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Published: 2020-04-29
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CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
GILDAN ACTIVEWEAR INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in thousands of U.S. dollars) - unaudited
March 29,December 29,
20202019
Current assets:
Cash and cash equivalents$505,085$64,126
Trade accounts receivable (note 4)344,601320,931
Inventories (note 5)1,188,2091,052,052
Prepaid expenses, deposits and other current assets65,92677,064
Total current assets2,103,8211,514,173
Non-current assets:
Property, plant and equipment981,141994,980
Right-of-use assets80,40373,539
Intangible assets (note 6)304,881383,864
Goodwill (note 6)206,636227,865
Deferred income taxes11,1359,917
Other non-current assets6,8876,732
Total non-current assets1,591,0831,696,897
Total assets$3,694,904$3,211,070
Current liabilities:
Accounts payable and accrued liabilities$342,602$406,631
Income taxes payable3671,255
Current portion of lease obligations (note 9(d))15,84414,518
Dividends payable30,251—
Total current liabilities389,064422,404
Non-current liabilities:
Long-term debt (note 7)1,550,000845,000
Lease obligations (note 9(d))72,47866,982
Other non-current liabilities40,60842,190
Total non-current liabilities1,663,086954,172
Total liabilities2,052,1501,376,576
Equity:
Share capital173,849174,218
Contributed surplus29,83132,769
Retained earnings1,475,7541,628,042
Accumulated other comprehensive income (loss)(36,680)(535)
Total equity attributable to shareholders of the Company1,642,7541,834,494
Total liabilities and equity$3,694,904$3,211,070
See accompanying notes to unaudited condensed interim consolidated financial statements.
QUARTERLY REPORT - Q1 2020  38
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
GILDAN ACTIVEWEAR INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
AND COMPREHENSIVE INCOME (LOSS)
(in thousands of U.S. dollars, except per share data) - unaudited
Three months ended
March 29,March 31,
20202019
Net sales (note 15)$459,103$623,935
Cost of sales352,557463,195
Gross profit106,546160,740
Selling, general and administrative expenses73,94892,989
Impairment of trade accounts receivable (note 4)20,75224,423
Restructuring and acquisition-related costs (note 8)10,18510,600
Impairment of goodwill and intangible assets (note 6)93,989—
Operating income (loss)(92,328)32,728
Financial expenses, net (note 9(b))7,8599,132
Earnings (loss) before income taxes (100,187)23,596
Income tax expense (recovery)(892)868
Net earnings (loss)(99,295)22,728
Other comprehensive income (loss), net of related income taxes (note 11):
Cash flow hedges(36,145)5,805
Comprehensive income (loss)$(135,440) $28,533
Earnings (loss) per share (note 12):
Basic$(0.50) $0.11
Diluted$(0.50) $0.11
See accompanying notes to unaudited condensed interim consolidated financial statements.
QUARTERLY REPORT - Q1 2020  39
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
GILDAN ACTIVEWEAR INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Three months ended March 29, 2020 and March 31, 2019 
(in thousands or thousands of U.S. dollars) - unaudited
Accumulated
Share capitalother
ContributedcomprehensiveRetainedTotal
surplusincome (loss)earningsequityNumberAmount
Balance, December 29, 2019199,012 $ 174,218$32,769$(535) $ 1,628,042$ 1,834,494
Share-based compensation——(2,938)——(2,938)
Shares issued under employee share 
purchase plan14375———375
Shares repurchased for cancellation(843)(744)——(22,472)(23,216)
Dividends declared————(30,521)(30,521)
Transactions with shareholders of the 
Company recognized directly in equity(829)(369)(2,938)—(52,993)(56,300)
Cash flow hedges (note 11)———(36,145)—(36,145)
Net earnings (loss)————(99,295)(99,295)
Comprehensive income (loss)———(36,145)(99,295)(135,440)
Balance, March 29, 2020198,183 $ 173,849$29,831$(36,680) $ 1,475,754$ 1,642,754
Balance, December 30, 2018206,732 $ 159,858$32,490$3,382$ 1,740,342$ 1,936,072
Adjustments relating to the adoption of new 
accounting standards————(1,155)(1,155)
Adjusted balance, December 31, 2018206,732159,85832,4903,3821,739,1871,934,917
Share-based compensation——4,639——4,639
Shares issued under employee share 
purchase plan11374———374
Shares issued pursuant to exercise of 
stock options3158,936(2,855)——6,081
Shares repurchased for cancellation(876)(676)——(30,361)(31,037)
Dividends declared————(27,859)(27,859)
Transactions with shareholders of the 
Company recognized directly in equity(550)8,6341,784—(58,220)(47,802)
Cash flow hedges (note 11)———5,805—5,805
Net earnings————22,72822,728
Comprehensive income———5,80522,72828,533
Balance, March 31, 2019206,182 $ 168,492$34,274$9,187$ 1,703,695$ 1,915,648
See accompanying notes to unaudited condensed interim consolidated financial statements.
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CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
GILDAN ACTIVEWEAR INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars) - unaudited
Three months ended
March 29,March 31,
20202019
Cash flows from (used in) operating activities:
Net earnings (loss)$(99,295) $22,728
Adjustments to reconcile net earnings to cash flows from (used in) operating 
activities (note 13(a))121,36946,277
22,07469,005
Changes in non-cash working capital balances:
Trade accounts receivable(26,146)(76,951)
Income taxes(922)(442)
Inventories(128,882)(67,160)
Prepaid expenses, deposits and other current assets13,890(761)
Accounts payable and accrued liabilities(89,444)(28,888)
Cash flows used in operating activities(209,430)(105,197)
Cash flows from (used in) investing activities:
Purchase of property, plant and equipment(20,715)(19,789)
Purchase of intangible assets(4,923)(3,042)
Business acquisitions—(1,300)
Proceeds on disposal of property, plant and equipment61269
Cash flows used in investing activities(25,577)(23,862)
Cash flows from (used in) financing activities:
Increase in amounts drawn under long-term bank credit facilities705,000219,000
Payment of lease obligations(4,188)(3,239)
Dividends paid—(27,859)
Proceeds from the issuance of shares3386,418
Repurchase and cancellation of shares(23,216)(31,037)
Cash flows from financing activities677,934163,283
Effect of exchange rate changes on cash and cash equivalents denominated in foreign 
currencies(1,968)99
Increase in cash and cash equivalents during the period440,95934,323
Cash and cash equivalents, beginning of period64,12646,657
Cash and cash equivalents, end of period$505,085$80,980
Cash paid during the period (included in cash flows from (used in) operating activities):
Interest$8,934$8,798
Income taxes, net of refunds1,3841,523
Supplemental disclosure of cash flow information (note 13).See accompanying notes to unaudited condensed interim consolidated financial statements.
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NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the period ended March 29, 2020(Tabular amounts in thousands or thousands of U.S. dollars except per share data, unless otherwise indicated)
1. REPORTING ENTITY:
Gildan Activewear Inc. (the "Company" or "Gildan") is domiciled in Canada and is incorporated under the CanadaBusiness Corporations Act. Its principal business activity is the manufacture and sale of activewear, hosiery, andunderwear. The Company’s fiscal year ends on the Sunday closest to December 31 of each year.
The address of the Company’s registered office is 600 de Maisonneuve Boulevard West, Suite 3300, Montreal,Quebec. These unaudited condensed interim consolidated financial statements are as at and for the three monthsended March 29, 2020 and include the accounts of the Company and its subsidiaries. The Company is a publiclylisted entity and its shares are traded on the Toronto Stock Exchange and New York Stock Exchange under thesymbol GIL.
2. BASIS OF PREPARATION:
(a) Statement of compliance:
These unaudited condensed interim consolidated financial statements have been prepared in accordance withInternational Accounting Standard (“IAS”) 34, Interim Financial Reporting, as issued by the InternationalAccounting Standards Board (“IASB”). These unaudited condensed interim consolidated financial statementsshould be read in conjunction with the Company’s fiscal 2019 audited consolidated financial statements. TheCompany applied the same accounting policies in the preparation of these unaudited condensed interimconsolidated financial statements as those disclosed in note 3 of its most recent annual consolidated financialstatements, except for the adoption of new standards effective as of December 30, 2019 as described below innote 2(d).
These unaudited condensed interim consolidated financial statements were authorized for issuance by the Boardof Directors of the Company on April 29, 2020.
(b) Seasonality of the business:
The Company’s net sales are subject to seasonal variations. Net sales have historically been higher during thesecond and third quarters, however for fiscal 2020 net sales are not expected to follow historical patterns due tothe impact of the coronavirus ("COVID-19") pandemic.
(c) Operating segments:
The Company manages its business on the basis of one reportable operating segment.
(d) Initial application of new accounting standards and interpretations in the reporting period:
On December 30, 2019, the Company adopted the following new amendment:
Amendments to IFRS 3, Business combinationsIn October 2018, the IASB issued amendments to IFRS 3, Business combinations. The amendments clarify thedefinition of a business, with the objective of assisting entities in determining whether a transaction should beaccounted for as a business combination or as an asset acquisition. The amendments are effective for businesscombinations for which the acquisition date is on or after the beginning of the first annual reporting periodbeginning on or after January 1, 2020 and apply prospectively. Given the prospective application of theamendment, its adoption did not have an impact on the Company’s consolidated financial statements.
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NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
3. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS NOT YET APPLIED:
Amendments to IAS 1, Presentation of Financial StatementsOn January 23, 2020, the IASB issued narrow-scope amendments to IAS 1, Presentation of Financial Statements, toclarify how to classify debt and other liabilities as current or non-current. The amendments (which affect only thepresentation of liabilities in the statement of financial position) clarify that the classification of liabilities as current ornon-current should be based on rights that are in existence at the end of the reporting period to defer settlement by atleast twelve months and make explicit that only rights in place at the end of the reporting period should affect theclassification of a liability; clarify that classification is unaffected by expectations about whether an entity will exerciseits right to defer settlement of a liability; and make clear that settlement refers to the transfer to the counterparty ofcash, equity instruments, other assets, or services. The amendments are effective for annual reporting periodsbeginning on or after January 1, 2022 and are to be applied retrospectively. Earlier application is permitted. TheCompany is currently evaluating the impact of the amendment on its consolidated financial statements.
4. TRADE ACCOUNTS RECEIVABLE:
March 29,December 29,
20202019
Trade accounts receivable$372,453 $328,115
Allowance for expected credit losses(27,852)(7,184)
$344,601 $320,931
As at March 29, 2020, trade accounts receivables being serviced under a receivables purchase agreement amountedto $77.3 million (December 29, 2019 - $141.0 million). The receivables purchase agreement, which allows for the saleof a maximum of $175 million of accounts receivables at any one time, expires on June 22, 2020, subject to annualextensions. The Company retains servicing responsibilities, including collection, for these trade receivables but hasnot retained any credit risk with respect to any trade receivables that have been sold. The difference between thecarrying amount of the receivables sold under the agreement and the cash received at the time of transfer was $0.5million (2019 - $0.7 million) for the three months ended March 29, 2020, and was recorded in bank and other financialcharges.
The movement in the allowance for expected credit losses in respect of trade receivables was as follows:
Three months ended
March 29,March 31,
20202019
Allowance for expected credit losses, beginning of period$(7,184) $(7,547)
Impairment of trade accounts receivable(20,752)(24,423)
Write-off of trade accounts receivable842
Allowance for expected credit losses, end of period$(27,852) $(31,968)
Impairment of trade accounts receivableThe impairment of trade accounts receivable for the three months ended March 29, 2020 was mainly related to anincrease in the estimate of expected credit losses (ECLs) attributable to the deteriorating economic environmentcaused by the COVID-19 pandemic. The impairment of trade accounts receivable for the three months ended March31, 2019 consisted primarily of a $21.7 million charge relating to the receivership and liquidation of one of theCompany's U.S. distributor customers.
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NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
4. TRADE ACCOUNTS RECEIVABLE (continued):
In determining its allowance for expected credit losses the Company applies the simplified approach per IFRS 9,Financial Instruments, and calculates expected credit losses based on lifetime expected credit losses. The Companyhas established a provision matrix, which segregates its customers by their economic characteristics and allocatesexpected credit loss rates based on days past due of its trade receivables. Expected credit loss rates are based onthe Company’s historical credit loss experience, adjusted for forward-looking factors of the economic environment. Inlight of the COVID-19 pandemic, the Company’s provision matrix was adjusted, as its historical experience was notreflective of the current market conditions, including the uncertainties present in the current economic environment,such as the financial viability of its debtors and the various levels of government support that have been announced.Many of our customers have seen a major reduction in their sales and operations during this period and are takingspecific measures to minimize operating losses and preserve liquidity, including requests to extend payment terms onthe Company’s previously invoiced shipments. As a result, previously determined loss rates for the individual dayspast due categories included in the provision matrix are not reflective of expected losses at this time. Therefore, theCompany has applied loss rates to individually significant receivables, or sub-categories of individually significantreceivables, based on its evaluation of possible outcomes with respect to the collectability of these amounts at themeasurement date. The Company has increased its expected credit loss rates by reference to projectedmacroeconomic loss factors (such as projected GDP decreases or projected market default rates) to reflect theadditional risk of loss that the current economic conditions would indicate. For customers in good standing who havenot requested extended payment terms on the Company’s previously invoiced shipments, the expected credit lossrates have not been modified. For customers who have requested extended payment terms on the Company’spreviously invoiced shipments, an expected loss rate ranging between 3% and 10% has been determined usingmacroeconomic factors, and depending on the customer's historical payment history, the nature of its operations, andits geographic location. For customers previously in default, a significant loss rate has been determined. A 10%increase in the expected loss rate for all customers with a balance due as at March 29, 2020 would result in a $37million increase in the allowance for expected credit losses. In the event that new information becomes available to usthat would change the Company's assessment of expected loss, the amounts recorded in allowance for expectedcredit losses will be updated in the period in which the additional information is received. There is no assurance thatour current estimates of recoverability will not change significantly as the COVID-19 pandemic and its relatedbusiness and societal impacts evolve, which may either require a charge to earnings or a reversal of such allowancesin subsequent periods based on revised estimates or actual collection experience.
5. INVENTORIES:
March 29,December 29,
20202019
Raw materials and spare parts inventories$155,503$152,584
Work in progress61,57475,535
Finished goods971,132823,933
$1,188,209$1,052,052
For the three months ended March 29, 2020, cost of sales includes write-downs of inventory to net realizable value of$9.0 million, including $5.2 million for a change in estimate that increased inventory reserves related to theCompany’s strategic initiative to significantly reduce its imprintables product line stock-keeping unit (SKU) count byexiting all ship to-the-piece activities and discontinuing overlapping and less productive styles and SKUs betweenbrands. The Company began implementing this initiative in the fourth quarter of fiscal 2019, which initially resulted ininventory write-downs to net realizable value of $47.6 million.
QUARTERLY REPORT - Q1 2020  44
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
6. INTANGIBLE ASSETS AND GOODWILL:
Goodwill and intangible assets acquired through business acquisitions have been allocated to the Company's cash-generating units ("CGUs") as follows:
March 29,December 29,
20202019
Textile & Sewing:
Goodwill$206,636$206,637
Definite life intangible assets (excluding computer software)31,77333,066
Indefinite life intangible assets93,40093,400
$331,809$333,103
Hosiery:
Goodwill$—$21,228
Definite life intangible assets (excluding computer software)69,515101,906
Indefinite life intangible assets86,129129,272
$155,644$252,406
In assessing whether goodwill and indefinite life intangible assets are impaired, the carrying amounts of the CGUs(including goodwill and long-lived assets) are compared to their recoverable amounts. The recoverable amounts ofCGUs are based on the higher of the value in use and fair value less costs of disposal. The Company performed theannual impairment review for goodwill and indefinite life intangible assets as at December 29, 2019, and theestimated recoverable amounts exceeded the carrying amounts of its CGUs and as a result, there was no impairmentidentified. However, for the Hosiery CGU, management had identified that a decrease in the risk adjusted forecastedadjusted EBITDA of 10%, combined with a decrease in the adjusted EBITDA multiple by a factor of 1 would result inthe estimated recoverable amount being equal to the carrying amount.
Hosiery CGUThe outbreak of the COVID-19, which was declared a pandemic on March 11, 2020 by the World Health Organizationled to a rapid deterioration in the global economic environment and triggered a sharp fall in stock markets andenterprise values worldwide. In addition, the Company’s market capitalization declined significantly between March11, 2020 and March 29, 2020. The measures adopted by the various levels of government across key markets inorder to mitigate the spread of the COVID-19 pandemic have significantly affected economic activity and sentiment,disrupting the business operations of companies worldwide, and have required many of the Company’s customers towhich it sells hosiery products to close all of their retail locations across the U.S. effective mid to late-March and untilfurther notice. Therefore, as a result of the adverse impact of the COVID-19 pandemic on the global economicenvironment and on the Company's market capitalization and considering that the fair value of the Hosiery CGU as atDecember 29, 2019 was only 20% higher than its carrying value, the Company performed an impairment review ofthe Hosiery CGU as at March 29, 2020.
Based on the results of its impairment review of the Hosiery CGU, the Company recorded an impairment charge of$94.0 million in the first quarter of fiscal 2020, relating to goodwill and intangible assets (both definite and indefinitelife) acquired in previous business acquisitions. The non-cash write-down of goodwill and intangible assets isexpected to have no impact on the Company’s liquidity, cash flows from operating activities, or its compliance withdebt covenants. The primary cause for the impairment charge is the deterioration in the global economic environmentand the resulting decline in the Company’s share price, market capitalization, and forecasted earnings.
The Company determined the recoverable amounts of the Hosiery CGU based on the fair value less costs of disposalmethod. The fair value of the Hosiery CGU was based on a multiple applied to forecasted recurring earnings beforefinancial expenses, income taxes, depreciation and amortization, and restructuring and acquisition-related costs("adjusted EBITDA"), which considers financial forecasts approved by senior management. The adjusted EBITDAmultiple was obtained by using market comparables as a reference. The key assumptions used in the estimation ofthe recoverable amount for the Hosiery CGU are the risk adjusted forecasted recurring adjusted EBITDA and theadjusted EBITDA multiple of 7 (adjusted EBITDA multiple of 11 in 2019). The most significant assumptions that formpart of the risk adjusted forecasted recurring adjusted EBITDA relate to estimated sales volumes, selling prices, input
QUARTERLY REPORT - Q1 2020  45
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
6. INTANGIBLE ASSETS AND GOODWILL (continued):
costs, and SG&A expenses. A decrease in the risk adjusted forecasted adjusted EBITDA of 10%, combined with adecrease in the adjusted EBITDA multiple by a factor of 1 would result in an additional impairment of approximately$90 million. The values assigned to the key assumptions represent management’s assessment of future trends andhave been based on historical data from external and internal sources.
Textile & Sewing CGUBased on the annual impairment review for goodwill and indefinite life intangible assets performed as atDecember 29, 2019, the excess of the recoverable amount over the carrying value for the Textile & Sewing CGU wassignificant. However, given the current global economic environment and its impact on the Company's marketcapitalization, the Company also performed an impairment review of the Textile & Sewing CGU as at March 29, 2020using the fair value less costs of disposal method, and concluded that no impairment was required and that that noreasonably possible change in the key assumptions used in determining the recoverable amount would result in anyimpairment of goodwill or indefinite life intangible assets for this CGU.
7. LONG-TERM DEBT:
Principal amount
Effective 
interest Maturity March 29,December 29,
rate(1)date20202019
Revolving long-term bank credit facility, interest at variable U.S. 
April 
LIBOR-based interest rate plus a spread ranging from 1% to 2.8%$950,000 $245,000
(2)2025
2%
Term loan, interest at variable U.S. LIBOR-based interest rate April 
(3)2.5%300,000300,000
plus a spread ranging from 1% to 2%, payable monthly2025
Notes payable, interest at fixed rate of 2.70%, payable semi-August 
(4)2.7%100,000100,000
annually2023
Notes payable, interest at variable U.S. LIBOR-based interest August 
(4)2.7%50,00050,000
rate plus a spread of 1.53%, payable quarterly2023
Notes payable, interest at fixed rate of 2.91%, payable semi-August 
(4)2.9%100,000100,000
annually2026
Notes payable, interest at variable U.S. LIBOR-based interest August 
(4)2.9%50,00050,000
rate plus a spread of 1.57%, payable quarterly2026
$1,550,000 $845,000
(1) Represents the annualized effective interest rate for the three months ended March 29, 2020, including the cash impact of
interest rate swaps, where applicable.
(2) The Company’s unsecured revolving long-term bank credit facility of $1 billion provides for an annual extension which is subject
to the approval of the lenders. The spread added to the U.S. LIBOR-based variable interest rate is a function of the total netdebt to EBITDA ratio (as defined in the credit facility agreement). In addition, an amount of $24.1 million (December 29, 2019 -$22.5 million) has been committed against this facility to cover various letters of credit.
(3) The unsecured term loan is non-revolving and can be prepaid in whole or in part at any time with no penalties. The spread
added to the U.S. LIBOR-based variable interest rate is a function of the total net debt to EBITDA ratio (as defined in the termloan agreement).
(4) The unsecured notes issued for a total aggregate principal amount of $300 million to accredited investors in the U.S. private
placement market can be prepaid in whole or in part at any time subject to the payment of a prepayment penalty as providedfor in the Note Purchase Agreement.
In March 2020, the Company amended its unsecured revolving long-term bank credit facility of $1 billion and itsunsecured term loan of $300 million, in each case to extend the maturity dates from April 2024 to April 2025. On April6, 2020, the Company entered into a new unsecured two-year term loan agreement for a total principal amount of$400 million. Interest is payable monthly at variable U.S. LIBOR-based interest rate plus a spread ranging from1.70% to 2.50%. The new term loan is non-revolving and can be prepaid in whole or in part at any time with nopenalties. The spread added to the U.S. LIBOR-based variable interest rate is a function of the total net debt toEBITDA ratio (as defined in the term loan agreement). Under the terms of the revolving long-term bank credit facility,both term loan facilities, and notes, the Company is required to comply with certain covenants, including maintenanceof financial ratios.
QUARTERLY REPORT - Q1 2020  46
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
7. LONG-TERM DEBT (continued):
The revolving long-term bank credit facility and both term loan facilities require that the Company maintain a minimuminterest coverage ratio and a maximum total debt to EBITDA ratio (as such ratios are defined in the loan agreements).The interest coverage ratio covenant requires that the ratio of the Company’s EBITDA for the preceding four fiscalquarters to its consolidated total interest expense for such period shall not be less than 3.50 to 1.00 for each fiscalquarter. The total debt to EBITDA ratio covenant requires that the ratio of the Company’s total debt to EBITDA for thepreceding four fiscal quarters will not be more than 3.25 to 1.00 for each fiscal quarter provided that following anacquisition for which the consideration is at least $75 million, such maximum total debt to EBITDA covenant shall beincreased to 3.75 to 1.00 for four consecutive fiscal quarters following such acquisition.
The notes issued to accredited investors in the U.S. private placement market require that the Company maintain aminimum interest coverage ratio and a maximum indebtedness to EBITDA ratio (as such ratios are defined in theagreements governing the notes). The interest coverage ratio covenant requires that the ratio of the Company’sEBITDA for the preceding four fiscal quarters to its consolidated total interest expense for such period shall not beless than 3.00 to 1.00 for each fiscal quarter. The indebtedness to EBITDA ratio covenant requires that the ratio of theCompany’s indebtedness to EBITDA for the preceding four fiscal quarters will not be more than 3.50 to 1.00 for eachfiscal quarter provided that upon notice of the Company to holders of the notes, as of the last day of each of the fourconsecutive fiscal quarters immediately following a qualified acquisition, such ratio may be greater than 3.50 to 1.00,but in no event greater than 4.00 to 1.00.
The Company was in compliance with all covenants at March 29, 2020.
8. RESTRUCTURING AND ACQUISITION-RELATED COSTS:
Three months ended
March 29,March 31,
20202019
Employee termination and benefit costs$3,042$1,396
Exit, relocation and other costs5,0812,839
Net loss on disposal and write-downs of property, plant and equipment, right- of-use assets and computer software related to exit activities2,0626,365
$10,185$10,600
Restructuring and acquisition-related costs for the three months ended March 29, 2020 related to the following: $4.8million for the closure of textile manufacturing and sewing operations in Mexico; $4.4 million for the exit of ship-to-the-piece activities, including computer software write-downs and warehouse consolidation costs; and $1.0 million tocomplete other restructuring activities that were initiated in fiscal 2019.
Restructuring and acquisition-related costs for the three months ended March 31, 2019 related to the following: $6.0million for the exit of yarn recycling activities, including the planned disposal of yarn recycling equipment; $0.9 millionfor the closure of an administrative office in the U.S.; $0.8 million for the consolidation of sewing activities in Mexico;and $2.9 million in other costs to complete restructuring activities that were initiated in fiscal 2018, including theclosure of the AKH textile manufacturing facility and the consolidation of U.S. distribution centres.
QUARTERLY REPORT - Q1 2020  47
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
9. OTHER INFORMATION:
(a) Depreciation and amortization:
Three months ended
March 29,March 31,
20202019
Depreciation of property, plant and equipment$28,033$31,091
Depreciation of right-of-use assets3,6793,322
Adjustment for the variation of depreciation included in inventories at the 
beginning and end of the period(7,275)(1,086)
Amortization of intangible assets, excluding computer software4,1125,517
Amortization of computer software1,7361,221
Depreciation and amortization included in net earnings$30,285$40,065
Included in property, plant and equipment as at March 29, 2020 is $16.0 million (December 29, 2019 - $37.7 million)of buildings and equipment not yet available for use in operations. Included in intangible assets as at March 29, 2020is $2.8 million (December 29, 2019 - $9.9 million) of software not yet available for use in operations. Depreciation andamortization on these assets commences when the assets are available for use.
Effective July 1, 2019, the Company revised the estimated useful lives of its yarn-spinning manufacturing equipmentbased on a re-assessment of their expected use to the Company and recent experience of their economic lives.These assets, which were previously being depreciated on a straight-line basis over 10 years, are now depreciatedon a straight-line basis over 15 to 20 years depending on the nature of the equipment. For fiscal 2020, the change inestimate resulted in a reduction in depreciation included in net earnings of approximately $4 million for the threemonths ended March 29, 2020, and is expected to result in a reduction of depreciation included in net earnings ofapproximately $13 million for the remainder of the fiscal year.
(b) Financial expenses, net:
Three months ended
March 29,March 31,
20202019
Interest expense on financial liabilities recorded at amortized cost(1)$7,057$6,894
Bank and other financial charges1,2811,866
Interest accretion on discounted lease obligations825831
Interest accretion on discounted provisions5871
Foreign exchange gain(1,362)(530)
$7,859$9,132
(1) Net of capitalized borrowing costs of $0.4 million (2019 - $0.1 million) for the three months ended March 29, 2020.
(c) Related party transaction:
The Company incurred expenses for airplane usage of $0.5 million (2019 - $0.4 million) for the three months endedMarch 29, 2020, with a company controlled by the President and Chief Executive Officer of the Company. Thepayments made are in accordance with the terms of the agreement established and agreed to by the related parties.As at March 29, 2020, the amount in accounts payable and accrued liabilities related to the airplane usage was $0.9million (December 29, 2019 - $0.7 million).
QUARTERLY REPORT - Q1 2020  48
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
9. OTHER INFORMATION (continued):
(d) Lease obligations:
The Company’s leases are primarily for manufacturing, sales, distribution, and administrative facilities.
The following table presents lease obligations recorded in the statement of financial position as at March 29, 2020:
March 29,
2020
Current$15,844
Non-current72,478
$88,322
The following table presents the future minimum lease payments under non-cancellable leases (including short termleases) as at March 29, 2020:
March 29,
2020
Less than one year$21,987
One to five years48,350
More than five years35,548
$105,885
For the three months ended March 29, 2020 the total cash outflow for recognized lease obligations (including interest) was $5.0 million, of which $4.2 million was included as part of cash outflows from financing activities.
QUARTERLY REPORT - Q1 2020  49
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
10. FAIR VALUE MEASUREMENT:
Disclosures relating to the nature and extent of the Company’s exposure to risks arising from financial instruments,including credit risk, liquidity risk, foreign currency risk and interest rate risk, as well as risks arising from commodityprices, and how the Company manages those risks, are included in the section entitled “Financial risk management”of the Management’s Discussion and Analysis of the Company’s operations, financial performance and financialposition as at December 29, 2019 and December 30, 2018. Updates to changes in our credit and liquidity risks aredescribed in the section entitled “Financial risk management” of the Management’s Discussion and Analysis of theCompany’s operations, financial performance and financial position as at March 29, 2020. Accordingly, thesedisclosures are incorporated into these condensed interim consolidated financial statements by cross-reference.
Financial instruments – carrying amounts and fair values:The carrying amounts and fair values of financial assets and liabilities included in the unaudited condensed interimconsolidated statements of financial position are as follows:
March 29,December 29,
20202019
Financial assetsAmortized cost:
Cash and cash equivalents$505,085$64,126
Trade accounts receivable344,601320,931
Financial assets included in prepaid expenses, deposits and other current 
assets34,09745,950
Long-term non-trade receivables included in other non-current assets3,3802,933
Derivative financial assets included in prepaid expenses, deposits and other 
current assets11,8379,816
Financial liabilitiesAmortized cost:
Accounts payable and accrued liabilities(1)291,308395,564
Dividend payable30,251—
Long-term debt - bearing interest at variable rates1,350,000645,000
Long-term debt - bearing interest at fixed rates(2)200,000200,000
Derivative financial liabilities included in accounts payable and accrued 
liabilities51,29411,067
(1) Accounts payable and accrued liabilities include balances payable of $46.7 million (December 29, 2019 - $39.6 million) undersupply-chain financing arrangements (reverse factoring) with a financial institution, whereby receivables due from the Company tocertain suppliers can be collected by the suppliers from a financial institution before their original due date. These balances areclassified as accounts payable and accrued liabilities and the related payments as cash flows from operating activities, given theprincipal business purpose of the arrangement is to provide funding to the supplier and not the Company, the arrangement does notsignificantly extend the payment terms beyond the normal terms agreed with other suppliers, and no additional deferral or specialguarantees to secure the payments are included in the arrangement.(2) The fair value of the long-term debt bearing interest at fixed rates was $222.9 million as at March 29, 2020 (December 29, 2019 -$206.4 million).
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NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
10. FAIR VALUE MEASUREMENT (continued):
Short-term financial assets and liabilitiesThe Company has determined that the fair value of its short-term financial assets and liabilities approximates theirrespective carrying amounts as at the reporting dates due to the short-term maturities of these instruments, as theybear variable interest-rates, or because the terms and conditions are comparable to current market terms andconditions for similar items.
Non-current assets and long-term debt bearing interest at variable ratesThe fair values of the long-term non-trade receivables included in other non-current assets and the Company’s long-term debt bearing interest at variable rates also approximate their respective carrying amounts because the interestrates applied to measure their carrying amounts approximate current market interest rates.
Long-term debt bearing interest at fixed ratesThe fair value of the long-term debt bearing interest at fixed rates is determined using the discounted future cashflows method and at discount rates based on yield to maturities for similar issuances. The fair value of the long-termdebt bearing interest at fixed rates was measured using Level 2 inputs in the fair value hierarchy. In determining thefair value of the long-term debt bearing interest at fixed rates, the Company takes into account its own credit risk andthe credit risk of the counterparties.
DerivativesDerivative financial instruments (most of which are designated as effective hedging instruments) consist of foreignexchange and commodity forward, option, and swap contracts, as well as floating-to-fixed interest rate swaps to fixthe variable interest rates on a designated portion of borrowings under the term loan and unsecured notes. The fairvalue of the forward contracts is measured using a generally accepted valuation technique which is the discountedvalue of the difference between the contract’s value at maturity based on the rate set out in the contract and thecontract’s value at maturity based on the rate that the counterparty would use if it were to renegotiate the samecontract terms at the measurement date under current conditions. The fair value of the option contracts is measuredusing option pricing models that utilize a variety of inputs that are a combination of quoted prices and market-corroborated inputs, including volatility estimates and option adjusted credit spreads. The fair value of the interest rateswaps is determined based on market data, by measuring the difference between the fixed contracted rate and theforward curve for the applicable floating interest rates.
The Company also has a total return swap (“TRS”) outstanding that is intended to reduce the variability of netearnings associated with deferred share units, which are settled in cash. The TRS is not designated as a hedginginstrument and, therefore, the fair value adjustment at the end of each reporting period is recognized in selling,general and administrative expenses. The fair value of the TRS is measured by reference to the market price of theCompany’s common shares, at each reporting date. The TRS has a one-year term, may be extended annually, andthe contract allows for early termination at the option of the Company. As at March 29, 2020, the notional amount ofTRS outstanding was 216,727 shares.
Derivative financial instruments were measured using Level 2 inputs in the fair value hierarchy. In determining the fairvalue of derivative financial instruments the Company takes into account its own credit risk and the credit risk of thecounterparties.
QUARTERLY REPORT - Q1 2020  51
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
11. OTHER COMPREHENSIVE INCOME (LOSS) (“OCI”):
Three months ended
March 29,March 31,
20202019
Net gain (loss) on derivatives designated as cash flow hedges:
Foreign currency risk$7,185$2,266
Commodity price risk(31,038)6,226
Interest rate risk(12,227)(3,702)
Income taxes(72)(23)
Amounts reclassified from OCI to inventory, related to commodity price risk4,0392,152
Amounts reclassified from OCI to net earnings, related to foreign currency 
risk, interest rate risk, and commodity risk, and included in:Net sales
(242)(1,083)
Cost of sales—(28)
Selling, general and administrative expenses(110)161
Financial expenses, net(3,721)(175)
Income taxes4111
Other comprehensive income (loss)$(36,145) $5,805
As at March  29, 2020, the Company determined that it no longer met the criteria for hedge accounting for certaincommodity forward, option, and swap contracts and certain forward foreign exchange contracts (collectively the"hedging instruments") as the commodity purchases and foreign currency sales which the hedging instruments wererespectively hedging, were no longer expected to occur due to current economic conditions resulting from theCOVID-19 pandemic. As a result, changes in the fair value of such commodity forward, option, and swap contracts(loss of $2.5 million) and forward foreign exchange contracts (gain of $2.9 million) were transferred out ofaccumulated other comprehensive income and recognized immediately in net earnings within bank and otherfinancial charges as part of the financial expenses caption.
The change in the time value element of option and swap contracts designated as cash flow hedges to reduce theexposure in movements of commodity prices was not significant for the three months ended March 29, 2020 and forthe three months ended March 31, 2019. The change in the forward element of derivatives designated as cash flowhedges to reduce foreign currency risk was not significant for the three months ended March 29, 2020 and for thethree months ended March 31, 2019. No ineffectiveness has been recognized in net earnings for the three monthsended March 29, 2020 and for the three months ended March 31, 2019.
As at March 29, 2020, accumulated other comprehensive loss of $36.7 million consisted of net deferred losses oncommodity forward, option, and swap contracts of $28.4 million, net deferred losses on interest rate swap contracts of$10.7 million, and net deferred gains on forward foreign exchange contracts of $2.4 million. Approximately$23.2  million of net losses presented in accumulated other comprehensive income (loss) are expected to bereclassified to inventory or net earnings within the next twelve months.
QUARTERLY REPORT - Q1 2020  52
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
12. EARNINGS (LOSS) PER SHARE:
Reconciliation between basic and diluted earnings (loss) per share is as follows:
Three months ended
March 29,March 31,
20202019
Net earnings (loss) - basic and diluted$(99,295) $22,728
Basic earnings (loss) per share:
Basic weighted average number of common shares outstanding198,624206,595
Basic earnings (loss) per share$(0.50) $0.11
Diluted earnings (loss) per share:
Basic weighted average number of common shares outstanding198,624206,595
Plus dilutive impact of stock options, Treasury RSUs and common shares 
held in trust—462
Diluted weighted average number of common shares outstanding198,624207,057
Diluted earnings (loss) per share$(0.50) $0.11
Excluded from the above calculation for the three months ended March 29, 2020 are 2,219,128 stock options (2019 - 282,737) and 114,127 Treasury RSUs (2019 - nil) which were deemed to be anti-dilutive.
QUARTERLY REPORT - Q1 2020  53
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
13. SUPPLEMENTAL CASH FLOW DISCLOSURE:
(a) Adjustments to reconcile net earnings to cash flows from (used in) operating activities:
Three months ended
March 29,March 31,
20202019
Depreciation and amortization (note 9(a))$30,285$40,065
Restructuring charges related to property, plant and equipment, right-of-use 
assets, and computer software (note 8)2,0626,365
Impairment of goodwill and intangible assets93,989—
Loss on disposal of property, plant and equipment and computer software417412
Share-based compensation(1)(2,901)4,676
Deferred income taxes(1,410)(260)
Unrealized net gain on foreign exchange and financial derivatives(1,762)(1,646)
Timing differences between settlement of financial derivatives and transfer of 
deferred gains and losses in accumulated OCI to inventory and net 
earnings2,655(133)
Other non-current assets680(1,891)
Other non-current liabilities(2,646)(1,311)
$121,369$46,277
(1) During the three months ended March 29, 2020, the Company revised its estimate for the achievement of performance factorsrelating to Non-Treasury RSUs to be settled in common shares purchased on the open market, resulting in a reduction of share-based compensation expense of $6.3 million for the three months ended March 29, 2020.
(b) Variations in non-cash transactions:
Three months ended
March 29,March 31,
20202019
Dividend payable$30,521$—
Additions to property, plant and equipment and intangible assets included in 
accounts payable and accrued liabilities(9,992)(1,652)
Proceeds on disposal of property, plant and equipment and computer 
software included in other current assets(835)(440)
Additions to right-of-use assets included in lease obligations11,661—
Impact of adoption of new accounting standards —(1,155)
Non-cash ascribed value credited to share capital from shares issued or 
distributed pursuant to vesting of restricted share units and exercise of 
stock options—2,855
14. CONTINGENT LIABILITIES:
Claims and litigation
The Company is a party to claims and litigation arising in the normal course of operations. The Company does notexpect the resolution of these matters to have a material adverse effect on the financial position or results ofoperations of the Company.
QUARTERLY REPORT - Q1 2020  54
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
15. DISAGGREGATION OF REVENUE:
Net sales by major product group were as follows:
Three months ended
March 29,March 31,
20202019
Activewear$372,580$493,567
Hosiery and underwear86,523130,368
$459,103$623,935
Net sales were derived from customers located in the following geographic areas:
Three months ended
March 29,March 31,
20202019
United States$389,348$530,846
Canada16,32925,778
International53,42667,311
$459,103$623,935
QUARTERLY REPORT - Q1 2020  55