estimates, and do not
reflect any benefit from economies which might be achieved from combined        
operations. The pro forma results do not necessarily represent results which    
would have occurred if the acquisition had taken place on the basis assumed     
above, nor are they indicative of the results of future combined operations.    

3.  INVENTORIES                                                                 

Inventories consist of the following (in thousands):                  

                                                                [Download Table]

                                                              DECEMBER 31    
                                                           ------------------
                                                            1997       1996  
                                                           -------    -------
                                                                             
Raw materials............................................  $14,192    $ 7,501
Work in process..........................................   12,507      7,257
Finished goods...........................................   44,342     32,746
                                                           -------    -------
                                                           $71,041    $47,504
                                                           =======    =======

 Inventory mark downs are periodically recorded based on analysis by the
Company in order to reflect inventories at the lower of cost or market. If the  
cost of the inventories exceeds their market value, provisions are made         
currently for the difference between the cost and the market value. Provision   
for potentially obsolete, irregular or slow-moving inventory is made based on   
management's analysis of inventory levels, future sales forecasts and expected  
sales prices.                                                                   

4.  PROPERTY, PLANT AND EQUIPMENT                                               

 Property, plant and equipment consists of the following (in thousands):

                                                                [Download Table]

                                                              DECEMBER 31    
                                                           ------------------
                                                            1997       1996  
                                                           -------    -------
                                                                             
Land.....................................................  $   742    $   538
Buildings and leasehold improvements.....................    9,060      4,451
Machinery and equipment..................................   14,997      5,164
Furniture and other equipment............................    1,750        733
Vehicles.................................................      291        176
Construction in progress.................................    1,027        215
                                                           -------    -------
                                                            27,867     11,277
Less accumulated depreciation............................    3,219      1,339
                                                           -------    -------
                                                           $24,648    $ 9,938
                                                           =======    =======

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5.  INCOME TAXES                                                                

    The components of the Company's net deferred tax assets are as follows (in
thousands):                                                                     

                                                                [Download Table]

                                                               DECEMBER 31   
                                                             ----------------
                                                              1997      1996 
                                                             ------    ------
                                                                             
Deferred tax assets:                                                         
  Inventory reserves.......................................  $  647    $1,019
  Postretirement benefits..................................   1,729     1,509
  Accrued royalty..........................................   2,025       716
  Restructuring reserves...................................     463       802
  Other....................................................   3,452     3,577
                                                             ------    ------
Total deferred tax assets..................................   8,316     7,623
Deferred tax liabilities:                                                    
  Depreciation.............................................   2,404       828
  Inventory methods........................................   1,926        --
  Other....................................................   1,306       367
                                                             ------    ------
Total deferred tax liabilities.............................   5,636     1,195
                                                             ------    ------
Net deferred tax assets....................................  $2,680    $6,428
                                                             ======    ======

Income tax expense is different from the amount that would result from
applying the Federal statutory rate to income before income taxes as follows (in
thousands):                                                                     

                                                                [Download Table]

                                                               DECEMBER 31   
                                                             ----------------
                                                              1997      1996 
                                                             ------    ------
                                                                             
Federal tax at statutory rate..............................  $4,244    $5,346
State income tax, net of Federal tax benefit...............     412       519
Other......................................................     108       379
                                                             ------    ------
Income tax expense.........................................  $4,764    $6,244
                                                             ======    ======

Current and deferred income tax expense are as follows (in thousands):

                                                                [Download Table]

                                                               DECEMBER 31    
                                                            ----------------- 
                                                             1997      1996   
                                                            ------    ------- 
                                                                              
Current:                                                                      
  Federal.................................................  $1,168    $10,379 
  State...................................................     135      1,256 
                                                            ------    ------- 
Total current.............................................   1,303     11,635 
Deferred:                                                                     
  Inventory reserves......................................     372     (1,019)
  Postretirement benefits.................................    (220)      (232)
  Accrued royalty.........................................  (1,309)      (716)
  Inventory methods.......................................   2,676       (750)
  Restructuring reserves..................................     339        198 
  Other...................................................   1,603     (2,872)
                                                            ------    ------- 
Total deferred............................................   3,461     (5,391)
                                                            ------    ------- 
Income tax expense........................................  $4,764    $ 6,244 
                                                            ======    ======= 

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     Income taxes paid were approximately $11,734,000 and $5,638,000 in 1997 and
1996, respectively.                                                             

6.  ACCRUED EXPENSES                                                            

Accrued expenses consist of the following (in thousands):             

                                                                [Download Table]

                                                              DECEMBER 31    
                                                           ------------------
                                                            1997       1996  
                                                           -------    -------
                                                                             
Interest.................................................  $ 2,914    $ 2,869
Salaries, wages and payroll taxes........................    7,618      1,801
Incentives...............................................    3,610      1,980
Advertising..............................................    1,684      1,217
Self-insurance reserves..................................    1,828      1,505
Royalties................................................    1,194        358
Restructuring............................................      335      1,541
Other....................................................    4,916      5,232
                                                           -------    -------
                                                           $24,099    $16,503
                                                           =======    =======

7.  OTHER ACCRUED LIABILITIES                                                   

Other accrued liabilities consist of the following (in thousands):    

                                                                [Download Table]

                                                               DECEMBER 31   
                                                             ----------------
                                                              1997      1996 
                                                             ------    ------
                                                                             
Royalties..................................................  $5,400    $1,909
Incentives.................................................      --       520
Other......................................................   3,313     1,424
                                                             ------    ------
                                                             $8,713    $3,853
                                                             ======    ======

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

8.  LONG-TERM DEBT                                                              

Long-term debt consists of (in thousands):                            

                                                                [Download Table]

                                                                 DECEMBER 31    
                                                              ------------------
                                                               1997       1996  
                                                              -------    -------
                                                                                
NationsBank term loan with interest accruing at the rate                        
  equal to the greater of 1) the Federal Funds Rate plus                        
   1/2 of 1%, or 2) the prime rate; plus an applicable                          
  percentage based on the current Leverage Ratio (7.4% at                       
  December 31, 1997); principal due on a quarterly payment                      
  schedule through September 30, 2002.......................  $38,500    $    --
Senior subordinated note payable with interest accruing at                      
  12%; one-half of the principal is due in January 2003 and                     
  the remaining balance in January 2004.....................   22,500     22,500
Junior subordinated note payable to Gerber Products Company                     
  with interest accruing at 12%; principal is due January                       
  2006......................................................   11,000     12,500
Note payable to a bank with interest accruing at 8.75%;                         
  principal and interest payable in monthly installments of                     
  $15,992...................................................    1,583         --
Industrial Revenue Bond, payable in annual principal                            
  installments of $100,000 through March 1, 1999, then                          
  annual principal installments of $200,000 through March 1,                    
  2004, plus interest at a floating rate not to exceed 14%                      
  (3.3% -- 4.9% in 1997)....................................    1,200         --
Industrial Revenue Bond, payable in annual principal                            
  installments of $100,000 through October 1, 1999, then                        
  annual principal installments of $200,000 through October                     
  1, 2004, plus interest at a floating interest rate not to                     
  exceed 14% (3.3% -- 4.9% in 1997).........................    1,200         --
Other.......................................................      921         --
Term note payable with interest accruing at 1) the prime                        
  rate or the Federal Funds effective rate, whichever is                        
  higher; plus 1.25%, or 2) the LIBOR rate plus 3...........       --      8,625
                                                              -------    -------
                                                               76,904     43,625
Less current portion........................................    7,286      1,725
Less unamortized discount...................................      144        189
                                                              -------    -------
                                                              $69,474    $41,711
                                                              =======    =======

    Substantially all of the Company's property, plant and equipment, accounts
receivable, and inventory have been pledged as collateral for the above debt.   
The loan agreements require the Company to maintain certain financial ratios and
restricts the payment of dividends                                              

  The Company has available a revolving credit facility which had $250,000
outstanding at December 31, 1997. The revolving credit loan permits the Company 
to borrow up to a maximum of $60,000,000 subject to specified levels of eligible
inventory, eligible inventory on order under letters of credit, and accounts    
receivable with the total amount reduced by outstanding letters of credit. At   
December 31, 1997, the Company had available borrowings up to approximately     
$50,000,000. The Company also had outstanding letters of credit in conjunction  
with purchases from foreign vendors of approximately $5,747,000 and $5,753,000  
at December 31, 1997 and 1996, respectively.                                    

  Beginning in 1999, the revolving credit facility and term loan agreement
require mandatory principal prepayments annually based on excess cash flow, as  
defined.                                                                        

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The Company has available a foreign credit facility which had $735,000
outstanding at December 31, 1997. This credit facility permits the Company to   
borrow up to a maximum of $3,400,000 on a long-term basis and $850,000 as a bank
overdraft. All amounts outstanding at December 31, 1997 relate to the long-term 
portion.                                                                        

   Total interest paid was approximately $6,000,000 and $3,142,000 in fiscal
years 1997 and 1996, respectively.                                              

    The aggregate annual maturities of long-term debt at December 31, 1997 are
as follows (in thousands):                                                      

                                                                [Download Table]
                                                        
1998...........................................  $ 7,286
1999...........................................    8,782
2000...........................................    8,966
2001...........................................    9,097
2002...........................................    7,229
Thereafter.....................................   35,544
                                                 -------
                                                 $76,904
                                                 =======

9.  LEASES                                                                      

     The Company leases buildings and machinery under both capital and operating
leases with various renewal terms and expiring in various years through 2012.   
Two of these leases contain renewal options totaling 10 years.                  

Future minimum lease payments as of December 31, 1997 under leases    
classified as capital leases and operating leases, are as follows (in           
thousands):                                                                     

                                                                [Download Table]

                                                            CAPITAL    OPERATING
FISCAL YEAR ENDING IN                                       LEASES      LEASES  
---------------------                                       -------    ---------
                                                                                
     1998.................................................   $127       $1,469  
     1999.................................................    109        1,018  
     2000.................................................      6          646  
     2001.................................................     --          579  
     2002.................................................     --          567  
  Thereafter..............................................     --          708  
                                                             ----       ------  
Total minimum lease payments..............................    242       $4,987  
                                                                        ======  
Less amounts representing interest........................     19               
                                                             ----               
Present value of net minimum lease payments...............    223               
Less current portion......................................    119               
                                                             ----               
                                                             $104               
                                                             ====               

   Rent expense totaled approximately $2,292,000 for the year ended December
31, 1997 and $2,318,000 for the period from January 22, 1996 to December 31,    
1996.                                                                           

     Assets recorded under capital leases, net of accumulated amortization, were
approximately $1,700,000 at December 31, 1997. The assets recorded under capital
leases are pledged as collateral for the capital lease obligations. Amortization
of assets recorded under capital lease obligations is included with depreciation
expense.                                                                        

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

10.  EMPLOYEE BENEFIT PLANS                                                     

 Previously, Gerber Childrenswear, Inc. had two non-contributory defined
benefit pension plans that covered substantially all full-time domestic         
employees. These two plans were merged together effective May 31, 1996. Benefits
are based on the employee's years of service and, for salaried employees, each  
employee's compensation during the last five years of employment. The Company's 
funding policy is to make the minimum annual contributions required by          
applicable regulations.                                                         

   Accumulated plan benefits and projected benefit obligations, as estimated
by consulting actuaries, and plan net assets and funded status as of December   
31, 1997 and 1996 are as follows (in thousands):                                

                                                                [Download Table]

                                                           1997        1996   
                                                         --------    -------- 
                                                                              
Actuarial present value of benefit obligations:                               
  Vested benefit obligations...........................  $(22,280)   $(21,792)
  Non-vested benefit obligations.......................      (422)       (525)
                                                         --------    -------- 
Accumulated benefit obligation.........................  $(22,702)   $(22,317)
                                                         ========    ======== 
Projected benefit obligation...........................  $(25,418)   $(25,169)
Plan assets at fair value..............................    25,155      24,630 
                                                         --------    -------- 
Funded status -- projected benefit obligation greater                         
  than plan assets.....................................      (263)       (539)
Unrecognized net (gain) loss...........................      (183)        542 
                                                         --------    -------- 
(Accrued) prepaid pension cost.........................  $   (446)   $      3 
                                                         ========    ======== 

     Net pension cost included the following components at December 31, 1997 and
1996 (in thousands):                                                            

                                                                [Download Table]

                                                           1997        1996   
                                                         --------    -------- 
                                                                              
Service cost -- benefits earned during the period......  $    850    $    845 
Interest cost on projected benefit obligation..........     1,709       1,541 
Actual return on plan assets...........................    (2,115)     (1,917)
                                                         --------    -------- 
Net periodic pension cost..............................  $    444    $    469 
                                                         ========    ======== 

The weighted-average discount rate used in determining the actuarial  
present value of projected benefit obligations was 7.25% at December 31, 1997   
and 1996. The weighted-average rate of increase in future compensation levels   
used was 5.5% for December 31, 1997 and 1996. The expected long-term rate of    
return on plan assets was 9% at December 31, 1997 and 1996.                     

The plan assets are invested primarily in mutual funds via the Gerber 
Childrenswear, Inc. Retirement Plans Master Trust and in a group annuity        
contract with an insurance company.                                             

Gerber Childrenswear, Inc. also has an investment retirement plan for 
salaried employees which provides for salaried employees and Company            
contributions. The Company will match 50% of the employee's contributions up to 
a maximum company match of 3% of the employee's compensation. In addition, the  
Company has a defined contribution plan for the benefit of its full-time hourly 
employees. The Company contributes one and one-half percent of each             
participant's annual compensation to the plan. Employees are not allowed to     
contribute to this plan. Effective January 1, 1997, these two plans were merged 
together. Total expense under these plans was approximately $439,000 and        
$230,000 for 1997 and 1996, respectively.                                       

     Sport Socks has a defined contribution pension plan. The assets of the plan
are held in an independently administered fund. No contributions were made      
between December 17, 1997 and December 31, 1997.                                

  Auburn has a defined contribution plan covering all employees who have 2
years of service of at least 1,000 hours each year. The contribution is         
determined by its Board of Directors annually. No contributions were made       
between December 17, 1997 and December 31, 1997.                                

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     Gerber Childrenswear, Inc. also sponsors two defined benefit postretirement
health care plans covering all full-time domestic employees. The plans are      
contributory, with retiree contributions adjusted annually, and contain other   
cost-sharing features such as deductibles and coinsurance. The accounting for   
the plans anticipates future cost-sharing changes to the written plan that are  
consistent with the Company's expressed intent to increase the retiree          
contribution rate annually for the expected general inflation rate for that     
year. The Company's policy is to fund the cost of medical benefits in amounts   
determined at the discretion of management. In conjunction with the acquisition 
(Note 1), Gerber Products Company assumed the accumulated benefit obligation for
retirees.                                                                       

    The following table presents the plans' funded status at December 31, 1997
(in thousands):                                                                 

                                                        [Enlarge/Download Table]

                                                     SALARIED  NON-SALARIED   TOTAL  
                                                     --------  ------------  ------- 
                                                                                     
Accumulated postretirement benefit obligation:                                       
  Retirees.......................................... $   (21)    $   (17)    $   (38)
  Fully eligible active plan participants...........    (490)       (230)       (720)
  Other active plan participants....................  (1,468)     (1,464)     (2,932)
                                                     -------     -------     ------- 
Funded status.......................................  (1,979)     (1,711)     (3,690)
Unrecognized net (gain).............................    (185)       (737)       (922)
                                                     -------     -------     ------- 
Accrued postretirement benefit cost................. $(2,164)    $(2,448)    $(4,612)
                                                     =======     =======     ======= 
Net periodic postretirement benefit cost includes                                    
  the following components:                                                          
  Service cost...................................... $   218     $   205     $   423 
  Interest cost.....................................     104          89         193 
                                                     -------     -------     ------- 
Net periodic postretirement benefit cost............ $   322     $   294     $   616 
                                                     =======     =======     ======= 

    The following table presents the plans' funded status at December 31, 1996
(in thousands):                                                                 

                                                        [Enlarge/Download Table]

                                                     SALARIED  NON-SALARIED   TOTAL  
                                                     --------  ------------  ------- 
                                                                                     
Accumulated postretirement benefit obligation:                                       
  Retirees.......................................... $    --     $    --     $    -- 
  Fully eligible active plan participants...........    (452)       (276)       (728)
  Other active plan participants....................  (1,495)     (1,584)     (3,079)
                                                     -------     -------     ------- 
Funded status.......................................  (1,947)     (1,860)     (3,807)
Unrecognized net loss (gain)........................      86        (303)       (217)
                                                     -------     -------     ------- 
Accrued postretirement benefit cost................. $(1,861)    $(2,163)    $(4,024)
                                                     =======     =======     ======= 
Net periodic postretirement benefit cost includes                                    
  the following components:                                                          
  Service cost...................................... $   217     $   201     $   418 
  Interest cost.....................................     108         104         212 
                                                     -------     -------     ------- 
Net periodic postretirement benefit cost............ $   325     $   305     $   630 
                                                     =======     =======     ======= 

The weighted-average discount rate used in determining the actuarial  
present value of projected benefit obligations was 7.25% at December 31, 1997   
and 1996. The weighted-average rate of increase in future compensation levels   
used was 5.5% for December 31, 1997 and 1996. The weighted-average annual       
assumed rate of increase in the per capita cost of covered medical benefits is  
8.25 percent to 10 percent and is assumed to decrease gradually to 5.5 percent  
by 2003 and remain at that level thereafter. The health care cost trend rate    

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assumption has a significant effect on the amounts reported. For example,       
increasing the assumed health care cost trend rate by one percentage point in   
each year would increase the accumulated postretirement benefit obligation as of
December 31, 1997 by approximately $689,000 and the aggregate of the service and
interest cost components of net periodic postretirement benefit cost for 1997 by
approximately $131,000.                                                         

11.  REDEEMABLE PREFERRED STOCK                                                 

    The outstanding redeemable preferred stock has a scheduled redemption date
of January 31, 2007 at $100 per share plus all accrued and unpaid dividends     
thereon. The Company may, at any time prior to this date, redeem all or a       
portion of the preferred stock at the same price.                               

12.  SHAREHOLDERS' EQUITY                                                       

     During 1997, the Company sold shares of its Class B common stock to certain
employees for $1 per share. The total proceeds for the shares was $50,750 and   
the total fair value for the shares was approximately $5,836,000. Some of these 
shares were immediately vested while others vest over a five-year period. At the
time of issuance of the unvested shares, the difference between the amount paid 
by the employees and the fair market value was credited to additional paid-in   
capital with a corresponding charge to unearned compensation. The unearned      
compensation is amortized to earnings over five years on a straight-line basis. 
1997 amortization expense was $161,000. Previously amortized amounts for shares 
forfeited is credited to compensation expense in the year of forfeiture. At the 
time of issuance of the shares which were vested, the difference between the    
amount paid by the employees and the fair market value was credited to          
additional paid-in capital with a corresponding charge to expense for           
$4,858,000.                                                                     

     Certain shareholders have demand registration rights with respect to shares
of common stock owned by them.                                                  

In connection with obtaining the $22,500,000 note payable for the     
acquisition of Gerber Childrenswear, Inc., the Company issued a warrant to the  
lender to purchase 191,250 shares of non-voting Class D common stock at a       
nominal price. The warrant, in whole or in part, may be exercised at anytime    
through January 22, 2006. The recorded value of the warrant at the date of      
issuance was $189,338 (based on the relative fair values of the warrant and the 
note) and reduced the face amount of the note payable.                          

13.  DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS                      

The following methods and assumptions were used by the Company in     
estimating its fair value disclosures for financial instruments:                

    Cash and cash equivalents:  The carrying amounts reported in the
   balance sheet for cash and cash equivalents approximate fair value due to
the short-maturity of these instruments.                              

        Receivables:  The carrying amounts reported in the balance sheet for
receivables approximate their fair value.                             

 Long and short-term liabilities:  The carrying amounts of the
 Company's long- and short-term borrowings approximate their fair value,
     based on the Company's analysis of long- and short-term rates available for
similar financing.                                                    

        Forward exchange contracts:  The fair value of the Company's forward
 foreign currency exchange contracts is estimated by reference to quoted
   prices. The estimated fair value of outstanding contracts at December 31,
    1997 was approximately $9,600,000 which results in a loss of approximately
$1,042,000 which was recorded at fair value in connection with the    
Company's acquisitions on December 17, 1997.                          

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14.  EARNINGS PER SHARE                                                         

The following table sets forth the computation of basic and diluted   
earnings per share:                                                             

                                                        [Enlarge/Download Table]

                                                                1997          1996     
                                                             -----------   ----------- 
                                                                                       
Numerator:                                                                             
  Income before extraordinary item.......................... $ 7,719,000   $ 9,480,000 
  Preferred stock dividends.................................  (1,637,000)   (1,328,000)
                                                             -----------   ----------- 
  Income available to common stockholders...................   6,082,000     8,152,000 
  Extraordinary item........................................    (708,000)           -- 
                                                             -----------   ----------- 
Numerator for basic and diluted earnings per share -- net                              
  income available to common stockholders................... $ 5,374,000   $ 8,152,000 
                                                             ===========   =========== 
Denominator:                                                                           
  Denominator for basic earnings per                                                   
     share -- weighted-average shares.......................     717,925       733,750 
  Effect of dilutive securities:                                                       
     Warrants...............................................     191,239       191,186 
     Nonvested stock........................................      42,303        75,000 
                                                             -----------   ----------- 
Denominator for diluted earnings per share -- adjusted                                 
  weighted-average shares...................................     951,467       999,936 
                                                             ===========   =========== 
Basic earnings per share.................................... $      7.48   $     11.11 
                                                             ===========   =========== 
Diluted earnings per share.................................. $      5.65   $      8.15 
                                                             ===========   =========== 

15.  EXTRAORDINARY ITEM                                                         

     In December 1997, the Company repaid its term note payable in the principal
amount of $6,500,000. The Company was required to pay a prepayment penalty of   
$160,000 in connection with this transaction. The write-off of unamortized loan 
costs and prepayment penalty totaling $708,000 (net of the income tax benefit of
$452,000) is included as an extraordinary item in the accompanying statement of 
income for the year ended December 31, 1997.                                    

16.  BUSINESS SEGMENTS AND GEOGRAPHIC AREAS                                     

 The Company operates in two business segments: apparel and hosiery. The
apparel segment consists of the production and sale of infant and toddler's     
sleepwear, playwear, underwear, bedding and cloth diapers to mass merchandise   
outlets in the United States under the Gerber trademark and private labels. The 
hosiery segment which was acquired on December 17, 1997 consists of the         
production and sale of sport socks under the Wilson, Coca Cola, and Dunlop names
to major retailers in the United States and Europe.                             

Sales, earnings before interest and income taxes, depreciation and    
amortization, and capital expenditures are reported based on the operations of  
each business segment or geographic region. Identifiable assets are those used  
exclusively in the operations of each business segment or geographic region, or 
which are allocated when used jointly.                                          

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

The following tables present sales and other financial information by 
business segment and geographic region for the years 1997 and 1996:             

                                                                [Download Table]

                                                             DECEMBER 31     
                                                         --------------------
                                                           1997        1996  
                                                         --------    --------
                                                            (IN THOUSANDS)   
                                                                             
BUSINESS SEGMENTS                                                            
Net trade sales:                                                             
  Apparel..............................................  $200,526    $185,223
  Hosiery..............................................     1,511          --
                                                         --------    --------
Total net sales........................................  $202,037    $185,223
                                                         ========    ========
Earnings (loss) before interest and taxes:                                   
  Apparel..............................................  $ 18,322    $ 22,032
  Hosiery..............................................       (41)         --
                                                         --------    --------
Total operating income.................................  $ 18,281    $ 22,032
                                                         ========    ========
Depreciation and amortization:                                               
  Apparel..............................................  $  2,472    $  1,834
  Hosiery..............................................        66          --
                                                         --------    --------
Total depreciation and amortization....................  $  2,538    $  1,834
                                                         ========    ========
Capital additions:                                                           
  Apparel..............................................  $  4,180    $  1,047
  Hosiery..............................................        --          --
                                                         --------    --------
Total capital additions................................  $  4,180    $  1,047
                                                         ========    ========
Identifiable assets:                                                         
  Apparel..............................................  $113,200    $106,060
  Hosiery..............................................    50,691          --
                                                         --------    --------
Total assets...........................................  $163,891    $106,060
                                                         ========    ========
GEOGRAPHIC AREAS                                                             
Net trade sales:                                                             
  United States........................................  $202,037    $185,223
  Europe...............................................        --          --
                                                         --------    --------
Total net sales........................................  $202,037    $185,223
                                                         ========    ========
Earnings (loss) before interest and taxes:                                   
  United States........................................  $ 18,281    $ 22,032
  Europe...............................................        --          --
                                                         --------    --------
Total operating income.................................  $ 18,281    $ 22,032
                                                         ========    ========
Identifiable assets:                                                         
  United States........................................  $153,944    $106,060
  Europe...............................................     9,947          --
                                                         --------    --------
Total assets...........................................  $163,891    $106,060
                                                         ========    ========

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GCIH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

17.  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)                              

The following is a summary of unaudited financial data regarding the  
Company's quarterly results of operations.                                      

                                                        [Enlarge/Download Table]

                                            1ST        2ND        3RD        4TH               
                                          QUARTER    QUARTER    QUARTER    QUARTER     TOTAL   
                                          -------    -------    -------    -------    -------- 
                                                (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)       
                                                                                               
1997                                                                                           
Net sales...............................  $45,350    $40,162    $60,323    $56,202    $202,037 
Gross margin............................   12,696     12,122     16,837     14,088      55,743 
Income(loss) before extraordinary                                                              
  item..................................    2,524      2,104      4,834     (1,743)      7,719 
Extraordinary item -- loss on early                                                            
  extinguishment of debt................       --         --         --       (708)       (708)
Net income(loss)........................    2,524      2,104      4,834     (2,451)      7,011 
Basic earnings per share:                                                                      
  Income(loss) before extraordinary                                                            
     item...............................     2.93       2.39       6.21      (3.06)       8.47 
  Extraordinary item....................       --         --         --      (0.99)      (0.99)
Net income(loss)........................     2.93       2.39       6.21      (4.05)       7.48 
Diluted earnings per share:                                                                    
  Income(loss) before extraordinary                                                            
     item...............................     2.20       1.81       4.71      (3.06)*      6.39 
  Extraordinary item....................       --         --         --       (.99)*     (0.74)
Net income (loss).......................     2.20       1.81       4.71      (4.05)*      5.65 

* Same as basic -- no incremental shares are included due to loss in the quarter.              

1996                                                                                           
Net sales...............................  $36,606    $39,042    $58,336    $51,239    $185,223 
Gross margin............................    9,429     10,556     15,522     11,108      46,615 
Net income..............................    1,486      1,064      4,419      2,511       9,480 
Basic earnings per share................     1.57       1.00       5.57       2.97       11.11 
Diluted earnings per share..............     1.15       0.73       4.09       2.18        8.15 

18.  OTHER MATTERS                                                              

    The Company has employment contracts in the normal course of business with
three of its officers with remaining terms of approximately three years.        

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GCIH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

19.  SUBSEQUENT EVENTS (UNAUDITED)                                              

  On March 4, 1998, the Company filed a preliminary registration statement
with the Securities and Exchange Commission on Form S-1 for the sale of shares  
of its common stock (the "Offering"). The Company intends to use the proceeds   
from the Offering to repay certain indebtedness of the Company, to redeem       
certain shares of the Company's preferred stock and for other general corporate 
purposes.                                                                       

Immediately prior to and in connection with the consummation of the   
Offering, the Company and Gerber Childrenswear, Inc. ("Gerber") will consummate 
a series of transactions pursuant to which the Company and Gerber will be       
reorganized and recapitalized. The principal transactions are as follows:       

     Prior to the consummation of the Offering, the certificate of incorporation
of the Company will be amended and restated (the "Recapitalization") to provide 
for the reclassification of its authorized common stock into two classes of     
capital stock ("Common Stock and Class B Common Stock"). Each share of the      
Common Stock will have one vote per share and the Class B Common Stock will have
no voting rights. The amended certificate will also provide that each share of  
Class B Common Stock will be convertible at the option of the holder at any time
into one share of Common Stock and each share of Common Stock held by a holder  
of Class B Common Stock will be convertible at the option of the holder at any  
time into one share of Class B Common Stock. In addition, the amended           
certificate will provide for change of the corporate name of the Company from   
"GCIH, Inc." to "Gerber Childrenswear, Inc."                                    

Prior to the consummation of the Offering and immediately after giving
effect to the Recapitalization, Gerber will be merged into the Company (the     
"Merger") with the Company as the surviving entity. The Merger is intended to be
treated as a tax-free liquidation of Gerber. Upon consummation of the Merger,   
113,623.6 shares of the Company's Redeemable Preferred Stock will be converted  
into shares of Class A Common Stock of the Company (at a conversion ratio to be 
determined at that date) and 2,828.4 shares will be converted into a right to   
receive cash equal to the liquidation value per share at the time of the Merger.
The Company will retire all shares held in the treasury. Then, all of the       
outstanding shares of the Company's Class A and Class C Common Stock will be    
exchanged for shares of Class B Common Stock (new Class B) pursuant to a stock  
split. All of the outstanding shares of the Company's Class B Common Stock (old 
Class B) of the Company will be exchanged for shares of the Company's Common    
Stock at a specified ratio. Finally, all of the outstanding warrants to purchase
shares of Class D Common Stock of the Company will be exchanged into warrants to
purchase shares of the Class B Common Stock (new Class B) of the Company.       

  The following pro forma information represents the historical amounts of
the Company adjusted to show the redemption and conversion of the Redeemable    
Preferred Stock at an assumed conversion price of $14 per share, the conversion 
of all classes of common stock of the Company into common stock of Gerber and a 
stock split at an assumed ratio of approximately 15.5 to 1. The pro forma per   
share amounts reflect the earnings per share as if the conversion of the        
Redeemable Preferred Stock and the stock split had occurred on January 22, 1996.

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GCIH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

                                                                [Download Table]

                                                              HISTORICAL            
                                                               AMOUNTS              
                                                             DECEMBER 31,  PRO FORMA
                                                                 1997      ADJUSTED 
                                                             ------------  ---------
                                                                                    
Total assets................................................   $163,891    $163,536 
Total liabilities...........................................    129,862     129,862 
Redeemable preferred stock..................................     14,610          -- 
Shareholders' equity:                                                               
  Common Stock..............................................         --          26 
  Class B Common Stock......................................         --         103 
  Common Stock, Class A.....................................          7          -- 
  Common Stock, Class B.....................................          2          -- 
  Common Stock, Class C.....................................         --          -- 
  Common Stock, Class D.....................................         --          -- 
  Treasury Stock............................................        (75)         -- 
  Detachable stock warrants.................................        189         189 
  Additional paid-in capital................................      6,537      20,597 
  Retained earnings.........................................     13,526      13,526 
  Less unearned compensation................................        767         767 
                                                               --------    -------- 
          Total shareholders' equity........................     19,419      33,674 

                                                        [Enlarge/Download Table]

                                                               HISTORICAL       PRO FORMA  
                                                             ---------------  -------------
                                                             1997      1996   1997     1996
                                                             -----    ------  -----    ----
                                                                                           
Per share amounts:                                                                         
  Earnings per common share:                                                               
     Income before extraordinary item....................... $8.47    $11.11  $ .63    $.76
     Extraordinary item.....................................  (.99)       --   (.06)     --
                                                             -----    ------  -----    ----
  Net income................................................ $7.48    $11.11  $ .57    $.76
                                                             =====    ======  =====    ====
  Earnings per common share -- assuming dilution:                                          
     Income before extraordinary item....................... $6.39    $ 8.15  $ .49    $.57
     Extraordinary item.....................................  (.74)       --   (.05)     --
                                                             -----    ------  -----    ----
  Net income................................................ $5.65    $ 8.15  $ .44    $.57
                                                             =====    ======  =====    ====

Also, in connection with the Offering, the Company plans to adopt a   
Long-Term Equity Incentive Plan (the "Incentive Plan") designed to provide      
incentives to present and future key employees of the Company and its           
subsidiaries as may be selected by the Compensation Committee of the Board of   
Directors (the "Committee"). The Incentive Plan will provide for the granting to
Participants the following types of incentive awards: stock options, stock      
appreciation rights, restricted stock, performance units, performance grants and
other awards deemed appropriate by the Committee. An aggregate of up to 750,000 
shares will be reserved for issuance under the Incentive Plan. The Incentive    
Plan affords the Company latitude in tailoring incentive compensation for the   
retention of key employees. This plan also limits the number of shares each     
participant in the plan shall be entitled to receive to no more than 25,000     
common shares in any calendar year and is scheduled to terminate ten years from 
the date the Incentive Plan is approved.                                        

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REPORT OF INDEPENDENT AUDITORS

Board of Directors                                                              
Gerber Childrenswear, Inc.                                                      

     We have audited the accompanying consolidated statements of income and cash
flows of Gerber Childrenswear, Inc. ("Predecessor Company") for the year ended  
December 31, 1995. These financial statements are the responsibility of the     
Predecessor Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.                                  

We conducted our audit in accordance with generally accepted auditing 
standards. Those standards require that we plan and perform the audit to obtain 
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting 
the amounts and disclosures in the financial statements. An audit also includes 
assessing the accounting principles used and significant estimates made by      
management, as well as evaluating the overall financial statement presentation. 
We believe that our audit provides a reasonable basis for our opinion.          

    In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated results of operations and cash flows 
of the Predecessor Company for the year ended December 31, 1995 in conformity   
with generally accepted accounting principles.                                  

                         /s/ ERNST & YOUNG LLP

Greenville, South Carolina                                                      
September 12, 1997                                                              

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GERBER CHILDRENSWEAR, INC.
("PREDECESSOR COMPANY") 

CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS)

                                                                [Download Table]
                                                                                
Net sales...................................................            $197,401
Cost of sales...............................................             156,434
                                                                        --------
Gross margin................................................              40,967
Selling, general and administrative expenses................              24,633
                                                                        --------
Income before income taxes..................................              16,334
Federal and state income taxes (Note 2):                                        
  Current...................................................  $6,716            
  Deferred..................................................    (446)      6,270
                                                              ------    --------
Net income..................................................            $ 10,064
                                                                        ========

See accompanying notes. 
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GERBER CHILDRENSWEAR, INC.
("PREDECESSOR COMPANY") 

CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS)

                                                                [Download Table]
                                                                       
OPERATING ACTIVITIES                                                   
Net income..................................................  $ 10,064 
Adjustments to reconcile net income to net cash provided by            
  operating activities:                                                
  Depreciation..............................................     1,959 
  Provision for allowance for doubtful accounts.............    (1,155)
  Provision for deferred income taxes.......................      (446)
  Loss on disposal of fixed assets..........................       (10)
  Changes in operating assets and liabilities:                         
     Inventories............................................     4,931 
     Accounts receivable....................................    (1,213)
     Prepaid expenses.......................................       (47)
     Accounts payable.......................................    (3,371)
     Accrued expenses.......................................     1,362 
     Income taxes payable...................................     2,107 
     Other accrued liabilities..............................    (1,564)
     Accrued pension and postretirement benefit cost........       755 
                                                              -------- 
Net cash provided by operating activities...................    13,372 

INVESTING ACTIVITIES                                                   
Purchases of property, plant and equipment..................    (1,483)

FINANCING ACTIVITIES                                                   
Advances to parent..........................................   (11,728)
                                                              -------- 
Net increase in cash and cash equivalents...................       161 
Cash and cash equivalents at December 31, 1994..............       319 
                                                              -------- 
Cash and cash equivalents at December 31, 1995..............  $    480 
                                                              ======== 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                       
Non-cash investing and financing activities:                           
  Fixed assets transferred to parent as a dividend..........  $  1,248 

See accompanying notes. 
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GERBER CHILDRENSWEAR, INC.
("PREDECESSOR COMPANY") 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1995 

1.  BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES        

Basis of Presentation                                                       

    Gerber Childrenswear, Inc. ("the Company") is a wholly-owned subsidiary of
Gerber Products Company. In August 1994, Sandoz, Ltd. ("Sandoz"), a company     
headquartered in Switzerland, acquired Gerber Products Company. The financial   
statements of the Company as of December 31, 1995 are based on historical costs 
incurred and recorded by the Company which in the opinion of management include 
all material expenses on a stand-alone basis.                                   

Principles of Consolidation                                                 

   The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary. All material intercompany transactions have    
been eliminated in consolidation.                                               

Revenue Recognition                                                         

Substantially all revenue is recognized when products are shipped to  
customers.                                                                      

Concentration of Credit Risk                                                

 The Company manufactures infant apparel and products that are primarily
sold to retail entities throughout the United States. The Company's primary     
customers are mass merchants and discount stores. Sales to three customers      
represented approximately 58% of net sales for 1995. The Company performs       
periodic credit evaluations of their customers and generally does not require   
collateral for credit sales.                                                    

Cash Equivalents                                                            

The Company considers all highly liquid investments with an original  
maturity of three months or less when purchased to be cash equivalents.         

Inventories                                                                 

   Inventories are stated at the lower of cost or market. Cost is determined
by the first-in, first-out (FIFO) method.                                       

Advertising                                                                 

  Advertising costs of approximately $3,108,000 were expensed as incurred.

Property, Plant and Equipment                                               

Depreciation of property, plant and equipment is computed by the      
straight-line method over the estimated useful lives of the assets. Depreciation
for income tax reporting is computed based upon "Modified Accelerated Cost      
Recovery System" guidelines.                                                    

Income Taxes                                                                

The Company accounts for its income taxes under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes". Deferred income    
taxes are recognized for the tax consequences of "temporary differences" by     
applying enacted statutory tax rates applicable to future years to differences  
between the financial statement carrying amounts and the tax bases of existing  
assets and liabilities.                                                         

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GERBER CHILDRENSWEAR, INC.
("PREDECESSOR COMPANY") 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

    The Company was included in a consolidated Federal income tax return filed
by its parent company, Gerber Products Company. The Company provides for income 
taxes on a stand-alone separate taxpayer basis, and reflects current income     
taxes as a part of its accounts with its parent company. In conjunction with the
sale of the Company in January 1996 to a third party, Gerber Products Company   
assumed all current income tax liabilities at December 31, 1995 and up to the   
date of the sale.                                                               

Use of Estimates                                                            

The preparation of financial statements in conformity with generally  
accepted accounting principles requires management to make estimates and        
assumptions that affect the amounts reported in the financial statements and    
accompanying notes. Actual results could differ from those estimates.           

2.  INCOME TAXES                                                                

Income tax expense is different from the amount that would result from
applying the Federal statutory rate to income before income taxes as follows (in
thousands):                                                                     

                                                                [Download Table]
                                                                    
Federal tax at statutory rate...............................  $5,717
State income tax, net of Federal tax benefit................     531
Other.......................................................      22
                                                              ------
Income tax expense..........................................  $6,270
                                                              ======

Current and deferred income tax expense are as follows:               

                                                                [Download Table]
                                                                     
Current:                                                             
  Federal...................................................  $5,917 
  State.....................................................     799 
                                                              ------ 
Total current...............................................   6,716 
Deferred:                                                            
  Inventory reserves........................................    (704)
  Postretirement benefits...................................    (452)
  Restructuring reserves....................................     436 
  Depreciation..............................................    (308)
  Other.....................................................     582 
                                                              ------ 
Total deferred..............................................    (446)
                                                              ------ 
Income tax expense..........................................  $6,270 
                                                              ====== 

Income taxes paid were approximately $400,000 in 1995.                

3.  EMPLOYEE BENEFIT PLANS                                                      

 The Company has two non-contributory defined benefit pension plans that
cover substantially all full-time domestic employees. Benefits are based on the 
employee's years of service and, for salaried employees, each employee's        
compensation during the last five years of employment. The company's funding    
policy is to make the minimum annual contributions required by applicable       
regulations.                                                                    

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GERBER CHILDRENSWEAR, INC.
("PREDECESSOR COMPANY") 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

     Net periodic pension cost included the following components at December 31,
1995 (in thousands):                                                            

                                                                [Download Table]

                                            SALARIED  NON-SALARIED    TOTAL  
                                            --------  -------------  ------- 
                                                                             
Service cost............................... $   640       $ 174      $   814 
Interest cost..............................   1,016         575        1,591 
Expected return of assets..................  (1,316)       (556)      (1,872)
                                            -------       -----      ------- 
Net periodic pension cost.................. $   340       $ 193      $   533 
                                            =======       =====      ======= 

   A weighted-average discount rate of 8.0% and a rate of increase in future
compensation levels of 5.5% were used in determining the actuarial present value
of projected benefit obligations. The expected long-term rate of return on      
plans' assets was 9.0%.                                                         

 The plans' assets are invested primarily in mutual funds via the Gerber
Childrenswear, Inc. Retirement Plans Master Trust and in a group annuity        
contract with an insurance company.                                             

   The Company also has an investment retirement plan for salaried employees
which provides for salaried employees and Company contributions. The Company    
will match 50% of the employee's contributions up to a maximum of 3% of the     
employee's compensation. In addition, the Company has a defined contribution    
plan for the benefit of its full-time hourly employees. The Company contributes 
one and one-half percent of each participant's annual compensation to the plan. 
Employees are not allowed to contribute to this plan. Total expense under these 
salaried and hourly employees defined contribution plans was approximately      
$536,000 for 1995.                                                              

  The Company also sponsors two defined benefit postretirement health care
plans covering all full-time domestic employees. The plans are contributory,    
with retiree contributions adjusted annually, and contain other cost-sharing    
features such as deductibles and coinsurance. The accounting for the plans      
anticipates future cost-sharing changes to the written plan that are consistent 
with the Company's expressed intent to increase the retiree contribution rate   
annually for the expected general inflation rate for that year. The Company's   
policy is to fund the cost of medical benefits in amounts determined at the     
discretion of management.                                                       

   Net periodic post retirement benefit cost for 1995 included the following
components (in thousands):                                                      

                                                                [Download Table]

                                                SALARIED  NON-SALARIED  TOTAL
                                                --------  ------------  -----
                                                                             
Service cost...................................   $235        $260      $495 
Interest cost..................................    137         171       308 
                                                  ----        ----      ---- 
Net periodic postretirement benefit cost.......   $372        $431      $803 
                                                  ====        ====      ==== 

The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 7.25 percent. The weighted-average annual 
assumed rate of increase in the per capita cost of covered medical benefits is 9
percent to 11 percent and is assumed to decrease gradually to 5.5 percent by    
2003 and remain at that level thereafter. The health care cost trend rate       
assumption has a significant effect on the amounts reported. For example,       
increasing the assumed health care cost trend rate by one percentage point in   
each year would increase the aggregate of the service and interest cost         
components of net periodic postretirement benefit cost for 1995 by approximately
$170,000.                                                                       

4.  LEASES                                                                      

The Company leases buildings and machinery under operating leases with
various renewal terms and expiring in various years through 2000. Rent expense  
for 1995 was approximately $2,840,000. Future                                   

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GERBER CHILDRENSWEAR, INC.
("PREDECESSOR COMPANY") 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

minimum lease payments under noncancelable operating leases at December 31, 1995
are as follows (in thousands):                                                  

                                                                [Download Table]
                                                            
1996................................................  $1,549
1997................................................     984
1998................................................     503
1999................................................     496
2000................................................      20
                                                      ------
                                                      $3,552
                                                      ======

5.  LETTERS OF CREDIT                                                           

The Company has letters of credit outstanding totaling approximately  
$4,600,000. These are used in conjunction with purchases from foreign vendors.  

6.  BUSINESS SEGMENTS                                                           

     The Company operates in the apparel line of business, which encompasses the
manufacture, distribution, and sale of infant and toddler's sleepwear, playwear,
underwear, bedding and cloth diapers to mass merchandise outlets under Gerber   
trademark and private labels. The Company's principal operations and markets are
located in the United States.                                                   

Net sales, earnings before interest and income taxes, depreciation and
amortization, capital expenditures and identifiable assets of businesses outside
of the United States were not significant. Historically, transfers of product   
between geographic areas have not been significant.                             

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INDEPENDENT AUDITORS' REPORT

Board of Directors                                                              
Auburn Hosiery Mills, Inc. and Subsidiary                                       
Auburn, Kentucky                                                                

     We have audited the accompanying consolidated statements of income and cash
flow of Auburn Hosiery Mills, Inc. and Subsidiary for the period January 1, 1997
through December 16, 1997. These consolidated financial statements are the      
responsibility of the Company's management. Our responsibility is to express an 
opinion on these consolidated financial statements based on our audit.          

We conducted our audit in accordance with generally accepted auditing 
standards. Those standards require that we plan and perform the audit to obtain 
reasonable assurance about whether the consolidated statements of income and    
cash flows are free of material misstatement. An audit includes examining, on a 
test basis, evidence supporting the amounts and disclosures in the consolidated 
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the    
overall financial statement presentation. We believe that our audit of the      
statements of income and cash flows provides a reasonable basis for our opinion.

 In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the results of the operations of      
Auburn Hosiery Mills, Inc. and Subsidiary and cash flows for the period January 
1, 1997 through December 16, 1997, in conformity with generally accepted        
accounting principles.                                                          

                            J. C. HOLLAND & CO., PSC

Bowling Green, Kentucky                                                         
January 16, 1998                                                                

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AUBURN HOSIERY MILLS, INC. AND SUBSIDIARY 

CONSOLIDATED STATEMENT OF INCOME
FOR THE PERIOD JANUARY 1, 1997 THROUGH DECEMBER 16, 1997

                                                                [Download Table]

                                                                 DOLLARS IN   
                                                                 THOUSANDS    
                                                              (EXCEPT EARNINGS
                                                                 PER SHARE)   
                                                              ----------------
                                                                              
Net sales...................................................      $49,033     
Cost of goods sold..........................................       39,019     
                                                                  -------     
Gross profit................................................       10,014     
                                                                  -------     
Operating expenses                                                            
  Sales and distribution expenses -- Note 4.................        5,941     
  General and administrative expenses.......................        2,269     
                                                                  -------     
                                                                    8,210     
                                                                  -------     
Income from operations......................................        1,804     
Other income (expense)                                                        
  Commission income -- Note 4...............................          443     
  Interest expense..........................................         (333)    
  Loss on disposal of equipment.............................           (6)    
  Interest income...........................................          182     
  Other.....................................................          380     
                                                                  -------     
                                                                      666     
                                                                  -------     
Income before income taxes..................................        2,470     
Income taxes -- Note 2......................................          939     
                                                                  -------     
Net income..................................................      $ 1,531     
                                                                  =======     
Basic and diluted earnings per share........................      $ 1,143     
                                                                  =======     

The accompanying notes are an integral part of the consolidated financial 
statements. 
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AUBURN HOSIERY MILLS, INC. AND SUBSIDIARY 

CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD JANUARY 1, 1997 THROUGH DECEMBER 16, 1997

                                                                [Download Table]

                                                              DOLLARS IN
                                                              THOUSANDS 
                                                              ----------
                                                                        
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS:                       
CASH FLOWS FROM OPERATING ACTIVITIES:                                   
  Net income................................................   $ 1,531  
  Adjustments to reconcile net income to net cash provided              
     by operating activities:                                           
     Depreciation...........................................     1,413  
     Amortization...........................................        13  
     Loss on sale of assets.................................         6  
     Change in assets and liabilities:                                  
       Increase in accounts receivable......................    (1,658) 
       Decrease in inventories..............................       407  
       Decrease in other receivables........................         7  
       Increase in refundable income taxes..................      (432) 
       Increase in other current assets.....................      (116) 
       Increase in accounts payable.........................       276  
       Increase in accrued royalties and commissions........        54  
       Increase in accrued labor............................        66  
       Increase in accrued vacation.........................        91  
       Increase in bank overdraft...........................       427  
       Increase in other accrued expenses and payables......       304  
       Decrease in deferred income taxes....................        (2) 
                                                               -------  
          NET CASH PROVIDED BY OPERATING ACTIVITIES.........     2,387  
                                                               -------  

CASH FLOWS FROM INVESTING ACTIVITIES:                                   
  Capital expenditures......................................    (1,136) 
  Net decrease in restricted cash...........................         8  
  Appreciation in cash surrender value of life insurance....       (97) 
  Payments received on receivables from affiliates..........        71  
  Loans to stockholder......................................    (1,512) 
                                                               -------  
          NET CASH USED IN INVESTING ACTIVITIES.............    (2,666) 
                                                               -------  

CASH FLOWS FROM FINANCING ACTIVITIES:                                   
  Net borrowings under revolving loan agreement.............     1,271  
  Principal payments on long-term debt......................    (1,038) 
                                                               -------  
          NET CASH PROVIDED BY FINANCING ACTIVITIES.........       233  
                                                               -------  
EFFECT OF EXCHANGE RATE CHANGES ON CASH.....................         1  
                                                               -------  
NET DECREASE IN CASH AND CASH EQUIVALENTS...................       (45) 
CASH AND CASH EQUIVALENTS AT JANUARY 1, 1997................        98  
                                                               -------  
          CASH AND CASH EQUIVALENTS AT DECEMBER 16, 1997....   $    53  
                                                               =======  

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                      
CASH PAID DURING THE PERIOD JANUARY 1, 1997 THROUGH DECEMBER            
  16, 1997 FOR:                                                         
  Interest..................................................   $   338  
  Income taxes..............................................     1,584  

The accompanying notes are an integral part of the consolidated financial 
statements. 
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AUBURN HOSIERY MILLS, INC. AND SUBSIDIARY 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 16, 1997 

NOTE 1:  NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES    

Nature of Operations                                                        

     Auburn Hosiery Mills, Inc. and Subsidiary (the "Company") is engaged in the
production and sale of various styles of socks to retail chain stores primarily 
in the United States of America.                                                

Basis of Consolidation                                                      

     These consolidated financial statements include the accounts of the Company
and its wholly-owned foreign subsidiary after elimination of significant        
intercompany balances and transactions.                                         

Foreign Currency Translation                                                

Assets and liabilities of the Company's wholly-owned subsidiary are   
translated into U.S. dollars at the current rate of exchange, while revenues and
expenses are translated at the average exchange rate during the year.           
Translation adjustments are excluded from the results of operations and are     
reported as a separate component of stockholders' equity.                       

Cash and Cash Equivalents                                                   

    Cash and cash equivalents include demand deposits, certificates of deposit
and highly liquid investments with original maturities of three months or less. 

Inventories                                                                 

 Inventories are stated at the lower of cost or market. Cost is computed
using currently adjusted standards that approximate actual cost on first-in,    
first-out basis. Market is based on estimated net realizable value.             

Property, Plant and Equipment                                               

Property, plant and equipment are stated at cost. Improvements and    
replacements are capitalized, while expenditures for maintenance and repairs are
charged to expense as incurred. The cost is depreciated over the estimated      
useful lives of the related assets. Leased equipment is amortized over the term 
of the related lease. Depreciation and amortization are computed on the         
straight-line method for financial reporting purposes and on an accelerated     
method for income tax purposes.                                                 

Use of Estimates                                                            

The preparation of financial statements in conformity with generally  
accepted accounting principles requires management to make estimates and        
assumptions that affect the reported amounts of assets and liabilities and      
disclosure of contingent assets and liabilities at the date of the financial    
statements and the reported amounts of revenues and expenses during the         
reporting period. Actual results could differ from those estimates.             

Intangibles                                                                 

   Loan closing costs and other deferred charges are amortized over the life
of the related charges on the straight-line method.                             

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AUBURN HOSIERY MILLS, INC. AND SUBSIDIARY 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

S Corporation -- Income Tax Status                                          

During 1987, the Company elected to be taxed under the provisions of  
subchapter S of the Internal Revenue Code effective July 1, 1987. Under those   
provisions, the Company did not pay federal or state corporate income taxes on  
its taxable income. Instead, the stockholders were liable for individual federal
and state income taxes on their respective shares of the Company's taxable      
income. Effective November 1, 1989, the Company terminated its S corporation    
status when it purchased the wholly-owned subsidiary. A provision for federal   
and state income taxes has been included in these financial statements for the  
period January 1, 1997 through December 16, 1997.                               

Deferred Income Taxes                                                       

The Company accounts for its income taxes using Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes, which requires       
recognition of deferred tax liabilities and assets for the expected future tax  
consequences of events that have been included in the financial statements or   
tax returns. Under this method, deferred tax liabilities and assets are         
determined based on the difference between the financial statement and tax bases
of assets and liabilities, using enacted tax rates in effect for the year in    
which the differences are expected to reverse. Differences are primarily        
inventory cost, vacation payable and depreciation.                              

Earnings Per Share                                                          

  Earnings per share amounts are based on the number of shares outstanding
during the period January 1, 1997 through December 16, 1997, which remained     
unchanged.                                                                      

New Accounting Standards                                                    

     The Financial Accounting Standards Board has issued SFAS No. 130, Reporting
Comprehensive Income, which is effective for financial statements for fiscal    
years ending after December 31, 1997. This standard establishes standards for   
the reporting and display of comprehensive income which is defined under SFAS   
No. 130 as "the change in equity (net assets) during a period from transactions 
and other events and circumstances from nonowner sources." Under SFAS No. 130,  
the Company has several choices in the disclosure of the components of other    
comprehensive income. The Company plans to implement SFAS No. 130 during the    
first quarter of fiscal year 1998, and management anticipates that such adoption
will have no material effect on the Company's financial condition or results of 
operations.                                                                     

NOTE 2:  INCOME TAXES                                                           

Income tax expense is different from the amount that would result from
applying the federal statutory rate of 34% to income before income taxes as     
follows:                                                                        

                                                                [Download Table]

                                                            DOLLARS IN
                                                            THOUSANDS 
                                                            ----------
                                                                      
Federal tax at statutory rate.............................     $777   
State income tax, net of federal tax benefit..............      193   
Other.....................................................      (31)  
                                                               ----   
          Income Tax Expense..............................     $939   
                                                               ====   

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AUBURN HOSIERY MILLS, INC. AND SUBSIDIARY 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

Current and deferred income tax expense for the period January 1, 1997
through December 16, 1997 are as follows:                                       

                                                                [Download Table]

                                                            DOLLARS IN
                                                            THOUSANDS 
                                                            ----------
                                                                      
Current:                                                              
     Federal..............................................     $755   
     State................................................      185   
                                                               ----   
          Total Current...................................      940   
                                                               ----   
Deferred:                                                             
     Inventory............................................       39   
     Accrued vacations....................................      (39)  
     Reserve for bad debts................................      (96)  
     Depreciation.........................................       95   
                                                               ----   
          Total Deferred..................................       (1)  
                                                               ----   
          Income Tax Expense..............................     $939   
                                                               ====   

   Income taxes paid were approximately $1,401,000 for the period January 1,
1997 through December 16, 1997.                                                 

NOTE 3:  OPERATING LEASES -- LESSEE                                             

The Company leases various equipment under non-cancellable operating  
leases.                                                                         

    Rent expense was approximately $101,000, net of subleases of approximately
$91,000, for the period January 1, 1997 through December 16, 1997.              

NOTE 4:  RELATED PARTY TRANSACTIONS                                             

One of the Company's stockholders owns certain companies that AUBURN  
HOSIERY MILLS, INC. uses as its sales representatives and pays those companies  
sales commissions. Also, the Company remits royalties through its affiliates to 
pay license grantors. The following is a summary of transactions with affiliates
for December 16, 1997 and the period January 1, 1997 through December 16, 1997. 

                                                                [Download Table]

                                                              DOLLARS IN
                                                              THOUSANDS 
                                                              ----------
                                                                        
Sales commissions paid to affiliates (included in sales and             
  distribution expense in the accompanying consolidated                 
  statements of income).....................................    $2,732  
                                                                ======  
Royalties paid through affiliates (included in sales and                
  distribution expense in the accompanying consolidated                 
  statements of income).....................................    $2,157  
                                                                ======  

The Company sold greige goods inventory at market price to a foreign  
affiliate, which amounted to approximately $149,000 for the period January 1,   
1997 through December 16, 1997.                                                 

The Company's subsidiary received approximately $443,000 in commission
income from a foreign affiliate for the period January 1, 1997 through December 
16, 1997.                                                                       

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AUBURN HOSIERY MILLS, INC. AND SUBSIDIARY 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

NOTE 5:  CONCENTRATIONS                                                         

The Company sells a substantial portion of its product to certain     
customers. Customers with ten percent or more of the Company's sales during the 
period January 1, 1997 through December 16, 1997 aggregated to approximately    
$32,239,000.                                                                    

 The Company manufactures and sells a substantial portion of its product
under a single licensing agreement. This agreement was renewed January 1, 1998  
and expires December 31, 2002 and is renewable for an additional 5 years at that
time.                                                                           

NOTE 6:  PROFIT SHARING PLAN                                                    

   The Company has a defined contribution plan covering all employees of the
Company who have two years of service of at least 1,000 hours each year. The    
Company's contribution is determined by its Board of Directors annually. The    
contributions charged to operations for the period January 1, 1997 through      
December 16, 1997 was $100,000.                                                 

NOTE 7:  CONTINGENCIES                                                          

     The Company is self-insured for their group medical plan. Any person who is
actively working for the employer on a full-time basis (at least 30 hours per   
week) and has been with the Company at least 90 days is eligible to participate 
in the plan. Dependent coverage is also offered to qualified dependents of an   
eligible employee. The Company has contracted with an administrator to process  
claims and has purchased stop-loss insurance to limit its losses on individual  
and aggregate claims. The Company's loss limit per person is $40,000 and the    
individual lifetime maximum stop loss coverage is $1,000,000; the Company's     
annual aggregate loss limit is based on a monthly limit per the average number  
of employees in the plan. The Company's minimum annual aggregate loss is equal  
to the greater of the average number of employees in the plan times a $330      
allowance times 90% or $1,842,588. Stop-loss insurance will pay any claims in   
excess of these calculated annual limits.                                       

    The Company elected to become self-insured for their worker's compensation
insurance. The Company has contracted with an administrator to process claims   
and provide stop-loss insurance to limit its losses on individual and aggregate 
claims. The Company's loss limit per event has a range from $150,000 to         
$300,000; the Company's aggregate loss limit is $1,000,000. Stop-loss insurance 
will pay any claims in excess of these limits.                                  

    The Company has obtained a letter of credit from Nations Bank for $150,000
for the purpose of supporting the worker's compensation self-insurance.         

NOTE 8:  SUBSEQUENT EVENT                                                       

    The stockholders of Auburn Hosiery Mills, Inc. and Subsidiary sold 100% of
their stock to GCIH, Inc., a Delaware corporation, effective as of the close of 
business December 16, 1997.                                                     

NOTE 9:  SEGMENT INFORMATION                                                    

     The Company operates in a single hosiery line of business, encompassing the
manufacture, distribution and sale of sport socks under the Wilson, Converse and
Coca-Cola names to major retailers. The Company's principal operations and      
markets are located in the United States.                                       

Net sales, earnings before interest and income taxes, depreciation and
amortization, capital expenditures and identifiable assets of businesses outside
of the United States were not significant. Historically, transfers of product   
between geographic areas have not been significant. During the period January 1,
1997 through December 16, 1997, sales to a single customer amounted to          
approximately 66% of total net sales.                                           
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SPORT SOCKS CO. (IRELAND) LIMITED 

Report of Independent Accountants                                               

To the Board of Directors of Sport Socks Co. (Ireland) Limited                  

    We have audited the accompanying statements of profit and loss account and
of cash flows of Sport Socks Co. (Ireland) Limited ("the company") for the fifty
weeks ended 16 December 1997 (the "financial statements") all expressed in Irish
pounds as set out on pages F-44 to F-55 inclusive. These financial statements   
are the responsibility of the company's directors and management. Our           
responsibility is to express an opinion on these financial statements based on  
our audit.                                                                      

We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform 
the audit to obtain reasonable assurance about whether the financial statements 
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An 
audit also includes assessing the accounting principles used and significant    
estimates made by management as well as evaluating the overall financial        
statement presentation. We believe that our audit provides a reasonable basis   
for our opinion.                                                                

   In our opinion, the financial statements audited by us present fairly, in
all material respects the results of its operations and its cash flows for the  
fifty weeks ended 16 December 1997 in conformity with accounting principles     
generally accepted in Ireland.                                                  

Accounting principles generally accepted in Ireland vary in certain   
significant respects from accounting principles generally accepted in the United
States. The application of the latter would have affected the determination of  
net loss expressed in Irish pounds for the fifty weeks ended 16 December 1997 to
the extent summarised in Note 16 to the financial statements.                   

                    PRICE WATERHOUSE

CORK, IRELAND                                                                   
Date: 23 February 1998                                                          

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SPORT SOCKS CO. (IRELAND) LIMITED 

PROFIT AND LOSS ACCOUNT 
FIFTY WEEKS ENDED 16 DECEMBER 1997

                                                                [Download Table]

                                                                 IRL     
                                                              ---------- 
                                                                         
TURNOVER....................................................  12,519,930 
Cost of sales...............................................  (8,514,277)
                                                              ---------- 

GROSS PROFIT................................................   4,005,653 
Selling and distribution costs..............................  (2,434,199)
Administrative expenses.....................................    (919,353)
Exceptional item -- loss on foreign exchange commitments                 
  (note 10).................................................    (716,000)
                                                              ---------- 

OPERATING LOSS..............................................     (63,899)
Interest receivable.........................................       9,913 
Interest payable (note 3)...................................     (56,835)
                                                              ---------- 

LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (note 4)........    (110,821)
Taxation credit (note 5)....................................      25,275 
                                                              ---------- 

LOSS FOR THE FINANCIAL PERIOD...............................     (85,546)
Transfer to other reserves (note 6).........................    (109,703)
Allotment of equity share capital (note 6)..................    (100,000)
                                                              ---------- 
Decrease in balance during the period.......................    (295,249)
Balance at beginning of period..............................   1,886,096 
                                                              ---------- 

BALANCE AT END OF PERIOD (note 7)...........................   1,590,847 
                                                              ========== 

    Turnover and operating loss arose solely from continuing operations. There
were no recognised gains and losses other than those dealt with in the profit   
and loss account.                                                               

  The accompanying footnotes on pages F-46 to F-55 are an integral part of
these financial statements.                                                     

ON BEHALF OF THE BOARD                                                          

R L Solar                                                                       
K K Angliss                                                                     

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SPORT SOCKS CO. (IRELAND) LIMITED 

CASH FLOW STATEMENT 
FIFTY WEEKS ENDED 16 DECEMBER 1997

                                                                [Download Table]

                                                                 IRL     
                                                              ---------- 
                                                                         
NET CASH INFLOW FROM OPERATING ACTIVITIES (note 8)..........   1,731,068 
                                                              ---------- 

RETURNS ON INVESTMENTS AND SERVICING OF FINANCE                          
Interest paid...............................................     (58,741)
Interest element of finance lease rentals...................      (1,281)
Interest received...........................................       9,372 
                                                              ---------- 
Net cash outflow from returns on investments and servicing               
  of finance................................................     (50,650)
                                                              ---------- 

TAXATION                                                                 
Corporation tax paid........................................    (113,882)
                                                              ---------- 

CAPITAL EXPENDITURE                                                      
Purchase of tangible assets.................................  (1,341,164)
                                                              ---------- 

EQUITY DIVIDENDS PAID.......................................          -- 
                                                              ---------- 

Net cash inflow before management of liquid resources and                
  financing.................................................     225,372 
                                                              ---------- 

MANAGEMENT OF LIQUID RESOURCES..............................          -- 
                                                              ---------- 

FINANCING                                                                
Bank loan advances (note 8).................................     298,645 
Bank loans repaid (note 8)..................................    (393,832)
Repayment of loan from director (note 8)....................    (100,000)
Capital element of finance lease rentals (note 8)...........     (36,409)
Capital grants received.....................................     132,715 
                                                              ---------- 
Net cash outflow from financing.............................     (98,881)
                                                              ---------- 
INCREASE IN CASH (note 8)...................................     126,491 
                                                              ========== 

  The accompanying footnotes on pages F-46 to F-55 are an integral part of
these financial statements.                                                     

ON BEHALF OF THE BOARD                                                          

R L Solar                                                                       
K K Angliss                                                                     

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SPORT SOCKS CO. (IRELAND) LIMITED 

NOTES TO THE FINANCIAL STATEMENTS 

1  ACCOUNTING POLICIES                                                          

BASIS OF ACCOUNTING                                                             

     The financial statements are prepared under the historical cost convention,
in Irish pounds, and in accordance with accounting standards generally accepted 
in Ireland. The preparation of financial accounts in conformity with generally  
accepted accounting principles requires management to make estimates and        
assumptions that affect the reported amount of assets and liabilities and       
disclosures of contingent assets and liabilities at the date of the financial   
statements and the reported amounts of revenues and expenses during the         
reporting period. Actual results could differ from those estimates.             

TURNOVER                                                                        

     Turnover represents the invoiced value of goods to third parties, exclusive
of value added tax.                                                             

TANGIBLE ASSETS                                                                 

Tangible assets are stated at cost less accumulated depreciation.     

Depreciation is calculated in order to write off the cost of tangible 
assets other than land over their estimated useful lives by equal annual        
instalments. The estimated useful lives of tangible assets by reference to which
depreciation has been calculated are as follows:                                

                                                                [Download Table]
                                                                    
Leasehold buildings.......................................  25 years
Plant and machinery.......................................  7 years 
Office equipment..........................................  10 years
Motor vehicles............................................  3 years 

LEASES                                                                          

    Where tangible assets are financed by leasing agreements which give rights
approximating to ownership ("finance leases") they are treated as if they had   
been purchased outright at the present values of the minimum lease payments and 
the corresponding leasing liabilities are shown in the balance sheet as finance 
leases.                                                                         

  Depreciation is calculated in order to write off the amounts capitalised
over the estimated useful lives of the assets by equal annual instalments.      
Interest arising on finance leases is charged to the profit and loss account in 
proportion to the amounts outstanding under the leases.                         

     All operating lease rentals are charged to the profit and loss account on a
straight line basis.                                                            

STOCKS                                                                          

Stocks are stated at the lower of cost and net realisable value.      

   Cost is based on normal levels of cost and activity and comprises cost of
purchase and, where applicable, cost of conversion to current condition. Cost of
purchase includes charges such as freight or duty where appropriate. Cost of    
conversion includes direct labour, direct expenses and fixed and variable       
production overhead expenditure.                                                

   Net realisable value comprises the actual or estimated selling price (net
of trade but before settlement discounts), less all further costs to completion,
and less all costs to be incurred in marketing, selling and distribution.       

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SPORT SOCKS CO. (IRELAND) LIMITED 

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

DEFERRED TAXATION                                                               

   Deferred taxation is provided on timing differences to the extent that it
is expected to become payable in the foreseeable future and any amount not      
provided is disclosed as a contingent liability.                                

  Timing differences are temporary differences between profits as computed
for taxation purposes and profits as stated in the financial statements which   
arise because certain items of income and expenditure in the financial          
statements are dealt with in different periods for taxation purposes.           

FOREIGN CURRENCIES                                                              

Monetary assets and liabilities denominated in foreign currencies are 
translated at the exchange rates ruling at the balance sheet date and revenues, 
costs and non-monetary assets at the exchange rates ruling at the dates of the  
transactions. However, where a transaction is covered by way of forward         
contract, the contracted exchange rate is used to translate the asset,          
liability, revenue or cost.                                                     

Profits and losses arising from foreign currency translations and on  
settlement of amounts receivable and payable in foreign currency are dealt with 
through the profit and loss account.                                            

 Monetary assets are money held and amounts to be received in money; all
other assets are non-monetary assets.                                           

   Where the company enters into forward currency contracts to hedge foreign
exchange exposures on anticipated foreign currency trading receipts, unrealised 
gains and losses on all contracts yet to mature are calculated and reflected in 
the profit and loss account for the period.                                     

GRANTS                                                                          

 Capital grants are treated as deferred income, which is credited to the
profit and loss account on the same basis as the related tangible assets are    
depreciated.                                                                    

Employment grants receivable on creation of new jobs are treated as   
deferred income, which is credited to the profit and loss account over the      
minimum period for which each job must be maintained. The period by reference to
which employment grants are amortised is five years being the minimum period for
which each job must be maintained.                                              

PENSION COSTS                                                                   

     Contributions to the defined contribution pension scheme are charged to the
profit and loss account as incurred.                                            

2  BACKGROUND OF THE COMPANY AND BASIS OF PREPARATION                           

    Sport Socks Co. (Ireland) Limited was incorporated on 19 December 1989 and
is registered in the Republic of Ireland. The company manufactures and sells    
branded sport socks in Europe under established brand names such as Wilson, Coca
Cola and Dunlop through volume retailers and major sporting goods chains. The   
company was wholly owned and controlled in the period by Mr. J. P. Manning,     
shareholder and director. With effect from 17 December 1997, the company is a   
wholly owned subsidiary of Gerber Childrenswear Inc. incorporated in the state  
of Delaware, USA.                                                               

    These financial statements, prepared for the fifty weeks ended 16 December
1997, do not constitute "statutory accounts" within the meaning of the Companies
Acts 1963 to 1990 of Ireland for the period presented. Statutory accounts were  
prepared for the year ended 31 December 1997.                                   

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SPORT SOCKS CO. (IRELAND) LIMITED 

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

   These financial statements exclude a balance sheet, related balance sheet
notes, comparatives for the prior year, a Directors' Report and certain other   
information (such as names and addresses of the Company's auditors, bankers and 
solicitors) which are required of "statutory accounts" by the Companies Acts    
1963 to 1990. However, they include all material disclosures required by        
generally accepted accounting principles in Ireland including those Companies   
Acts disclosures relating to profit and loss and cash flow statements.          

3  INTEREST PAYABLE                                                             

                                                                [Download Table]

                                                               IRL  
                                                              ------
                                                                    
This interest was in respect of:                                    
Borrowings wholly repayable within five years:                      
     - bank overdrafts......................................   1,788
     - bank loans...........................................  40,117
     - finance leases.......................................   1,281
     - creditors............................................  13,649
                                                              ------
                                                              56,835
                                                              ======

4  LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION                                  

                                                                [Download Table]

                                                                 IRL   
                                                              ---------
                                                                       
Loss on ordinary activities before taxation has been arrived           
  at after charging:                                                   
Staff costs                                                            
     - wages and salaries...................................  3,375,602
     - social welfare costs.................................    313,801
     - pension costs........................................     75,217
                                                              ---------
                                                              3,764,620
Depreciation................................................    805,181
Royalties...................................................    679,351
Currency translation loss...................................    170,199
Loss on foreign exchange commitments........................    716,000
Auditors' remuneration......................................     19,795
Directors' emoluments.......................................         --
                                                              =========
and after crediting:                                                   
Amortisation of capital grants..............................     59,804
Amortisation of employments grants..........................    172,998
Training grants.............................................     23,508
                                                              =========

The estimated useful economic lives and recoverable values of tangible
assets are subject to regular review by management. Where management has        
committed to a plan to dispose of or replace the assets, whether by sale or     
abandonment, the assets are reduced to their estimated fair values and a charge 
is reflected in the profit and loss account. As a result of the company's       
ongoing capital expenditure investment programme in 1997, management abandoned  
or were committed to a plan to dispose of certain assets resulting in a charge  
to the profit and loss of IRL192,419 and which is included in the depreciation  
charge.                                                                         

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SPORT SOCKS CO. (IRELAND) LIMITED 

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

5  TAXATION CREDIT                                                              

                                                                [Download Table]

                                                               IRL  
                                                              ------
                                                                    
Based on profit for the period at 10%                               
Corporation tax.............................................      --
Deferred tax................................................  20,000
                                                              ------
                                                              20,000
Overprovision in respect of prior years                             
Corporation tax.............................................   5,275
                                                              ------
                                                              25,275
                                                              ======

   There is no corporation tax charge for the period due to losses incurred.

6  CHANGES IN SHAREHOLDERS' EQUITY                                              

The changes in shareholders' equity balances are comprised of the     
following:                                                                      

                                                        [Enlarge/Download Table]

                                                           CALLED UP                             
                                                          EQUITY SHARE  PROFIT AND LOSS   OTHER  
                                                            CAPITAL         ACCOUNT      RESERVES
                                                              IRL             IRL          IRL   
                                                          ------------  ---------------  --------
                                                                                                 
Balance at 1 January 1997................................  1,623,800       1,886,096      78,212 
Transfers................................................    100,000        (209,703)    109,703 
Loss for the financial period............................         --         (85,546)         -- 
                                                           ---------       ---------     ------- 
Balance at 16 December 1997..............................  1,723,800       1,590,847     187,915 
                                                           =========       =========     ======= 

Other reserves represent a non distributable reserve maintained in    
compliance with the company's existing grant agreements.                        

    During the period ended 16 December 1997 100,000 ordinary IRL1 shares were
allotted in consideration for the reduction by an equivalent amount of the      
company's revenue reserves.                                                     

7  PROFIT AND LOSS ACCOUNT                                                      

Profit and loss account includes IRL810,037 which is not available for
distribution until the contingencies referred to in note 11 have expired.       

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SPORT SOCKS CO. (IRELAND) LIMITED 

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

8  NOTES ON THE CASH FLOW STATEMENT                                             

                                                                [Download Table]

                                                                 IRL     
                                                              ---------- 
                                                                         
NET CASH INFLOW FROM OPERATING ACTIVITIES:                               
  Operating loss............................................     (63,899)
  Depreciation..............................................     805,181 
  Amortisation of capital grants............................     (59,804)
  Amortisation of employment grants.........................    (172,998)
  Currency translation loss on director's loan..............      83,697 
  Currency translation loss on bank loans...................       9,713 
  Exceptional item -- loss on foreign exchange                           
     commitments............................................     716,000 
  Increase in stocks........................................    (205,477)
  Decrease in debtors.......................................      31,004 
  Increase in creditors.....................................     587,651 
                                                              ---------- 
                                                               1,731,068 
                                                              ========== 
                                                                 IRL     
                                                              ---------- 
RECONCILIATION OF NET CASHFLOW TO MOVEMENT IN NET DEBT:                  
  Increase in cash in the year..............................     126,491 
  Cash outflow from decrease in debt and finance leases.....     131,596 
  Cash outflow from decrease in loan from director..........     100,000 
                                                              ---------- 
  Reduction in net debt resulting from cash flows...........     358,087 
  Effects of changes in foreign exchange rates..............     (93,410)
                                                              ---------- 
  Movement in net debt in the period........................     264,677 
  Net debt at 1 January 1997................................  (1,021,195)
                                                              ---------- 
  Net debt at 16 December 1997..............................    (756,518)
                                                              ========== 

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SPORT SOCKS CO. (IRELAND) LIMITED 

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

                                                        [Enlarge/Download Table]

                                                                  EFFECTS OF                          
                                            AT                      FOREIGN                    AT     
                                        1 JANUARY                EXCHANGE RATE   OTHER     16 DECEMBER
                                           1997      CASH FLOWS     CHANGES     CHANGES       1997    
ANALYSIS OF CHANGES IN NET DEBT            IRL          IRL           IRL         IRL          IRL    
-------------------------------         ----------   ----------  -------------  --------   -----------
                                                                                                      
Cash at bank and in hand...............    455,059     (18,454)          --           --     436,605  
Bank overdrafts........................   (144,945)    144,945           --           --          --  
                                        ----------    --------      -------     --------    --------  
Cash...................................    310,114     126,491           --           --     436,605  
                                        ----------    --------      -------     --------    --------  
Bank loans                                                                                            
Due within one year....................   (217,593)   (298,645)      (9,713)     214,951    (311,000) 
Due after one year.....................   (413,424)    393,832           --     (214,951)   (234,543) 
                                        ----------    --------      -------     --------    --------  
                                          (631,017)     95,187       (9,713)          --    (545,543) 
                                        ----------    --------      -------     --------    --------  
Finance leases                                                                                        
Due within one year....................    (28,239)     27,697           --      (19,266)    (19,808) 
Due after one year.....................    (34,126)      8,712           --       19,266      (6,148) 
                                        ----------    --------      -------     --------    --------  
                                           (62,365)     36,409           --           --     (25,956) 
                                        ----------    --------      -------     --------    --------  
Loan from director.....................   (637,927)    100,000      (83,697)          --    (621,624) 
                                        ----------    --------      -------     --------    --------  
Net debt............................... (1,021,195)    358,087      (93,410)          --    (756,518) 
                                        ==========    ========      =======     ========    ========  

     Tangible assets purchases of IRL300,000 were made on extended credit terms.
This liability is repayable on an instalment basis over five years commencing   
subsequent to 16 December 1997.                                                 

9  RELATED PARTY TRANSACTIONS                                                   

    Details of the company's transactions with related parties are as follows:

    (i) Cost of sales include purchases of stocks of IRL126,070 from
Auburn Hosiery Mills Inc, a company owned and controlled by Mr. J.P.  
Manning during the period.                                            

        (ii) Selling and distribution costs include sales commission payable
of IRL286,573 to Sport Socks Co. (UK) Limited, a company owned and    
controlled by Mr. J.P. Manning during the period.                     

         (iii) Selling and distribution costs include Wilson licence royalties
 of IRL372,683 and IRL80,016 respectively payable to Sales and Marketing
     Hosiery Corporation and Auburn Hosiery Mills Inc., companies controlled and
owned by Mr. J.P. Manning, company shareholder and director during the
period.                                                               

         (iv) Selling and distribution costs include sales and marketing costs
 amounting to IRL214,376 representing the salary and related expenses of
     sales and marketing personnel, recharged to the company by JP Manning Inc.,
a company controlled by Mr. J.P. Manning.                             

     (iv) Included in administrative expenses are amounts of IRL5,597,
 IRL8,500 and IRL7,350 respectively, paid to White and Case, and Anthony
    Carroll & Co. and T. Collins relating to legal and engineering consultancy
   services provided by firms in which J. Reiner, B. Carroll and T. Collins,
company directors, have respective interests.                         

10  FOREIGN EXCHANGE COMMITMENTS                                                

    The company's revenues are primarily received in currency other than Irish
pounds and accordingly the company is subject to currency exposure. The company 
seeks to limit this risk by entering into forward                               

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SPORT SOCKS CO. (IRELAND) LIMITED 

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

currency contracts at varying maturity dates. Unrealised gains or losses on all 
of those contracts yet to mature are calculated at the balance sheet date and   
reflected in the profit and loss account for the period.                        

At the balance sheet date, the company has contracted to sell forward 
foreign currencies equivalent to IRL8,032,000 at various rates and maturity     
dates. Unrealised losses of IRL716,000 in respect of all of those contracts     
relating to future transactions, excluding those contracts in respect of sales  
which have arisen or were committed prior to the balance sheet date, are        
reflected in the profit and loss account. This represents a change in accounting
policy for the company and is considered by the directors to be more appropriate
to the company's circumstances and give a fairer presentation of the results and
financial position of the business. The comparatives have not been restated as  
in the opinion of the directors the financial effects of the change in          
accounting policy are not material to the company's comparative results and     
financial position.                                                             

If the forward currency contracts were considered separately from     
underlying future revenues the company would be subject to market risk from     
fluctuations in currency exchange rates. The company only enters these forward  
contracts to hedge the related currency risks. Therefore there is a market risk 
only to the extent that the actual foreign currency cashflows differ from       
anticipated amounts and the only credit risk arises from potential non          
performance by counter parties which is restricted to the hedging differential  
and not the principal amount hedged. The company does not anticipate non        
performance as the counterparties are all licensed banks.                       

11  CONTINGENT LIABILITIES                                                      

CAPITAL GRANTS                                                                  

 If certain circumstances occur, these grants could be repayable up to a
maximum of IRL950,808. Such circumstances would arise if the company ceased to  
use the assets to which the grants relate.                                      

EMPLOYMENT GRANTS                                                               

 If certain circumstances occur, these grants could be repayable up to a
maximum of IRL864,991. Such circumstances would arise at any time within five   
years from the date of receipt of the first moiety of the employment grant in   
respect of any job if the job should become vacant and remain vacant for a      
period in excess of six calendar months.                                        

12  EMPLOYEES                                                                   

     The average number of persons employed by the company during the period was
270, 266 of whom are based in the Republic of Ireland, and 4 in Belgium.        

13  PENSIONS                                                                    

   The company operates a defined contribution pension scheme. The assets of
the scheme are held separately from those of the company in an independently    
administered fund. The pension cost charge represents contributions payable by  
the company to the fund and amounted to IRL75,217.                              

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SPORT SOCKS CO. (IRELAND) LIMITED 

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

14  DIRECTORS' RESPONSIBILITIES                                                 

The directors are required to prepare financial statements for each   
financial year which give a true and fair view of the state of affairs of the   
company and of the profit or loss of the company for that period. In preparing  
those financial statements, the directors are required to:                      

- Select suitable accounting policies and then apply them consistently

- Make judgements and estimates that are reasonable and prudent       

    - Prepare the financial statements on the going concern basis unless it is
 inappropriate to presume that the company will continue in business

 The directors are responsible for keeping proper books of account which
disclose with reasonable accuracy at any time the financial position of the     
company. They are also responsible for safeguarding the assets of the company   
and hence for taking reasonable steps for the prevention and detection of fraud 
and other irregularities.                                                       

15  APPROVAL OF THE FINANCIAL STATEMENTS                                        

The directors approved the financial statements on 23 February 1998.  

16  DIFFERENCES BETWEEN IRISH AND US ACCOUNTING PRINCIPLES                      

 The financial statements of the company are prepared in accordance with
Irish GAAP, which differ in certain significant respects from US GAAP. The      
following is a reconciliation to US GAAP pursuant to Item 17 of Form 20-F.      

                                                                [Download Table]

                                                                IRL   
                                                              ------- 
                                                                      
Net loss for the period (Irish GAAP)........................  (85,546)
Amortisation of interest capitalised(1).....................   (1,750)
Restructuring costs(2)......................................   36,000 
Loss on foreign exchange contracts(3).......................   30,000 
Income taxes(4).............................................   (7,000)
                                                              ------- 
NET LOSS FOR THE PERIOD (US GAAP)...........................  (28,296)
                                                              ======= 

---------------                                                                 
(1) CAPITALISATION OF INTEREST EXPENSES AND RELATED AMORTISATION.  Under Irish  
GAAP, interest incurred during the period for which assets are under    
    construction is not required to be capitalised. Under US GAAP, such interest
incurred during the period is eligible for capitalisation. The amount   
   capitalised is to be an allocation of the interest cost incurred during the
period required to complete the asset. The Company had no assets under  
 construction during the period. The adjustment reflected above relates to
amortisation of past interest capitalised in accordance with US GAAP.   

(2) RESTRUCTURING COSTS.  Under Irish GAAP, the company has accrued over the    
  past three years, a provision to cover the potential costs associated with
 possible employee redundancies at its manufacturing facility. The related
amount charged to profit and loss in the period ended 16 December 1997  
totalled IRL36,000. These provisions, which do not conform with the more
prescriptive requirements of US GAAP, have been reversed.               

(3) LOSS ON FORWARD EXCHANGE CONTRACTS.  Under Irish GAAP, the Company adopted  
during the period an accounting policy to mark to market forward foreign
    exchange contracts which hedge anticipated transactions (e.g. Future sales).
Such transactions do not constitute firm commitments under US GAAP as   
   contemplated by Statement of Standards Accounting No. 52, "Foreign Currency
Translation".                                                           

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SPORT SOCKS CO. (IRELAND) LIMITED 

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

    Therefore, under US GAAP such contracts would have been marked to market for
 both 1996 and 1997. The resultant adjustment of IRL30,000 represents that
   portion of the total loss recognized under Irish GAAP in the current period
which would have been reflected in the prior year under US GAAP.        

Additionally, the Company classified this loss on foreign exchange      
  commitments as an exceptional Item in the Irish GAAP financial statements.
   Under US GAAP such an item is not considered to be an extraordinary item as
such classification is limited to those items that are both unusual in  
nature and infrequent in occurrence.                                    

(4) INCOME TAXES.  Under Irish GAAP, deferred taxes are provided for temporary  
  differences and tax loss carryforwards using the liability method, when it
is probable that an asset or liability will crystalise. Under US GAAP,  
deferred taxes are provided for temporary differences and for tax loss  
  carryforwards. A valuation allowance is established when it is more likely
    than not that the deferred tax asset will not be realised. Additionally, for
US GAAP purposes, deferred taxes are provided in respect of US GAAP     
adjustments to the book basis of assets and liabilities.                

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SPORT SOCKS CO. (IRELAND) LIMITED 

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

STATEMENT OF CASHFLOWS                                                          

    The company's cashflow statement prepared in accordance with Irish GAAP is
different from that which is required under SFAS 95. A statement of cash flows  
provided under SFAS 95 is as follows:                                           

                                                                [Download Table]

                                                                 IRL     
                                                              ---------- 
                                                                         
NET LOSS FOR THE PERIOD (US GAAP)...........................     (28,296)
ADJUSTMENTS TO RECONCILE NET LOSS TO CASH PROVIDED FROM                  
  OPERATING ACTIVITIES                                                   
Depreciation................................................     806,931 
Amortisation of capital grants..............................     (59,804)
Amortisation of employment grants...........................    (172,998)
Currency translation loss on directors' loan................      83,697 
Currency translation loss on bank loans.....................       9,713 
Exceptional item -- loss on foreign exchange commitments....     686,000 
Increase in stocks..........................................    (205,477)
Decrease in debtors.........................................      31,004 
Increase in creditors and other liabilities.................     415,766 
                                                              ---------- 
Net cash provided by operating activities...................   1,566,536 
                                                              ---------- 
CASH UTILISED IN INVESTING ACTIVITIES                                    
Payments for tangible assets................................  (1,341,164)
                                                              ---------- 
CASHFLOWS FROM FINANCING ACTIVITIES                                      
Proceeds from bank loan advances............................     298,645 
Payments to settle bank debt................................    (538,777)
Repayments of loan from director............................    (100,000)
Capital element of finance lease rentals....................     (36,409)
Capital grants received.....................................     132,715 
                                                              ---------- 
Net cash outflow from financing activities..................    (243,826)
                                                              ---------- 
Net decrease in cash and cash equivalents for the year......     (18,454)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............     455,059 
                                                              ---------- 
CASH AND CASH EQUIVALENTS AT END OF PERIOD..................     436,605 
                                                              ========== 

Supplemental disclosures of cash flow information:                       
Cash paid during the period for:                                         
Interest.........  IRL60,022                                             
Income tax.......  IRL113,882                                            

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======================================================                          

NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY  
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN  
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH 
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR THE SOLICITATION OF AN OFFER TO BUY THE COMMON STOCK IN ANY          
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER 
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE      
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS 
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS 
OF THE COMPANY SINCE THE DATE HEREOF.                                           
------------------------

TABLE OF CONTENTS 

                                                                [Download Table]

                                        PAGE
                                        ----
                                            
Prospectus Summary....................     3
Risk Factors..........................    11
Use of Proceeds.......................    19
Dividend Policy.......................    19
Capitalization........................    20
Dilution..............................    21
Selected Consolidated Financial             
  Data................................    22
Unaudited Pro Forma Condensed               
  Consolidated Statement of                 
  Operations..........................    24
Management's Discussion and Analysis        
  of Financial Condition and Results        
  of Operations.......................    27
Business..............................    36
Management............................    53
Certain Relationships and Related           
  Transactions........................    60
Principal Stockholders................    63
Description of Certain Indebtedness...    64
Description of Capital Stock..........    66
Certain United States Federal Income        
  Tax Consequences to Non-United            
  States Holders of Common Stock......    68
Shares Eligible for Future Sale.......    70
Underwriting..........................    72
Legal Matters.........................    74
Experts...............................    74
Additional Information................    75
Index to Consolidated Financial             
  Statements..........................   F-1
  UNTIL JULY 5, 1998 (25 DAYS AFTER THE DATE
OF THIS PROSPECTUS), ALL DEALERS EFFECTING  
TRANSACTIONS IN COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE  
REQUIRED TO DELIVER A PROSPECTUS. THIS      
DELIVERY REQUIREMENT IS IN ADDITION TO THE  
OBLIGATION OF DEALERS TO DELIVER A          
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND  
WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR  
SUBSCRIPTIONS.                              
============================================

======================================================                          

3,600,000 SHARES

GERBER LOGO 

GERBER CHILDRENSWEAR, INC.

COMMON STOCK
--------------------

PROSPECTUS
--------------------

MERRILL LYNCH & CO. 

BEAR, STEARNS & CO. INC.

LEHMAN BROTHERS 

FURMAN SELZ 

WASSERSTEIN PERELLA 
SECURITIES, INC.
JUNE 10, 1998 
======================================================                          

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘424B4’ Filing		Date		First		Last			Other Filings
		1/22/16		48
		1/31/07		19		98
		12/31/06		50
		1/22/06		19		98
		10/1/04		94
		3/1/04		94
		1/22/04		19
		1/22/03		19
		12/31/02		49		117
		10/31/02		33		64
		9/30/02		19		94
		1/1/02		50
		12/31/01		11		50			10-K
		1/22/01		55		67
		12/31/00		11		48			10-K
		12/31/99		68					10-K
		10/1/99		94
		3/1/99		94
		1/22/99		56
		1/1/99		46		50
		12/31/98		9		50			10-K
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		7/5/98		131
		6/16/98		1
Filed on:		6/11/98
		6/10/98		1		131			S-1/A
		4/4/98		9		80
		3/24/98		3
		3/12/98		48
		3/4/98		102					S-1
		2/24/98		53
		1/30/98		83
		1/16/98		111
		1/1/98		10		117
		12/31/97		6		115
		12/17/97		10		99
		12/16/97		24		117
		12/15/97		35		90
		11/26/97		62
		11/25/97		62
		11/24/97		59		61
		9/30/97		61		62
		9/12/97		104
		7/25/97		62
		3/29/97		9		76
		2/28/97		62
		2/11/97		59		61
		1/1/97		10		117
		12/31/96		9		97
		5/31/96		96
		1/22/96		9		102
		1/21/96		10		31
		1/1/96		10		31
		12/31/95		9		110
		3/18/95		55
		12/31/94		22		106
		3/31/94		22
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