Exhibit 99.2
 (GILDAN LOGO)
    
    CONSOLIDATED FINANCIAL STATEMENTS
 MANAGEMENTS RESPONSIBILITY FOR FINANCIAL REPORTING
    (Signed: Glenn J. Chamandy)
    
    
    
    (Signed: Laurence G. Sellyn)Glenn J. Chamandy
    
    
    
    Laurence G. SellynPresident and Chief Executive Officer
    
    
    
    Executive Vice-President,Chief Financial and Administrative Officer




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
     Internal Control  Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission COSO
 
 
 *   CA Auditor permit no 20408
    
    KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity.
KPMG Canada provides services to KPMG LLP.




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  Internal Control  Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
    Internal Control 
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO).
  
 
 * CA Auditor permit no 20408
    
    KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity.
KPMG Canada provides services to KPMG LLP.




---



##### 



(GILDAN LOGO)
    
    CONSOLIDATED FINANCIAL STATEMENTS
 GILDAN ACTIVEWEAR INC.
CONSOLIDATED BALANCE SHEETS
As at October 3, 2010 and October 4, 2009
(in thousands of U.S. dollars)
 2010
    
    
    2009Current assets:Cash and cash equivalents
    
    $
    258,442
    
    
    $
    99,732Trade accounts receivable
    
    
    145,684
    
    
    
    159,645Inventories (note 3)
    
    
    332,542
    
    
    
    301,867Prepaid expenses and deposits
    
    
    9,584
    
    
    
    11,604Other current assets
    
    
    9,079
    
    
    
    7,117755,331
    
    
    
    579,965Property, plant and equipment (note 4)
    
    
    479,292
    
    
    
    402,203Assets held for sale (note 15)
    
    
    3,246
    
    
    
    6,544Intangible assets (note 5)
    
    
    61,321
    
    
    
    69,092Goodwill (note 2)
    
    
    10,197
    
    
    
    6,709Other assets (note 6)
    
    
    11,805
    
    
    
    9,985Total assets
    
    $
    1,321,192
    
    
    $
    1,074,498Current liabilities:Accounts payable and accrued liabilities
    
    $
    186,205
    
    
    $
    124,378Income taxes payable
    
    
    5,024
    
    
    
    11,822Current portion of long-term debt (note 8)
    
    
    
    
    
    
    2,803191,229
    
    
    
    139,003Long-term debt (note 8)
    
    
    
    
    
    
    1,584Future income taxes (note 14)
    
    
    4,476
    
    
    
    15,854Non-controlling interest in consolidated joint venture
    
    
    11,058
    
    
    
    7,272Commitments and contingencies (note 12)Shareholders equity (note 9):Share capital
    
    
    97,036
    
    
    
    93,042Contributed surplus
    
    
    10,091
    
    
    
    6,976Retained earnings
    
    
    982,764
    
    
    
    784,519Accumulated other comprehensive income
    
    
    24,538
    
    
    
    26,2481,007,302
    
    
    
    810,7671,114,429
    
    
    
    910,785Total liabilities and shareholders equity
    
    $
    1,321,192
    
    
    $
    1,074,498
   (Signed: Glenn J. Chamandy)
    
    (Signed: William D. Anderson)Director
    
    DirectorGlenn J. Chamandy
    
    William D. Anderson




---



##### 



(GILDAN LOGO)
    
    CONSOLIDATED FINANCIAL STATEMENTS
 GILDAN ACTIVEWEAR INC.
CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
Years ended October 3, 2010, October 4, 2009 and October 5, 2008
(in thousands of U.S. dollars, except per share data)
 2010
    
    
    2009
    
    
    2008Net sales
    
    $
    1,311,463
    
    
    $
    1,038,319
    
    
    $
    1,249,711Cost of sales (note 18(e))
    
    
    947,206
    
    
    
    807,986
    
    
    
    911,242Gross profit
    
    
    364,257
    
    
    
    230,333
    
    
    
    338,469Selling, general and administrative expenses
    
    
    154,674
    
    
    
    134,785
    
    
    
    142,760Restructuring and other charges (note 15)
    
    
    8,705
    
    
    
    6,199
    
    
    
    5,489Operating income
    
    
    200,878
    
    
    
    89,349
    
    
    
    190,220Financial expense (income), net (note 20(b))
    
    
    751
    
    
    
    (304
    )
    
    
    9,240Non-controlling interest in consolidated joint venture
    
    
    3,786
    
    
    
    110
    
    
    
    230Earnings before income taxes
    
    
    196,341
    
    
    
    89,543
    
    
    
    180,750Income taxes (note 14)
    
    
    (1,904
    )
    
    
    (5,786
    )
    
    
    34,400Net earnings
    
    
    198,245
    
    
    
    95,329
    
    
    
    146,350Other comprehensive loss, net of related
income taxes (note 16)
    
    
    (1,710
    )
    
    
    
    
    
    
    Comprehensive income
    
    $
    196,535
    
    
    $
    95,329
    
    
    $
    146,350Earnings per share:Basic EPS (note 17)
    
    $
    1.64
    
    
    $
    0.79
    
    
    $
    1.21Diluted EPS (note 17)
    
    $
    1.63
    
    
    $
    0.79
    
    
    $
    1.20




---



##### 



(GILDAN LOGO)
    
    CONSOLIDATED FINANCIAL STATEMENTS
 GILDAN ACTIVEWEAR INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
Years ended October 3, 2010, October 4, 2009 and October 5, 2008
(in thousands or thousands of U.S. dollars)
 Accumulatedother
    
    
    
    
    
    
    TotalShare capital
    
    
    Contributed
    
    
    comprehensive
    
    
    Retained
    
    
    shareholdersNumber
    
    
    Amount
    
    
    surplus
    
    
    income
    
    
    earnings
    
    
    equityBalance, September 30, 2007
    
    
    120,419
    
    
    $
    88,061
    
    
    $
    3,953
    
    
    $
    26,248
    
    
    $
    542,840
    
    
    $
    661,102Stock-based compensation related to
stock
options and Treasury restricted share
units
    
    
    
    
    
    
    
    
    
    
    2,965
    
    
    
    
    
    
    
    
    
    
    
    2,965Shares issued under employee share
purchase plan
    
    
    21
    
    
    
    720
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    720Shares issued pursuant to exercise of
stock
options
    
    
    81
    
    
    
    418
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    418Shares issued pursuant to vesting of
Treasury restricted share units
    
    
    15
    
    
    
    190
    
    
    
    (190
    )
    
    
    
    
    
    
    
    
    
    
    Share repurchases
    
    
    
    
    
    
    (12
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12
    )Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    146,350
    
    
    
    146,350Balance, October 5, 2008
    
    
    120,536
    
    
    $
    89,377
    
    
    $
    6,728
    
    
    $
    26,248
    
    
    $
    689,190
    
    
    $
    811,543Stock-based compensation related to
stock
options and Treasury restricted share
units
    
    
    
    
    
    
    
    
    
    
    3,007
    
    
    
    
    
    
    
    
    
    
    
    3,007Shares issued under employee share
purchase plan
    
    
    58
    
    
    
    781
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    781Shares issued pursuant to exercise of
stock
options
    
    
    54
    
    
    
    125
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    125Shares issued pursuant to vesting of
Treasury restricted share units
    
    
    315
    
    
    
    2,759
    
    
    
    (2,759
    )
    
    
    
    
    
    
    
    
    
    
    Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    95,329
    
    
    
    95,329Balance, October 4, 2009
    
    
    120,963
    
    
    $
    93,042
    
    
    $
    6,976
    
    
    $
    26,248
    
    
    $
    784,519
    
    
    $
    910,785Stock-based compensation related to
stock
options and Treasury restricted share
units
    
    
    
    
    
    
    
    
    
    
    4,081
    
    
    
    
    
    
    
    
    
    
    
    4,081Recovery related to repricing of stock
options previously exercised
(note 10(b))
    
    
    
    
    
    
    
    
    
    
    1,159
    
    
    
    
    
    
    
    
    
    
    
    1,159Shares issued under employee share
purchase plan
    
    
    24
    
    
    
    628
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    628Shares issued pursuant to exercise of
stock
options
    
    
    183
    
    
    
    1,251
    
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    1,241Shares issued pursuant to vesting of
Treasury restricted share units
    
    
    182
    
    
    
    2,115
    
    
    
    (2,115
    )
    
    
    
    
    
    
    
    
    
    
    Other comprehensive loss (note 16)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,710
    )
    
    
    
    
    
    
    (1,710
    )Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    198,245
    
    
    
    198,245Balance, October 3, 2010
    
    
    121,352
    
    
    $
    97,036
    
    
    $
    10,091
    
    
    $
    24,538
    
    
    $
    982,764
    
    
    $
    1,114,429




---



##### 



(GILDAN LOGO)
    
    CONSOLIDATED FINANCIAL STATEMENTS
 GILDAN ACTIVEWEAR INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended October 3, 2010, October 4, 2009 and October 5, 2008
(in thousands of U.S. dollars)
 2010
    
    
    2009
    
    
    2008Cash flows from (used in) operating activities:Net earnings
    
    $
    198,245
    
    
    $
    95,329
    
    
    $
    146,350Adjustments for:Depreciation and amortization (note 18(b))
    
    
    66,472
    
    
    
    65,407
    
    
    
    57,135Variation of depreciation included in inventories (note 18(b))
    
    
    2,725
    
    
    
    (2,437
    )
    
    
    (957
    )Restructuring charges related to assets held for sale and property, plant
and equipment (note 15)
    
    
    4,351
    
    
    
    976
    
    
    
    2,174Loss on disposal of property, plant and equipment
    
    
    842
    
    
    
    561
    
    
    
    1,369Stock-based compensation costs
    
    
    4,081
    
    
    
    3,007
    
    
    
    2,965Future income taxes (note 14)
    
    
    (11,427
    )
    
    
    (2,434
    )
    
    
    (15,885
    )Non-controlling interest
    
    
    3,786
    
    
    
    110
    
    
    
    230Unrealized net loss (gain) on foreign exchange and financial derivatives
not designated as cash flow hedges
    
    
    846
    
    
    
    (1,012
    )
    
    
    (2,222
    )Realized gain on financial derivatives included in other comprehensive
income, net of amounts reclassified to net earnings
    
    
    684
    
    
    
    
    
    
    
    270,605
    
    
    
    159,507
    
    
    
    191,159Changes in non-cash working capital balances:Trade accounts receivable
    
    
    16,018
    
    
    
    45,608
    
    
    
    8,622Inventories
    
    
    (32,280
    )
    
    
    16,742
    
    
    
    (31,178
    )Prepaid expenses and deposits
    
    
    2,020
    
    
    
    (1,191
    )
    
    
    (881
    )Other current assets
    
    
    (168
    )
    
    
    2,743
    
    
    
    1,641Accounts payable and accrued liabilities
    
    
    52,127
    
    
    
    (22,731
    )
    
    
    25,700Income taxes payable
    
    
    (6,771
    )
    
    
    (31,499
    )
    
    
    43,802301,551
    
    
    
    169,179
    
    
    
    238,865Cash flows from (used in) financing activities:Decrease in amounts drawn under revolving long-term credit facility
    
    
    
    
    
    
    (45,000
    )
    
    
    (4,000
    )Decrease in bank indebtedness
    
    
    
    
    
    
    
    
    
    
    (2,739
    )Increase in other long-term debt
    
    
    43
    
    
    
    44
    
    
    
    2,805Repayment of other long-term debt
    
    
    (4,430
    )
    
    
    (3,661
    )
    
    
    (5,461
    )Proceeds from the issuance of shares
    
    
    1,869
    
    
    
    906
    
    
    
    1,138Repurchase of shares
    
    
    
    
    
    
    
    
    
    
    (12
    )Recovery related to repricing of stock options previously exercised (note
10(b))
    
    
    1,159
    
    
    
    
    
    
    
    (1,359
    )
    
    
    (47,711
    )
    
    
    (8,269
    )Cash flows from (used in) investing activities:Purchase of property, plant and equipment
    
    
    (126,855
    )
    
    
    (43,877
    )
    
    
    (85,440
    )Purchase of intangible assets
    
    
    (1,026
    )
    
    
    (1,061
    )
    
    
    (11,590
    )Business acquisition (note 2)
    
    
    (15,850
    )
    
    
    (1,196
    )
    
    
    (126,819
    )Restricted cash related to a business acquisition (note 2)
    
    
    254
    
    
    
    3,958
    
    
    
    (10,000
    )Proceeds on disposal of assets held for sale
    
    
    4,708
    
    
    
    6,349
    
    
    
    3,736Net (increase) decrease in other assets
    
    
    (2,477
    )
    
    
    1,629
    
    
    
    2,826(141,246
    )
    
    
    (34,198
    )
    
    
    (227,287
    )Effect of exchange rate changes on cash and cash equivalents denominated in
foreign currencies
    
    
    (236
    )
    
    
    105
    
    
    
    (202
    )Net increase in cash and cash equivalents during the year
    
    
    158,710
    
    
    
    87,375
    
    
    
    3,107Cash and cash equivalents, beginning of year
    
    
    99,732
    
    
    
    12,357
    
    
    
    9,250Cash and cash equivalents, end of year
    
    $
    258,442
    
    
    $
    99,732
    
    
    $
    12,357




---



##### 



(GILDAN LOGO)
    
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Years ended October 3, 2010, October 4, 2009 and October 5, 2008
 (Tabular amounts in thousands or thousands of U.S. dollars except per share data, unless otherwise
indicated)
 Canada Business Corporations
Act
 1. SIGNIFICANT ACCOUNTING POLICIES:
  (a)
    
    Basis of presentation:The accompanying consolidated financial statements include the accounts of the Company and its
subsidiaries. The consolidated financial statements also include the accounts of a yarn spinning
joint venture with Frontier Spinning Mills, Inc., CanAm Yarns LLC (CanAm), as the Company is
considered the primary beneficiary of this entity. All significant intercompany balances and
transactions have been eliminated on consolidation.
 (b)
    
    Future accounting standards:Business combinations:In January 2009, the Accounting Standards Board (AcSB) issued CICA Handbook Section 1582,
Business Combinations, which replaces Section 1581, Business Combinations, and is generally
equivalent to IFRS 3, Business Combinations(January 2008). The new Section expands the definition
of a business subject to an acquisition and establishes significant new guidance on the measurement
of consideration transferred, and the recognition and measurement of assets acquired and
liabilities assumed in a business combination. The new Section requires that all business
combinations be measured at the full fair value of the acquired entity at the acquisition date even
if the business combination is achieved in stages, or if less than 100 percent of the equity
interest in the acquiree is owned at the acquisition date. Subsequent changes in fair value of
contingent consideration classified as a liability will be recognized in earnings and not as an
adjustment to the purchase price. Restructuring and direct costs of a business combination are no
longer considered part of the acquisition accounting. Instead, such costs will be expensed as
incurred, unless they constitute the costs associated with issuing debt or equity securities. The
Section applies prospectively to business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period beginning on or after January 1, 2011.
Earlier adoption is permitted. This new Section will only have an impact on our consolidated
financial statements for future acquisitions that will be made in periods subsequent to the date of
adoption. The Company expects to early adopt Section 1582 in fiscal 2011.




---



##### 



(GILDAN LOGO)
    
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. SIGNIFICANT ACCOUNTING POLICIES (continued):
 (b)
    
    Future accounting standards (continued):Consolidated financial statements and non-controlling interests:In January 2009, the AcSB issued Canadian Institute of Chartered Accountants (CICA) Handbook
Section 1601, Consolidated Financial Statements, and Handbook Section 1602, Non-Controlling
Interests, which together replace Section 1600, Consolidated Financial Statements. These two
Sections are the equivalent to the corresponding provisions of International Accounting Standard
27, Consolidated and Separate Financial Statements(January 2008) under IFRS. Section 1602 applies
to the accounting for non-controlling interests and transactions with non-controlling interest
holders in consolidated financial statements. The new Sections require that, for each business
combination, the acquirer measure any non-controlling interest in the acquiree either at fair value
or at the non-controlling interests proportionate share of the acquirees identifiable net assets.
The new Sections also require non-controlling interest to be presented as a separate component of
shareholders equity. Under Section 1602, non-controlling interest in income is not deducted in
arriving at consolidated net income or other comprehensive income. Instead, net income and each
component of other comprehensive income are allocated to the controlling and non-controlling
interests based on relative ownership interests. These Sections apply to interim and annual
consolidated financial statements relating to fiscal years beginning on or after January 1, 2011,
and should be adopted concurrently with Section 1582. Earlier adoption is permitted which would be
effective as of the beginning of the fiscal year of adoption. The Company expects to early adopt
these Sections in fiscal 2011, which would result in the reclassification of the non-controlling
interest in consolidated joint venture from a separate item on the consolidated balance sheet to a
separate component of shareholders equity for all periods presented.International Financial Reporting Standards (IFRS):In February 2008, the AcSB confirmed that IFRS, as issued by the International Accounting Standards
Board, will replace Canadian generally accepted accounting principles for publicly accountable
enterprises effective for fiscal years beginning on or after January 1, 2011. As a result, the
Company will be required to change over to IFRS for its fiscal 2012 interim and annual financial
statements with comparative information for fiscal 2011.In preparation for the changeover to IFRS, the Company has developed an IFRS transition plan. The
Company has completed its initial phase, comprised of a diagnostic process, which involved a
comparison of the Companys current accounting policies under Canadian generally accepted
accounting principles with currently issued IFRS. The second phase of the transition plan, which
involved a detailed impact analysis of the identified differences, is substantially complete, and
the final implementation phase is currently underway. As the IFRS transition plan progresses, the
Company will continue to report on the status of its transition plan in its Managements Discussion and Analysis.(c)
    
    Cash and cash equivalents:The Company considers all liquid investments with maturities of three months or less when
acquired to be cash equivalents.(d)
    
    Trade accounts receivable:Trade accounts receivable consist of amounts due from our normal business activities. We
maintain an allowance for doubtful accounts to reflect expected credit losses. We provide for
bad debts based on collection history and specific risks identified on a customer-by-customer
basis. Uncollected accounts are written off through the allowance for doubtful accounts.(e)
    
    Inventories:Inventories are stated at the lower of First-In First-Out cost and net realizable value.
Inventory costs include the purchase price and other costs directly related to the acquisition
of materials. Inventory costs also include the costs directly related to the conversion of
materials to finished goods, such as direct labour, and a systematic allocation of fixed and
variable production overhead, including manufacturing depreciation expense. The allocation of
fixed production overheads to the cost of inventories is based on the normal capacity of the
production facilities. Normal capacity is the average production expected to be achieved over a
number of periods under normal circumstances.




---



##### 



(GILDAN LOGO)
    
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. SIGNIFICANT ACCOUNTING POLICIES (continued):
 (f)
    
    Property, plant and equipment:Property, plant and equipment are recorded at cost. Depreciation and amortization are recorded
on a straight-line basis over the estimated useful lives of the assets at the following annual
rates:
 Asset
    
    RateBuildings and improvements
    
    2 1/2% to 20%Manufacturing Equipment
    
    10% to 33%Other Equipment
    
    10% to 50%
 Assets not in service include expenditures incurred to date for plant expansions which are still
in process and equipment not yet in service as at the balance sheet date. Depreciation on these
assets commences when the assets are put into service.
 (g)
    
    Assets held for sale:
 Long-lived assets are classified as held for sale when certain criteria are met, which include:
the Companys commitment to a plan to sell the assets; the assets are available for immediate
sale in their present condition; an active program to locate buyers and other actions to sell
the assets have been initiated; the sale of the assets is probable and their transfer is
expected to qualify for recognition as a completed sale within one year; the assets are being
actively marketed at reasonable prices in relation to their fair value; and it is unlikely that
significant changes will be made to the plan to sell the assets or that the plan will be
withdrawn.
 The Company measures assets held for sale at the lower of carrying amount or fair value less
cost to sell. These assets are not depreciated.
 (h)
    
    Intangible assets:
 Intangible assets consist of computer software recorded at cost and acquired customer contracts
and customer relationships. Depreciation and amortization are recorded on a straight-line basis
over the estimated useful lives of the assets at the following annual rates:
 Asset
    
    RateCustomer contracts and customer relationships
    
    
    5
    %Computer software
    
    
    25
    %
 The costs of information technology projects including internally developed computer software
are capitalized and included in intangible assets commencing at the point at which the following
criteria are met: the technical feasibility of completing the projects have been achieved so
that the software will be available for use; the Company intends to complete the information
technology projects and is capable of using the software internally; the software will generate
probable future economic benefits; the Company has adequate technical, financial and other
resources to complete development of the projects; and the Company has the ability to reliably
measure the expenditures attributable to the information technology projects during development.
The Company does not capitalize pilot projects where it believes that future economic benefits
are less than probable or projects that do not meet the above criteria. The costs of information
technology projects that are capitalized include the cost of software tools and licenses used in
the development of the projects as well as direct payroll and consulting costs.
 (i)
    
    Goodwill:
 Goodwill recorded in connection with business combinations represents the excess of the purchase
price over the fair value of net assets acquired. Goodwill is not amortized and is tested for
impairment annually, or more frequently if events or changes in circumstances indicate that the
asset might be impaired. When the carrying amount of a reporting unit exceeds the estimated fair
value of the reporting unit, an impairment loss is recognized in an amount equal to the excess
of the carrying value over the fair value of the goodwill, if any.




---



##### 



(GILDAN LOGO)
    
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. SIGNIFICANT ACCOUNTING POLICIES (continued):
 (j)
    
    Impairment of long-lived assets:
 Long-lived assets consisting of property, plant and equipment and intangible assets with finite
lives are reviewed for potential impairment whenever events or changes in circumstances indicate
that the carrying amounts of such assets may not be recoverable. An impairment loss would be
recognized when the estimated undiscounted future cash flows expected to result from the use of
an asset and its eventual disposition are less than its carrying amount. The amount of the
impairment loss recognized is measured as the amount by which the carrying value for an asset
exceeds the fair value of the asset, with fair value being determined based upon discounted cash
flows or appraised values, depending on the nature of the asset.
 (k)
    
    Foreign currency translation:
 Monetary assets and liabilities of the Canadian and foreign operations denominated in currencies
other than U.S. dollars are translated at the rates of exchange at the balance sheet date. Other
balance sheet items denominated in currencies other than U.S. dollars are translated at the
rates prevailing at the respective transaction dates. Income and expenses denominated in
currencies other than U.S. dollars are translated at average rates prevailing during the year.
Gains or losses on foreign exchange are recorded in the consolidated statements of earnings.
 The foreign subsidiaries are considered to be integrated foreign operations, and their accounts
have been translated using the temporal method with translation gains and losses included in the
consolidated statements of earnings. The Company does not currently have any self-sustaining
foreign subsidiaries.
 (l)
    
    Revenue recognition:
 Revenue is recognized upon shipment of products to customers, since title passes upon shipment,
and when the selling price is fixed or determinable. At the time of sale, estimates are made for
customer price discounts and volume rebates based on the terms of existing programs. Accruals
required for new programs, which relate to prior sales, are recorded at the time the new program
is introduced. Sales are recorded net of these program costs and a provision for estimated sales
returns, which is based on historical experience, current trends and other known factors, and
exclude sales taxes.
 (m)
    
    Cost of sales and gross profit:
 Cost of sales includes all raw material costs, manufacturing conversion costs, including
manufacturing depreciation expense, sourcing costs, transportation costs incurred until the
receipt of finished goods at the Companys distribution facilities, and outbound freight to
customers. Cost of sales also includes costs relating to purchasing, receiving and inspection
activities, manufacturing administration, third-party manufacturing services, insurance,
internal transfer of inventories, inventory write-downs, and customs and duties.
 Gross profit is the result of sales less cost of sales. The Companys gross profit may not be
comparable to this metric as reported by other companies, since some entities exclude
depreciation expense and outbound freight to customers from cost of sales.
 (n)
    
    Selling, general and administrative expenses:
 Selling, general and administrative (SG&A) expenses include warehousing and handling costs,
selling and administrative personnel costs, advertising and marketing expenses, costs of leased
facilities and equipment, professional fees, non-manufacturing depreciation and amortization
expense, and other general and administrative expenses. SG&A expenses also include amortization
of customer-related intangible assets and bad debt expense.
 (o)
    
    Advertising and product introduction expenditures:
 Advertising and co-op advertising expenses are expensed as incurred in selling, general and
administrative expenses. Product introduction expenditures are one-time fees paid to retailers
to allow the Companys products to be placed on store shelves. These fees are recognized as a
reduction in revenue when incurred unless the Company receives a benefit over a period of time
and certain other criteria are met, such as identifiable contractual rights which are
enforceable and recoverable. In this case, these fees are recorded as an asset and are amortized
as a reduction of revenue over the term of the arrangement. The Company evaluates the
recoverability of these assets on a quarterly basis.




---



##### 



(GILDAN LOGO)
    
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. SIGNIFICANT ACCOUNTING POLICIES (continued):
 (p)
    
    Cotton and yarn procurements:
 The Company contracts to buy cotton and yarn with future delivery dates at fixed prices in order
to reduce the effects of fluctuations in the prices of cotton used in the manufacture of its
products. These contracts are not used for trading purposes and are not considered to be
financial instruments. The Company commits to fixed prices on a percentage of its cotton and
yarn requirements up to eighteen months in the future. If the cost of committed prices for
cotton and yarn plus estimated costs to complete production exceed current selling prices, a
loss is recognized for the excess as a charge to cost of sales.
 (q)
    
    Financial instruments and hedging relationships:
 All financial instruments are classified into one of the following five categories:
held-for-trading, held-to-maturity investments, loans and receivables, available-for-sale
financial assets or other financial liabilities. All financial instruments, including
derivatives, are included on the consolidated balance sheet and are measured at fair market
value with the exception of loans and receivables, held-to-maturity investments and other
financial liabilities, which are measured at amortized cost. Subsequent measurement and
recognition of changes in fair value of financial instruments depend on their initial
classification. Held-for-trading financial investments are measured at fair value and all gains
and losses are included in net earnings in the period in which they arise. Available-for-sale
financial instruments are measured at fair value with revaluation gains and losses included in
other comprehensive income until the asset is removed from the balance sheet. Financial assets
and liabilities measured at fair value use a fair value hierarchy to prioritize the inputs used
in measuring fair value. Level 1, defined as observable inputs such as quoted prices in active
markets; Level 2, defined as inputs other than quoted prices in active markets that are either
directly or indirectly observable; and Level 3, defined as unobservable inputs in which little
or no market data exists, therefore requiring an entity to develop its own assumptions.
 Derivative instruments are recorded as either assets or liabilities measured at their fair value
unless exempted from derivative treatment as a normal purchase and sale. Certain derivatives
embedded in other contracts must also be measured at fair value. All changes in the fair value
of derivatives are recognized in net earnings unless specific hedge criteria are met, which
requires that a company must formally document, designate and assess the effectiveness of
transactions that receive hedge accounting. Derivatives that qualify as hedging instruments must
be designated as either a cash flow hedge, when the hedged item is a future cash flow, or a
fair value hedge, when the hedged item is a recognized asset or liability. The effective
portion of unrealized gains and losses related to a cash flow hedge are included in other
comprehensive income. For a cash flow hedge, when hedging instruments become ineffective before
their maturity or the hedging relationship is terminated, any gains, losses, revenues
or expenses associated with the hedging item that had previously been recognized in other
comprehensive income as a result of applying hedge accounting are carried forward to be
recognized in net earnings in the same period as the hedged item affects net earnings, to the
extent that it is probable that the forecasted cash flows will occur. For a fair value hedge,
both the derivative and the hedged item are recorded at fair value in the consolidated balance
sheet and the unrealized gains and losses from both items are included in net earnings. Any
derivative instrument that does not qualify for hedge accounting is marked-to-market at each
reporting date and the gains or losses are included in net earnings.
 When the Company utilizes derivatives in hedge accounting relationships, the Company formally
documents all relationships between hedging instruments and hedged items, as well as its risk
management objective and strategy for undertaking various hedge transactions. This process
includes linking all derivatives to specific assets and liabilities on the balance sheet or to
specific firm commitments or anticipated transactions. The Company also formally assesses, both
at the hedges inception and on an ongoing basis, whether the derivatives that are used in
hedging transactions are effective in offsetting cash flows of hedged items.
 (r)
    
    Comprehensive income:
 Comprehensive income, which consists of net earnings and other comprehensive income, is defined
as the change in shareholders equity from transactions and other events from non-owner sources.
Other comprehensive income refers to items recognized in comprehensive income but that are
excluded from net earnings calculated in accordance with generally accepted accounting
principles and includes unrealized gains and losses on financial assets classified as available
for sale, unrealized foreign currency translation gains and losses arising from self-sustaining
foreign subsidiaries and changes in the fair value of the effective portion of qualifying cash
flow hedging instruments.




---



##### 



(GILDAN LOGO)
    
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. SIGNIFICANT ACCOUNTING POLICIES (continued):
 (s)
    
    Income taxes:
 The Company utilizes the asset and liability method for accounting for income taxes which
requires the establishment of future tax assets and liabilities, measured at substantively
enacted tax rates, for all temporary differences caused when the tax bases of assets and
liabilities differ from those reported in the financial statements. Future income tax assets are
evaluated and a valuation allowance is provided to the extent that it is determined that it is
no longer more likely than not that the asset will be realized. Future income tax assets and
future income tax liabilities are offset if they relate to the same taxable entity and the same
taxation authority.
 The Companys income tax provision is based on interpretations of applicable tax laws, including
income tax treaties between various countries in which the Company operates as well as
underlying rules and regulations with respect to transfer pricing. These interpretations involve
judgments and estimates and may be challenged through government taxation audits that the
Company is regularly subject to. The Company recognizes the benefits of uncertain tax filing
positions in its financial statements when it is considered likely that the tax position will be
sustained upon examination by tax authorities, including the resolution of any related appeals
or litigation processes, based on the technical merits of the position. The tax benefits
recognized from such positions are measured at the best estimate of the amounts expected to be
realized upon ultimate resolution. The Company periodically reviews and adjusts its estimates
and assumptions of income tax assets and liabilities as circumstances warrant, such as changes
to tax laws, administrative guidance, change in managements assessment of the technical merits
of its positions due to new information, and the resolution of uncertainties through either the
conclusion of tax audits or expiration of prescribed time limits within relevant statutes.
Previously recognized tax benefits relating to uncertain tax filing positions are derecognized
if it becomes likely that the Companys tax position will no longer be upheld.
 (t)
    
    Stock-based compensation and other stock-based payments:
 The Company follows the fair value-based method to account for all transactions where services
are received in exchange for stock-based compensation and other stock-based payments. For stock
options and Treasury restricted share units, compensation cost is measured at the fair value at
the date of grant, net of estimated forfeitures, and is expensed over the awards vesting
period. The fair value of stock options granted is estimated on the date of grant using the
Black-Scholes pricing model, and the fair value of Treasury restricted share units granted is
equal to the market price of the common shares of the Company on the date of grant. For
non-Treasury restricted share units, the compensation cost is ultimately measured based on the
market price of the Companys shares at the vesting date, net of estimated forfeitures, and is
expensed over the awards vesting period. The offsetting liability is marked to the underlying
market price until the vesting date with any changes in the market value of the Companys shares
resulting in a change in the measure of compensation cost for these awards until vested, which
is recorded in the periods in which these changes occur.
 For employee share purchase plans, the Companys contribution, on the employees behalf, is
recognized as compensation expense with an offset to share capital, and consideration paid by
employees on purchase of stock is also recorded as an increase to share capital.
 (u)
    
    Employee future benefits:
 The Company offers group defined contribution plans to eligible employees whereby the Company
matches employees contributions up to a fixed percentage of the employees salary.
Contributions by the Company to trustee-managed investment portfolios or employee associations
are expensed as incurred.
 The Company maintains a liability for statutory severance and pre-notice benefit obligations for
active employees located in the Caribbean Basin and Central America which is payable to the
employees in a lump sum upon termination of employment. The liability is based on managements
best estimates of the ultimate costs to be incurred to settle the liability and is based on a
number of assumptions and factors, including historical trends, actuarial assumptions and
economic conditions.




---



##### 



(GILDAN LOGO)
    
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. SIGNIFICANT ACCOUNTING POLICIES (continued):
 (v)    Earnings per share:
 Basic earnings per share are computed by dividing net earnings by the weighted average number of
common shares outstanding for the year. Diluted earnings per share are computed using the
treasury stock method. Under the treasury stock method, the weighted average number of common
shares outstanding for the period is increased to include additional shares from the assumed
exercise of options and the issuance of Treasury restricted share units, if dilutive. The
number of additional shares is calculated by assuming that all outstanding options are exercised
and all outstanding Treasury restricted share units have vested, and that the proceeds from such
exercises, as well as the amount of unrecognized stock-based compensation which is considered to
be assumed proceeds under the treasury stock method, are used to repurchase common shares at the
average share price for the period. For Treasury restricted share units, only the unrecognized
stock-based compensation is considered assumed proceeds since there is no exercise price paid by
the holder.
 (w)   Environmental expenditures:
 Environmental expenditures that relate to current operations are expensed or capitalized as
appropriate. Expenditures that extend the life of the related property or mitigate or prevent
future environmental contamination are capitalized in property, plant and equipment and are
generally amortized over the remaining useful life of the underlying asset. Expenditures that
relate to an existing condition caused by past operations and which are not expected to
contribute to current or future operations are expensed. Liabilities are recorded when
environmental assessments and/or remedial efforts are likely, and when the costs, based on a
specific plan of action in terms of the technology to be used and the extent of the corrective
action required, can be reasonably estimated.
 The Company may be obliged to incur certain future removal and site restoration costs should it
decide to discontinue some of its activities. Where there is a legal obligation associated with
the retirement of property, plant and equipment, and the fair value of the obligation can be
reasonably estimated, a liability is initially recognized at its estimated fair value and a
corresponding asset retirement cost is added to the carrying value of the related asset and
amortized over the remaining life of the underlying asset. The Company had no recognized asset
retirement obligations as at October 3, 2010 and October 4, 2009 as the Company plans to
continue its activities for an indeterminate period and the range of possible methods of
restoration are not conclusive at this time. As such, the information available to the Company
is insufficient to reasonably estimate the fair value of a conditional asset retirement
obligation.
 (x)    Business acquisitions:
 The Company accounts for business acquisitions using the purchase method. Accordingly, the
purchase price of a business acquisition is allocated to its identifiable net assets including
identifiable intangible assets, on the basis of estimated fair values as at the date of
purchase, with any excess being assigned to goodwill. When the amounts assigned to identifiable
net assets exceed the cost of the purchase, resulting in negative goodwill, the excess is
applied, to the extent possible, to certain non-current assets, with the balance recorded as an
extraordinary gain.
 (y)    Use of estimates:
 The preparation of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements, and the reported amounts of revenues and expenses during the
reporting period. Financial results as determined by actual events could differ materially from
those estimates.
 Significant areas requiring the use of management estimates and assumptions include the
allowance for doubtful accounts, sales promotional programs, inventory valuation, recoverability
of long-lived assets, income tax assets and liabilities, and business acquisitions and goodwill.




---



##### 



(GILDAN LOGO)
    
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 2. BUSINESS ACQUISITIONS:
 Shahriyar Fabric Industries Limited
    Assets acquired:Trade accounts receivable
    
    $
    1,392Inventories
    
    
    1,120Other current assets
    
    
    1,383Property, plant and equipment
    
    
    12,18116,076Liabilities assumed:Accounts payable and accrued liabilities
    
    
    (3,714
    )Net identifiable assets acquired
    
    
    12,362Goodwill
    
    
    3,488Purchase price
    
    $
    15,850Consideration:Payment to shareholders
    
    $
    3,250Repayment of debt on behalf of the selling shareholders at closing
    
    
    12,000Transaction costs
    
    
    600$
    15,850




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##### 



(GILDAN LOGO)
    
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 2. BUSINESS ACQUISITIONS (continued):
 V.I. Prewett & Son, Inc.
     Assets acquired:Trade accounts receivable
    
    $
    28,228Inventories
    
    
    44,074Prepaid expenses
    
    
    1,573Property, plant and equipment
    
    
    26,202Customer contracts and customer relationships
    
    
    61,000Other assets
    
    
    196161,273Liabilities assumed:Bank indebtedness
    
    
    (2,739
    )Accounts payable and accrued liabilities
    
    
    (12,800
    )Future income taxes
    
    
    (24,428
    )(39,967
    )Net identifiable assets acquired
    
    
    121,306Goodwill
    
    
    6,709Purchase price
    
    $
    128,015Consideration:Cash
    
    $
    125,294Transaction costs
    
    
    1,525Deferred payment disbursed in fiscal 2009
    
    
    1,196$
    128,015




---



##### 



(GILDAN LOGO)
    
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 3. INVENTORIES:
  2010
    
    
    2009Raw materials and spare parts inventories
    
    $
    54,353
    
    
    $
    43,078Work in process
    
    
    37,305
    
    
    
    24,576Finished goods
    
    
    240,884
    
    
    
    234,213$
    332,542
    
    
    $
    301,867
  4. PROPERTY, PLANT AND EQUIPMENT:
 Accumulated
    
    
    Net book2010
    
    Cost
    
    
    depreciation
    
    
    valueLand
    
    $
    28,993
    
    
    $
    
    
    
    $
    28,993Buildings and improvements
    
    
    175,908
    
    
    
    42,010
    
    
    
    133,898Manufacturing equipment
    
    
    413,287
    
    
    
    176,686
    
    
    
    236,601Other equipment
    
    
    73,486
    
    
    
    38,005
    
    
    
    35,481Assets not in service
    
    
    44,319
    
    
    
    
    
    
    
    44,319$
    735,993
    
    
    $
    256,701
    
    
    $
    479,292
 Accumulated
    
    
    Net book2009
    
    Cost
    
    
    depreciation
    
    
    valueLand
    
    $
    17,152
    
    
    $
    
    
    
    $
    17,152Buildings and improvements
    
    
    146,823
    
    
    
    34,798
    
    
    
    112,025Manufacturing equipment
    
    
    363,672
    
    
    
    172,471
    
    
    
    191,201Other equipment
    
    
    71,517
    
    
    
    14,875
    
    
    
    56,642Assets not in service
    
    
    25,183
    
    
    
    
    
    
    
    25,183$
    624,347
    
    
    $
    222,144
    
    
    $
    402,203




---



##### 



(GILDAN LOGO)
    
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 5. INTANGIBLE ASSETS:
 Accumulated
    
    
    Net book2010
    
    Cost
    
    
    amortization
    
    
    valueCustomer contracts and customer relationships
    
    $
    63,526
    
    
    $
    9,966
    
    
    $
    53,560Computer software
    
    
    26,453
    
    
    
    18,692
    
    
    
    7,761$
    89,979
    
    
    $
    28,658
    
    
    $
    61,321
 Accumulated
    
    
    Net book2009
    
    Cost
    
    
    amortization
    
    
    valueCustomer contracts and customer relationships
    
    $
    63,526
    
    
    $
    6,769
    
    
    $
    56,757Computer software
    
    
    25,427
    
    
    
    13,092
    
    
    
    12,335$
    88,953
    
    
    $
    19,861
    
    
    $
    69,092
 6. OTHER ASSETS:
 2010
    
    
    2009Restricted cash related to the acquisition of Prewett (note 2)
    
    $
    5,788
    
    
    $
    6,042Long-term prepaid expenses and other
    
    
    5,064
    
    
    
    2,689Long-term non-trade receivable
    
    
    953
    
    
    
    1,254$
    11,805
    
    
    $
    9,985
 7. REVOLVING LINE OF CREDIT:




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##### 



(GILDAN LOGO)
    
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 8. LONG-TERM DEBT:
  2009Secured:Term loan, repayable in monthly instalments, bearing interest at 30-day LIBOR
plus 2.50% (2.76% at October 4, 2009), secured by assets (a)
    
    $
    3,162Municipal bonds, repayable in annual instalments, bearing interest at variable
rates (3.05% at October 4, 2009), secured by building and equipment (b)
    
    
    7143,876Current portion of secured debt
    
    
    2,348$
    1,528Unsecured:Term loans, bearing interest at rates up to 4% per annum
    
    $
    511Current portion of unsecured debt
    
    
    455$
    56Total secured and unsecured long-term debt
    
    $
    1,584
 (a)
    
    The term loan had been entered into by CanAm. The property, plant and equipment of CanAm
served as collateral for the long-term borrowings of CanAm. Other creditors of CanAm did not
have any recourse to the general credit of the Company.(b)
    
    As a result of the acquisition of Kentucky Derby Hosiery Co., Inc. (Kentucky Derby) in
fiscal 2006, the Company assumed the obligations entered into by Kentucky Derby. The property,
plant and equipment of Kentucky Derby served as collateral for the long-term borrowings of
Kentucky Derby.




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##### 



(GILDAN LOGO)
    
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 9. SHAREHOLDERS EQUITY:
 (a)
    
    The Board of Directors has approved a shareholder rights plan to replace the previous plan that expired on December 1, 2010, which provides the Board of Directors and the
shareholders with additional time to assess any unsolicited take-over bid for the Company and,
where appropriate, pursue other alternatives for maximizing shareholder value. It will be submitted for ratification by shareholders at the Companys
annual and special meeting of shareholders to be held on February 9, 2011.(b)
    
    Accumulated other comprehensive income:At the commencement of fiscal 2004, the Company adopted the U.S. dollar as its functional and
reporting currency. The change in the functional currency for the prior periods resulted in a
currency translation adjustment of $26.2 million, which is reflected in the accumulated other
comprehensive income. In addition, accumulated other comprehensive income includes the changes in the fair value of the effective portion of qualifying cash flow hedging instruments outstanding at the end of the period.(c)
    
    Share capital:Authorized:First preferred shares, without limit as to number and without par value, issuable in series and
non-voting. Second preferred shares, without limit as to number and without par value, issuable
in series and non-voting. As at October 3, 2010 and October 4, 2009 none of the first and second
preferred shares were issued. Common shares, authorized without limit as to number and without
par value.Issued:As at October 3, 2010, there were 121,351,998 common shares (October 4, 2009  120,963,028)
issued and outstanding.
 10. STOCK-BASED COMPENSATION:
 (a)
    
    Employee share purchase plans:The Company has employee share purchase plans which allow eligible employees to authorize
payroll deductions of up to 10% of their salary to purchase from Treasury, common shares of the
Company at a price of 90% of the then current stock price as defined in the plans. Shares
purchased under the plans prior to January 1, 2008 must be held for a minimum of one year.
Employees purchasing shares under the plans subsequent to January 1, 2008 must hold the shares
for a minimum of two years. The Company has reserved 2,800,000 common shares for issuance under
the plans. As at October 3, 2010, a total of 243,702 shares (2009  219,353) were issued under
these plans. Included as compensation costs in selling, general and administrative expenses is
$0.1 million (2009  $0.1 million; 2008  $0.1 million) relating to the employee share purchase
plans.(b)
    
    Stock options and restricted share units:The Companys Long Term Incentive Plan (the LTIP) includes stock options and restricted share
units. The LTIP allows the Board of Directors to grant stock options, dilutive restricted share
units (Treasury RSUs) and non-dilutive restricted share units (non-Treasury RSUs) to
officers and other key employees of the Company and its subsidiaries. On February 2, 2006, the
shareholders of the Company approved an amendment to the LTIP to fix at 6,000,316 the number of
common shares that are issuable pursuant to the exercise of stock options and the vesting of
Treasury RSUs. As at October 3, 2010, 2,760,661 common shares remained authorized for future
issuance under this plan.The exercise price payable for each common share covered by a stock option is determined by the
Board of Directors at the date of the grant, but may not be less than the closing price of the
common shares of the Company on the trading day immediately preceding the effective date of the
grant. Stock options granted since fiscal 2007 vest equally beginning on the second, third, fourth and fifth
anniversary of the grant date, with the exception of a special one-time award of 409,711 options which cliff vest on the fifth anniversary of the grant date, and expire no more than seven or ten years after the date of the
grant. All options granted prior to fiscal 2007 have fully vested.




---



##### 



(GILDAN LOGO)
    
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 10. STOCK-BASED COMPENSATION (continued):
 (b)
    
    Stock options and restricted share units (continued):As previously disclosed, an internal review of all stock option grants made by the Company since
its initial public offering in 1998 was conducted by a special committee of independent
directors of the Board. As a result of this review, the Company determined that certain stock
options granted to employees, officers and directors during fiscal years 1999 to 2003 had been
awarded at prices which were inconsistent with the terms of the Companys LTIP in effect at the
time, as well as with certain requirements of the Toronto Stock Exchange. The special committee
of the Board concluded that there had been no intention of wrongdoing on the part of any current
or former director or senior officer in the granting of stock options during the aforesaid
period. However, current directors and senior executive officers who inadvertently benefitted
from more favourable pricing of stock options have voluntarily reimbursed the Company for any
excess gains and have agreed to the repricing of unexercised options. In addition, the Company
has pursued all reasonable avenues for recoveries from other parties. The steps taken by the
Company resulted in: (i) the Company increasing the exercise price of 261,440 unexercised vested
stock options during the second quarter, resulting in a $0.2 million increase in the aggregate
exercise value of the unexercised stock options, or representing an increase to the weighted
average exercise price for these stock options of $0.77 (from $6.18 to $6.95), and also
resulting in an increase of $0.10 to the weighted average exercise price of all options
outstanding as at April 4, 2010 (from $18.76 to $18.86), and; (ii) the Company recovering $2.2
million in cash, including $1.1 million from current senior officers during the second quarter
relating to stock options that were previously exercised, and $1.1 million from other parties
during the first quarter. Amounts recovered in cash from current senior officers have been
recorded as a credit to contributed surplus. No adjustment is required to prior year financial
statements under either Canadian or U.S. GAAP.Changes in outstanding stock options were as follows:
 Weighted averageNumber
    
    exercise price(in Canadian dollars)Options outstanding, October 5, 2008
    
    
    878
    
    
    $
    14.23Granted
    
    
    233
    
    
    
    23.48Exercised
    
    
    (54
    )
    
    
    2.58Forfeited
    
    
    (47
    )
    
    
    30.75Options outstanding, October 4, 2009
    
    
    1,010
    
    
    
    16.21Granted
    
    
    498
    
    
    
    21.77Exercised
    
    
    (183
    )
    
    
    7.06Forfeited
    
    
    (26
    )
    
    
    26.87Options outstanding, October 3, 2010
    
    
    1,299
    
    
    $
    19.57
  2010
    
    
    2009
    
    
    2008Risk-free interest rate
    
    
    2.69
    %
    
    
    3.06
    %
    
    
    4.17
    %Expected volatility
    
    
    42.48
    %
    
    
    34.98
    %
    
    
    30.73
    %Expected life
    
    7.1 years
    
    5.25 years
    
    4.68 yearsExpected dividend yield
    
    
    
    
    
    
    
    
    
    
    
 The grant date weighted average fair value of options granted in fiscal 2010 was $8.51 (2009 
$9.24; 2008  $13.02).




---



##### 



(GILDAN LOGO)
    
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 10. STOCK-BASED COMPENSATION (continued):
 (b)
    
    Stock options and restricted share units (continued):The following table summarizes information about stock options outstanding and exercisable at
October 3, 2010:
 Options outstanding
    
    
    Options exercisableWeightedRange of exercise
    
    
    
    
    
    Weighted average
    
    
    average remaining
    
    
    
    
    
    
    Weighted averageprices
    
    Number
    
    
    exercise price
    
    
    contractual life (yrs)
    
    
    Number
    
    
    exercise price(in Canadian dollars)
    
    
    
    
    
    (in Canadian dollars)
    
    
    
    
    
    
    
    
    
    
    (in Canadian dollars)$5.00 - $5.72
    
    
    51
    
    
    $
    5.33
    
    
    
    1.09
    
    
    
    51
    
    
    $
    5.33$6.88 - $7.55
    
    
    125
    
    
    
    6.89
    
    
    
    0.37
    
    
    
    125
    
    
    
    6.89$8.64 - $8.72
    
    
    214
    
    
    
    8.65
    
    
    
    0.34
    
    
    
    214
    
    
    
    8.65$20.12 - $23.49
    
    
    696
    
    
    
    22.26
    
    
    
    7.49
    
    
    
    
    
    
    
    $27.17 - $39.39
    
    
    213
    
    
    
    32.64
    
    
    
    3.44
    
    
    
    136
    
    
    
    31.461,299
    
    
    $
    19.57
    
    
    
    
    
    
    
    526
    
    
    $
    13.79
 A Treasury RSU represents the right of an individual to receive one common share on the vesting
date without any monetary consideration being paid to the Company. With the exception of a
special, one-time award, which vests at the end of an eight-year period, all other Treasury RSUs
awarded to date vest at the end of a five-year vesting period. The vesting of at least 50% of
the Treasury RSUs are dependent upon the fiscal performance of the Company relative to a
benchmark group of Canadian publicly listed companies, or as determined by the Board of Directors.Changes in outstanding Treasury RSUs were as follows:
 Weightedaverage fairNumber
    
    
    value per unitTreasury RSUs outstanding, October 5, 2008
    
    
    978
    
    
    $
    17.43Granted
    
    
    181
    
    
    
    11.11Settled through the issuance of common shares
    
    
    (315
    )
    
    
    8.75Forfeited
    
    
    (86
    )
    
    
    26.75Treasury RSUs outstanding, October 4, 2009
    
    
    758
    
    
    
    18.48Granted
    
    
    202
    
    
    
    18.57Settled through the issuance of common shares
    
    
    (182
    )
    
    
    11.64Forfeited
    
    
    (30
    )
    
    
    24.17Treasury RSUs outstanding, October 3, 2010
    
    
    748
    
    
    $
    19.93
 As at October 3, 2010, none (2009  20,000) of the outstanding Treasury RSUs were vested for
which shares were issued subsequent to year-end. The compensation expense included in selling,
general and administrative expenses and cost of sales, in respect of the options and Treasury
RSUs, was $4.1 million (2009  $3.0 million; 2008  $3.0 million). The counterpart has been
recorded as contributed surplus. When the shares are issued to the employees, the amounts
previously credited to contributed surplus are transferred to share capital.




---



##### 



(GILDAN LOGO)
    
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 10. STOCK-BASED COMPENSATION (continued):
 (b)
    
    Stock options and restricted share units (continued):Changes in outstanding non-Treasury RSUs were as follows:
 NumberNon-Treasury RSUs outstanding, October 5, 2008
    
    
    99Granted
    
    
    106Settled
    
    
    (3
    )Forfeited
    
    
    (17
    )Non-Treasury RSUs outstanding, October 4, 2009
    
    
    185Granted
    
    
    214Settled
    
    
    (70
    )Forfeited
    
    
    (16
    )Non-Treasury RSUs outstanding, October 3, 2010
    
    
    313
 Non-Treasury RSUs have the same features as Treasury RSUs, except that their vesting period is a
maximum of three years and they are expected to be settled in cash at the end of the vesting
period. The settlement amount is based on the Companys stock price at the vesting date.
Beginning in fiscal 2010, 100% of Non-Treasury RSUs awarded to executive officers are dependent
upon the financial performance of the Company relative to a benchmark group of Canadian publicly
listed companies. In addition, up to two times the actual number of Non-Treasury RSUs awarded to
executive officers can vest if exceptional financial performance is achieved. As of October 3,
2010, the weighted average fair value per non-Treasury RSU was $28.04. Non-Treasury RSUs that
are expected to be settled in cash are non-dilutive as no common shares are issued from
treasury. As at October 3, 2010, 18,911 (2009  47,170) of the outstanding non-Treasury RSUs were vested.The compensation expense included in selling, general and administrative expenses and cost of
sales, in respect of the non-Treasury RSUs, was $2.9 million (2009  $0.8 million; 2008  $0.3
million). The total obligation under this plan as at October 3, 2010, is $3.1 million (October
4, 2009  $1.7 million) and is recorded in accounts payable and accrued liabilities.
 11. DEFERRED SHARE UNIT PLAN:
   NumberDSUs outstanding, October 5, 2008
    
    
    19Granted
    
    
    17DSUs outstanding, October 4, 2009
    
    
    36Granted
    
    
    18DSUs outstanding, October 3, 2010
    
    
    54




---



##### 



(GILDAN LOGO)
    
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 12. COMMITMENTS AND CONTINGENCIES:
 (a)
    
    The minimum annual lease payments under operating leases for premises, equipment and aircraft
are approximately as follows:
 Fiscal year2011
    
    $
    9,1902012
    
    
    6,4472013
    
    
    5,8892014
    
    
    4,5612015
    
    
    4,028Thereafter
    
    
    16,114$
    46,229
 (b)
    
    As at October 3, 2010, there were contractual obligations outstanding of approximately $76.1
million for the acquisition of property, plant and equipment (2009  $60.0 million).(c)
    
    During fiscal 2010, the United States Department of Agriculture advanced $3.1 million
(October 4, 2009  $4.3 million) to CanAm in connection with a subsidy program with the intent
of assisting domestic spinning and textile manufacturers. Amounts received under this program
are based on U.S. cotton consumption. The assistance provided is not repayable, provided that
eligible capital investments are incurred over a certain period of time for amounts equivalent
to the assistance received. All amounts received are recorded as deferred income and are
included in accounts payable and accrued liabilities until there is reasonable assurance that
eligible capital investments will be incurred. Once reasonable assurance is obtained, the
amounts recorded in deferred income are recognized and proportionately allocated as a
reduction of cost of goods sold and property, plant and equipment, using the intent of the
subsidy program as a basis for the allocation. During fiscal 2010, the Company recognized
$6.0 million of the subsidies received to date as a reduction of cost of goods sold, partially offset by a charge of $3.0
million to non-controlling interest in the Companys consolidated statement of earnings to
reflect the 50% non-controlling interest of the amount recognized. In addition, the Company
recorded $0.7 million as a reduction of capital expenditures, and $0.7 million as a reduction
of inventories as at October 3, 2010. As at October 3, 2010, financial assistance received in
the amount of $3.1 million, $3.9 million, and $0.4 million is to be disbursed by CanAm no
later than February 2011, February 2012 and February 2013, respectively, to finance eligible
capital expenditures.(d)
    
    Securities Class Actions:The Company and certain of its senior officers have been named as defendants in a number of
proposed class action lawsuits filed in the United States District Court for the Southern District
of New York. A proposed class action has also been filed in the Ontario Superior Court of Justice
and a petition for authorization to commence a class action has been filed in the Quebec Superior
Court. Each of these U.S. and Canadian lawsuits, which have yet to be certified as a class action
by the respective courts at this stage, seek to represent a class comprised of persons who acquired
the Companys common shares between August 2, 2007 and April 29, 2008 and allege, among other
things, that the defendants misrepresented the Companys financial condition and its financial
prospects in its financial guidance concerning the 2008 fiscal year, which was subsequently revised
on April 29, 2008.The U.S. lawsuits have been consolidated, and a consolidated amended complaint was filed alleging
claims under the U.S. securities laws. On July 1, 2009, the District Court granted the motion by
the Company and other defendants to dismiss the U.S. action in its entirety, holding that the
consolidated amended complaint failed to adequately allege the essential elements of a claim under
the applicable provisions of the U.S. securities laws, including the existence of a material
misstatement and fraudulent intent. On July 17, 2009, plaintiffs filed a motion seeking
reconsideration of this decision only insofar as it declined to grant plaintiffs an opportunity to
file a second
amended complaint. On July 31, 2009, the Company and the other defendants filed a response to
plaintiffs motion seeking reconsideration. On December 4, 2009, the plaintiffs motion seeking
reconsideration was denied. The Plaintiffs have appealed the decisions on the motion for
reconsideration and the motion to dismiss, but no date has been set yet for the appeal.




---



##### 



(GILDAN LOGO)
    
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 12. COMMITMENTS AND CONTINGENCIES (continued):
 (d)
    
    Securities Class Actions (continued):In addition to pursuing common law claims, the Ontario action proposes to seek leave from the
Ontario court to also bring statutory misrepresentation civil liability claims under Ontarios
Securities Act. A motion, along with affidavit evidence, for leave to pursue such statutory
liability claims and class certification have been filed by the plaintiff. No date has been set yet
for the hearing of that motion. In the Quebec action, a motion requesting permission to amend the
petition was filed on April 6, 2010, to align the allegations in said petition with those pleaded
in the Ontario action. A case management judge has been appointed but no date has been set yet for
the case conference.On August 3, 2010, the Company announced it had entered into an agreement to settle all claims
raised in these proposed class action lawsuits, subject to final approval from the courts. In
consideration of the dismissal of the proposed class actions currently pending before all three
courts and releases from the proposed class members of the claims against the Company and certain
of its senior executives, the settlement agreement provides for a total amount of $22.5 million to
be paid into an escrow account for distribution to the proposed class members. The settlement is
conditional on the courts approval and subject to the Companys option to terminate the settlement
in the event valid opt-outs by the proposed class members exceed a pre-agreed confidential opt-out
threshold. Under this agreement, the Company would have no financial obligation as the settlement
would be entirely funded by the Companys insurers, and therefore no provision has been recorded in
the Consolidated Financial Statements.In the event the Company would elect to terminate the settlement agreement because valid opt-outs
by proposed class members exceed the pre-agreed opt-out threshold, or if the courts would not
provide final approval of the settlement, the parties would revert to their litigation positions
immediately prior to the execution of the settlement agreement. If such event would occur, the
Company would continue to strongly contest the basis upon which these actions are predicated and
would vigorously defend its position. Under this scenario, due to the inherent uncertainties of
litigation, it would not be possible to predict the final outcome of these lawsuits or determine
the amount of any potential losses, if any.(e)
    
    The Company is a party to other claims and litigation arising in the normal course of
operations. The Company does not expect the resolution of these matters to have a materially
adverse effect on the financial position or results of operations of the Company.
 13. GUARANTEES:




---



##### 



(GILDAN LOGO)
    
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 14. INCOME TAXES:
  2010
    
    
    2009
    
    
    2008Combined basic Canadian federal and provincial income taxes
    
    $
    59,533
    
    
    $
    27,884
    
    
    $
    56,114(Decrease) increase in income taxes resulting from:Effect of different tax rates on earnings of foreign subsidiaries
    
    
    (70,105
    )
    
    
    (32,181
    )
    
    
    (51,292
    )Income tax charge (recovery) for prior taxation years
    
    
    2,322
    
    
    
    (6,085
    )
    
    
    26,906Effect of non-deductible expenses and other
    
    
    6,346
    
    
    
    4,596
    
    
    
    2,672$
    (1,904
    )
    
    $
    (5,786
    )
    
    $
    34,400
    2010
    
    
    2009
    
    
    2008Current income taxes
    
    $
    9,523
    
    
    $
    (3,352
    )
    
    $
    50,285Future income taxes
    
    
    (11,427
    )
    
    
    (2,434
    )
    
    
    (15,885
    )$
    (1,904
    )
    
    $
    (5,786
    )
    
    $
    34,400




---



##### 



(GILDAN LOGO)
    
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 14. INCOME TAXES (continued):
  2010
    
    
    2009Future income tax assets (liabilities)Non-capital losses
    
    $
    12,778
    
    
    $
    3,817Taxable temporary differences related to:Reserves and accruals
    
    
    6,340
    
    
    
    6,634Property, plant and equipment and intangible assets
    
    
    (25,614
    )
    
    
    (26,699
    )Other
    
    
    2,020
    
    
    
    394Net future income tax liability (presented as long-term liabilities)
    
    $
    (4,476
    )
    
    $
    (15,854
    )
   15. RESTRUCTURING AND OTHER CHARGES, AND ASSETS HELD FOR SALE:
 2010
    
    
    2009
    
    
    2008Loss (gain) on disposal of assets held for sale
    
    $
    37
    
    
    $
    (619
    )
    
    $
    (526
    )Accelerated depreciation
    
    
    2,488
    
    
    
    
    
    
    
    Asset impairment loss and write-down of assets held for sale
    
    
    1,826
    
    
    
    1,595
    
    
    
    2,700Employee termination costs and other benefits
    
    
    744
    
    
    
    2,180
    
    
    
    400Other exit costs
    
    
    3,705
    
    
    
    3,120
    
    
    
    3,470Adjustment for employment contract
    
    
    (95
    )
    
    
    (77
    )
    
    
    (555
    )$
    8,705
    
    
    $
    6,199
    
    
    $
    5,489




---



##### 



(GILDAN LOGO)
    
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 15. RESTRUCTURING AND OTHER CHARGES, AND ASSETS HELD FOR SALE (continued):
    Balance, October 5, 2008
    
    $
    1,993Employee termination and other benefits
    
    
    2,180Adjustment for employment contract
    
    
    (77
    )Foreign exchange adjustment
    
    
    (25
    )Payments
    
    
    (2,385
    )Balance, October 4, 2009
    
    
    1,686Employee termination and other benefits
    
    
    744Adjustment for employment contract
    
    
    (95
    )Foreign exchange adjustment
    
    
    34Payments
    
    
    (915
    )Balance, October 3, 2010
    
    $
    1,454
 16. OTHER COMPREHENSIVE INCOME (LOSS):
  2010
    
    
    2009
    
    
    2008Net gain on derivatives designated as cash flow hedges (net of
income tax of $22)
    
    $
    2,129
    
    
    $
    
    
    
    $
    Amounts reclassified from other comprehensive income to net
earnings, and included in:Net sales (net of income tax of $27)
    
    
    (2,661
    )
    
    
    
    
    
    
    Selling, general and administrative expenses (net of income
tax of $7)
    
    
    (694
    )
    
    
    
    
    
    
    Financial income, net (net of income tax of $5)
    
    
    (484
    )
    
    
    
    
    
    
    Other comprehensive loss
    
    $
    (1,710
    )
    
    $
    
    
    
    $
    




---



##### 



(GILDAN LOGO)
    
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 17. EARNINGS PER SHARE:
  2010
    
    
    2009
    
    
    2008Basic earnings per share:Basic weighted average number of common shares
outstanding
    
    
    121,159
    
    
    
    120,811
    
    
    
    120,479Basic earnings per share
    
    $
    1.64
    
    
    $
    0.79
    
    
    $
    1.21Diluted earnings per share:Basic weighted average number of common shares
outstanding
    
    
    121,159
    
    
    
    120,811
    
    
    
    120,479Plus dilutive impact of stock options and Treasury RSUs
    
    
    821
    
    
    
    624
    
    
    
    1,143Diluted weighted average number of common shares
outstanding
    
    
    121,980
    
    
    
    121,435
    
    
    
    121,622Diluted earnings per share
    
    $
    1.63
    
    
    $
    0.79
    
    
    $
    1.20
  18. OTHER INFORMATION:
 (a)
    
    Supplemental cash flow disclosure:
 2010
    
    
    2009
    
    
    2008Cash paid during the year for:Interest
    
    $
    638
    
    
    $
    2,028
    
    
    $
    7,866Income taxes
    
    
    16,443
    
    
    
    30,419
    
    
    
    5,867Balance of non-cash transactions:Additions to property, plant and equipment included in
accounts payable and accrued liabilities
    
    
    2,099
    
    
    
    627
    
    
    
    1,720Proceeds on disposal of long-lived assets in other assets
    
    
    427
    
    
    
    808
    
    
    
    1,382Proceeds on disposal of long-lived assets in other
current assets
    
    
    
    
    
    
    456
    
    
    
    Business acquisition in accounts payable and accrued
liabilities
    
    
    
    
    
    
    
    
    
    
    1,196Non-cash ascribed value credited to share capital from
shares issued pursuant to vesting of Treasury RSUs and
exercise of stock options
    
    
    2,125
    
    
    
    2,759
    
    
    
    190




---



##### 



(GILDAN LOGO)
    
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 18. OTHER INFORMATION (continued):
 (a)
    
    Supplemental cash flow disclosure (continued):
 2010
    
    
    2009
    
    
    2008Cash and cash equivalents consist of:Cash balances with banks
    
    $
    196,279
    
    
    $
    92,608
    
    
    $
    8,068Short-term investments, bearing interest at rates up to
0.25% at October 3, 2010, up to 0.12% at
October 4, 2009 and up to 2.22% at October 5, 2008
    
    
    62,163
    
    
    
    7,124
    
    
    
    4,289$
    258,442
    
    
    $
    99,732
    
    
    $
    12,357
  2010
    
    
    2009
    
    
    2008Depreciation and amortization of property, plant and
equipment and intangible assets
    
    $
    66,472
    
    
    $
    65,407
    
    
    $
    57,135Adjustment for the variation of depreciation of property,
plant and equipment and intangible assets included in
inventories at the beginning and end of the period
    
    
    2,725
    
    
    
    (2,437
    )
    
    
    (957
    )Depreciation and amortization included in the consolidated
statements of earnings and comprehensive income
    
    $
    69,197
    
    
    $
    62,970
    
    
    $
    56,178Consists of:Depreciation of property, plant and equipment
    
    $
    60,378
    
    
    $
    53,925
    
    
    $
    48,809Amortization of intangible assets
    
    
    8,797
    
    
    
    8,843
    
    
    
    7,148Amortization of deferred financing costs and other
    
    
    22
    
    
    
    202
    
    
    
    221Depreciation and amortization included in the consolidated
statements of earnings and comprehensive income
    
    $
    69,197
    
    
    $
    62,970
    
    
    $
    56,178
  2010
    
    
    2009
    
    
    2008Defined contribution expense
    
    $
    1,380
    
    
    $
    1,447
    
    
    $
    1,827Bad debt expense
    
    
    2,430
    
    
    
    5,995
    
    
    
    4,543
 (d)
    
    During fiscal 2010, the Company expensed $9.1 million (2009  $7.1 million; 2008  $6.1
million) in cost of sales, representing managements best estimate of the cost of statutory
severance and pre-notice benefit obligations accrued for active employees located in the
Caribbean Basin and Central America. As at October 3, 2010, an amount of $10.2 million
(October 4, 2009  $9.5 million) has been included in accounts payable and accrued
liabilities.(e)
    
    During the fourth quarter of fiscal 2010, the Company received business interruption
insurance proceeds of $8.0 million, reflecting the maximum insurance recovery available under
its insurance policy related to the earthquake which struck Haiti on January 12, 2010. The
earthquake impacted the Companys third-party contractor operations used to sew the majority
of the fabric produced at its Dominican Republic textile facility, which resulted in lost
sales opportunities due to a temporary loss of production, as well as incremental costs
related to supply chain inefficiencies. Business interruption proceeds have been recorded as a
reduction of cost of sales in the statement of earnings.




---



##### 



(GILDAN LOGO)
    
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 19. RELATED PARTY TRANSACTIONS:
  2010
    
    
    2009
    
    
    2008Transactions:Yarn purchases
    
    $
    156,761
    
    
    $
    149,754
    
    
    $
    138,642Management fee expense
    
    
    750
    
    
    
    750
    
    
    
    750Balances outstanding:Accounts payable and accrued liabilities
    
    
    30,050
    
    
    
    22,129
    
    
    
    32,445
 20. FINANCIAL INSTRUMENTS:
  (a)
    
    Financial instruments  carrying values and fair values:
 The fair values of financial assets and liabilities, together with the carrying amounts included
in the consolidated balance sheets, are as follows:
 2010
    
    
    
    
    
    
    2009Carrying
    
    
    
    
    
    
    Carryingamount
    
    
    Fair value
    
    
    amount
    
    
    Fair valueFinancial assetsHeld-for-trading financial assets:Cash and cash equivalents
    
    $
    258,442
    
    
    $
    258,442
    
    
    $
    99,732
    
    
    $
    99,732Loans and receivables:Trade accounts receivable
    
    
    145,684
    
    
    
    145,684
    
    
    
    159,645
    
    
    
    159,645Other current assets
    
    
    7,980
    
    
    
    7,980
    
    
    
    7,117
    
    
    
    7,117Long-term non-trade receivable included
in other assets
    
    
    953
    
    
    
    953
    
    
    
    1,254
    
    
    
    1,254Restricted cash related to the acquisition of
Prewett included in other assets
    
    
    5,788
    
    
    
    5,788
    
    
    
    6,042
    
    
    
    6,042Derivative assets
    
    
    1,099
    
    
    
    1,099
    
    
    
    
    
    
    
    




---



##### 



(GILDAN LOGO)
    
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 20. FINANCIAL INSTRUMENTS (continued):
 (a)
    
    Financial instruments  carrying values and fair values (continued):
 2010
    
    
    2009Carrying
    
    
    
    
    
    
    Carryingamount
    
    
    Fair value
    
    
    amount
    
    
    Fair valueFinancial liabilitiesOther financial liabilities:Accounts payable and accrued liabilities
    
    $
    183,117
    
    
    $
    183,117
    
    
    $
    124,378
    
    
    $
    124,378Long-term debt  bearing interest at variable
rates
    
    
    
    
    
    
    
    
    
    
    3,876
    
    
    
    3,876Long-term debt  bearing interest at fixed
rates
    
    
    
    
    
    
    
    
    
    
    511
    
    
    
    511Derivative liabilities
    
    
    3,088
    
    
    
    3,088
    
    
    
    
    
    
    
    
 Derivative assets and derivative liabilities consist of the fair values of forward foreign
exchange contracts outstanding at October 3, 2010 and are included in other current assets, and
accounts payable and accrued liabilities, respectively. The Company has determined that the fair
value of its short-term financial assets and liabilities approximates their respective carrying
amounts as at the balance sheet dates because of the short-term maturity of those instruments.
The fair values of the long-term receivable and the restricted cash included in other assets,
and the Companys interest-bearing financial liabilities also approximate their respective
carrying amounts. The fair values of cash and cash equivalents and forward foreign exchange
contracts were measured using Level 2 inputs in the fair value hierarchy. In determining the
fair value of financial assets and financial liabilities, including derivative financial
instruments, the Company takes into account its own credit risk and the credit risk of the
counterparty.
 (b)
    
    Financial expense (income), net:
 2010
    
    
    2009
    
    
    2008Interest expense (i)
    
    $
    436
    
    
    $
    1,824
    
    
    $
    7,223Bank and other financial charges
    
    
    1,392
    
    
    
    1,039
    
    
    
    946Foreign exchange (gain) loss (ii)
    
    
    (1,077
    )
    
    
    (3,167
    )
    
    
    1,071$
    751
    
    
    $
    (304
    )
    
    $
    9,240
 (i)
    
    Interest expense (income):
 2010
    
    
    2009
    
    
    2008Interest expense on long-term debt
    
    $
    88
    
    
    $
    1,800
    
    
    $
    7,422Interest expense on short-term indebtedness
    
    
    463
    
    
    
    142
    
    
    
    191Interest income on held-for-trading financial assets
    
    
    (132
    )
    
    
    (103
    )
    
    
    (413
    )Interest income on loans and receivables
    
    
    (80
    )
    
    
    (80
    )
    
    
    (80
    )Other interest expense
    
    
    97
    
    
    
    65
    
    
    
    103$
    436
    
    
    $
    1,824
    
    
    $
    7,223
 Interest income on held-for-trading financial assets consists of interest earned from cash
and cash equivalents invested in short-term deposits. Interest income on loans and
receivables relates to interest earned on the Companys long-term receivable included in
other assets.




---



##### 



(GILDAN LOGO)
    
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 20. FINANCIAL INSTRUMENTS (continued):
 (b)
    
    Financial expense (income), net (continued):
 (ii)
    
    Foreign exchange (gain) loss:
 2010
    
    
    2009
    
    
    2008(Gain) loss relating to financial assets and liabilities
    
    $
    (1,154
    )
    
    $
    (220
    )
    
    $
    674Loss (gain) relating to financial derivatives not
designated as cash flow hedges, including
amounts realized on contract maturity and
changes in fair value of open positions
    
    
    7
    
    
    
    (82
    )
    
    
    2,084Foreign exchange (gain) loss relating to financial
instruments
    
    
    (1,147
    )
    
    
    (302
    )
    
    
    2,758Other foreign exchange loss (gain)
    
    
    70
    
    
    
    (2,865
    )
    
    
    (1,687
    )$
    (1,077
    )
    
    $
    (3,167
    )
    
    $
    1,071
 (c)
    
    Derivative instruments:The Company has entered into forward foreign exchange contracts in order to reduce the exposure
of forecasted cash flows in currencies other than the U.S. dollar. The forward foreign exchange
contracts were designated as cash flow hedges and qualified for hedge accounting. As such, the
effective portion of unrealized gains and losses related to the fair value of the cash flow
hedges are included in other comprehensive income, and are recognized in net earnings in the
same period in which the foreign exchange impact of the forecasted cash flow affects net
earnings. The forward foreign exchange contracts outstanding as at October 3, 2010 consisted
primarily of contracts to sell or buy Euros, Australian dollars, Canadian dollars, and Pounds
sterling in exchange for U.S. dollars.The Company has also entered into forward fuel oil contracts in order to reduce the exposure of
forecasted cash outflows that are affected by oil prices. The forward fuel oil contracts were
designated as cash flow hedges and qualified for hedge accounting. As such, the effective
portion of unrealized gains and losses related to the fair value of the cash flow hedges are
included in other comprehensive income, and are recognized in net earnings in the same period as
the hedged fuel oil affects net earnings. As at October 3, 2010 and October 4, 2009, there were
no forward fuel oil contracts outstanding.As at October 3, 2010, the derivatives designated as cash flow hedges were considered to be
fully effective with no resulting portions being designated as ineffective.
 Carrying and fair value
    
    
    
    
    
    
    MaturityNotional
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accountsforeign
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    payablecurrency
    
    
    Average
    
    
    Notional
    
    
    Other
    
    
    andamount
    
    
    exchange
    
    
    U.S. $
    
    
    current
    
    
    accrued
    
    
    0 to 6
    
    
    7 to 12October 3, 2010
    
    equivalent
    
    
    rate
    
    
    equivalent
    
    
    assets
    
    
    liabilities
    
    
    months
    
    
    monthsForward foreign exchange contracts designated as cash flow hedges:Sell AUD/Buy USD
    
    
    7,908
    
    
    
    0.8704
    
    
    $
    6,883
    
    
    $
    
    
    
    $
    (570
    )
    
    $
    (334
    )
    
    $
    (236
    )Sell GBP/Buy USD
    
    
    24,900
    
    
    
    1.5443
    
    
    
    38,454
    
    
    
    
    
    
    
    (511
    )
    
    
    (210
    )
    
    
    (301
    )Sell EUR/Buy USD
    
    
    33,150
    
    
    
    1.2964
    
    
    
    42,977
    
    
    
    
    
    
    
    (2,007
    )
    
    
    (813
    )
    
    
    (1,194
    )Sell CAD/Buy USD
    
    
    16,000
    
    
    
    0.9938
    
    
    
    15,900
    
    
    
    393
    
    
    
    
    
    
    
    393
    
    
    
    Buy CAD/Sell USD
    
    
    21,222
    
    
    
    0.9330
    
    
    
    19,800
    
    
    
    706
    
    
    
    
    
    
    
    368
    
    
    
    338$
    124,014
    
    
    $
    1,099
    
    
    $
    (3,088
    )
    
    $
    (596
    )
    
    $
    (1,393
    )
 As at October 4, 2009 the Company had no outstanding derivative financial instruments relating
to commitments to buy or sell foreign currencies through forward foreign exchange contracts.




---



##### 



(GILDAN LOGO)
    
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 21. CAPITAL DISCLOSURES:
    2010
    
    
    2009
    
    
    2008Current portion of long-term debt
    
    $
    
    
    
    $
    2,803
    
    
    $
    3,556Long-term debt
    
    
    
    
    
    
    1,584
    
    
    
    49,448Less: cash and cash equivalents
    
    
    (258,442
    )
    
    
    (99,732
    )
    
    
    (12,357
    )(Cash in excess of total indebtedness) net debt
    
    $
    (258,442
    )
    
    $
    (95,345
    )
    
    $
    40,647
 For the last four quarters ended onOctober 3,2010
    
    
    October 4,2009
    
    
    October 5,2008Net earnings
    
    $
    198,245
    
    
    $
    95,329
    
    
    $
    146,350Restructuring and other charges
    
    
    8,705
    
    
    
    6,199
    
    
    
    5,489Depreciation and amortization
    
    
    66,472
    
    
    
    65,407
    
    
    
    57,135Variation of depreciation included in inventories
    
    
    2,725
    
    
    
    (2,437
    )
    
    
    (957
    )Interest, net
    
    
    436
    
    
    
    1,824
    
    
    
    7,223Income tax (recovery) expense
    
    
    (1,904
    )
    
    
    (5,786
    )
    
    
    34,400Non-controlling interest in consolidated joint venture
    
    
    3,786
    
    
    
    110
    
    
    
    230EBITDA
    
    $
    278,465
    
    
    $
    160,646
    
    
    $
    249,870Net debt to EBITDA ratio
    
    
    n/a
    
    
    
    n/a
    
    
    
    0.2:1




---



##### 



(GILDAN LOGO)
    
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 21. CAPITAL DISCLOSURES (continued):
    22. SEGMENTED INFORMATION:
  (a)
    
    Net sales by major product group:
 2010
    
    
    2009
    
    
    2008Activewear and underwear
    
    $
    1,084,953
    
    
    $
    795,535
    
    
    $
    957,061Socks
    
    
    226,510
    
    
    
    242,784
    
    
    
    292,650$
    1,311,463
    
    
    $
    1,038,319
    
    
    $
    1,249,711
 (b)
    
    Major customers and revenues by geographic area:
 (i)
    
    The Company has two customers accounting for at least 10% of total net sales:
 2010
    
    
    2009
    
    
    2008Company A
    
    
    21.0
    %
    
    
    18.6
    %
    
    
    23.1
    %Company B
    
    
    14.3
    %
    
    
    15.5
    %
    
    
    13.6
    %
 (ii)
    
    Net sales were derived from customers located in the following geographic areas:
 2010
    
    
    2009
    
    
    2008United States
    
    $
    1,154,776
    
    
    $
    939,717
    
    
    $
    1,125,961Canada
    
    
    54,160
    
    
    
    35,134
    
    
    
    56,353Europe and other
    
    
    102,527
    
    
    
    63,468
    
    
    
    67,397$
    1,311,463
    
    
    $
    1,038,319
    
    
    $
    1,249,711




---



##### 



(GILDAN LOGO)
    
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 22. SEGMENTED INFORMATION (continued):
 (c)
    
    Property, plant and equipment by geographic area are as follows:
 2010
    
    
    2009Honduras
    
    $
    243,033
    
    
    $
    211,267Caribbean Basin
    
    
    118,876
    
    
    
    102,216United States
    
    
    81,555
    
    
    
    65,347Canada
    
    
    10,051
    
    
    
    13,252Other
    
    
    25,777
    
    
    
    10,121$
    479,292
    
    
    $
    402,203
 (d)
    
    Intangible assets by geographic area are as follows:
 2010
    
    
    2009Canada
    
    $
    5,456
    
    
    $
    8,959United States
    
    
    54,650
    
    
    
    58,901Honduras
    
    
    907
    
    
    
    766Other
    
    
    308
    
    
    
    466$
    61,321
    
    
    $
    69,092
 (e)
    
    Goodwill by geographic area is as follows:
 2010
    
    
    2009United States
    
    $
    6,709
    
    
    $
    6,709Bangladesh
    
    
    3,488
    
    
    
    $
    10,197
    
    
    $
    6,709
 23. COMPARATIVE FIGURES: