##### 



EXHIBIT 99.1




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##### 



20
Gildan 2005 Annual ReportMD&AManagements Discussion and Analysis of Financial Condition and Results of Operations
 21
    
    
    CORPORATE OVERVIEW21
    
    
    INDUSTRY OVERVIEW22
    
    
    FINANCIAL OBJECTIVES AND STRATEGY24
    
    
    OPERATING RESULTS 2004-200534
    
    
    OPERATING RESULTS 2003-200436
    
    
    CRITICAL ACCOUNTING ESTIMATES37
    
    
    CHANGES IN ACCOUNTING POLICIES38
    
    
    RECENT ACCOUNTING PRONOUNCEMENTS39
    
    
    RELATED PARTY TRANSACTIONS39
    
    
    DISCLOSURE CONTROLS40
    
    
    RISKS43
    
    
    DISCLOSURE OF OUTSTANDING SHARE DATA43
    
    
    RECONCILIATION OF NON-GAAP FINANCIAL MEASURES45
    
    
    FORWARD-LOOKING STATEMENTS




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Gildan 2005 Annual Report
    
    
    21MD&AManagements Discussion and Analysis of Financial Condition and Results of Operations
 The information below should be read in conjunction with the Consolidated Financial Statements
and Auditors Report included in the Companys Annual Report. All financial information contained
in this MD&A and the Companys Consolidated Financial Statements has been prepared in accordance
with Canadian generally accepted accounting principles (GAAP), except for certain information
discussed in the paragraph entitled non-GAAP financial measures on page 24 of this MD&A. The effect
of significant differences between Canadian and U.S. GAAP is discussed in Note 18 to the Companys
Consolidated Financial Statements. All amounts in this report are in U.S. dollars, unless otherwise
stated. Gildan Activewears Audit and Finance Committee and its Board of Directors have reviewed
this MD&A to ensure consistency with the approved strategy of the Company.
 For additional information relating to the Company, readers may review the documentation filed by
the Company with the Canadian Securities Authorities (including the Companys Annual Information
Form) available at www.sedar.com and with the U.S. Securities and Exchange Commission (including
the Annual Report on Form 40-F) available at www.sec.gov.
 In this MD&A, Gildan, the Company, or the words we, our and us refer, depending on the
context, either to Gildan Activewear Inc. or to Gildan Activewear Inc. together with its
subsidiaries.




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##### 



22
Gildan 2005 Annual ReportMD&AManagements Discussion and Analysis of Financial Condition and Results of Operations
  
    
    continued use of activewear for event merchandising (such as concerts, festivals, etc.);
    
    continued evolution of the entertainment/sports licensing and merchandising businesses;
    
    the growing use of activewear for uniform applications;
    
    the growing use of activewear for corporate promotions;
    
    continued increase in use of activewear products for travel and tourism;
    
    an increased emphasis on physical fitness; and
    
    a greater use and acceptance of casual dress in the workplace.
     
    
    Increase market share in the U.S. distributor market in all current product categories;
    
    Make a gradual entry into retail markets, building a solid base from which to drive significant brand penetration;
    
    Increase market penetration in Europe and other international markets; and
    
    Support unit sales growth and maintain pricing competitiveness through significant
and continued investments in low-cost production capacity.




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Gildan 2005 Annual Report
    
    
    23MD&AManagements Discussion and Analysis of Financial Condition and Results of Operations
  Selected Annual Information
 Fiscal years ended October 2, 2005, October 3, 2004 and October 5, 2003
(in thousands of dollars, except earnings per share)
 2005
    
    
    2004
    
    
    2003Sales
    
    $
    653,851
    
    
    $
    533,368
    
    
    $
    431,195Cost of sales
    
    
    450,570
    
    
    
    378,696
    
    
    
    301,341Gross profit
    
    
    203,281
    
    
    
    154,672
    
    
    
    129,854Selling, general and administrative expenses
    
    
    74,896
    
    
    
    62,898
    
    
    
    48,403Special charge(1)
    
    
    10,726
    
    
    
    
    
    
    
    Earnings before the undernoted
    
    
    117,659
    
    
    
    91,774
    
    
    
    81,451Depreciation and amortization
    
    
    25,615
    
    
    
    22,275
    
    
    
    16,088Interest
    
    
    4,615
    
    
    
    6,170
    
    
    
    6,419Non-controlling interest in income
of consolidated joint venture
    
    
    34
    
    
    
    
    
    
    
    Earnings before incomes taxes
    
    
    87,395
    
    
    
    63,329
    
    
    
    58,944Income taxes
    
    
    1,352
    
    
    
    3,078
    
    
    
    5,788Net earnings
    
    $
    86,043
    
    
    $
    60,251
    
    
    $
    53,156Basic EPS(2)
    
    $
    1.44
    
    
    $
    1.02
    
    
    $
    0.91Diluted EPS(2)
    
    
    1.43
    
    
    
    1.01
    
    
    
    0.89Total assets
    
    $
    597,516
    
    
    $
    488,815
    
    
    $
    429,494Total long-term liabilities
    
    
    64,068
    
    
    
    66,037
    
    
    
    74,794
 (1)
    
    During the second quarter of fiscal 2005, the Company closed its two Canadian yarn-spinning
operations and reported closure costs of
$7.0 million net of taxes, as described on page 26. See non-GAAP financial measures on page 24.(2)
    
    All earnings per share data reflects the effect of the stock split as described on page 34.




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##### 



MD&A
 Managements Discussion and Analysis of Financial Condition and Results of Operations
  Year ended October 2, 2005, compared with year ended October 3, 2004
 Change in Functional and Reporting Currency in Fiscal 2004
  Non-GAAP Financial Measures
   Sales




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##### 



Gildan 2005 Annual Report
    
    25
   Managements Discussion and Analysis of Financial Condition and Results of Operations
 
   Gross Margins
  
 
 *
    
    Before the impact of the change in functional currency on cost of sales. See
non-GAAP financial measures on page 24.




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##### 



26 Gildan 2005 Annual Report MD&A
 Managements Discussion and Analysis of Financial Condition and Results of Operations
  Selling, General and Administrative Expenses
  
 Special Charge
  (in thousands of dollars)Writedown of fixed assets
    
    $
    6,783Employee severance
    
    
    3,688Other
    
    
    255$
    10,726
  Depreciation and Interest Expenses
  
 *
    
    Before charge for H. Greg Chamandy. See non-GAAP financial measures on page 24.




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Gildan 2005 Annual Report
    
    27
  Managements Discussion and Analysis of Financial Condition and Results of Operations
  Income Taxes
  
 Net Earnings
  
 
 *
    
    Before charge for H. Greg Chamandy and the impact of the functional currency change
on cost of sales. See non-GAAP financial measures on page 24.**
    
    Before special charge for the closure of the Canadian yarn spinning operations. See
non-GAAP financial measures on page 24.




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##### 



28 Gildan 2005 Annual Report MD&A
 Managements Discussion and Analysis of Financial Condition and Results of Operations
 Fourth Quarter Results
       Summary of Quarterly Results




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##### 



Gildan 2005 Annual Report
    
    29
  Managements Discussion and Analysis of Financial Condition and Results of Operations
 2005
    
    
    
    2004(in millions, except per share data)
    
    Q4
    
    
    Q3
    
    
    Q2
    
    
    Q1
    
    
    
    Q4
    
    
    Q3
    
    
    Q2
    
    
    Q1Sales
    
    $
    180.7
    
    
    $
    198.9
    
    
    $
    165.3
    
    
    $
    109.0
    
    
    
    $
    145.6
    
    
    $
    168.4
    
    
    $
    141.4
    
    
    $
    78.0Net earnings
    
    
    29.2
    
    
    
    34.1
    
    
    
    14.3
    
    
    
    8.4
    
    
    
    
    16.8
    
    
    
    26.2
    
    
    
    14.3
    
    
    
    2.9Basic EPS
    
    
    0.49
    
    
    
    0.57
    
    
    
    0.24
    
    
    
    0.14
    
    
    
    
    0.28
    
    
    
    0.44
    
    
    
    0.24
    
    
    
    0.05Diluted EPS
    
    
    0.48
    
    
    
    0.57
    
    
    
    0.24
    
    
    
    0.14
    
    
    
    
    0.28
    
    
    
    0.44
    
    
    
    0.24
    
    
    
    0.05
   Recap of Fiscal 2005 Guidance




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##### 



30 Gildan 2005 Annual Report MD&A
 Managements Discussion and Analysis of Financial Condition and Results of Operations
  Balance Sheets
   Liquidity and Capital Resources




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##### 



Gildan 2005 Annual Report
    
    31
  Managements Discussion and Analysis of Financial Condition and Results of Operations
  (1)
 (2)
    Off-Balance Sheet Arrangements
 Operating Leases
  
 (1)
    
    Cash flow from operating activities less cash used in investing activities. See
non-GAAP financial measures on page 24.(2)
    
    Total indebtedness. See non-GAAP financial measures on page 24.




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##### 



32 Gildan 2005 Annual Report MD&A
 Managements Discussion and Analysis of Financial Condition and Results of Operations
 Derivative Financial Instruments
     NotionalNotional
    
    
    Exchange
    
    
    
    
    
    
    U.S. dollaramount
    
    
    rate
    
    
    Maturity
    
    
    equivalent2005:Sell contracts:Foreign exchange contracts:
    
    
    9,276
    
    
    
    1.3450 to 1.3721
    
    
    
    Oct. 2005 - Sept. 2006
    
    
    $
    12,620£
    4,490
    
    
    
    1.8707 to 1.8909
    
    
    
    Oct. 2005 - Sept. 2006
    
    
    
    8,439CA $
    2,800
    
    
    
    0.8610
    
    
    
    Oct. 2005
    
    
    
    2,410Buy contracts:Foreign exchange contracts:
    
    CA $
    21,400
    
    
    
    0.7997 to 0.8216
    
    
    
    Oct. 2005 - Aug. 2006
    
    
    $
    17,348
    2,150
    
    
    
    1.2039
    
    
    
    Oct. 2005
    
    
    
    2,5882004:Sell contracts:Foreign exchange contracts:
    
    
    1,409
    
    
    
    1.2703 to 1.2717
    
    
    
    Oct. - Dec. 2004
    
    
    $
    1,791£
    1,002
    
    
    
    1.7970 to 1.8490
    
    
    
    Oct. - Dec. 2004
    
    
    
    1,836Buy contracts:Foreign exchange contracts:
    
    CA $
    38,990
    
    
    
    0.7251 to 0.7401
    
    
    
    Oct. 2004 - May 2005
    
    
    $
    28,726




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##### 



Gildan 2005 Annual Report
    
    33
  Managements Discussion and Analysis of Financial Condition and Results of Operations
 Contractual Obligations
   Less than
    
    
    2 - 3
    
    
    4 - 5
    
    
    After(in millions)
    
    Total
    
    
    
    1 year
    
    
    years
    
    
    years
    
    
    5 yearsLong-term debt
    
    $
    47.0
    
    
    
    $
    19.7
    
    
    $
    21.9
    
    
    $
    3.6
    
    
    $
    1.8Fixed interest payments
    
    
    4.3
    
    
    
    
    3.0
    
    
    
    1.3
    
    
    
    
    
    
    
    Capital lease obligations
    
    
    0.2
    
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    Operating leases
    
    
    29.9
    
    
    
    
    7.3
    
    
    
    7.0
    
    
    
    5.0
    
    
    
    10.6Purchase obligations
    
    
    116.5
    
    
    
    
    116.5
    
    
    
    
    
    
    
    
    
    
    
    Other long-term obligations
    
    
    43.4
    
    
    
    
    43.4
    
    
    
    
    
    
    
    
    
    
    
    Total contractual obligations
    
    $
    241.3
    
    
    
    $
    190.1
    
    
    $
    30.2
    
    
    $
    8.6
    
    
    $
    12.4
  Outlook




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##### 



34 Gildan 2005 Annual Report MD&A
 Managements Discussion and Analysis of Financial Condition and Results of Operations
 Stock Split
   Year ended October 3, 2004, compared with year ended October 5, 2003
   Gross Margins




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##### 



Gildan 2005 Annual Report
    
    35
  Managements Discussion and Analysis of Financial Condition and Results of Operations
 Selling, General and Administrative Expenses
  Depreciation and Interest Expenses
   Income Taxes
  Net Earnings




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##### 



36
    
    Gildan 2005 Annual Report
 MD&A
 Managements Discussion and Analysis of Financial Condition and Results of Operations
    Sales Promotional Programs
  Trade Accounts Receivable
   Fixed Assets




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##### 



Gildan 2005 Annual Report
    
    
    37
  Managements Discussion and Analysis of Financial Condition and Results of Operations
 Cotton and Yarn Procurements
  Future Income Taxes
    Variable Interest Entities (AcG-15)
 Consolidation of Variable Interest Entities




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##### 



38
    
    Gildan 2005 Annual Report
 MD&A
 Managements Discussion and Analysis of Financial Condition and Results of Operations
  Comprehensive Income / Financial Instruments / Hedges
  
    
    1530, Comprehensive Income;
 
    
    3885, Financial Instruments  Recognition and Measurement; and
 
    
    3865, Hedges
   
    
    financial assets held for sale, for which unrealized changes in fair value are initially reported
in other comprehensive income and subsequently reclassified to net income when the financial assets
are sold or become impaired; and
    
    certain financial instruments that qualify as hedging items
under the application of hedge accounting, for which unrealized changes in fair value are initially
reported in other comprehensive income and subsequently reclassified to net income when the
offsetting loss or gain on the hedged item affects net income.
   Equity




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##### 



Gildan 2005 Annual Report
    
    
    39
  Managements Discussion and Analysis of Financial Condition and Results of Operations
 Non-Monetary Transactions
  
    
    the transaction lacks
commercial substance;
    
    the transaction is an exchange of a product or property held for sale in
the ordinary course of business for a product or the property to be sold in the same line of
business to facilitate sales to customers other than the parties to the exchange;
    
    neither the
fair value of the assets or services received nor the fair value of the assets or services given up
is reliably measurable; or
    
    the transaction is a non-monetary, non-reciprocal transfer to owners
that represents a spin-off or other form of restructuring or liquidation.




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##### 



40
    
    Gildan 2005 Annual Report
 MD&A
 Managements Discussion and Analysis of Financial Condition and Results of Operations
   Our industry is competitive
    Our industry is subject to pricing pressures
   
    
    if we are forced to reduce our prices and we cannot reduce our production costs; or
 
    
    if our production costs increase and we cannot increase our prices.
 We rely on a relatively small number of significant customers




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Gildan 2005 Annual Report
    
    
    41
  Managements Discussion and Analysis of Financial Condition and Results of Operations
 We are subject to international trade legislation that is becoming increasingly liberalized
  We currently pay income tax at a comparatively low effective rate, which could change in the future
   The price of the raw materials we buy is prone to significant fluctuations and volatility
   Our operations are subject to political, social and economic risks




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42
    
    Gildan 2005 Annual Report
 MD&A
 Managements Discussion and Analysis of Financial Condition and Results of Operations
 Our industry is subject to fluctuations in sales demand
  Our operations are subject to environmental regulation
  
    
    a change in
existing laws and regulations;
    
    the enactment of new laws and regulations;
    
    a release of
hazardous substances on or from our properties or any associated offsite disposal location; or
    
    the discovery of contamination from prior activities at any of our properties may give rise to
compliance or environmental remediation costs that could have a material adverse effect on our
business.
 We are exposed to concentrations of credit risk
   Foreign currency fluctuations risk




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##### 



Gildan 2005 Annual Report
    
    
    43
  Managements Discussion and Analysis of Financial Condition and Results of Operations
      1.
    
    Free cash flow;2.
    
    Total indebtedness;3.
    
    Cash in excess of debt (Net debt); and4.
    
    All references made to adjusted gross margin, adjusted selling, general and administrative
expenses, adjusted net earnings and adjusted diluted earnings per share.
  (in thousands of dollars, except earnings per share)
 2005
    
    
    2004
    
    2003Free Cash FlowCash flows from operating activities
    
    $
    93,250
    
    
    
    $
    58,920
    
    
    $
    63,721Cash flows from investing activities
    
    
    (83,848
    )
    
    
    
    (53,820
    )
    
    
    (39,458
    )Free cash flow
    
    $
    9,402
    
    
    
    $
    5,100
    
    
    $
    24,263Total Indebtedness/Cash in excess of debt (Net debt)Bank indebtedness
    
    $
    (3,980
    )
    
    
    $
    
    
    
    $
    Current portion of long-term debt
    
    
    (19,859
    )
    
    
    
    (18,610
    )
    
    
    (19,481
    )Long-term debt
    
    
    (27,288
    )
    
    
    
    (37,979
    )
    
    
    (54,078
    )Total indebtedness
    
    
    (51,127
    )
    
    
    
    (56,589
    )
    
    
    (73,559
    )Cash and cash equivalents
    
    
    69,802
    
    
    
    
    60,671
    
    
    
    69,340Cash in excess of debt (Net debt)
    
    $
    18,675
    
    
    
    $
    4,082
    
    
    $
    (4,219
    )




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##### 



44
    
    Gildan 2005 Annual Report
 MD&A
 Managements Discussion and Analysis of Financial Condition and Results of Operations
 Adjusted Consolidated Statement of Earnings and Earnings per Share
 (in thousands of dollars, except earnings per share)
 2005
    
    Audited
    
    
    
    
    
    AdjustedSales
    
    $
    653,851
    
    
    
    
    
    
    $
    653,851Cost of sales
    
    
    450,570
    
    
    
    
    
    
    
    450,570Gross profit
    
    
    203,281
    
    
    
    
    
    
    
    203,281Special charge
    
    
    10,726
    
    
    
    (10,726
    )(1)
    
    
    Selling, general and administrative expenses
    
    
    74,896
    
    
    
    
    
    
    
    74,896EBITDA(2)
    
    
    117,659
    
    
    
    10,726
    
    
    
    128,385Depreciation and amortization
    
    
    25,615
    
    
    
    
    
    
    
    25,615Interest expense
    
    
    4,615
    
    
    
    
    
    
    
    4,615Non-controlling interest in income of consolidated joint venture
    
    
    34
    
    
    
    
    
    
    
    34Earnings before income taxes
    
    
    87,395
    
    
    
    10,726
    
    
    
    98,121Income taxes expense
    
    
    1,352
    
    
    
    3,718
    (1)
    
    
    5,070Net earnings
    
    $
    86,043
    
    
    $
    7,008
    
    
    $
    93,051Basic EPS
    
    $
    1.44
    
    
    
    
    
    
    $
    1.56Diluted EPS
    
    
    1.43
    
    
    
    
    
    
    
    1.55
 2004
    
    Audited
    
    
    
    
    
    AdjustedSales
    
    $
    533,368
    
    
    
    
    
    
    $
    533,368Cost of sales
    
    
    378,696
    
    
    
    (3,251
    )(3)
    
    
    375,445Gross profit
    
    
    154,672
    
    
    
    3,251
    
    
    
    157,923Selling, general and administrative expenses
    
    
    62,898
    
    
    
    (4,614
    )(4)
    
    
    58,284EBITDA(2)
    
    
    91,774
    
    
    
    7,865
    
    
    
    99,639Depreciation and amortization
    
    
    22,275
    
    
    
    
    
    
    
    22,275Interest expense
    
    
    6,170
    
    
    
    
    
    
    
    6,170Earnings before income taxes
    
    
    63,329
    
    
    
    7,865
    
    
    
    71,194Income taxes expense
    
    
    3,078
    
    
    
    1,430
    (4)
    
    
    4,508Net earnings
    
    $
    60,251
    
    
    $
    6,435
    
    
    $
    66,686Basic EPS
    
    $
    1.02
    
    
    
    
    
    
    $
    1.13Diluted EPS
    
    
    1.01
    
    
    
    
    
    
    
    1.12
 1
    
    Adjustment to remove special charge relating to the closure of the Canadian yarn-spinning
facilities and the income tax effect thereon. See page 26.2
    
    Earnings before interest, income taxes, depreciation and amortization3
    
    Adjustments due to the change in functional currency. See page 24.4
    
    Adjustments due the charge to satisfy the Companys contractual commitments to H. Greg
Chamandy and the income tax effect thereon. See page 26.




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##### 



Gildan 2005 Annual Report
    
    
    45
  Managements Discussion and Analysis of Financial Condition and Results of Operations