<PAGE>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

      (Mark One)
/X/   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934

For the fiscal year ended December 31, 2001

                                       OR

/ /   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

                         Commission file number: 1-14189

                           GERBER CHILDRENSWEAR, INC.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                       <C>
           Delaware                                             62-1624764
(State or other jurisdiction of                              (I.R.S. employer
 incorporation or organization)                           identification number)
</TABLE>

                                7005 Pelham Road
                              Greenville, SC 29615
                    (Address of principal executive offices)

                                 (864) 987-5200
              (Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

<TABLE>
<CAPTION>
                                                           Name of each
     Title of each class                           exchange on which registered
     -------------------                           ----------------------------
<S>                                                <C>
Common Stock, $0.01 par value                        New York Stock Exchange
</TABLE>

Securities registered pursuant to Section 12(g) of the Act: None

      Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /

      Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /

      As of March 25, 2002, there were outstanding 8,414,660 shares of Common
Stock and 11,396,046 shares of Class B Common Stock. As of March 25, 2002, the
aggregate market value of the shares of Common Stock held by nonaffiliates of
the registrant (based on the closing price for the Common Stock on the New York
Stock Exchange on March 25, 2002) was approximately $35,762,000.

                       DOCUMENTS INCORPORATED BY REFERENCE

The information called for by Part III is incorporated by reference to the
definitive Proxy Statement for the Annual Meeting of Stockholders of the Company
to be held May 21, 2002, which will be filed with the Securities and Exchange
Commission not later than 120 days after December 31, 2001.


                                       1
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
                                     PART I
Item 1.  Business .....................................................       4
Item 2.  Properties ...................................................       9
Item 3.  Legal Proceedings ............................................       9
Item 4.  Submission of Matters to a Vote of Security Holders ..........       9

                                     PART II

Item 5.  Market for the Registrant's Common Equity and Related
         Stockholder Matters ..........................................      10
Item 6.  Selected Financial Data ......................................      11
Item 7.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations ....................................      12
Item 7A. Quantitative and Qualitative Disclosures About Market Risk ...      18
Item 8.  Financial Statements and Supplementary Data ..................      19
Item 9.  Changes in and Disagreements with Accountants on Accounting
         and Financial Disclosure .....................................      19

                                    PART III

Item 10. Directors and Executive Officers of the Registrant ...........      19
Item 11. Executive Compensation .......................................      19
Item 12. Security Ownership of Certain Beneficial Owners and
         Management ...................................................      20
Item 13. Certain Relationships and Related Transactions ...............      20

                                     PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on
         Form 8-K .....................................................      20
</TABLE>


                                       2
<PAGE>
           SAFE-HARBOR STATEMENT REGARDING FORWARD-LOOKING DISCLOSURE

      This report includes "forward-looking statements" within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended, which represent
the Company's expectations or beliefs concerning future events that involve
known and unknown risks and uncertainties, including, without limitation, those
associated with the effect of international, national and regional economic and
political conditions, the overall level of consumer spending, the performance of
the Company's products within the prevailing retail environment, customer
acceptance of both new designs and newly-introduced product lines, competition
and financial difficulties encountered by customers. All statements other than
statements of historical facts included in this annual report, including,
without limitation, the statements under Management's Discussion and Analysis of
Financial Condition and Results of Operations, are forward-looking statements.
Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such
expectations will prove to have been correct and actual results, performance or
events could differ materially from those expressed in such statements.

References in this annual report on Form 10-K (the "Report") 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 Report to "Gerber" shall, as the context requires,
collectively refer to Apparel Operations of Gerber Childrenswear, Inc., GCW
Holdings, Inc., Costura Dominicana, Inc., Gerber Childrenswear Canada, Inc. (a
Delaware corporation formed in 1998), GCI IP Sub, Inc., Costura Matamoros S.A.
de C.V. (a Mexican corporation formed in 1998) and GCW Mexico S.A. de C.V. (a
Mexican corporation formed in 1998). References in this Report to "Auburn"
shall, as the context requires, collectively refer to the Hosiery Operations of
Auburn Hosiery Mills, Inc., GCI Spainco, S.L. (a Spanish corporation formed in
1998), Sport Socks Co. (Belgium) BVBA (a Belgian corporation formed in 1999),
Sport Socks Co. (UK) Limited and Sport Socks Co. (Ireland) Limited, each a
wholly-owned direct or indirect subsidiary of Gerber Childrenswear, Inc.


                                       3
<PAGE>
                                     PART I

ITEM 1. BUSINESS.

HISTORY

      Gerber Childrenswear, Inc. (the "Company") was formed and became a single
corporate entity through the merger in April 1989 of four separate companies
acquired by Gerber Products Company ("GPC"). In January 1996, Gerber
Childrenswear, Inc. was acquired by GCIH, Inc. ("GCIH") from GPC for
approximately $61.5 million in cash and a $12.5 million promissory note. The
equity of GCIH was primarily held by Citicorp Venture Capital, Ltd. ("CVC"),
management and directors. Gerber conducts the apparel segment of the Company's
business, which consists of the production and sale of infant and toddler
sleepwear, underwear, bedding, bath, cloth diapers and other products, under the
Gerber, Baby Looney Tunes, Little Suzy's Zoo and Curity licensed brand names,
the Onesies trademark and private labels.

      The Company acquired all of the capital stock of Auburn in December 1997
for approximately $40.0 million in cash (the "Auburn Acquisition"). Auburn
conducts the hosiery segment of the Company's business, which consists of the
production and sale of branded sport socks, under licensed brand names such as
Wilson, Converse, and Coca-Cola to major retailers in the United States and/or
Europe.

      In connection with the consummation of the Company's Initial Public
Offering in June 1998, GCIH and Gerber consummated a series of transactions
pursuant to which GCIH was recapitalized and reorganized and Gerber was merged
into GCIH.

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


                                       4
<PAGE>
BUSINESS SEGMENTS

      APPAREL SEGMENT

            The apparel segment consists of the production and sale of infant
and toddler sleepwear, underwear, bedding, bath, cloth diapers and other
products under the Gerber, Baby Looney Tunes, Little Suzy's Zoo and Curity brand
names, the Onesies trademark and private labels. 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, the Onesies trademark and the Little Suzy's Zoo brand. 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 has historically
constituted 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 and cloth diaper categories.

      HOSIERY SEGMENT

            The hosiery segment consists of the production and sale of sport and
casual socks under the Wilson, Coca-Cola, and Converse names to major retailers
in the United States and/or 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 in
these distribution channels by offering its branded products at competitive
prices, operating as a low-cost producer, servicing customers with quick
turnaround and maintaining strong customer relations.

      BUSINESS SEGMENT DATA

            For information regarding net sales, income (loss) before interest
and income taxes and assets by industry segment and geographic area, reference
is made to the information presented in Note 15 "Business Segments and
Geographic Areas" to the consolidated financial statements.

GENERAL

MANUFACTURING AND SOURCING

            Through its own and third party manufacturing operations, Gerber is
able to monitor the knitting, cutting, sewing, embroidering and packaging of its
products. Over the last several years, Gerber has formed strategic relationships
worldwide to obtain quality products at a low cost. 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.

            Gerber has four manufacturing operations, including one in South
Carolina, two Caribbean Basin Initiative ("CBI") facilities in the Dominican
Republic and one NAFTA facility in Mexico. Effective October 1, 2000, the CBI
eliminated duties and quotas on the Company's apparel products manufactured in
the CBI countries and sold in the U.S. These products must be manufactured from
fabrics wholly formed in the U.S. of U.S. yarns and cut in either the U.S. or
countries covered by the CBI. As an additional qualification, U.S. sewing thread
must be used if the fabric is cut in CBI countries.

            Gerber utilizes third party vendors and has entered into
relationships with vendors primarily in the U.S., Estonia, China, India,
Guatemala and Mexico. These relationships are intended to be strategic and
long-term in nature. These vendors are expected to provide labor and conduct
hiring practices consistent with local laws as well as the Company's initiative
that all vendors will become Worldwide Responsible Apparel Production ("WRAP")
certified. Pricing terms are negotiated on an item-by-item basis.


                                       5
<PAGE>
            Hosiery segment manufacturing requires a capital intensive 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 at its manufacturing facility in
Adairville, Kentucky. The Adairville facility houses technologically advanced
knitting and sewing equipment. A computerized monitoring system of the knitting
machinery increases efficiency, usage rates and productivity. Auburn's
bleaching, dyeing, finishing, packaging and shipping operations are conducted at
its facility in Auburn, Kentucky with a portion of these operations, other than
shipping, also performed on a contract basis in Mexico. Technological advances,
other control mechanisms, as well as sourcing from Mexico a portion of its
manufacturing processes, allow Auburn to offer high quality, branded sport socks
at competitive prices.

            Outside the U.S., Auburn operates a facility in Cahirciveen, County
Kerry, Ireland and a newly opened plant in Tralee, Ireland which conduct
knitting, sewing, bleaching, packaging and shipping functions using machinery,
processes and technology virtually identical to those of the U.S. facilities.
The Ireland business primarily supplies the European market with the branded
American-style sports socks. In addition, the Company has a similar computerized
monitoring system in its Cahirciveen, Ireland as in its Kentucky facility, which
has increased efficiency and productivity at these facilities. The Company
opened the Tralee, Ireland facility in February 2001 which increased the
capacity to service the European market.

      CUSTOMERS

            Certain of the Company's volume retailer and mid-tier department
store customers account for significant portions of the Company's net sales.
Apparel segment sales to its top 10 customers represent approximately 85%, 83%
and 84% of total 2001, 2000 and 1999 sales, respectively. The Apparel segment
had sales to Wal-Mart and two other customers that accounted for 36%, 14% and
12% of total Apparel Sales in 2001, respectively; 32%, 13% and 12% of total
Apparel sales in 2000, respectively; 37%, 11%, and 11% of total Apparel sales in
1999, respectively. The Hosiery segment had sales to Wal-Mart that accounted for
53%, 48% and 51% of 2001, 2000 and 1999 sales, respectively.

            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 electronic
data interchange ("EDI") systems. Replenishment orders for planogram merchandise
are generally filled within three days. Under the second method, customer orders
for fashion-oriented and seasonal products (e.g., thermal underwear) are
received on a purchase order basis, and such orders are filled without an
in-season reorder expectation.

      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 the Hanes subsidiary of the Sara Lee Corporation, The
William Carter Company, licensed products and firms using character licenses
from Walt Disney Company, Inc. and others. Gerber also competes with certain
retailers, including several which are customers of the Company, which have
significant private label product offerings. 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 products 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, Neuville Industries, Inc. and the Russell Corporation. 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.


                                       6
<PAGE>

      PATENTS, LICENSES AND TRADEMARKS

            The Company is largely dependent on the use of the Gerber 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 in the U.S., 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. The terms and conditions for use of the Gerber name for
other product categories 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. 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. The Company was not required to pay royalty fees to GPC until
2002, although the Company has been recording royalty expense to reflect such
fees over the initial license period. For a discussion of the royalty accrual to
GPC see "Item 7. 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 AOL-Time Warner, Inc. ("Warner Brothers"), the
Curity brand name from The Kendall Company and the Little Suzy's Zoo brand name
from Suzy's Zoo. The Company is licensed to use the Baby Looney Tunes and Little
Suzy's Zoo brand names in the U.S. and Canada and the Curity brand name in the
U.S. and internationally. The Baby Looney Tunes, Curity and Little Suzy's Zoo
licenses are limited to certain product categories, including, in the case of
Baby Looney Tunes and Little Suzy's Zoo, bath products, bedding, sleepwear,
underwear, footwear, layette 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) and certain other products, in
each case for infants and toddlers. The Curity license automatically renews for
periods of ten years. The Baby Looney Tunes license extends through December 31,
2003. The Little Suzy's Zoo license expires on December 31, 2002. Any subsequent
renewals will be the subject of good faith negotiations. The Company owns the
Onesies trademark.

            Auburn also licenses properties from different companies for its
products. The license from Wilson Sporting Goods Co. ("Wilson") has recently
been renewed through December 31, 2007. 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, 2004 with a two year renewal
option if certain sales targets are met. This license can be terminated by
Converse if Kevin K. Angliss and/or Timothy Graham are no longer the principal
managers of Auburn's Converse brand product line. Messrs. Angliss, Murphy and
Graham do not have employment agreements with Auburn. The Company decided not to
renew the Coca-Cola Company ("Coca-Cola") license in the U.S. as sales under
this license were not sufficient to warrant its renewal at December 31, 1999.
The Coca-Cola license for Europe expired on December 31, 2001 and management is
currently negotiating a renewal of this license. 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; and (iii) athletic and
casual socks in the case of Coca-Cola.

      RAW MATERIALS

            The Company depends on certain raw materials such as yarn for the
manufacturing of its products. The Company actively manages its cost through
contracts with its yarn suppliers with terms of up to one year. 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 the foreign suppliers,
either individually or in the aggregate, provide material quantities of yarn to
the Company. Management believes that none of these suppliers are material and
that there are many alternate sources from which yarn may be readily obtained.


                                       7
<PAGE>
      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 its acquisition by the Company,
Auburn was cited for discharging contaminants into the sewer system from its
facility in Auburn, Kentucky in excess of the amounts allowed under its permits.
The city has been working with Auburn to remedy the problem, and the Company
purchased approximately $0.4 million in additional wastewater pretreatment
equipment in 2001. Auburn is currently operating under a compliance schedule to
reach the permitted levels of contaminants in the process wastewater. The
compliance schedule and discharge permit expire on March 31, 2002. At present
all contaminants are within prescribed levels except for ammonia. Auburn has
received a draft permit renewal, which is identical to the current permit, but
without a compliance schedule. Auburn requested in late February 2002 an
extension of the compliance schedule for a period of six months for ammonia. As
of the present date, no response has been received.

            Gerber and, other than the above, Auburn have never been cited or
fined regarding 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 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.

      BACKLOG OF ORDERS

            The EDI system has significantly reduced the average order period,
which effectively reduces backlog. At December 31, 2001, the Company's backlog
of orders for its products, all of which were expected to be shipped during
2002, was approximately $6.4 million, compared to approximately $13.6 million
and $19.5 million at December 31, 2000 and December 31, 1999, respectively. The
reductions in backlog reflect a decrease in seasonal products, an increase in
the percentage of business done in replenishment products and the overall
reduction in sales. 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.

      EMPLOYEES

            As of December 31, 2001, the Company had approximately 2,400
employees including approximately 900 in the U.S. and approximately 1,500 in
foreign countries. None of the Company's domestic employees are members of
unions or are otherwise party to a collective bargaining agreement. Certain of
the Company's employees in Mexico and Ireland are subject to a collective
bargaining agreement and to the national wage agreement, respectively. The
Company considers its relations with its employees to be good.


                                       8
<PAGE>
ITEM 2. PROPERTIES.

            The following table sets forth the principal real property owned or
leased by the Company as of December 31, 2001:

<TABLE>
<CAPTION>
                                                                     Owned or       Approximate
           Location                           Use                     Leased     Floor Space (S.F.)
------------------------------   -------------------------------     --------    ------------------
<S>                              <C>                                 <C>         <C>
APPAREL SEGMENT:

   Ballinger, TX                 Idle                                 Owned            85,000
   Evergreen, AL                 Warehouse, Distribution              Leased          255,000
   Dominican Republic
     (Two Facilities)            Manufacturing                        Leased           71,000
   Lumberton, NC
     (Two Facilities)            Leased, Idle                         Owned           183,000
   Pelzer, SC (Two Facilities)   Manufacturing, Distribution          Owned           804,000
   Matamoros, Mexico             Manufacturing                        Leased           74,000

HOSIERY SEGMENT:

   Adairville, KY                Manufacturing                        Owned            72,000
   Auburn, KY                    Manufacturing, Distribution and
                                   Administration                     Owned           160,000
   Cahirciveen, Ireland          Manufacturing, Distribution and
     (Two Facilities)              Administration                     Leased           63,000
   Tralee, Ireland               Manufacturing and Distribution       Owned            50,000
</TABLE>

            In addition to the facilities described above, the Company leases
53,000 square feet for its headquarters in Greenville, South Carolina. The
Company also leases approximately 21,000 square feet for its executive offices
and showroom in New York, New York. From time to time, the Company also uses
storage space in warehouses in Adairville, Kentucky for Hosiery and Evergreen,
Alabama for Apparel. The Company holds a purchase option for the Evergreen,
Alabama warehouse which is exercisable at any time during the 15 year lease term
at a price of two dollars. The Company also holds a purchase option on the
Matamoros, Mexico lease which is exercisable at the end of the initial lease
term or during any subsequent extension for a price of approximately $2.6
million. The Company leased the Lumberton Cut facility in September 2001 and
sold the Lumberton Sew facility in March 2002 for approximately $0.5 million.

ENVIRONMENTAL AND OTHER REGULATORY MATTERS

            For a discussion of environmental and other regulatory matters see
"Item 1. Business - General - Cost of Environmental Compliance."

ITEM 3. 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 actions against infringements on its trademarks. 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.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

      None.


                                       9
<PAGE>
                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

MARKET INFORMATION FOR COMMON STOCK

            Gerber Childrenswear, Inc.'s Common Stock is traded on the New York
Stock Exchange (ticker symbol: GCW). The following table reflects the range of
high and low selling prices of Gerber Childrenswear, Inc.'s Common Stock by
quarter for the last two years (rounded to the nearest cent).

<TABLE>
<CAPTION>
                                                   2001                2000
                                                   ----                ----
                                              HIGH       LOW      HIGH       LOW
                                              ----       ---      ----       ---
<S>                                           <C>       <C>       <C>       <C>
First Quarter ..........................      6.10      4.50      5.25      4.00
Second Quarter .........................      7.10      5.28      5.44      4.00
Third Quarter ..........................      6.69      5.90      6.50      5.06
Fourth Quarter .........................      6.70      5.70      6.31      4.25
</TABLE>

HOLDERS

            At March 25, 2002, there were approximately 77 holders of record of
Common Stock and three holders of record of Class B Common Stock.

WARRANT CONVERSION

            During August 2001, the Company issued 2,953,731 shares of stock to
Citicorp Mezzanine Partners, L.P. ("CMP"). These shares were issued in a
cashless exercise of all of CMP's warrants to purchase shares of Class B Common
Stock. Simultaneously, CMP converted 250,000 shares of Class B Common Stock into
an equal number of shares of Common Stock.

DIVIDENDS

            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. The Company's credit facility, as amended, which was
entered into with certain lenders in connection with the Auburn Acquisition
("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.


                                       10
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.

ANNUAL FINANCIAL DATA

            The following table presents selected historical consolidated
financial information of the Company as of and for each of the five years and
the period ended December 31, 2001. The selected financial data of the Company
as of and for each of the five years and the period ended December 31, 2001 has
been derived from the financial statements of the Company. The selected
financial data should be read in conjunction with the Consolidated Financial
Statements and the related notes as indexed on page F-1 and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in
Item 7.

<TABLE>
<CAPTION>
                                                                    YEAR ENDED DECEMBER 31,
                                                         -----------------------------------------------
INCOME STATEMENT DATA:                                    2001      2000      1999      1998    1997 (a)
                                                          ----      ----      ----      ----    --------
                                                               (In millions, except per share data)
<S>                                                      <C>       <C>       <C>       <C>       <C>
Net sales ............................................   $209.5    $259.2    $278.8    $278.5    $202.0
Cost of sales ........................................    155.8     196.6     212.2     209.5     146.3
                                                         ------    ------    ------    ------    ------
Gross margin .........................................     53.7      62.6      66.6      69.0      55.7
Selling, general and administrative expenses .........     36.3      37.5      42.0      38.5      27.7
Stock compensation (b) ...............................       --        --        --        --       9.5
Other (c) ............................................     (2.8)     (0.2)     (1.8)       --       0.2
                                                         ------    ------    ------    ------    ------
Total operating expenses .............................     33.5      37.3      40.2      38.5      37.4
                                                         ------    ------    ------    ------    ------
Income before interest and income taxes ..............     20.2      25.3      26.4      30.5      18.3
Interest (income) expense, net .......................     (0.7)      0.1       2.7       5.8       5.8
                                                         ------    ------    ------    ------    ------
Income before income taxes and extraordinary item, net     20.9      25.2      23.7      24.7      12.5
Provision for income taxes ...........................      7.5       8.7       8.0       8.7       4.8
                                                         ------    ------    ------    ------    ------
Income before extraordinary item, net ................     13.4      16.5      15.7      16.0       7.7
Extraordinary item, net (d) ..........................       --        --        --      (0.2)     (0.7)
                                                         ------    ------    ------    ------    ------
Net income ...........................................     13.4      16.5      15.7      15.8       7.0
Less preferred stock dividends .......................       --        --        --      (0.8)     (1.6)
                                                         ------    ------    ------    ------    ------
Net income available to common shareholders ..........   $ 13.4    $ 16.5    $ 15.7    $ 15.0    $  5.4
                                                         ======    ======    ======    ======    ======

Earnings per common share ............................   $  .68    $  .84    $  .80    $  .88    $  .38
Earnings per common share - assuming dilution ........   $  .68    $  .83    $  .79    $  .85    $  .37
</TABLE>

<TABLE>
<CAPTION>
                                                                          DECEMBER 31,
                                                         ----------------------------------------------
BALANCE SHEET DATA:                                       2001      2000      1999      1998      1997
                                                          ----      ----      ----      ----      ----
                                                                          (In millions)
<S>                                                      <C>       <C>       <C>       <C>       <C>
Working capital ......................................   $101.3    $ 93.8    $ 90.8    $ 82.7    $ 65.9
Total assets .........................................    185.3     191.7     178.4     185.7     163.9
Total debt (including capital leases) ................      5.9      13.4      19.5      39.8      77.2
Preferred stock including accrued dividends ..........       --        --        --        --      14.6
Shareholders' equity .................................    139.2     127.3     111.9      98.9      19.4
</TABLE>

Note: Certain amounts have been reclassified to agree to the current
presentation.

See following page for notes to the selected financial data.


                                       11
<PAGE>
----------
(a)   Includes the following operating results for Auburn for the period
      December 17, 1997 through December 31, 1997 (in millions).

<TABLE>
<S>                                                                <C>
            Net sales .........................................    $1.5
            Gross margin ......................................     0.2
            Selling, general and administrative expenses ......     0.2
            Loss before interest and income taxes .............       *
            Net loss ..........................................       *
</TABLE>

*     Less than $50,000

(b)   Represents expense related to stock compensation incurred in connection
      with the sale of capital stock below fair market value to executives and
      management of the Company.

(c)   In January of 2001, the Company decided to change eligibility requirements
      of the Postretirement Plan resulting in a $1.8 million gain on curtailment
      of postretirement benefit costs. In August 2001, the Company discontinued
      the Postretirement Plan, except for employees currently participating in
      the Postretirement Plan. The discontinuance of the Postretirement Plan
      resulted in an additional gain on curtailment of postretirement benefit
      costs of approximately $1.0 million. During 2000 and 1999, the Company
      downsized its domestic Apparel operations resulting in a gain on
      curtailment of postretirement benefit costs of approximately $0.2 million
      and $0.5 million, respectively. In addition, in 1999 the Company reached a
      settlement with its insurance providers of the Company's losses associated
      with Hurricane Georges for a casualty gain of approximately $1.3 million.

(d)   In June 1998, the Company repaid senior and junior subordinated notes in
      the principal amount of $22.5 million and $11.0 million, respectively. The
      write-off of unamortized discount and loan costs totaled $0.2 million (net
      of an income tax benefit). In 1997, the Company expensed unamortized loan
      costs and a prepayment penalty of $0.7 million (net of an income tax
      benefit) in connection with the replacement of the Company's then existing
      credit facility with the current Credit Agreement.

QUARTERLY FINANCIAL DATA

            For information regarding quarterly financial data, reference is
made to Note 16 "Selected Quarterly Financial Data - (Unaudited)" to the
consolidated financial statements.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

SIGNIFICANT ACCOUNTING POLICIES

            In response to the SEC's Release numbers 33-8040 "Cautionary Advice
Regarding Disclosure About Critical Accounting Policies" and 33-8056,
"Commission Statement about Management's Discussion and Analysis of Financial
Condition and Results of Operations," the Company has identified the following
critical accounting policies that affect the more significant judgments and
estimates used in the preparation of our consolidated financial statements.

            The Company's discussion and analysis of its financial condition and
results of operations is based upon the consolidated financial statements, which
have been prepared in accordance with U.S. generally accepted accounting
principles. The preparation of financial statements in conformity with U.S.
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities as of the date of the financial
statements, and the reported amounts of revenue and expenses during the periods.
The Company has based its estimates on historical experience and on various
other assumptions that we believe to be reasonable under the circumstances.
Actual results may differ materially from these estimates under different
assumptions or conditions. The Company's critical accounting policies include
the following:


                                       12
<PAGE>
      Revenue Recognition and Related Allowances

            The Company recognizes substantially all of its revenue when
products are shipped to customers. The Company estimates allowances against the
revenues which are recorded in the same period the revenue is recorded. These
estimates are based upon historical analysis, customer agreements and/or
currently known factors that arise in the normal course of business. If the
allowances the Company calculates do not accurately reflect amounts associated
with current revenue, actual revenues could be higher or lower than the level
recognized.

      Inventories

            The Company's inventories are stated at the lower of cost or market.
Cost is determined by the first-in, first-out ("FIFO") method including
material, labor and overhead. Significant management judgment is required to
determine the appropriate levels of reserves for closeout, irregular and excess
inventory. The Company establishes a reserve for closeout, irregular and excess
inventory by reviewing various factors such as past selling prices, current
selling prices or anticipated selling prices. These adjustments are estimates,
which could vary significantly, either favorably or unfavorably, from actual
requirements if future economic conditions, customer inventory levels or
competitive conditions differ from our expectations.

      Impairment of Long-Lived Assets and Intangibles

            The Company reviews the carrying values of its long-lived assets and
intangibles, including goodwill, whenever events or changes in circumstances
indicate that such carrying values may not be recoverable. Unforeseen events and
changes in circumstances and market conditions and material differences in the
value of intangible assets due to changes in estimates of future cash flows
could negatively affect the fair value of the company's assets and result in an
impairment charge. Fair value is the amount at which the asset could be bought
or sold in a current transaction between willing parties and may be estimated
using a number of techniques, including quoted market prices or valuations by
third parties, present value techniques based on estimates of cash flows, or
multiples of earnings or revenues performance measures. The fair value of the
assets could be different using different estimates and assumptions in these
valuation techniques.

      Pension and Postretirement Benefit Plans

            The Company's pension and postretirement benefit plan liabilities
are calculated utilizing various actuarial assumptions and methodologies
prescribed under U.S. generally accepted accounting principles. The Company
utilizes certain assumptions including, but not limited to, the selection of
the: (i) discount rate, (ii) expected return on plan assets, and (iii) expected
health care cost trend rate. The discount rate assumption is based upon the
review of high quality corporate bond rates and the change in these rates during
the year. The expected return on plan assets and health care cost trend rate are
based upon an evaluation of the Company's historical trends and experience
taking into account current and expected market conditions. Changes in
assumptions and future investment returns could potentially have a material
impact on the Company's pension and postretirement expenses and related funding
requirements.

      Income Taxes

            The Company's estimated income taxes are calculated in each of the
jurisdictions in which it operates. The process involves estimating actual
current tax expense along with assessing temporary differences resulting from
differing treatment of items for book and tax purposes. These timing differences
result in deferred tax assets and liabilities, which are included in the
Company's consolidated balance sheet. The Company has considered future taxable
income and ongoing tax planning strategies in assessing the need for a valuation
allowance. As a result of this review, the Company does not believe a valuation
allowance is needed at this time. The Company will continue to monitor and
assess the recoverability of its deferred tax assets in the future for changes
to the tax code, changes in statutory tax rates and the projected levels of
future taxable income.


                                       13
<PAGE>
      GPC Royalty

            The Company has entered into a ten year license agreement between
the Company and GPC, the initial term of which expires in 2006. The Company was
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 during the remaining term of the license
agreement and during the two consecutive five-year renewal terms if such
agreements are renewed. The Company is recording charges against earnings in
accordance with generally accepted accounting principles. The Company estimates
the projected sales and the related royalty expense for the last four years of
the initial term and straight-lines this expense over the initial term. Due to
changes in current and/or future market conditions, the Company periodically
updates its estimated sales and royalty expense for the remaining four years of
the initial term and adjusts the straight-line expense accordingly. Changes in
estimated sales levels can significantly increase or decrease the straight-line
royalty expense adjustment over the remaining term.

CASUALTY EVENT - HURRICANE GEORGES

            For information regarding the Company's insured casualty loss,
reference is made to the information presented in Note 13 "Casualty Event" to
the consolidated financial statements.

SEASONALITY

            In the Apparel segment, sales historically have typically been
higher in the third and fourth quarters. The Company believes that there are
three main reasons for this trend: (i) sales of blanket sleepers and fleece
products (most of which were discontinued in 2000) 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 Hosiery segment, sales are generally non-seasonal, but Auburn
does experience 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.

RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
                                                           PERCENTAGE OF NET SALES
                                                         ----------------------------
                                                           YEAR ENDED DECEMBER 31,
                                                         ----------------------------
                                                          2001       2000       1999
                                                         ----------------------------
<S>                                                      <C>        <C>        <C>
Net sales ............................................    100.0%     100.0%     100.0%
Cost of sales ........................................     74.4       75.8       76.1
                                                         ------     ------     ------
Gross margin .........................................     25.6       24.2       23.9
Selling, general and administrative expenses .........     17.3       14.5       15.1
Other ................................................     (1.4)      (0.1)      (0.7)
                                                         ------     ------     ------
Income before interest and income taxes ..............      9.7        9.8        9.5
Interest (income) expense, net .......................     (0.3)       0.0        1.0
                                                         ------     ------     ------
Income before income taxes and extraordinary item, net     10.0        9.8        8.5
Provision for income taxes ...........................      3.6        3.4        2.9
                                                         ------     ------     ------
Net income ...........................................      6.4%       6.4%       5.6%
                                                         ======     ======     ======
</TABLE>

BUSINESS SEGMENT DATA

            For information regarding net sales, income (loss) before interest
and income taxes and assets by industry segment and geographic area, reference
is made to the information presented in Note 15 "Business Segments and
Geographic Areas" to the consolidated financial statements.


                                       14
<PAGE>
YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

            Net sales. Apparel net sales were $145.1 million for 2001, a
decrease of $44.8 million or 23.6% below net sales of $189.9 million for 2000.
The Apparel sales decline was due to unit declines in both basic products and
fashion/seasonal products. The Company eliminated specific fashion/seasonal
products in 2001 with sales in these products of $1.4 million versus $26.6
million in 2000. The Company also experienced lower sales in 2001 of other
continuing fashion/seasonal products, representing an approximately $6.4 million
sales reduction. Sales of basic products in 2001 were down $12.9 million, or
approximately 9.0%, compared to last year's sales, reflecting increased use of
promotional activity as well as retailers seeking to lower inventory levels to
reflect a general softening of sales in the marketplace. Hosiery net sales were
$64.4 million in 2001, a decrease of $4.9 million or 7.0% below net sales of
$69.3 million in 2000. The Hosiery sales decline was due to a loss of U.S.
business with Kmart and companies that filed for bankruptcy in the last two
years, reduced selling prices in Europe as a result of weak demand and
increased promotional pricing in response to market conditions and the
devaluation of the Euro relative to the U.S. dollar for the European operations.

            Gross margin. Gross margin as a percentage of net sales increased
from 24.2% in 2000 to 25.6% in 2001. The increase in gross margin in 2001 was
due to higher margins achieved on Apparel sales as a result of the
discontinuance of less profitable product lines, unexpected losses on imported
merchandise in the prior year, lower costs resulting from reduced domestic
manufacturing and more efficient operations, offset in part by lower Hosiery
margins due to domestic cost increases and promotional pricing in European
markets.

            Selling, general and administrative expenses. Selling, general and
administrative expenses ("SG&A") decreased in absolute dollars but increased as
a percentage of net sales to 17.3% for 2001 from 14.5% for 2000. The percentage
increase was due to a 19.2% sales decline.

            Other. Represents a $2.8 million gain on curtailment of
postretirement benefit costs associated with the Company's decision to change
and later discontinue the Postretirement Plan. In January 2001, the Company
decided to change eligibility requirements of the Postretirement Plan resulting
in a $1.8 million gain on curtailment of postretirement benefit costs. In
addition, effective August 1, 2001, the Company discontinued its Postretirement
Plan, except for employees currently participating in it. The discontinuance of
the Postretirement Plan resulted in an additional gain on curtailment of
postretirement benefit costs of approximately $1.0 million. The $0.2 million in
2000 represents a gain on curtailment of postretirement benefit costs associated
with the Company's decision to downsize its domestic Apparel operations.

            Income before interest and income taxes. Apparel income before
interest and income taxes ("EBIT") was 11.4% and 9.1% of Apparel sales in 2001
and 2000, respectively. Hosiery EBIT was 5.7% of Hosiery sales in 2001 compared
to 11.6% in 2000. The increase in Apparel EBIT was the result of improved gross
margin percentage and the $2.8 million gain reported, offset partially by the
increased percentage of SG&A expenses to sales. The decrease in Hosiery EBIT was
the result of lower domestic sales, domestic cost increases and promotional
pricing in European markets.

            Interest (income) expense, net. Interest (income) expense was
approximately $(0.7) million in 2001 and $0.1 million in 2000. The decrease in
interest expense reflects the higher levels of invested cash and lower levels of
debt in 2001 due to continuing strong cash flow from reducing inventories and
maintaining profitable operations.

            Provision for income taxes. Provision for income taxes was $7.5
million in 2001, compared to $8.7 million in 2000. The effective tax rate was
35.8% for 2001 compared to 34.5% for 2000. The Company's effective income tax
rate differed from the prior period effective rate due to a lower impact of
foreign earnings, certain of which are taxed at lower rates than in the United
States, and goodwill amortization, most of which is not deductible for federal
and state income tax purposes.

            Net income. As a result of the above, net income was $13.4 million
for 2001 and $16.5 million for 2000.


                                       15
<PAGE>
YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

            Net sales. Apparel net sales were $189.9 million for 2000, a
decrease of $16.3 million or 7.9% below net sales of $206.2 million for 1999.
The Apparel sales decline was due to decreased unit volume sales, attributable
primarily to lower planned sales in 2000 of certain fashion and/or highly price
sensitive products. Hosiery net sales were $69.3 million in 2000, a decrease of
$3.4 million or 4.6% below net sales of $72.7 million in 1999 due to decreased
unit sales and the devaluation of the Irish punt to U.S. dollars on the European
operations.

            Gross margin. Gross margin as a percentage of net sales increased
from 23.9% in 1999 to 24.2% in 2000. The increase in gross margin in 2000 was
due to improved Hosiery margins, primarily as a result of lower material costs
and sourcing a portion of manufacturing processes from Mexico.

            Selling, general and administrative expenses. SG&A decreased in
absolute dollars and as a percentage of net sales to 14.5% for 2000 from 15.1%
for 1999. The percentage decrease was due to lower expense levels in 2000 for
advertising, professional services, salaries and related employee costs, bad
debt expense, and facilities realignment cost.

            Other. Represents a gain on curtailment of postretirement benefit
costs associated with the Company's decision to downsize its domestic Apparel
operations of $0.2 million in 2000, compared to an insurance recovery and a gain
on curtailment of postretirement benefit costs in 1999, aggregating $1.8
million.

            Income before interest and income taxes. Apparel EBIT was 9.1% of
Apparel sales in 2000 and 1999. Hosiery EBIT was 11.6% of Hosiery sales in 2000
compared to 10.6% in 1999. The increase in Hosiery EBIT was the result of
improved margins due to lower product cost.

            Interest (income) expense, net. Interest expense was approximately
$0.1 million in 2000 and $2.7 million in 1999. The decrease in interest expense
reflects the higher levels of invested cash and lower levels of debt in 2000 due
to continuing strong cash flow from reducing inventories and maintaining
profitable operations.

            Provision for income taxes. Provision for income taxes was $8.7
million in 2000, compared to $8.1 million in 1999. The effective tax rate was
34.5% for 2000 compared to 34.0% for 1999. The Company's effective income tax
rate differed from the prior period effective rate due to a lower impact of
foreign earnings, certain of which are taxed at lower rates than in the United
States, and goodwill amortization, most of which is not deductible for federal
and state income tax purposes.

            Net income. As a result of the above, net income was $16.5 million
for 2000 and $15.7 million for 1999.

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, if necessary, under the
Company's Credit Agreement.

            For the Apparel segment, working capital requirements vary
throughout the year. Working capital has historically increased during the first
half of the year as inventory builds to support peak shipping periods. The
Hosiery segment is less seasonal and, while working capital needs tend to
increase slightly during the second half of the year, the variation is small.

            Net cash provided by operating activities was $28.9 million, $31.9
million and $43.7 million for 2001, 2000 and 1999, respectively. Cash provided
by operating activities was impacted in 2001, 2000 and 1999 due to decreases in
inventory of $6.2 million, $8.3 million and $21.4 million, respectively, due to
better inventory management, lower than planned overall production levels and/or
management's decision to exit certain fashion/seasonal products, partially
offset by lower than planned sales in the fourth quarter of 2001. Accounts
receivable decreased $11.0 million in 2001 primarily due to lower fourth quarter
2001 sales of approximately $18.7 million, or 27.0%, compared to the fourth
quarter of 2000. Income taxes payable (decreased) increased $(4.2) million, $1.8
million and $(2.6) million in 2001, 2000 and 1999, respectively. The changes for
each year primarily relate to: (i) differences in the timing of payments and
(ii) changes in temporary differences. The accrued pension


                                       16
<PAGE>
and post-retirement benefit cost decrease of approximately $3.4 million is due
to the decision in January 2001 to change eligibility requirements of the
Postretirement Plan which resulted in a $1.8 million gain and the decision in
August 2001 to discontinue the Postretirement Plan, except for employees
currently participating in the Postretirement Plan, which resulted in a $1.0
million gain.

            The Company invested $6.5 million, $11.3 million and $7.4 million in
capital expenditures during 2001, 2000 and 1999, respectively. These
expenditures consisted primarily of upgrades to information systems, normal
replacement of manufacturing equipment, purchases of office equipment and
renovation/construction of a second manufacturing plant in Tralee, Ireland. The
Company is budgeting an aggregate of $3.8 million for capital expenditures for
2002. Included in this amount is $1.9 million to replace or upgrade
manufacturing equipment, $0.2 million to upgrade MIS systems and $1.7 million
for leasehold improvements, to replace or upgrade distribution equipment and
miscellaneous other uses. The Apparel and Hosiery segment's portion of the
overall 2002 capital expenditure budget is $2.4 and $1.4 million, respectively.
During 2000, the Company sold its idle Liberty facility to the lessee for
approximately $0.5 million. In March 2002, the Company sold its idle Lumberton
Sew facility for approximately $0.5 million.

            Net cash used in financing activities was $8.1 million, $7.3 million
and $20.3 million for 2001, 2000 and 1999, respectively. The change in cash
provided by financing activities in 2001, 2000 and 1999 was due to repayments
made under the Company's Credit Agreement and other long-term borrowings.

            Under the terms of a ten year license agreement between the Company
and GPC, the initial term of which expires in 2006, the Company was 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 during the remaining term of the license agreement and
during the two consecutive five-year renewal terms if such agreements are
renewed. The Company is recording charges against earnings in accordance with
generally accepted accounting principles in order to estimate a straight-line
effect of the total royalty expense expected to be incurred over the initial ten
year license term. The initiation of such royalty payments in 2002 will
significantly affect the Company's cash flow.

            In connection with the Auburn Acquisition, the Company's
then-existing senior credit facility was refinanced and replaced with the Credit
Agreement which consisted of a $40.0 million term loan to finance the
acquisition and a $60.0 million revolving facility to fund current working
capital requirements. In May 2001, the Company lowered the revolving committed
amount under the Credit Agreement from $60.0 million to $20.0 million due to the
increased amount of cash on hand. The Company had no amounts outstanding under
the revolving credit portion of the Credit Agreement at December 31, 2001, 2000
and 1999. The Credit Agreement subjects the Company to standard covenants and
events of default. As of December 31, 2001, the Company was in compliance with
all such covenants and was not in default. The revolving credit facility and
term loan agreement requires mandatory principal prepayments based on excess
annual cash flow as defined, which commenced with calendar year 2000. The excess
cash flow payment for 2000 was approximately $2,100,000 and was paid in March
2001. The Company on January 31, 2002 elected to pay off the remaining balance
on the term loan of approximately $3.7 million.

            Auburn's Irish operations maintain a Euro (euro)2.0 million loan
facility (U.S. $1.8 million as of December 31, 2001) with the National Irish
Bank consisting of a combined term loan and overdraft. This facility is subject
to annual review. The overdraft facility is available at the Company's
discretion with each term loan draw down subject to the National Irish Bank's
approval. At present, the Irish entity has no outstanding balances under any
portion of the loan facility. In addition, the Irish entity has received capital
and employment grants from the Industrial Development Authority (the "IDA")
which could become repayable to the IDA (if certain conditions are not met) in
the aggregate amount of up to Euro (euro)2.3 million (U.S. $2.1 million) as of
December 31, 2001. 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 $1.2 million remained outstanding at
December 31, 2001.

            The Company believes that cash on hand, combined with cash generated
from operations and amounts available under the Credit Agreement and the Irish
entity'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.


                                       17
<PAGE>
RECENT ACCOUNTING STANDARDS

            In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement established accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts (collectively referred to as
derivatives), and for hedging activities. It requires that an entity recognize
all derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. If the derivative is a
hedge, depending on the nature of the hedge, changes in fair value will be
either offset against the change in fair value of the hedged assets,
liabilities, or firm commitments through earnings, or recognized in other
comprehensive income until the hedged item is recognized in earnings. The
Company adopted the standard effective January 1, 2001, and the adoption did not
have a material impact on the consolidated financial statements.

            In July 2001, the Financial Accounting Standards Board issued
Financial Accounting Standards No. 142 "Goodwill and Other Intangible Assets"
("SFAS 142"). SFAS 142 supersedes Accounting Principles Bulletin No. 17,
"Intangible Assets." SFAS 142 primarily addresses the accounting for goodwill
and intangible assets subsequent to their acquisition. The most significant
changes made by SFAS 142 are: (a) goodwill and indefinite lived intangible
assets will no longer be amortized, (b) goodwill will be tested for impairment
at least annually, (c) intangible assets deemed to have an indefinite life will
be tested for impairment at least annually and (d) the amortization period of
intangible assets with finite lives will no longer be limited to forty years.
The provisions of SFAS 142 will be effective for fiscal years beginning after
December 15, 2001. The Company will apply the provisions of SFAS 142 beginning
on January 1, 2002. Application of the non-amortization provisions of SFAS 142
is expected to result in an increase in earnings of approximately $1.0 million
per year. The Company is currently in the process of testing goodwill using the
methodology prescribed by SFAS 142, and has not yet determined the effect, if
any, on its consolidated financial position, results of operations and cash
flows.

            The Financial Accounting Standards Board also recently issued
Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets ("SFAS 144"). SFAS 144 establishes accounting standards for the
recognition and measurement of long-lived assets held for use or held for
disposal. This statement is required to be adopted by the beginning of 2002. The
Company is evaluating the impact of this standard and has not yet determined the
effect of adoption on our consolidated financial position, results of operations
and cash flows.

WARRANT CONVERSION

            During August 2001, the Company issued 2,953,731 shares of stock to
Citicorp Mezzanine Partners, L.P. ("CMP"). These shares were issued in a
cashless exercise of all of CMP's warrants to purchase shares of Class B Common
Stock. Simultaneously, CMP converted 250,000 shares of Class B Common Stock into
an equal number of shares of Common Stock.

INFLATION

            In general, costs are affected by inflation and the Company may
experience the effects of inflation in future periods. The Company does not
currently consider the impact of inflation to be significant in the businesses
or countries in which the Company operates.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

            The Company considered the provisions of Financial Reporting Release
No. 48 "Disclosure of Accounting Policies for Derivative Financial Instruments
and Derivative Commodity Instruments, and Disclosure of Quantitative and
Qualitative Information about Market Risk Inherent in Derivative Financial
Instruments, Other Financial Instruments and Derivative Commodity Instruments."
The Company's holdings of derivative financial or commodity-based instruments at
December 31, 2001 were not for trading or speculative purposes but were in the
regular course of business. A review of these holdings and risk exposures at
that date revealed that the Company had exposure to interest rate and foreign
currency exchange rate risks.


                                       18
<PAGE>
      INTEREST RATES

            The Company's primary borrowings consist of industrial revenue bonds
and a term loan (that was paid off in January 2002) that are subject to interest
rate risk. Borrowings are priced at floating rates of interest, with a basis of
LIBOR or prime rate at the Company's option. As a result of these factors, at
any given time, a change in interest rates could result in either an increase or
decrease in the Company's interest expense. At December 31, 2001, the Company
performed sensitivity analysis to assess the potential effect of a 1% increase
or decrease in interest rates and concluded that near-term changes in interest
rates should not materially affect the Company's consolidated financial
position, results of operations or cash flows.

      FOREIGN CURRENCY EXCHANGE RATES

            The Company's earnings are affected by fluctuations in the value of
the U.S. Dollar as compared to foreign currencies, predominately in European
countries, as a result of the sale of its products in foreign markets and
translation adjustments associated with the conversion of the Company's foreign
subsidiaries into the reporting currency (U.S. Dollar). As such, the Company's
exposure to changes in foreign currency exchange rates could impact the
Company's consolidated financial position, results of operations or cash flows.
At December 31, 2001, the Company performed sensitivity analysis to assess the
potential effect of a 10% increase or decrease in foreign exchange rates and
concluded that near-term changes in exchange rates should not materially affect
the Company's consolidated financial position, results of operations or cash
flows. This calculation assumes that each exchange rate would change in the same
direction relative to the U.S. Dollar. In addition to the direct effects of
changes in exchange rates, which are a changed dollar value of the resulting
sales, changes in exchange rates also affect the volume of sales or the foreign
currency sales price as competitors' products become more or less attractive.
The Company's sensitivity analysis of the effects of changes in foreign currency
exchange rates did not factor in a potential change in sales levels or local
currency prices.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

            See Index to Consolidated Financial Statements which appears on page
F-1 herein.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

            None.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

            Information required by this Item will be contained in the Company's
definitive Proxy Statement for its Annual Meeting of Stockholders, to be filed
on or before April 30, 2002, and such information is incorporated herein by
reference.

ITEM 11. EXECUTIVE COMPENSATION.

            Information required by this Item will be contained in the Company's
definitive Proxy Statement for its Annual Meeting of Stockholders, to be filed
on or before April 30, 2002, and such information is incorporated herein by
reference.


                                       19
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

            Information required by this Item will be contained in the Company's
definitive Proxy Statement for its Annual Meeting of Stockholders, to be filed
on or before April 30, 2002, and such information is incorporated herein by
reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

            Information required by this Item will be contained in the Company's
definitive Proxy Statement for its Annual Meeting of Stockholders, to be filed
on or before April 30, 2002, and such information is incorporated herein by
reference.

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

            (1) Listing of Documents.

                  (a) Financial Statements. The financial statements filed as
                  part of this report are listed on the Index to Consolidated
                  Financial Statements on page F-1.

                  (b) Financial Statement Schedules.

                        (i) Schedule II - Supplemental Schedule of Valuation and
                        Qualifying Accounts

                              All other schedules for which provision is made in
                              the applicable regulations of the Securities and
                              Exchange Commission are not required under the
                              related instructions, are inapplicable or not
                              material, or the information called for thereby is
                              otherwise included in the financial statements and
                              therefore have been omitted.

            (2) Reports on Form 8-K. - None


                                       20
<PAGE>
            (3) Exhibits.

<TABLE>
<CAPTION>
Exhibit
Number                                       Description
-------           --------------------------------------------------------------
<S>        <C>    <C>
 3.1       (1)    Form of Amended and Restated Certificate of Incorporation of
                  the registrant.
 3.2       (1)    Form of Amended and Restated Bylaws of the registrant.
 4.1       (1)    Form of Certificate representing shares of Common Stock, $0.01
                  par value per share.
 4.2       (1)    Credit Agreement by and among GCIH, Auburn, GCI, the domestic
                  subsidiaries of the same and various lending institutions
                  dated as of December 17, 1997.
 4.3       (1)    First Amendment to Credit Agreement by and among GCIH, Auburn,
                  GCI, the domestic subsidiaries of the same and various lending
                  institutions dated as of April 3, 1998.
 4.4       (1)    Second Amendment to Credit Agreement by and among GCIH,
                  Auburn, GCI, the domestic subsidiaries of the same and various
                  lending institutions dated as of June 4, 1998.
 4.5       (2)    Gerber Childrenswear, Inc. 1998 Long-Term Performance
                  Incentive Plan, dated as of March 3, 1998.
 4.6       (3)    Third Amendment to Credit Agreement by and among GCIH, Auburn,
                  GCI, the domestic subsidiaries of the same and various lending
                  institutions dated as of August 24, 1999.
 4.7       (7)    Fourth Amendment to Credit Agreement by and among GCIH,
                  Auburn, GCI, the domestic subsidiaries of the same and various
                  lending institutions dated as of May 9, 2001.
10.1       (1)    Stock Purchase Agreement by and between GPC and GCIH dated as
                  of December 14, 1995.
10.2       (1)    Form of Executive Stock Purchase Agreement between GCIH and
                  certain of its Executives, each dated January 22, 1996.
10.3       (1)    Form of Manager Securities Purchase Agreement between GCIH and
                  certain of its Managers.
10.4       (1)    Securities Purchase Agreement by and between GCIH and CVC,
                  dated as of January 22, 1996.
10.5       (1)    Form of Director Stock Purchase Agreement between GCIH and
                  certain of its directors.
10.6       (1)    Amended and Restated Registration Rights Agreement by and
                  between GCIH, Citicorp Venture Capital, Ltd., and other
                  stockholders of GCIH, dated as of June 5, 1998.
10.7       (1)    Stock Purchase Agreement by and among GCIH, James P. Manning,
                  Eileen Manning and Certain Charitable Remainder Trusts dated
                  as of November 12, 1997.
10.8       (1)    Share Purchase Agreement by and among GCIH, James P. Manning
                  and Eileen Manning dated as of December 16, 1997.
10.9       (1)    Amended and Restated Senior Subordinated Credit Agreement
                  dated as of December 17, 1997 by and among GCIH, GCI, CMP and
                  others.
10.10      (1)    Subordination and Intercreditor Agreement by and among
                  Nationsbank, CMP, GCI and others dated as of December 17,
                  1997.
10.11      (1)    12% Junior Subordinated Note in the face amount of
                  $11,000,000, issued by GCIH to GPC as of December 29, 1997.
10.12      (3)    License Agreement by and between Warner Bros. Division of Time
                  Warner Entertainment Company, L.P. and GCI dated as of
                  December 3, 1998.
10.13      (1)    License Agreement by and between GPC and GCI dated as of
                  January 22, 1996.
10.14      (1)    License Agreement among The Kendall Company, GPC, and Soft
                  Care Apparel, Inc. (n/k/a GCI), dated as of July 31, 1986, as
                  amended pursuant to that certain Letter Agreement dated
                  January 19, 1996 by and among The Kendall Company, GPC, GCI
                  and GCIH.
10.15      (1)    Trademark License Agreement between Auburn and Wilson Sporting
                  Goods Co. dated April 29, 1997; as sublicensed to Sport Socks
                  Ireland as of October 1, 1997, effective as of January 1,
                  1998; as amended as of December 5, 1997.
10.16      (1)    Lease Agreement by and between GCI and Operadora Zona Franca
                  De la Romana, S.A. for property located at Zona Franca
                  Industrial La Romana (Sewing, Packaging).
10.17      (1)    Lease Agreement by and between GCI and Operadora Zona Franca
                  De la Romana, S.A. for property located at Altos Buvillaverde.
10.18      (1)    Lease Agreement by and between GCI and Operadora Zona Franca
                  De la Romana, S.A. for property located at Altos Buvillaverde.
10.19      (1)    Lease Amendment by and between GCI and the Industrial
                  Development Board of the City of Evergreen, Alabama, dated as
                  of August 28, 1997, and assignment and assumption agreement
                  and resolution of the Industrial Development Board dated as of
                  the same date.
10.20      (1)    Lease Agreement between GCI and Highland Properties, LLC dated
                  as of November 25, 1996, and amendments thereto, for the lease
                  of the Greenville facility.
</TABLE>


                                       21
<PAGE>
<TABLE>
<S>        <C>    <C>
10.21      (1)    Severance Agreement by and between GPC, GCI and David E. Uren,
                  dated as of March 18, 1995.
10.22      (1)    Form of Amendment No. 1 to the Executive Stock Purchase
                  Agreement.
10.23      (2)    Lease Agreement by and between GCW Mexico, S.A. de C.V. and
                  Parques Industriales Amistad Alaianzas, S.A. de C.V. for
                  property located in Matamoros, Mexico.
10.24      (2)    Waiver and termination agreement by and between Citicorp
                  Venture Capital, Ltd. and GCI related to Manager, Investor,
                  Director and Executive Stock Purchase Agreements.
10.25      (3)    Lease Agreement by and between GCI and 1333 Broadway
                  Associates, dated as of April 1, 1999, for the lease of the
                  New York Sales Office.
10.26      (3)    License Agreement by and between Suzy's Zoo and GCI, effective
                  as of October 1, 1998.
10.27      (5)    Employment Agreement by and between Gerber Childrenswear, Inc.
                  and Bobby J. Prochaska, effective on December 30, 1999.
10.28      (5)    Executive Deferral Plan for certain key management employees
                  of Gerber Childrenswear, Inc., dated as of December 29, 1997.
10.29      (6)    License Agreement by and between Warner Bros., a division of
                  Time Warner Entertainment Company, L.P., and GCI dated as of
                  April 25, 2001.
10.30      (8)    Employment Agreement by and between Gerber Childrenswear, Inc.
                  and Bobby J. Prochaska, effective on January 1, 2002.
10.31      (8)    Trademark License Renewal Agreement between Auburn and Wilson
                  Sporting Goods Co. dated February 14, 2002.
21.1       (8)    Subsidiaries of the registrant.
23         (8)    Consent of Ernst & Young LLP, independent auditors.
99.1       (4)    Press release announcing the hiring of First Union Securities
                  to explore strategic alternatives, dated as of May 24, 2000.
</TABLE>

----------
(1)   Incorporated by reference from the Registrant's Registration Statement
      #333-47327 on Form S-1 filed on June 10, 1998 with the Securities and
      Exchange Commission, and herein incorporated by reference.
(2)   Incorporated by reference from the Registrant's Form 10-K filed on March
      31, 1999 with the Securities and Exchange Commission, and herein
      incorporated by reference.
(3)   Incorporated by reference from the Registrant's Form 10-K filed on March
      30, 2000 with the Securities and Exchange Commission, and herein
      incorporated by reference.
(4)   Incorporated by reference from the Registrant's Form 8-K filed on May 26,
      2000 with the Securities and Exchange Commission, and herein incorporated
      by reference.
(5)   Incorporated by reference from the Registrant's Form 10-K filed on March
      29, 2001 with the Securities and Exchange Commission, and herein
      incorporated by reference.
(6)   Incorporated by reference from the Registrant's Form 10-Q filed on May 11,
      2001 with the Securities and Exchange Commission, and herein incorporated
      by reference.
(7)   Incorporated by reference from the Registrant's Form 10-Q filed on August
      13, 2001 with the Securities and Exchange Commission, and herein
      incorporated by reference.
(8)   Filed herewith.

The Company will furnish a copy of any of the above exhibits not included herein
upon the written request of such shareholder and the payment to the Company of
the reasonable expenses incurred by the Company in furnishing such copy or
copies.


                                       22
<PAGE>
                                   SIGNATURES

            Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

                                        GERBER CHILDRENSWEAR, INC.
                                              (Registrant)


DATE: March 27, 2002                    By: /s/ Richard L. Solar
                                        ----------------------------------------
                                        Name:   Richard L. Solar
                                        Title:  Senior Vice President and
                                                Chief Financial Officer

            Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
        Signature                   Title                              Date
        ---------                   -----                              ----
<S>                         <C>                                   <C>
 /s/ Edward Kittredge       Director, Chairman, Chief             March 27, 2002
-------------------------   Executive Officer and President
   Edward Kittredge         (Principal Executive Officer)


 /s/ Richard L. Solar       Director, Senior Vice President       March 27, 2002
-------------------------   and Chief Financial Officer
   Richard L. Solar         (Chief Financial Officer)


  /s/ David E. Uren         Vice President of Finance,            March 27, 2002
-------------------------   Secretary and Treasurer
    David E. Uren           (Chief Accounting Officer)


  /s/ Richard Cashin        Director                              March 27, 2002
-------------------------
    Richard Cashin


/s/ Lawrence R. Glenn       Director                              March 27, 2002
-------------------------
  Lawrence R. Glenn


 /s/ James P. Manning       Director                              March 27, 2002
-------------------------
   James P. Manning


  /s/ Joseph Medalie        Director                              March 27, 2002
-------------------------
    Joseph Medalie


  /s/ John D. Weber         Director                              March 27, 2002
-------------------------
    John D. Weber
</TABLE>


                                       23
<PAGE>
                           Gerber Childrenswear, Inc.

                   Index to Consolidated Financial Statements

<TABLE>
<S>                                                                         <C>
Report of Independent Auditors ...........................................   F-2
Consolidated Balance Sheets at December 31, 2001 and 2000 ................   F-3
Consolidated Statements of Income and Comprehensive Income for the
years ended December 31, 2001,2000 and 1999 ..............................   F-5
Consolidated Statements of Changes in Shareholders' Equity for the
years ended December 31, 2001, 2000 and 1999 .............................   F-6
Consolidated Statements of Cash Flows for the years ended December 31,
2001, 2000 and 1999 ......................................................   F-8
Notes to Consolidated Financial Statements ...............................  F-10
</TABLE>


                                      F-1
<PAGE>
               Report of Ernst & Young LLP, Independent Auditors

Board of Directors
Gerber Childrenswear, Inc.

We have audited the accompanying consolidated balance sheets of Gerber
Childrenswear, Inc. as of December 31, 2001 and 2000, and the related
consolidated statements of income and comprehensive income, changes in
shareholders' equity, and cash flows for each of the three years in the period
ended December 31, 2001. Our audits also included the financial statement
schedule listed in the Index at Item 14 (1)(b). These financial statements and
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and schedule based on our
audits.

We conducted our audits 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 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 Gerber
Childrenswear, Inc. at December 31, 2001 and 2000, and the consolidated results
of its operations and its cash flows for each of the three years in the period
ended December 31, 2001, in conformity with accounting principles generally
accepted in the United States. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.


                                          /s/ ERNST & YOUNG LLP

Greenville, South Carolina
February 22, 2002


                                      F-2
<PAGE>
                           Gerber Childrenswear, Inc.

                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                        DECEMBER 31,
                                                                      2001         2000
                                                                   ----------------------
                                                                       (In thousands)
<S>                                                                <C>          <C>
                                     ASSETS
Current assets:
   Cash and cash equivalents ...................................   $  45,556    $  31,203
   Accounts receivable, net of allowances for doubtful
     accounts of approximately $1,833,000 (2001)
     and $804,000 (2000) .......................................      26,119       38,658
   Inventories .................................................      50,625       56,937
   Deferred income taxes .......................................       4,490        3,085
   Other .......................................................       3,232        2,562
                                                                   ---------    ---------
Total current assets ...........................................     130,022      132,445

Property, plant and equipment, net .............................      32,799       32,762
Deferred income taxes ..........................................       5,024        7,592
Excess of cost over fair value of net assets acquired, net .....      15,662       16,985
Debt issuance costs, net .......................................         232          445
Other ..........................................................       1,542        1,421
                                                                   ---------    ---------
                                                                   $ 185,281    $ 191,650
                                                                   =========    =========
</TABLE>

See accompanying notes.


                                      F-3
<PAGE>
                           Gerber Childrenswear, Inc.

                     Consolidated Balance Sheets (Continued)

<TABLE>
<CAPTION>
                                                                        DECEMBER 31,
                                                                      2001         2000
                                                                   ----------------------
                                                                       (In thousands)
<S>                                                                <C>          <C>
                      LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable ............................................   $   8,968    $  10,825
   Accrued expenses ............................................      14,845       15,160
   Income taxes payable ........................................         606        4,862
   Current portion of obligations under capital leases .........         276          214
   Current portion of long-term debt ...........................       4,051        7,553
                                                                   ---------    ---------
Total current liabilities ......................................      28,746       38,614

Accrued pension and post-retirement benefit cost ...............       4,417        7,632
Other accrued liabilities ......................................      11,319       12,477
Long-term obligations under capital leases, less current portion         753          770
Long-term debt, less current portion ...........................         800        4,851

Shareholders' equity:
   Common stock, par value $.01, 20,774,000 shares
     authorized; 8,437,863 shares outstanding
     (2001), 8,248,537 shares outstanding (2000) ...............          86           84
   Common stock, Class B, par value $.01 per share,
     11,842,000 shares authorized; 11,396,046
     shares outstanding (2001), 8,692,315 shares
     outstanding (2000) ........................................         114           87
   Treasury stock ..............................................        (647)        (312)
   Detachable stock warrants ...................................          --          189
   Additional paid-in capital ..................................      69,809       69,651
   Accumulated comprehensive income ............................      (4,244)      (3,009)
   Retained earnings ...........................................      74,145       60,708
                                                                   ---------    ---------
                                                                     139,263      127,398
   Less unearned compensation under restricted stock plan ......          17           92
                                                                   ---------    ---------
Total shareholders' equity .....................................     139,246      127,306
                                                                   ---------    ---------
                                                                   $ 185,281    $ 191,650
                                                                   =========    =========
</TABLE>

See accompanying notes.


                                      F-4
<PAGE>
                           Gerber Childrenswear, Inc.

           Consolidated Statements of Income and Comprehensive Income

<TABLE>
<CAPTION>
                                                            YEAR ENDED DECEMBER 31,
                                                      2001            2000             1999
                                                    -----------------------------------------
                                                    (In thousands, except for per share data)
<S>                                                 <C>             <C>              <C>
Net sales ......................................    $209,485        $259,193         $278,822
Cost of sales ..................................     155,811         196,554          212,281
                                                    --------        --------         --------
Gross margin ...................................      53,674          62,639           66,541

Expenses:
   Selling, general and administrative expenses       36,219          37,507           41,968
   Other, net ..................................      (2,765)           (226)          (1,824)
                                                    --------        --------         --------
                                                      33,454          37,281           40,144
                                                    --------        --------         --------
Income before interest and income taxes ........      20,220          25,358           26,397
Interest (income) expense, net .................        (714)            112            2,678
                                                    --------        --------         --------
Income before income taxes .....................      20,934          25,246           23,719
Provision for income taxes .....................       7,497           8,715            8,053
                                                    --------        --------         --------
Net income .....................................      13,437          16,531           15,666
Minimum pension liability adjustment ...........        (211)             --               --
Foreign currency translation ...................      (1,024)         (1,086)          (2,668)
                                                    --------        --------         --------
Comprehensive income ...........................    $ 12,202        $ 15,445         $ 12,998
                                                    ========        ========         ========

Per share amounts:
   Earnings per common share ...................        $.68            $.84             $.80
   Earnings per common share - assuming dilution        $.68            $.83             $.79
</TABLE>

See accompanying notes.


                                      F-5
<PAGE>
                           Gerber Childrenswear, Inc.

           Consolidated Statements of Changes in Shareholders' Equity

                  Years ended December 31, 2001, 2000 and 1999

                        (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                      CLASS B     CLASS B
                                               COMMON     COMMON      COMMON      COMMON     TREASURY    TREASURY
                                               SHARES     STOCK       SHARES       STOCK      SHARES      STOCK
                                             --------------------------------------------------------------------
<S>                                          <C>          <C>       <C>           <C>        <C>         <C>
Balance at December 31, 1998 .............   8,372,284     $84       8,692,315     $ 87       19,335      $ (33)
   Repurchase of shares for treasury .....          --      --              --       --       61,874       (117)
   Pursuant to restricted stock plan:
      Amortization .......................          --      --              --       --           --         --
      Forfeitures ........................          --      --              --       --           --         --
   Foreign currency translation adjustment          --      --              --       --           --         --
   Net income ............................          --      --              --       --           --         --
                                             ---------     ---      ----------     ----      -------      -----
Balance at December 31, 1999 .............   8,372,284      84       8,692,315       87       81,209       (150)
   Repurchase of shares for treasury .....          --      --              --       --       42,538       (162)
   Pursuant to restricted stock plan:
      Amortization .......................          --      --              --       --           --         --
      Forfeitures ........................          --      --              --       --           --         --
   Foreign currency translation adjustment          --      --              --       --           --         --
   Net income ............................          --      --              --       --           --         --
                                             ---------     ---      ----------     ----      -------      -----
Balance at December 31, 2000 .............   8,372,284      84       8,692,315       87      123,747       (312)
   Repurchase of shares for treasury .....          --      --              --       --       61,874       (335)
   Pursuant to restricted stock plan:
      Amortization .......................          --      --              --       --           --         --
      Forfeitures ........................          --      --              --       --           --         --
   Exercise of stock options .............       1,200      --              --       --           --         --
   Warrant exercise and conversion .......     250,000       2       2,703,731       27           --         --
   Minimum pension liability adjustment ..          --      --              --       --           --         --
   Foreign currency translation adjustment          --      --              --       --           --         --
   Net income ............................          --      --              --       --           --         --
                                             ---------     ---      ----------     ----      -------      -----
Balance at December 31, 2001 .............   8,623,484     $86      11,396,046     $114      185,621      $(647)
                                             =========     ===      ==========     ====      =======      =====
</TABLE>

See accompanying notes.


                                      F-6
<PAGE>
                           Gerber Childrenswear, Inc.

     Consolidated Statements of Changes in Shareholders' Equity (Continued)

                  Years ended December 31, 2001, 2000 and 1999

                        (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                            ACCUMULATED
                                                                       COMPREHENSIVE INCOME
                                                                     -------------------------
                                                                       FOREIGN       MINIMUM
                                            DETACHABLE  ADDITIONAL     CURRENCY      PENSION
                                              STOCK      PAID-IN     TRANSLATION    LIABILITY   RETAINED     UNEARNED
                                             WARRANTS    CAPITAL      ADJUSTMENT    ADJUSTMENT  EARNINGS   COMPENSATION     TOTAL
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>         <C>          <C>            <C>         <C>        <C>             <C>
Balance at December 31, 1998 .............     $ 189      $69,776      $   745        $  --      $28,511      $(433)       $ 98,926
   Repurchase of shares for treasury .....        --           --           --           --           --         --            (117)
   Pursuant to restricted stock plan:
      Amortization .......................        --           --           --           --           --        119             119
      Forfeitures ........................        --         (100)          --           --           --        100              --
   Foreign currency translation adjustment        --           --       (2,668)          --           --         --          (2,668)
   Net income ............................        --           --           --           --       15,666         --          15,666
                                               -----      -------      -------        -----      -------      -----        --------
Balance at December 31, 1999 .............       189       69,676       (1,923)          --       44,177       (214)        111,926
   Repurchase of shares for treasury .....        --           --           --           --           --         --            (162)
   Pursuant to restricted stock plan:
      Amortization .......................        --           --           --           --           --         97              97
      Forfeitures ........................        --          (25)          --           --           --         25              --
   Foreign currency translation adjustment        --           --       (1,086)          --           --         --          (1,086)
   Net income ............................        --           --           --           --       16,531         --          16,531
                                               -----      -------      -------        -----      -------      -----        --------
Balance at December 31, 2000 .............       189       69,651       (3,009)          --       60,708        (92)        127,306
   Repurchase of shares for treasury .....        --           --           --           --           --         --            (335)
   Pursuant to restricted stock plan:
      Amortization .......................        --           --           --           --           --         66              66
      Forfeitures ........................        --           (9)          --           --           --          9              --
   Exercise of stock options .............        --            7           --           --           --         --               7
   Warrant exercise and conversion .......      (189)         160           --           --           --
   Minimum pension liability adjustment ..        --           --           --         (211)          --         --            (211)
   Foreign currency translation adjustment        --           --       (1,024)          --           --         --          (1,024)
   Net income ............................        --           --           --           --       13,437         --          13,437
                                               -----      -------      -------        -----      -------      -----        --------
Balance at December 31, 2001 .............     $  --      $69,809      $(4,033)       $(211)     $74,145      $ (17)       $139,246
                                               =====      =======      =======        =====      =======      =====        ========
</TABLE>

See accompanying notes.


                                      F-7
<PAGE>
                           Gerber Childrenswear, Inc.

                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                YEAR ENDED DECEMBER 31,
                                                             2001        2000        1999
                                                           --------------------------------
                                                                    (In thousands)
<S>                                                        <C>         <C>         <C>
OPERATING ACTIVITIES
Net income .............................................   $ 13,437    $ 16,531    $ 15,666
Adjustments to reconcile net income to net cash
   provided by operating activities:
      Depreciation .....................................      5,810       4,923       4,900
      Amortization of excess of cost over fair
        value of net assets acquired and
        acquisition costs ..............................      1,036       1,051       1,103
      Amortization of debt issuance costs ..............        222         217         218
      Amortization of deferred income ..................        (62)        (84)       (313)
      Provision for allowance for doubtful accounts ....      1,379         157         (13)
      Provision for deferred income taxes ..............      1,163      (1,534)        341
      Amortization pursuant to restricted stock plan ...         66          97         119
      Gain on disposal of property, plant and equipment         (78)       (233)       (105)
      Loss on impairment of assets .....................        365         788          --
      Other ............................................         18         (45)          2
      Changes in operating assets and liabilities:
        Accounts receivable ............................     10,997      (1,762)     (1,129)
        Inventories ....................................      6,155       8,258      21,438
        Other assets ...................................       (828)       (721)        771
        Accounts payable ...............................     (1,842)      1,614      (2,498)
        Accrued expenses ...............................       (238)         80       2,990
        Income taxes payable ...........................     (4,240)      1,824      (2,555)
        Accrued pension and post-retirement benefit cost     (3,426)        704         836
        Other accrued liabilities ......................     (1,071)          1       1,938
                                                           --------    --------    --------
Net cash provided by operating activities ..............     28,863      31,866      43,709
                                                           --------    --------    --------

INVESTING ACTIVITIES
Purchases of property, plant and equipment .............     (6,513)    (11,323)     (7,364)
Proceeds from sale of property, plant and equipment ....        194         683         216
                                                           --------    --------    --------
Net cash used in investing activities ..................   $ (6,319)   $(10,640)   $ (7,148)
                                                           ========    ========    ========
</TABLE>


                                      F-8
<PAGE>
                           Gerber Childrenswear, Inc.

                Consolidated Statements of Cash Flows (Continued)

<TABLE>
<CAPTION>
                                                                       YEAR ENDED DECEMBER 31,
                                                                    2001        2000        1999
                                                                  --------------------------------
                                                                           (In thousands)
<S>                                                               <C>         <C>         <C>
FINANCING ACTIVITIES
Borrowings under revolving credit agreement ...................   $     --    $     --    $ 60,800
Repayments under revolving credit agreement ...................         --          --     (76,100)
Principal payments on long-term borrowings ....................     (7,551)     (7,107)     (4,821)
Principal payments on capital leases ..........................       (218)         (8)        (92)
Repurchase of common stock ....................................       (335)       (162)       (117)
Other .........................................................         (2)         --          --
                                                                  --------    --------    --------
Net cash used in financing activities .........................     (8,106)     (7,277)    (20,330)
                                                                  --------    --------    --------

Effect of foreign exchange rate changes on cash ...............        (85)       (249)       (508)
                                                                  --------    --------    --------

Net increase in cash and cash equivalents .....................     14,353      13,700      15,723
Cash and cash equivalents at beginning of period ..............     31,203      17,503       1,780
                                                                  --------    --------    --------
Cash and cash equivalents at end of period ....................   $ 45,556    $ 31,203    $ 17,503
                                                                  ========    ========    ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Noncash items:
   Obligations under capital leases ...........................   $    309    $    984    $     --
   Warrant conversion .........................................        189          --          --
   Minimum pension liability adjustment .......................        211          --          --
</TABLE>

See accompanying notes.


                                      F-9
<PAGE>
                           Gerber Childrenswear, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 2001

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

Gerber Childrenswear, Inc. (formerly known as GCIH, Inc., and referred to herein
as, the "Company") acquired 100% of the outstanding stock of certain apparel
operations 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 cost over fair value of net assets
acquired of approximately $2.0 million is being amortized over twenty years on a
straight-line basis.

On December 17, 1997, the Company acquired Auburn Hosiery Mills, Inc. ("Auburn")
and Sport Socks Company (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.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries GCI IP Sub. Inc., Gerber Childrenswear Canada,
Inc., Costura Dominicana, Inc., Costura Matamoros S.A. de C.V., GCW Mexico S.A.
de C.V. and GCW 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

In December 1999, the Securities and Exchange Commission staff issued Staff
Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements." SAB No. 101 further defines the basic principles of revenue
recognition and was adopted by the Company on October 1, 2000. The Company
recognizes substantially all of its revenue when products are shipped to
customers. The adoption of SAB No. 101 did not have a material effect on the
2000 financial statements.


                                      F-10
<PAGE>
                           Gerber Childrenswear, Inc.

             Notes to Consolidated Financial Statements (Continued)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

SHIPPING AND HANDLING COSTS

During 2000, the Emerging Issues Task Force ("EITF") issued EITF 00-10,
"Accounting for Shipping and Handling Fees and Costs." Effective with the
adoption of SAB 101 on October 1, 2000, EITF 00-10 requires shipping and
handling costs charged to customers to be included in revenue. Previously, the
Company primarily netted shipping and handling costs charged to customers in the
"Selling, general and administrative expenses" ("SG&A") section of the Company's
consolidated statements of income and comprehensive income. The amount of
shipping and handling costs that was charged to customers has been reclassified
and included in "Net Sales" for all periods presented. EITF 00-10 further
requires that all shipping and handling charges incurred by the seller should be
included in cost of sales, and if not, the amount and classification of such
costs should be disclosed. The Company has reclassified certain shipping and
handling costs that had previously been recorded in SG&A to "Cost of Sales." The
amount of shipping and handling costs incurred by the Company that is still
included in SG&A expenses for 2001, 2000 and 1999 was approximately $5,540,000,
$6,720,000 and $6,904,000, respectively.

ROYALTY EXPENSE RECOGNITION

The Company has certain royalty agreements and recognizes royalty expenses in
cost of sales 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 cost of sales for
these royalties on a straight-line basis over the ten-year term of the
agreement.

CONCENTRATION OF CREDIT RISK

The Company manufactures infant and toddler apparel and related products, plus
sport socks 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 60%, 56% and 57% for 2001,
2000 and 1999, respectively. Sales to one customer were 41%, 36% and 40% for
2001, 2000 and 1999, respectively. The Company performs periodic credit
evaluations of their customers and does not require collateral for credit sales.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with an original maturity of
three months or less when purchased to be cash equivalents. Cash and cash
equivalents principally consist of cash, interest bearing bank accounts,
repurchase agreements and commercial paper.


                                      F-11
<PAGE>
                           Gerber Childrenswear, Inc.

             Notes to Consolidated Financial Statements (Continued)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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 approximately $883,000 and $661,000 at
December 31, 2001 and 2000, respectively. Amortization expense is included in
interest expense in the accompanying consolidated statements of income and
comprehensive income.

ADVERTISING

Advertising costs of approximately $2,895,000, $2,918,000 and $5,042,000 for
2001, 2000 and 1999, 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 which generally
range from 10 to 30 years for buildings and leasehold improvements and 3 to 10
years for machinery, furniture, vehicles and equipment. Depreciation is 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 basis of existing
assets and liabilities.

EXCESS OF COST OVER FAIR VALUE OF 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
approximately $4,192,000 and $3,246,000 at December 31, 2001 and 2000,
respectively.


                                      F-12
<PAGE>
                           Gerber Childrenswear, Inc.

             Notes to Consolidated Financial Statements (Continued)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

FOREIGN CURRENCY TRANSLATION

The financial statements of the European subsidiaries were prepared in their
respective local currencies and translated into United States ("U.S.") dollars
based on the current exchange rate at the end of the period for the consolidated
balance sheet and a weighted average rate for the period on the consolidated
statements of income and comprehensive income.

FORWARD EXCHANGE CONTRACTS

The Company enters into forward foreign currency exchange contracts in the
regular course of business to manage its exposure against foreign currency
fluctuations on sales, raw materials and certain fixed asset purchase
transactions denominated in foreign currencies. The Company does not utilize
financial instruments for trading or other speculative purposes. The terms of
these contracts are generally less than one year. Unrealized gains or losses
resulting from changes in currency exchange rates are recognized currently.

STOCK-BASED COMPENSATION

The Company has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25"), and related
interpretations in accounting for its employee stock options. Under APB 25,
because the exercise price of employee stock options equals the market price of
underlying stock on the date of grant, no compensation expense is recorded. The
Company has adopted the disclosure-only provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("FAS
123").

IMPAIRMENT OF LONG-LIVED ASSETS

In accordance with the provisions of Statement of Financial Accounting Standards
No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of," the Company evaluates the recoverability of
long-lived assets for financial impairment, and will continue to evaluate them
as events or changes in circumstances indicate that the carrying amount of such
assets may not be fully recoverable. Based on these evaluations, the Company's
apparel segment recorded a charge of approximately $365,000 and $788,000 in 2001
and 2000 to reduce the carrying value of idle facilities and machinery to
reflect the fair value of the assets, less the cost to sell. This loss has been
reflected in "Selling, general and administrative expenses" in the Company's
consolidated statement of income and comprehensive income for 2001 and 2000.

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 consolidated financial statements and
accompanying notes. Actual results could differ from those estimates.


                                      F-13
<PAGE>
                           Gerber Childrenswear, Inc.

             Notes to Consolidated Financial Statements (Continued)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

NEW ACCOUNTING STANDARDS

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). This statement established accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts (collectively referred to as
derivatives), and for hedging activities. It requires that an entity recognize
all derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. If the derivative is a
hedge, depending on the nature of the hedge, changes in fair value will be
either offset against the change in fair value of the hedged assets,
liabilities, or firm commitments through earnings, or recognized in other
comprehensive income until the hedged item is recognized in earnings. The
Company adopted the standard effective January 1, 2001, and the adoption did not
have a material impact on the consolidated financial statements.

In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 142 "Goodwill and Other Intangible Assets"
("SFAS 142"). SFAS 142 supersedes Accounting Principles Bulletin No. 17,
"Intangible Assets." SFAS 142 primarily addresses the accounting for goodwill
and intangible assets subsequent to their acquisition. The most significant
changes made by SFAS 142 are: (a) goodwill and indefinite lived intangible
assets will no longer be amortized, (b) goodwill will be tested for impairment
at least annually, (c) intangible assets deemed to have an indefinite life will
be tested for impairment at least annually and (d) the amortization period of
intangible assets with finite lives will no longer be limited to forty years.
The provisions of SFAS 142 will be effective for fiscal years beginning after
December 15, 2001. The Company will apply the provisions of SFAS 142 beginning
on January 1, 2002. Application of the non-amortization provisions of SFAS 142
is expected to result in an increase in earnings of approximately $1.0 million
per year. The Company is currently in the process of testing goodwill using the
methodology prescribed by SFAS 142, and has not yet determined the effect, if
any, on its consolidated financial position, results of operations and cash
flows.

            The Financial Accounting Standards Board also recently issued
Statement of Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("SFAS 144"). SFAS 144 establishes
accounting standards for the recognition and measurement of long-lived assets
held for use or held for disposal. This statement is required to be adopted by
the beginning of 2002. The Company is evaluating the impact of this standard and
has not yet determined the effect of adoption on our consolidated financial
position, results of operations and cash flows.

RECLASSIFICATIONS

Certain amounts in 2000 and 1999 have been reclassified to conform to current
presentations.


                                      F-14
<PAGE>
                           Gerber Childrenswear, Inc.

             Notes to Consolidated Financial Statements (Continued)

2. INVENTORIES

Inventories consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                                         DECEMBER 31,
                                                                        2001      2000
                                                                      -----------------
<S>                                                                   <C>       <C>
Raw materials .....................................................   $ 5,547   $ 9,514
Work in process ...................................................     4,155     9,956
Finished goods ....................................................    40,923    37,467
                                                                      -------   -------
                                                                      $50,625   $56,937
                                                                      =======   =======
</TABLE>

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.

3. PROPERTY, PLANT AND EQUIPMENT

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

<TABLE>
<CAPTION>
                                                                         DECEMBER 31,
                                                                        2001      2000
                                                                      -----------------
<S>                                                                   <C>       <C>
Property, plant and equipment owned:
      Land and land improvements ..................................   $   823   $   832
      Buildings and leasehold improvements ........................    13,956     9,762
      Machinery and equipment .....................................    19,343    18,916
      Furniture, computers, software and other equipment ..........    16,467     4,307
      Vehicles ....................................................       443       381
      Construction in progress ....................................       358    13,102
                                                                      -------   -------
                                                                       51,390    47,300
      Less accumulated depreciation ...............................    20,004    16,589
                                                                      -------   -------
Property, plant and equipment owned, net ..........................    31,386    30,711
                                                                      -------   -------
Property, plant and equipment under capital lease:
      Land, buildings and improvements, machinery and equipment and
      other equipment held under capital leases ...................     2,584     2,329
      Less accumulated amortization ...............................     1,171       278
                                                                      -------   -------
Property, plant and equipment under capital lease, net ............     1,413     2,051
                                                                      -------   -------
Total property, plant and equipment owned or under capital lease ..   $32,799   $32,762
                                                                      =======   =======
</TABLE>


                                      F-15
<PAGE>
                           Gerber Childrenswear, Inc.

             Notes to Consolidated Financial Statements (Continued)

3. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Interest was capitalized in connection with the design and implementation of the
Company's new enterprise resource system. The capitalized interest is recorded
as part of the asset to which it relates and is amortized over the asset's
estimated useful life. Capitalized interest was approximately $200,000, $361,000
and $114,000 for 2001, 2000 and 1999.

Included in the above amounts, is approximately $1,404,000 (net of accumulated
depreciation of approximately $725,000) related to facilities that are idle or
leased to others that the Apparel segment desires to dispose of.

4. INCOME TAXES

Income before provision for income taxes consisted of (in thousands):

<TABLE>
<CAPTION>
                                         2001             2000            1999
                                       -----------------------------------------
<S>                                    <C>              <C>              <C>
United States .................        $ 20,062         $ 22,437         $20,213
International .................             872            2,809           3,506
                                       --------         --------         -------
                                       $ 20,934         $ 25,246         $23,719
                                       ========         ========         =======
</TABLE>

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

<TABLE>
<CAPTION>
                                         2001             2000            1999
                                       -----------------------------------------
<S>                                    <C>              <C>              <C>
Current:
   Federal ....................        $  6,054         $  9,862         $ 7,232
   State ......................              14              445              95
   International ..............             272              276             385
                                       --------         --------         -------
Total current .................           6,340           10,583           7,712

Deferred:
   Federal ....................           1,220           (1,903)            301
   State ......................               7              (80)             22
   International ..............             (70)             115              18
                                       --------         --------         -------
Total deferred ................           1,157           (1,868)            341
                                       --------         --------         -------
Income tax expense ............        $  7,497         $  8,715         $ 8,053
                                       ========         ========         =======
</TABLE>


                                      F-16
<PAGE>
                           Gerber Childrenswear, Inc.

             Notes to Consolidated Financial Statements (Continued)

4. INCOME TAXES (CONTINUED)

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

<TABLE>
<CAPTION>
                                                      2001       2000       1999
                                                    -----------------------------
<S>                                                 <C>        <C>        <C>
Tax at U.S. Federal statutory rate ..............   $ 7,327    $ 8,836    $ 8,302
State income tax, net of U.S. Federal tax benefit         9        290         62
International rate difference ...................      (103)      (592)      (825)
Other ...........................................       264        181        514
                                                    -------    -------    -------
Income tax expense ..............................   $ 7,497    $ 8,715    $ 8,053
                                                    =======    =======    =======
</TABLE>

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

<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                           2001            2000
                                                         -----------------------
<S>                                                      <C>             <C>
Deferred tax assets:
   Inventory mark-downs ........................         $ 1,315         $ 4,612
   Postretirement benefits .....................             860           2,112
   Accrued royalty .............................           4,202           3,964
   Other .......................................           4,724           3,902
                                                         -------         -------
Total deferred tax assets ......................          11,101          14,590

Deferred tax liabilities:
   Depreciation ................................             498             205
   Inventory methods ...........................           1,026           3,507
   Other .......................................              63             201
                                                         -------         -------
Total deferred tax liabilities .................           1,587           3,913
                                                         -------         -------
Net deferred tax assets ........................         $ 9,514         $10,677
                                                         =======         =======
</TABLE>

Income taxes paid were approximately $10,721,000, $8,389,000 and $10,511,000 in
2001, 2000 and 1999, respectively.


                                      F-17
<PAGE>
                           Gerber Childrenswear, Inc.

             Notes to Consolidated Financial Statements (Continued)

5. ACCRUED EXPENSES

Accrued expenses consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                           2001            2000
                                                         -----------------------
<S>                                                      <C>             <C>
Interest .......................................         $   127         $   142
Salaries, wages and payroll taxes ..............           2,315           2,373
Incentives .....................................           1,690           1,997
Advertising ....................................           3,375           3,770
Self-insurance reserves ........................             168             745
Royalties ......................................           2,413           1,175
Executive deferred compensation ................           1,349           1,032
Other ..........................................           3,408           3,926
                                                         -------         -------
                                                         $14,845         $15,160
                                                         =======         =======
</TABLE>

6. OTHER ACCRUED LIABILITIES

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

<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                           2001            2000
                                                         -----------------------
<S>                                                      <C>             <C>
Royalties ......................................         $ 9,823         $10,934
Other ..........................................           1,496           1,543
                                                         -------         -------
                                                         $11,319         $12,477
                                                         =======         =======
</TABLE>


                                      F-18
<PAGE>
                           Gerber Childrenswear, Inc.

             Notes to Consolidated Financial Statements (Continued)

7. LONG-TERM DEBT

<TABLE>
<CAPTION>
Long-term debt consists of the following (in thousands):         DECEMBER 31,
                                                                 2001      2000
                                                               -----------------
<S>                                                            <C>       <C>
Term loan with a bank, principal due on a quarterly payment
  schedule through September 30, 2002 ......................   $ 3,651   $10,754
Industrial Revenue Bond, payable in annual principal
  installments of $200,000 through March 1, 2004,
  plus interest at a floating rate not to exceed 14%
  (1.45% - 4.80% in 2001 and 2.55% - 6.19% in 2000) ........       600       800
Industrial Revenue Bond, payable in annual principal
  installments of $200,000 through October 1, 2004,
  plus interest at a floating rate not to exceed 14%
  (1.45% - 4.80% in 2001 and 2.55% - 6.19% in 2000) ........       600       800
Other ......................................................        --        50
                                                               -------   -------
                                                                 4,851    12,404
Less current portion .......................................     4,051     7,553
                                                               -------   -------
                                                               $   800   $ 4,851
                                                               =======   =======
</TABLE>

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

Interest rates on borrowings under the term loan and related revolving credit
facility are set from time to time, at the Company's option, as (a) Base rate
loans which bear interest at a 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, or (b) Eurodollar loan which accrues interest at
the LIBOR rate plus an applicable percentage based on the current Leverage
Ratio. The term loan interest rate at December 31, 2001 and 2000 was 2.43% and
7.14%, respectively. The Company had no outstanding borrowings under its
revolving credit facility at December 31, 2001 and December 31, 2000. The
revolving credit agreement permits the Company to borrow up to a maximum of
$20,000,000 (lowered from $60,000,000 in May 2001) 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, 2001 and 2000, the Company had available borrowings up
to approximately $13,300,000 and $48,100,000, respectively. The Company had
outstanding letters of credit of approximately $6,683,000 and $6,109,000 at
December 31, 2001 and 2000, respectively, for purchases from foreign vendors and
to guarantee (a) certain casualty insurance activities and (b) payment of the
Company's industrial revenue bonds.

The revolving credit facility and term loan agreement, as amended, requires
mandatory principal prepayments based on excess annual cash flow as defined,
which commenced with calendar year 2000. The excess cash flow payment for 2000
was approximately $2,100,000 and was paid in March 2001. The Company on January
31, 2002 paid off the remaining balance of the term loan of approximately
$3,650,000.


                                      F-19
<PAGE>
                           Gerber Childrenswear, Inc.

             Notes to Consolidated Financial Statements (Continued)

7. LONG-TERM DEBT (CONTINUED)

The Company has available a foreign credit facility which had no outstanding
balance at December 31, 2001 and 2000. This credit facility permits the Company
to borrow up to a maximum of approximately $1,510,000 on a long-term basis and
approximately $270,000 as a bank overdraft.

Total interest paid was approximately $600,000, $1,772,000 and $2,034,000 in
2001, 2000 and 1999, respectively. Total interest income was approximately
$1,548,000, $1,239,000 and $132,000 in 2001, 2000 and 1999, respectively.

The aggregate annual maturities of long-term debt at December 31, 2001 are as
follows (in thousands):

<TABLE>
<S>                                                              <C>
            2002 ..............................................   4,051
            2003 ..............................................     400
            2004 ..............................................     400
                                                                 ------
                                                                 $4,851
                                                                 ======
</TABLE>

8. LEASES

The Company leases buildings, machinery and equipment under operating leases
with various renewal terms and expiring in various years through 2012. Three of
these leases contain renewal options totaling 20 years.

Future minimum lease payments as of December 31, 2001 under leases classified as
capital leases and operating leases, are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                 OPERATING
YEAR ENDING IN                                               CAPITAL LEASES       LEASES
--------------                                               -----------------------------
<S>                                                          <C>                 <C>
2002 .................................................           $  347           $1,485
2003 .................................................              347            1,508
2004 .................................................              292            1,067
2005 .................................................              188              826
2006 .................................................                9              455
Thereafter ...........................................               --              505
                                                                 ------           ------
Total minimum lease payments .........................            1,183           $5,846
                                                                                  ======
Less amounts representing interest ...................              154
                                                                 ------
Present value of net minimum lease payments ..........            1,029
Less current portion .................................              276
                                                                 ------
                                                                 $  753
                                                                 ======
</TABLE>


                                      F-20
<PAGE>
                           Gerber Childrenswear, Inc.

             Notes to Consolidated Financial Statements (Continued)

8. LEASES (CONTINUED)

Rent expense totaled approximately $2,459,000, $2,781,000 and $2,888,000 for the
years ended December 31, 2001, 2000 and 1999, respectively.

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.

9. EMPLOYEE BENEFIT PLANS

The Apparel segment of the Company has a non-contributory defined benefit
pension plan ("Pension Plan") that covers 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. 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.

The Apparel segment also sponsors a defined benefit postretirement health care
plan ("Postretirement Plan") covering all full-time domestic employees. The plan
is contributory, with retiree contributions adjusted annually, and contains
other cost sharing features such as deductibles and coinsurance. The accounting
for the plan 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.

During 2000 and 1999, the Company downsized its domestic Apparel operations
resulting in a significant reduction in the number of employees covered under
the Company's Pension and Postretirement Plans. These reductions of employees
resulted in a curtailment of benefits gain in the Postretirement Plan of
approximately $226,000 and $487,000 that is included in "Other, net" in the
Company's 2000 and 1999 consolidated statements of income and comprehensive
income, respectively.

The Company in 2001 decided to change and later discontinue the Postretirement
Plan which resulted in a $2.8 million gain on curtailment of postretirement
benefit costs for the twelve months ended December 31, 2001. In January of 2001,
the Company decided to change eligibility requirements of the Postretirement
Plan resulting in a $1.8 million gain on curtailment of postretirement benefit
costs. In addition, the Company discontinued the Postretirement Plan, except for
employees currently participating in the Postretirement Plan, effective August
1, 2001. The discontinuance of the Postretirement Plan resulted in an additional
gain on curtailment of postretirement benefit costs of approximately $1.0
million.


                                      F-21
<PAGE>
                           Gerber Childrenswear, Inc.

             Notes to Consolidated Financial Statements (Continued)

9. EMPLOYEE BENEFIT PLANS (CONTINUED)

Change in benefit obligations and change in plan net assets, as estimated by
consulting actuaries, as of December 31, 2001 and 2000 are as follows (in
thousands):

<TABLE>
<CAPTION>
                                                   PENSION BENEFITS        POSTRETIREMENT BENEFITS
                                                 ---------------------     -----------------------
                                                   2001         2000         2001            2000
                                                 ---------------------     -----------------------
<S>                                              <C>          <C>          <C>             <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year ......   $ 27,662     $ 26,327     $ 2,773         $ 3,650
   Service cost ..............................        599          903          46             443
   Interest cost .............................      1,847        1,864          44             270
   Plan amendments ...........................        148           --          --              --
   Actuarial (gains) losses ..................       (573)         338          20          (1,305)
   Curtailments ..............................       (214)          51      (2,765)           (226)
   Benefits paid .............................     (2,017)      (1,821)        (45)            (59)
                                                 --------     --------     -------         -------
Benefit obligation at end of year ............   $ 27,452     $ 27,662     $    73         $ 2,773
                                                 ========     ========     =======         =======

CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year   $ 27,971     $ 28,787     $    --         $    --
   Actual return on plan assets ..............     (1,295)       1,005          --              --
   Company contributions .....................         --           --          45              59
   Benefits paid .............................     (2,017)      (1,821)        (45)            (59)
                                                 --------     --------     -------         -------
Fair value of plan assets at end of year .....   $ 24,659     $ 27,971     $    --         $    --
                                                 ========     ========     =======         =======

RECONCILIATION OF PREPAID/(ACCRUED)
Funded status of plan (underfunded) ..........   $ (2,793)    $    309     $   (73)        $(2,773)
   Unrecognized net actuarial gain ...........        959       (2,115)     (2,299)         (3,053)
   Unrecognized prior service cost ...........        110           --          --              --
   Minimum pension liability adjustment ......       (321)          --          --              --
                                                 --------     --------     -------         -------
Accrued benefit cost .........................   $ (2,045)    $ (1,806)    $(2,372)        $(5,826)
                                                 ========     ========     =======         =======

AMOUNT RECOGNIZED IN THE BALANCE SHEET
Accrued benefit cost .........................   $ (2,045)    $ (1,806)    $(2,372)        $(5,826)
   Intangible asset ..........................        110           --          --              --
   Accumulated other comprehensive income ....        211           --          --              --
                                                 --------     --------     -------         -------
Net accrued benefit cost .....................   $ (1,724)    $ (1,806)    $(2,372)        $(5,826)
                                                 ========     ========     =======         =======

WEIGHTED AVERAGE ASSUMPTIONS
Discount rate obligations ....................       7.00%        7.25%       7.00%           7.25%
Discount rate for expense ....................       7.25%        7.50%       7.25%           7.50%
Expected return on plan assets ...............       9.00%        9.00%         --              --
Rate of compensation increase ................       4.00%        4.00%         --              --
</TABLE>


                                      F-22
<PAGE>
                           Gerber Childrenswear, Inc.

             Notes to Consolidated Financial Statements (Continued)

9. EMPLOYEE BENEFIT PLANS (CONTINUED)

Net pension and postretirement cost included the following components at
December 31, 2001, 2000 and 1999 (in thousands):

<TABLE>
<CAPTION>
PENSION BENEFITS                                                  2001       2000       1999
                                                                -----------------------------
<S>                                                             <C>        <C>        <C>
Service cost - benefits earned during the period ............   $   599    $   903    $ 1,066
Interest cost on projected benefit obligation ...............     1,847      1,864      1,804
Expected return on plan assets ..............................    (2,467)    (2,386)    (2,299)
Amortization of unrecognized net gain and prior service costs      (103)       (20)        --
                                                                -------    -------    -------
Net periodic pension (income) expense .......................      (124)       361        571
One-time curtailment loss ...................................        34         --         --
                                                                -------    -------    -------
Total (income) expense ......................................   $   (90)   $   361    $   571
                                                                =======    =======    =======
</TABLE>

<TABLE>
<CAPTION>
POSTRETIREMENT BENEFITS                                           2001       2000       1999
                                                                -----------------------------
<S>                                                             <C>        <C>        <C>
Service cost - benefits earned during the period ............   $    46    $   443    $   474
Interest cost on projected benefit obligation ...............        44        270        320
Amortization of unrecognized net gain .......................      (735)       (85)        (9)
                                                                -------    -------    -------
Net periodic postretirement (income) expense ................      (645)       628        785
One-time curtailment gain ...................................    (2,765)      (226)      (487)
                                                                -------    -------    -------
Total (income) expense ......................................   $(3,410)   $   402    $   298
                                                                =======    =======    =======
</TABLE>

The weighted-average annual assumed rate of increase in the per capita cost of
covered medical benefits for 2001 is 6.5 percent to 7.0 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 accumulated
postretirement benefit obligation as of December 31, 2001 by approximately
$1,000 and the aggregate of the service and interest cost components of net
periodic postretirement benefit cost for 2001 by approximately $14,000.
Decreasing the assumed health care cost trend rate by one percentage point in
each year would decrease the accumulated postretirement benefit obligation as of
December 31, 2001 by approximately $1,000 and the aggregate of the service and
interest cost components of net periodic postretirement benefit cost for 2001 by
approximately $12,000.

Gerber Childrenswear, Inc. also has a 401(k) plan for its employees whereby the
Company will match 50% of the employee's contributions up to a maximum company
match of 3% of the employee's compensation. Total expense under the plan was
approximately $323,000, $297,000 and $480,000 in 2001, 2000 and 1999,
respectively.


                                      F-23
<PAGE>
                           Gerber Childrenswear, Inc.

             Notes to Consolidated Financial Statements (Continued)

9. EMPLOYEE BENEFIT PLANS (CONTINUED)

Sport Socks has a defined contribution pension plan. The assets of the plan are
held in an independently administered fund. Total expense under the plan was
approximately $153,000, $131,000 and $156,000 in 2001, 2000 and 1999,
respectively.

Auburn has a defined contribution plan covering all employees who have two years
of service with at least 1,000 hours each year. The contribution was determined
by its Board of Directors annually. Effective June 1, 1998, the plan was amended
and restated whereby the Company will match 50% of the employee's contributions
up to a maximum company match of 3% of the employee's compensation. Total
expense under the plan was approximately $158,000, $189,000 and $111,000 for
2001, 2000 and 1999, respectively.

10. SHAREHOLDERS' EQUITY

During 1997, the Company sold shares of its Class B common stock to certain
employees for $1 per share. 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. Amortization expense for
2001, 2000 and 1999 was approximately $66,000, $97,000 and $119,000,
respectively. Previously amortized amounts for shares forfeited are credited to
compensation expense in the year of forfeiture.

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 2,958,503 shares (191,250 shares prior to Merger) of Class B Common
Stock (non-voting Class D common stock prior to Merger) at a nominal price. The
warrant, in whole or in part, could be exercised at anytime through January 22,
2006. The recorded value of the warrant at the date of issuance was
approximately $189,000 (based on the relative fair values of the warrant and the
note) and reduced the face amount of the note payable. In August 2001, the
Company issued 2,953,731 shares of stock to Citicorp Mezzanine Partners, L.P.
("CMP"). These shares were issued in a cashless exercise of all of CMP's
warrants to purchase shares of Class B Common Stock. Simultaneously, CMP
converted 250,000 shares of Class B Common Stock into an equal number of shares
of Common Stock.


                                      F-24
<PAGE>
                           Gerber Childrenswear, Inc.

             Notes to Consolidated Financial Statements (Continued)

11. DISCLOSURES ABOUT 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 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 consolidated
balance sheets for cash and cash equivalents approximate fair value due to the
short-maturity of these instruments.

Receivables: The carrying amounts reported in the consolidated balance sheets
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
contract value and estimated fair value of contracts at December 31, 2001 was
approximately $2,577,000 and $2,621,000, respectively. The contract value and
estimated fair value of contracts at December 31, 2000 was approximately
$3,043,000 and $2,951,000, respectively.

12. EARNINGS PER SHARE

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

<TABLE>
<CAPTION>
                                               2001          2000          1999
                                           ---------------------------------------
<S>                                        <C>           <C>           <C>
Numerator for basic and diluted earnings
  per share - net income available to
  common shareholders ..................   $13,437,000   $16,531,000   $15,666,000
                                           ===========   ===========   ===========

Denominator:
  Denominator for basic earnings per
    share - weighted-average shares
                                            19,845,000    19,771,000    19,600,000
  Effect of dilutive securities:
    Nonvested stock and options ........        15,000       125,000       317,000
                                           -----------   -----------   -----------
Denominator for diluted earnings per
  share - adjusted weighted-average
  shares ...............................    19,860,000    19,896,000    19,917,000
                                           ===========   ===========   ===========

Basic earnings per share ...............          $.68          $.84          $.80
                                           ===========   ===========   ===========

Diluted earnings per share .............          $.68          $.83          $.79
                                           ===========   ===========   ===========
</TABLE>


                                      F-25
<PAGE>
                           Gerber Childrenswear, Inc.

             Notes to Consolidated Financial Statements (Continued)

13. CASUALTY EVENT

In September 1998, the Company's three plants in the Dominican Republic
sustained property damage and began to experience business interruption losses
associated with Hurricane Georges. The Company maintained property damage and
business interruption insurance and settled a majority of the claim with its
insurance providers in November 1999 resulting in a net casualty gain of
approximately $1,337,000. This gain has been reflected in "Other, net" in the
Company's consolidated statement of income and comprehensive income for 1999.

14. LONG-TERM PERFORMANCE INCENTIVE PLAN AND EXECUTIVE DEFERRAL PLAN

In June 1998, the Company adopted a Long-Term Performance 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 provides 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 750,000 shares of Common Stock 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 shares of Common Stock in any
calendar year and is scheduled to terminate ten years from the inception date of
the Plan.

During 2001, 2000 and 1999, stock options were granted to certain employees of
the Company at prices equal to the market value of the common shares at the date
of grant and generally vest and become exercisable ratably over a five year
period, commencing one year after the grant date and expire ten years after the
date of grant. The weighted average remaining contractual life of outstanding
stock options at December 31, 2001 was approximately 7.8 years.

The following tables summarize the transactions of the Incentive Plan during
2001, 2000 and 1999:

<TABLE>
<CAPTION>
                                            Weighted Average   Exercise Price
2001                               Shares    Exercise Price        Range
                                   ------   ----------------   --------------
<S>                                <C>      <C>                <C>
Outstanding at beginning of year   66,800         $6.77        $4.44 - $13.00
      Granted ..................   12,500          4.69            4.69
      Exercised ................    1,200          6.00            6.00
      Forfeited ................   11,800          6.00            6.00
      Expired ..................       --            --              --
                                   ------         -----        --------------
Outstanding at end of year .....   66,300         $6.53        $4.44 - $13.00
                                   ======         =====        ==============

Options exercisable at year-end    19,320         $8.48        $4.44 - $13.00
                                   ======         =====        ==============
</TABLE>


                                      F-26
<PAGE>
                           Gerber Childrenswear, Inc.

             Notes to Consolidated Financial Statements (Continued)

14. LONG-TERM PERFORMANCE INCENTIVE PLAN AND EXECUTIVE DEFERRAL PLAN (CONTINUED)

<TABLE>
<CAPTION>
                                              Weighted Average   Exercise Price
2000                                Shares     Exercise Price         Range
                                   -------    ----------------   --------------
<S>                                <C>        <C>                <C>
Outstanding at beginning of year    82,600          $ 7.53       $4.00 - $13.00
      Granted ..................    25,000            4.44                 4.44
      Exercised ................        --              --                   --
      Forfeited ................   (40,800)           6.90         4.00 - 13.00
      Expired ..................        --              --                   --
                                   -------          ------       --------------
Outstanding at end of year .....    66,800          $ 6.77       $4.44 - $13.00
                                   =======          ======       ==============

Options exercisable at year-end     11,160          $ 9.38       $4.63 - $13.00
                                   =======          ======       ==============
</TABLE>

<TABLE>
<CAPTION>
                                              Weighted Average   Exercise Price
1999                                Shares     Exercise Price         Range
                                   -------    ----------------   --------------
<S>                                <C>        <C>                <C>
Outstanding at beginning of year    34,000          $10.98       $8.38 - $13.00
      Granted ..................    48,600            5.13        4.00 - 6.00
      Exercised ................        --              --                 --
      Forfeited ................        --              --                 --
      Expired ..................        --              --                 --
                                   -------          ------       --------------
Outstanding at end of year .....    82,600          $ 7.53       $4.00 - $13.00
                                   =======          ======       ==============

Options exercisable at year-end      6,800          $10.98       $8.38 - $13.00
                                   =======          ======       ==============
</TABLE>

As permitted by FAS 123, the Company applies APB 25 and related interpretations
in accounting for stock options; accordingly, no compensation expense has been
recognized by the Company for its Incentive Plan in 2001, 2000 or 1999. Had
compensation expense been determined based upon the fair value of the stock
options at grant date consistent with the method of FAS 123, the Company's
consolidated net income and earnings per share for 2001, 2000 and 1999 would
have not been materially different from amounts reported.

The fair value of each stock option was estimated on the date of grant using the
Black-Scholes option-pricing model with the following assumption for 2001, 2000
and 1999, respectively; risk-free interest rates of approximately 4.85%, 6.9%
and 6.5%; no expected dividend yield for both years; expected lives of 10 years
for both years and volatility of approximately 45%, 48.0% and 60.0%. Changes in
these assumptions can materially affect the fair value estimate. In management's
opinion the existing models do not necessarily provide a reliable single measure
of the fair value of its stock options.

Effective January 1, 1998, the Company established an Executive Deferral Plan
for certain officers of the Company. The Plan enables participants to defer
compensation on a pre-tax basis and is not funded. Participants are credited
interest at current market rates. The charge to interest expense was
approximately $115,000, $78,000 and $48,000 in 2001, 2000 and 1999,
respectively.


                                      F-27
<PAGE>
                           Gerber Childrenswear, Inc.

             Notes to Consolidated Financial Statements (Continued)

15. 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 sleepwear,
underwear, bedding, bath, cloth diapers and other products to mass merchandise
outlets in the U.S. under the Gerber brand and other 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 Converse names to major
retailers in the United States and/or Europe.

Net sales, income (loss) before interest and income taxes, depreciation and
amortization, and capital additions are reported based on the operations of each
business segment or geographic region. Assets are those used exclusively in the
operations of each business segment or geographic region, or which are allocated
when used jointly. The following tables present sales and other financial
information by business segment and geographic region for the years 2001, 2000
and 1999 (in thousands):

<TABLE>
<CAPTION>
BUSINESS SEGMENTS                                         2001       2000       1999
                                                        ------------------------------
<S>                                                     <C>        <C>        <C>
Net sales:
   Apparel ..........................................   $145,070   $189,902   $206,164
   Hosiery ..........................................     64,415     69,291     72,658
                                                        --------   --------   --------
Total net sales .....................................   $209,485   $259,193   $278,822
                                                        ========   ========   ========

Income (loss) before interest and income taxes:
   Apparel ..........................................   $ 16,533   $ 17,329   $ 18,724
   Hosiery ..........................................      3,687      8,029      7,673
                                                        --------   --------   --------
Total income (loss) before interest and income taxes:   $ 20,220   $ 25,358   $ 26,397
                                                        ========   ========   ========

Depreciation and amortization:
   Apparel ..........................................   $  3,667   $  2,937   $  3,039
   Hosiery ..........................................      3,401      3,254      3,182
                                                        --------   --------   --------
Total depreciation and amortization .................   $  7,068   $  6,191   $  6,221
                                                        ========   ========   ========

Capital additions:
   Apparel ..........................................   $  4,394   $  6,359   $  4,741
   Hosiery ..........................................      2,119      4,964      2,623
                                                        --------   --------   --------
Total capital additions .............................   $  6,513   $ 11,323   $  7,364
                                                        ========   ========   ========

Assets:
   Apparel ..........................................   $135,828   $141,338
   Hosiery ..........................................     49,453     50,312
                                                        --------   --------
Total assets ........................................   $185,281   $191,650
                                                        ========   ========
</TABLE>


                                      F-28
<PAGE>
                           Gerber Childrenswear, Inc.

             Notes to Consolidated Financial Statements (Continued)

15. BUSINESS SEGMENTS AND GEOGRAPHIC AREAS (CONTINUED)

<TABLE>
<CAPTION>
                                                  2001       2000       1999
                                                ------------------------------
<S>                                             <C>        <C>        <C>
Inventories (included in assets):
   Apparel ..................................   $ 41,208   $ 48,047
   Hosiery ..................................      9,417      8,890
                                                --------   --------
Total inventories (included in assets) ......   $ 50,625   $ 56,937
                                                ========   ========

GEOGRAPHIC AREAS

Net sales:
   United States ............................   $188,775   $238,605   $256,091
   All other ................................     20,710     20,588     22,731
                                                --------   --------   --------
Total net sales .............................   $209,485   $259,193   $278,822
                                                ========   ========   ========

Income before interest and income taxes:
   United States ............................   $ 19,441   $ 22,633   $ 21,608
   All other ................................        779      2,725      4,789
                                                --------   --------   --------
Total income before interest and income taxes   $ 20,220   $ 25,358   $ 26,397
                                                ========   ========   ========

Assets:
   United States ............................   $160,786   $166,769
   All other ................................     24,495     24,881
                                                --------   --------
Total assets ................................   $185,281   $191,650
                                                ========   ========
</TABLE>

The Apparel segment had sales to Wal-Mart and two other customers that accounted
for 36%, 14% and 12% of total Apparel sales in 2001, 32%, 13% and 12% of total
Apparel sales in 2000, respectively; and 37%, 11%, and 11% of total Apparel
sales in 1999, respectively. The Hosiery segment had sales to Wal-Mart that
accounted for 53%, 48% and 51% of that segment's sales for 2001, 2000 and 1999,
respectively.


                                      F-29
<PAGE>
                           Gerber Childrenswear, Inc.

             Notes to Consolidated Financial Statements (Continued)

16. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

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

<TABLE>
<CAPTION>
                                   1ST       2ND       3RD       4TH
                                 QUARTER   QUARTER   QUARTER   QUARTER     TOTAL
                                 ------------------------------------------------
                                     (In thousands, except per share amounts)
<S>                              <C>       <C>       <C>       <C>       <C>
2001
Net sales ....................   $54,245   $49,156   $55,548   $50,536   $209,485
Gross margin .................    14,199    11,675    15,132    12,668     53,674
Net income ...................     4,690     1,445     4,770     2,532     13,437

Basic earnings per share .....      $.24      $.07      $.24      $.13       $.68
Diluted earnings per share....      $.24      $.07      $.24      $.13       $.68

2000
Net sales ....................   $60,760   $58,599   $70,588   $69,246   $259,193
Gross margin .................    16,138    13,084    16,452    16,965     62,639
Net income ...................     3,919     2,343     5,074     5,195     16,531

Basic earnings per share .....      $.20      $.12      $.26      $.26       $.84
Diluted earnings per share....      $.20      $.12      $.25      $.26       $.83
</TABLE>

The fourth quarter of 2000 reflects adjustments which increase income of
approximately $434,000 (net of income taxes), which included reductions in
advertising, incentives, postretirement benefits, partially offset by losses on
impairment, or $.02 per diluted share.

17. COMMITMENTS AND CONTINGENT LIABILITIES

Litigation

Various lawsuits, claims and proceedings have been or may be instituted or
asserted against the Company, including those pertaining to environmental,
product liability, and safety and health matters. While the amounts claimed may
be substantial, the ultimate liability cannot now be determined because of the
considerable uncertainties that exist. Therefore, it is possible that results of
operations or liquidity in a particular period could be materially affected by
certain contingencies. However, based on facts currently available, management
believes that the disposition of matters that are pending or asserted will not
have a materially adverse effect on the financial position of the Company.


                                      F-30
<PAGE>
                           Gerber Childrenswear, Inc.

             Notes to Consolidated Financial Statements (Continued)

17. COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)

Employment Contracts

The Company has an employment contract in the normal course of business with one
of its officers with a remaining term of approximately one year.

Yarn Contracts

The Company depends on certain raw materials such as yarn for the manufacturing
of its products. The Company actively manages its cost through contracts with
its yarn suppliers with terms of up to one year. The Company has contracts to
purchase up to approximately 9,500,000 pounds of yarn in 2002. The Company has
evaluated the yarn contracts in light of SFAS 133, and where applicable, as
amended by Statement of Financial Accounting Standards No. 138 "Accounting for
Certain Derivative Instruments and Certain Hedging Activities." The Company has
determined that such contracts qualify for exclusion under the "Normal Purchases
and Normal Sales" provision of these standards and thus are not subject to its
requirements.

Capital Grants

Sport Socks has received capital and employment grants from the Industrial
Development Authority (the "IDA") which could become repayable to the IDA (if
certain conditions are not met) in the aggregate amount of up to $2,054,000 as
of December 31, 2001.


                                      F-31
<PAGE>
                                                                     SCHEDULE II

                           Gerber Childrenswear, Inc.

           Supplemental Schedule of Valuation and Qualifying Accounts

                                 (In thousands)

<TABLE>
<CAPTION>
                                              BALANCE AT     CHARGED                  BALANCE AT
                                              BEGINNING    TO COST AND                  END OF
               DESCRIPTION                    OF PERIOD     EXPENSES     DEDUCTIONS     PERIOD
------------------------------------------------------------------------------------------------
<S>                                           <C>          <C>           <C>          <C>
Year ended December 31, 2001:
   Allowance for doubtful accounts .........    $  804        1,379         350(1)      $1,833

Year ended December 31, 2000:
   Allowance for doubtful accounts .........     1,103          157         456(1)         804

Year ended December 31, 1999:
   Allowance for doubtful accounts .........     1,487          (13)        371(1)       1,103
</TABLE>

(1)   Allowances, uncollected amounts and credit balances written off against
      reserve, net of recoveries.


                                      F-32