<PAGE>

     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 25, 2006

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

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 20-F/A
                                 AMENDMENT No. 2

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004

                         COMMISSION FILE NUMBER 0-30020

                           DELTA GALIL INDUSTRIES LTD.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                                     ISRAEL
                 (JURISDICTION OF INCORPORATION OR ORGANIZATION)

                    2 Kaufman Street, Tel Aviv 68012, Israel
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

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

                                      NONE
                              (Title of each class)

 Securities registered or to be registered pursuant to Section 12(g) of the Act:

                               ORDINARY SHARES (1)
                                (Title of Class)

                         AMERICAN DEPOSITARY SHARES (2)
                                (Title of Class)

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

(1)     Not for trading, but only in connection with the listing of the American
        Depositary Shares.
(2)     Evidenced by American Depositary Receipts, each American Depositary
        Share representing one ordinary share, par value NIS 1.00 per share.

        Securities for which there is a reporting obligation pursuant to
                            Section 15(d) of the Act:

                                      NONE
                                      ----
                                (Title of class)

        Indicate the number of outstanding shares of each of the issuer's
classes of capital or common stock at the close of the period covered by the
annual report:

        AS OF DECEMBER 31, 2004 THE REGISTRANT HAD 19,947,849 ORDINARY SHARES
OUTSTANDING (INCLUDING 1,206,802 ORDINARY SHARES OWNED BY THE REGISTRANT AND
45,882 ORDINARY SHARES HELD BY A TRUSTEE IN CONNECTION WITH THE REGISTRANT'S
STOCK OPTION PLANS).

        Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                              Yes __X__ No _______

      Indicate by check mark which financial statement item the Registrant
                               elected to follow:

                          Item 17 _______ Item 18 __X__

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

<PAGE>

                                EXPLANATORY NOTE

Delta Galil Industries Ltd. (the "Company") is filing this Amendment No. 2 on
Form 20-F/A to its Form 20-F for the year ended December 31, 2004, originally
filed on June 27, 2005 ("Original Form 20-F"). On April 12, 2006, the Company
filed Amendment No. 1 to the original Form 20-F ("Amendment No. 1"). Amendment
No. 1 included a revised section entitled "Liquidity and Capital Resources"
under "Item 5 - Operating and Financial Review and Prospectus", following the
correction of an error contained in the statement of cash flows for the year
ended December 31, 2004.

The purpose of this Amendment No. 2 is to

        a)      Include revised Item 5 in its entirety; and
        b)      Amend Item 15 within the Original Form 20-F to clarify the
                opinion of our Chief Executive Officer and of our Chief
                Financial Officer with respect to the effectiveness of our
                internal controls over financial reporting as of December 31
                2004. We hereby replace Item 15 of the Original Form 20-F with
                the amended Item 15 included in this Amendment No. 2.

Except as otherwise expressly stated herein and to reflect the changes referred
to above, this amended annual report on Form 20-F/A speaks as of the filing date
of the Original Form 20-F, and does not purport to reflect events or
developments subsequent to the original filing date of the Original Form 20-F.

<PAGE>

PART I

ITEM 5:     OPERATING AND FINANCIAL REVIEW AND PROSPECTS

        THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH
DELTA GALIL'S CONSOLIDATED FINANCIAL STATEMENTS AND THE NOTES TO THOSE FINANCIAL
STATEMENTS INCLUDED IN ITEM 18 OF THIS ANNUAL REPORT. DELTA GALIL'S CONSOLIDATED
FINANCIAL STATEMENTS ARE PREPARED IN CONFORMITY WITH US GAAP.

OVERVIEW

        Following is a discussion of certain topics that will help you to better
understand our results of operations discussed below:

    REVENUES

        Delta Galil's revenues in 2004 increased by 13% and amounted to $654.3
million compared to $580.1 million in 2003.

        The following table shows Delta Galil's revenues by geographical area,
stated in million U.S. dollars and as a percentage of total revenues, for the
years ended December 31, 2002, 2003 and 2004:

<TABLE>
<CAPTION>
                                                 YEAR ENDED DECEMBER 31,
                                 -----------------------------------------------------

                                      2002               2003                2004
                                 ---------------    ---------------    ---------------

                                    $        %         $        %         $        %
                                 ------   ------    ------   ------    ------   ------
<S>                               <C>       <C>      <C>       <C>      <C>       <C>
    North America........         303.1     53.4     300.7     51.8     334.8     51.2

    United Kingdom.......         181.3     32.0     187.9     32.4     202.8     31.0

    Europe (excluding U.K.)        44.4      7.8      48.7      8.4      64.7      9.9

    Israel...............          38.5      6.8      42.8      7.4      52.0      7.9
                                 ------   ------    ------   ------    ------   ------
    Total................         567.3    100.0     580.1    100.0     654.3    100.0
                                 ======   ======    ======   ======    ======   ======
</TABLE>

        In 2004, sales to North America increased by 11.3% to $334.8 million
representing 51.2% of total sales. The increase in sales to North America is
attributed mainly to the acquisitions of Auburn in 2003 and Burlen in 2004.
Delta Galil's sales to its top customer, the U.K. chain Marks & Spencer,
increased by 5.5% to $189.0 million in 2004, compared to $179.1 million in 2003.
The increase in the sales to Marks & Spencer is attributed to the strengthening
of the pound sterling versus the dollar. Delta Galil's sales to the European
market increased by 32.8% to $64.7 million in 2004 compared to $48.7 million in
2003, mainly due to acquisition of Auburn in 2003 and the strengthening of the
euro versus the dollar. Delta Galil's sales to the Israeli market increased by
21.5% to $52.0 million in 2004 compared to $42.8 million in 2003. The increase
in sales to the Israeli market is attributed mainly to different mix of products
and to the opening of new stores.

        Effective January 1, 2005, the World Trade Organization's 148 member
nations lifted all quotas on apparel and textiles. As a result, all textiles and
textile apparel manufactured in a member nation will no longer be subject to
quota restrictions. This will allow retailers, apparel firms and others to
import unlimited quantities of apparel and textile items from China, India and
other low-cost countries. As a result, prices of textiles and apparel, including
our products, have faced downward pressure and may continue to decline. If
prices decline faster than we are able to cut costs, our business and results of
operations could be affected adversely.

                                       -3-
<PAGE>

        The following table shows Delta Galil's revenues by product categories,
stated as a percentage of total revenues, for the years ended December 31, 2002,
2003, and 2004:

<TABLE>
<CAPTION>
                                                       YEAR ENDED DECEMBER 31
                                             -------------------------------------
                                                 2002        2003         2004
                                             -----------  -----------  -----------
<S>                                              <C>          <C>          <C>
Ladies' Intimate Apparel.................        59.2%        61.1%        53.6%
Socks....................................        15.2         16.4         23.0
Men's Underwear..........................        11.2         10.1         12.9
Babywear.................................         7.2          6.8          4.4
Leisurewear..............................         3.6          3.0          3.7
Fabrics and Others.......................         3.6          2.6          2.4
                                             -----------  -----------  -----------
Total....................................        100%         100%         100%
                                             ===========  ===========  ===========
</TABLE>

The decrease in revenues in the Ladies Intimate Apparel in 2004 compared to 2003
is attributed to a decrease in sales to US mass-market customers. The increase
in revenues in the Socks category in 2004 compared to 2003 is attributed to the
acquisition of Auburn in the fourth quarter of 2003.

ACQUISITION OF BURLEN

        In December 2004, Delta acquired Burlen Corp., a leading private label
manufacturer of ladies intimate apparel.

        As consideration for all of the share capital of Burlen Corp., Delta
paid Burlen's selling shareholders $48.2 million in cash and $2.2 million in
ordinary shares comprised of 215,684 ordinary shares valued at $10.43 per share
transferred from Delta's treasury shares. In addition, Delta paid $8.2 million
of Burlen's bank debt. Delta Galil also accrued $1.0 million in other deal cost
related to the transaction, which will be paid in 2005. Delta is also obligated
to pay the selling shareholders additional amounts if Burlen meets specified
sales and profitability targets in 2005, 2006, and 2007.

        An intangible asset related to customer relations, which amounted to
$14.8 million will be amortized over a period of 20 years. The excess of cost of
acquisition over the fair value of net assets on acquisition date - $3.9 million
- was allocated to goodwill and is included as part of Delta USA segment.
Customer relations and goodwill are deductible for tax purposes.

ACQUISITION OF A MANUFACTURING PLANT IN THAILAND

        In December 2004, Delta Galil acquired a manufacturing sewing and
cutting facility in Thailand for a total consideration of $2.4 million. Of this
amount $0.9 million was paid for the shares and $0.8 million to pay off debt to
the former shareholders. In addition, Delta assumed bank debt of $0.7 million.
Delta Galil accounted for this acquisition as an acquisition of a business. The
excess of the cost of the acquisition over the fair value of the net assets on
the acquisition date, which was approximately $1.0 million, was allocated to
goodwill and is included as part of Europe segment.

    ACQUISITION OF AUBURN HOSIERY MILLS

        On November 13, 2003 Delta Galil completed the acquisition of the
outstanding shares of Auburn Hosiery Mills. Auburn manufactures, markets and
sells branded sport socks under exclusive licenses to brand names both in the
United States and Europe.

        As consideration for all of the share capital of Auburn Hosiery, Delta
Galil paid $10.8 million to Kellwood and recorded liabilities in respect of
restructuring costs in the amount of $6.2 million. The total purchase price
amounted to approximately $17.0 million. During 2004, Delta Galil finalized the
restructuring plan, and actual liabilities in respect of restructuring costs,
were $1.9 million less than originally anticipated which resulted in a decrease
in the excess of cost of the acquisition over the fair value of the net assets
on the acquisition date. The decrease was allocated $1.4 million to the goodwill
(which off set the entire goodwill initially recognized) and $0.5 million to
property, plant and equipment.

                                       -4-
<PAGE>

        LOGISTIC CENTER IN HUNGARY

        In November 2002, Delta Galil, through a wholly owned subsidiary,
purchased the operations of Komar Textile Trading, a logistic center, which
included real estate, movables and receivables from subcontractors in Hungary.
The acquisition price was $5.6 million, and the excess of the cost of the
acquisition over the fair value of net assets amounted to $0.8 million. During
the fourth quarter of 2004, Delta Galil decided to close the logistic center,
and accrued $1.5 million for restructuring expenses. During the first half of
2005 the logistic center was closed.

    ACQUISITION OF INNER SECRETS

        In 2001, Delta Galil , through its wholly owned subsidiary, Wundies
Industries Inc., completed the acquisition of all of the outstanding shares of
Inner Secrets Inc., a New Jersey corporation, and its subsidiaries. Inner
Secrets manufactures and markets private label brassieres and other ladies'
intimate apparel.

        As consideration for all of the share capital of Inner Secrets, Delta
Galil paid $48.7 million in cash, of which $14.4 million was for retirement of
bank and other debt, and $5.9 million in ordinary shares, comprised of 454,020
ordinary shares valued at $13.05 per ordinary share. The goodwill attributed to
the purchase of Inner Secrets amounted to approximately $24.3 million.

        In April 2003, Delta Galil USA paid $2.0 million as an adjustment to the
purchase price. A provision was made in 2002 for this payment, which was
allocated as part of the goodwill.

        In accordance with the acquisition agreement, and as a result of the
performance of Delta Galil USA in 2003 , Delta Galil paid the selling
shareholders of Inner Secrets additional performance payment of $6.7 million
during April 2004. This payment was allocated as part of the goodwill.

    SALE OF INTERESTS IN ARAD TOWELS AND STANDARD TEXTILE (EUROPE) LTD.

        On December 31, 1998, Delta Galil sold its 40.7% interest in Arad Towels
Ltd. to Standard Textile (Europe) Ltd. ("STE") for $12.4 million in cash and a
15% interest in STE. The capital gain on this transaction totaled $ 5.2 million,
of which $3.1 million was applied to income in 1998 and the balance of $2.1
million was applied to income in 1999.

        On August 6, 2000 Delta Galil entered into an agreement with S.T.I.
Industries and Technologies Ltd., S.T.I.A. Holdings Ltd. and STE , for the sale
of its 15% holdings in STE for $9 million. The transaction is to be carried out
in four installments, subject to adjustments as stipulated in the agreement. The
first installment, 25% of the shares held by Delta Galil, was transferred to the
buyers upon the signing of the agreement, for $2.25 million. The second
installment was transferred on January 15, 2002, for consideration of $2.48
million, the third installment was transferred on January 15, 2003 for
consideration of $2.57 million and the fourth and final installment was
transferred on January 15, 2004 for consideration of $2.64 million. Delta Galil
recognized a capital gain of $0.9 million in 2003 and a capital gain of $1.0
million in 2004 for this transaction.

        STOCK REPURCHASES

        In September 2001 Delta Galil's Board of Directors approved a plan for
the repurchase of up to $3 million of its ordinary shares within the following
12 months. By the end of 2002, Delta Galil completed the repurchase of 378,500
ordinary shares at an average price of $7.9 per share.

        In December 2002, Delta Galil successfully completed a self-tender offer
in which it purchased 565,000 ordinary shares at a price per share of $11.0, for
aggregate consideration of $6.2 million.

        EMPLOYEE STOCK OPTION PLAN

        In October 2002, Delta Galil's Board of Directors approved an employee
stock option plan for the grant, without consideration, of options exercisable
to purchase 1,100,000 ordinary shares. The plan provides for forfeited options
to return to the pool for future grants. In November 2002, the Company granted
1,004,500 options to 97 employees of the group (including 100,000 options
granted to the CEO) at an exercise price of $9.0 per share. In May 2003 Delta
Galil granted an aggregate of 30,000 options to three employees

                                       -5-
<PAGE>

at an exercise price of $10.76. In March 2004, Delta Galil granted 80,000
options to six employees at an exercise price of $15.35 and in August 2004 Delta
Galil granted an additional 30,000 options to one employee at an exercise price
of $12.74. The options granted in May 2003 and in 2004 are subject to the same
terms and conditions as those granted in 2002.

        The options are exercisable over a three-year period, following one year
after the vesting date of the first batch and on the vesting date of the second,
third and fourth batches. All options granted after January 1, 2003 may be
exercised only following the elapse of two years after the end of the year in
which the options were granted.

RESULTS OF OPERATIONS

        The following table sets forth Delta Galil's results of operations
expressed as a percentage of total revenues for the periods indicated:

<TABLE>
<CAPTION>
                                                                     YEAR ENDED DECEMBER 31
                                                               ----------------------------------
                                                                  2002        2003        2004
                                                               ----------  ----------  ----------
<S>                                                              <C>         <C>         <C>
Revenues....................................................     100.0%      100.0%      100.0%
Cost of revenues............................................     (80.1)      (80.0)      (81.5)
                                                               ----------  ----------  ----------
Gross profit................................................      19.9        20.0        18.5
Selling, marketing, general and administrative..............     (14.8)      (14.1)      (15.1)
Restructuring expenses......................................      (0.2)       (0.2)       (0.1)
Gain (loss) on sales of assets and subsidiary shares........       *           0.6         0.1
                                                               ----------  ----------  ----------
Operating income............................................       4.9         6.3         3.4
Financial expenses - net....................................      (1.0)       (0.9)       (1.0)
Other income- net...........................................       0.2         *           0.2
                                                               ----------  ----------  ----------
Income before taxes on income...............................       4.1         5.4         2.6
Taxes on income.............................................      (1.0)       (1.2)       (0.4)
                                                               ----------  ----------  ----------
Income after taxes on income................................       3.1         4.2         2.2
Share in profits (losses) of associated companies - net.....       *          (0.1)       (0.1)
Minority interests- net.....................................      (0.2)       (0.1)       (0.2)
                                                               ----------  ----------  ----------
Net income..................................................       2.9%        4.0%        1.9%
                                                               ==========  ==========  ==========
</TABLE>
--------------------
* Less than 0.1%.

        SEGMENT RESULTS

        We have five principal segments: Delta USA, U.S. Upper Market, Europe,
Socks and Delta Marketing Israel. Delta USA, U.S. Upper Market and Europe
segments are engaged in manufacturing and marketing of intimate apparel to
various customers in the U.S. and European markets. The Socks segment is engaged
in manufacturing and marketing of socks to various customers in the U.S. and
European markets. Delta Marketing Israel is engaged in marketing ladies intimate
apparel, men's underwear and socks to various customers in Israel through retail
and wholesale operations.


                                       -6-
<PAGE>

        The following table sets forth Delta Galil's revenues and operating
results relating to the various segments:

                                    SALES BY SEGMENT
                           ----------------------------------
                                     ($ MILLION)
                           ----------------------------------
                              2002        2003        2004
                              ----        ----        ----
Delta USA(1) ...........    $202.0       $213.2      $186.3
U.S. Upper Market(2)         111.1         88.3       111.9
Europe .................     171.0        177.4       193.8
Socks(3) ...............      83.9         89.4       144.2
Delta Marketing
Israel(3)...............      34.8         37.6        46.5
Adjustments(4)..........     (35.5)       (25.8)      (28.4)
                            ------       ------      ------

Total                       $567.3       $580.1      $654.3
                            ======       ======      ======

        (1)     2004 sales include $3.6 million for Burlen, which was acquired
                in the fourth quarter of 2004.
        (2)     US Upper Market and the textile divisions were merged. Numbers
                included above have been reclassified accordingly.
        (3)     Socks marketing operation in Israel was transferred to the
                managerial responsibility of Delta Marketing Israel. Numbers
                included above have been reclassified accordingly.
        (4)     Adjustments include inter-segment sales and results of hedging
                transactions.

        SALES BY SEGMENT IN 2004 VS. 2003

        The decrease in sales by Delta USA is attributed mainly to a decrease in
sales to Wal-Mart and Target. The increase in sales by the U.S. Upper Market
segment resulted primarily from an increase in sales to Calvin Klein and JC
Penney. The increase in sales by the European segment is attributed to the
strengthening of the pound sterling and the euro against the U.S. dollar as well
as sales to new customers. The increase in sales by the Socks segment is
attributed to the acquisition of European operation of Auburn. The increase in
sales by the Israeli market segment is attributed mainly to different mix of
products and to the opening of new stores.

        SALES BY SEGMENT IN 2003 VS. 2002

        The increase in sales by Delta USA segment resulted primarily from an
increase in sales to existing customers. The decrease in sales by the U.S. Upper
Market segment resulted primarily from Delta Galil's decision to reduce the
number of customers, as well as general weakness in this market, part of which
is reflected in a decrease in sales to Victoria's Secret, this segment's largest
customer. The increase in sales by the European segment is attributed to the
strengthening of the pound sterling and the euro against the U.S. dollar. In
pound sterling and euro terms, sales declined. The increase in sales by the
Socks segment is attributed to the consolidation of Auburn in the fourth quarter
of 2003.

                                       -7-
<PAGE>

                                       OPERATING INCOME (LOSS) BY SEGMENT
                                                  ($ MILLION)
                                          2002        2003        2004
                                          ----        ----        ----
Delta USA..........................      $14.6       $24.8        $5.9
U.S. Upper Market(1)...............       (4.7)       (8.9)       (0.6)
Europe(2)..........................       10.2         4.4         4.9
Socks(3)...........................        8.3         9.0         9.1
Delta Marketing Israel(3)..........       (1.3)        2.4         4.8
Adjustments and Capital Gains(4)...        0.7         5.1        (1.7)
                                         -----       -----       -----

Total                                    $27.8       $36.8       $22.4
                                         =====       =====       =====

        (1)     In the beginning of 2005, US upper market and the textile
                divisions were merged. Numbers included above have been
                reclassified accordingly.
        (2)     Operating profit in 2004 includes restructuring expenses
                relating to the closure of a logistic center in Hungary in the
                amount of $1.5 million, $1.0 million in 2003 for the closure of
                sewing facility in Scotland and in Israel, and $0.7 million in
                2002 for the closure of facilities in Scotland.
        (3)     Socks marketing operation in Israel was transferred to the
                managerial responsibility of Delta Marketing Israel. Numbers
                included above have been reclassified accordingly.
        (4)     Adjustments include mainly cancellation of unrealized profits
                and hedging transactions results. In 2003 adjustments include
                mainly capital gain from the sale of the real estate in London.

        OPERATING INCOME (LOSS) BY SEGMENT IN 2004 VS. 2003

        The decrease in the operating income of Delta USA was due primarily to a
decrease in sales and to losses from operations with certain customers. The
decrease in the operating loss in the U.S. Upper Market segment is primarily due
to an increase in sales volumes. The erosion in the operating margin in the
Socks segment is attributed to the acquisition of Auburn, which contributed to
an increase in sales, which had no substantial operating income. The increase in
operating income in Delta Marketing Israel is attributed to the improvement of
procurement sources and to increased in sales volumes.

        OPERATING INCOME (LOSS) BY SEGMENT IN 2003 VS. 2002

        The increase in operating income in Delta USA resulted from an increase
in sales in 2003, as well as the write-off of doubtful accounts receivable from
K-mart in 2002, which reduced operating income in 2002. The decrease in
operating income in the U.S. Upper Market segment is primarily due to reduced
sales volumes. The reduction in operating income was less than the reduction in
sales due to the change in the mix of customers, towards sales to more
profitable customers. The decline in operating income of the European segment,
despite the favorable exchange rates, is due primarily to costs associated with
the closure of a manufacturing and warehousing center in Scotland and the
integration of a new logistics center in Hungary that replaced part of the
Scottish operation. The increase in operating income of the Socks segment
resulted primarily from the strengthening of the pound sterling and the euro
against the U.S. dollar. The Adjustments in 2003 include mainly a capital gain
from the sale of real estate in London.

        YEAR ENDED DECEMBER 31, 2004 COMPARED WITH YEAR ENDED DECEMBER 31, 2003
- CONSOLIDATED

        REVENUES. Total revenues in 2004 increased by 12.8% and amounted to
$654.3 million compared to $580.1 million in 2003. Excluding sales of Burlen,
which was acquired in the fourth quarter of 2004, and Auburn, which was acquired
in the fourth quarter of 2003, sales from continuing operations increased by
4.5%, reaching $598.7 million in 2004 compared to $573.0 million in 2003. The
increase in revenues from continuing operations is due mainly to the
strengthening of the pound sterling and the Euro against the US dollar and to
the increase in sales in the Israeli market.

                                      -8-
<PAGE>

        COST OF REVENUES. Delta Galil's cost of revenues is comprised mainly of
cost of materials, salaries and related expenses, work performed by
subcontractors, depreciation and amortization and the changes in inventories of
finished products and products in process. While costs associated with
depreciation and indirect salaries are generally fixed, cost of materials, work
performed by subcontractors and direct salaries are variable. Cost of revenues
in 2004 increased by 14.9% and amounted to $533.0 million (81.5% of revenues)
compared to $463.9 million (80.0% of revenues) in 2003. Most of the increase in
the cost of revenues is attributed to an increase in sales volume.

        GROSS PROFIT. Gross profit in 2004 increased by 4.3% over 2003 and
totaled $121.2 million (18.5% of revenues), compared to $116.3 million (20.0% of
revenues) in 2003.

        SELLING AND MARKETING EXPENSES. Delta Galil's selling and marketing
expenses are comprised mainly of salaries and related expenses, professional
expenses, packaging, transportation and delivery, advertising, royalties,
depreciation and amortization, commissions and leases. While costs associated
with salaries, professional expenses, depreciation and amortization and leases
are generally fixed, packaging, transportation, delivery, advertising, royalties
and commissions are more variable. Selling and marketing expenses increased by
24.2 % to $ 81.2 million (12.4% of revenues) in 2004 compared to $65.4 million
(11.3% of revenues) in 2003. The increase in selling and marketing expenses is
attributed mainly to the acquisition of Auburn, to a $2.5 million increase in
salaries and related expenses due to the strengthening of the pound sterling and
the NIS versus the dollar, to a $1.4 million increase in lease expenses mainly
due to the strengthening of the pound sterling versus the dollar and to the
increased activity in the Israeli market.

        GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
are comprised mainly of salaries and related expenses, entertainment and travel
expenses, professional fees, doubtful accounts and bad debts, depreciation and
amortization and other office expenses. General and administrative expenses
increased from $16.7 million in 2003 to $17.4 million in 2004. The increase in
general and administrative expenses is attributed mainly to the acquisition of
Auburn.

        CAPITAL GAIN (LOSS) FROM REALIZATION OF FIXED ASSETS. In 2004 Delta
Galil recorded capital gain of $0.9 million mainly from the sale of real estate
in Ireland. In 2003 Delta Galil recorded a $3.9 million capital gain from the
sale of real estate in London, which was offset by $0.3 million of capital loss
from realization of other fixed assets.

        GOODWILL AMORTIZATION. Based on FAS 142, which Delta Galil adopted on
January 1, 2002, goodwill is no longer amortized. Prior to January 1, 2002 Delta
Galil amortized goodwill in equal annual installments usually over a period of
40 years. See "Critical Accounting Policies - Valuation of Intangible
Assets-Goodwill".

        RESTRUCTURING EXPENSES. Restructuring expenses in 2004 related to the
closure of the logistic center in Hungary. In 2003 restructuring expenses
related to the closure of sewing plants in Scotland and in Israel.

        OPERATING INCOME. Operating income in 2004 decreased by 39.1% compared
to 2003 and totaled $22.4 million (3.4% of revenues) compared to $36.8 million
(6.3% of revenues) in 2003. The decrease in the operating profit is primarily
due to losses from operations with certain of Delta USA's customers, and to
losses incurred from the operation of the logistic center in Hungary.

        FINANCIAL EXPENSES - NET. Financial expenses increased by 10.5% to $6.2
million in 2004 from $5.6 million in 2003 mainly due to increased bank loans due
to the acquisition of Auburn and to the increase in the average interest rate.
Financial expenses were composed mainly of interest and exchange differences.

        OTHER INCOME- NET. Other income in 2004 increased by $0.7 million
compared to 2003. In 2004 other income included $1.0 million capital gain from
realization of the investment in an associated company, as described above
"Sales of Arad Towels and Standard Textile (Europe) Ltd.", while in 2003 a
similar capital gain of $0.9 million was offset by the write-off of other
investments.

        TAXES ON INCOME. Income taxes for 2004 were provided for at an effective
tax rate of 16.6% compared to 23.4% in 2003. The decrease in the effective tax
rate in 2004 compared to 2003 is mainly due to a decrease in pre-tax earnings of
subsidiaries that are subject to higher tax rates.

        SHARE IN LOSSES OF ASSOCIATED COMPANIES. Delta Galil's share in losses
of associated companies includes its investment in Edomit Ltd., which is
accounted for by the equity method. In 2004 this share amounted to a loss of
$0.2 million compared to a loss of $0.3 million in 2003.

                                       -9-
<PAGE>

        MINORITY INTEREST- NET. Delta Galil operates sewing facilities in Jordan
through a partially owned subsidiary - Century Wear Corporation (WLL). Minority
interests in profit of this subsidiary and starting April 2003, also 10% of
Delta Elastic Tapes, amounted to $1.4 million in 2004 compared to $0.4 million
in 2003.

        NET INCOME. Net income in 2004 decreased by 45.7% and totaled $12.7
million (1.9% of sales) compared to $23.4 million (4.0% of sales) in 2003.

    YEAR ENDED DECEMBER 31, 2003 COMPARED WITH YEAR ENDED DECEMBER 31, 2002 -
CONSOLIDATED

        REVENUES. Total revenues in 2003 increased by 2.3% and amounted to
$580.1 million compared to $567.3 million in 2002. Sales in 2003 include $7.1
million that resulted from the consolidation of Auburn Hosiery starting in
November. Excluding these sales, the total sales in 2003 increased by 1% and
amounted to $573.0 million, compared to $567.3 million in 2002. Revenues in
North America decreased by 0.8% and amounted to $300.7 million in 2003 compared
to $303.1 million in 2002. The decrease is attributed to a decrease in Delta's
North America sales to specialty and department stores, which dropped 25% in
2003, totaling $75.8 million, compared to $101.1 million in 2002. This decrease
was offset by the revenues from the US mass market, which increased 11.3% in
2003 totaling $224.9 million, compared to $202.0 million in 2002. The increase
in revenues in the U.K. is attributed to the strengthening of the pound sterling
against the US dollar. Revenues from the Israeli market increased by 11.2% from
$38.5 million in 2002 to $42.8 million in 2003. The increase in revenues from
the Israeli market resulted from the increase of Delta Plus retail chain stores
activity reaching 79 stores, improved procurement sources, and the strengthening
of the NIS versus the dollar. Delta Galil's sales to the European market
increased by 9.7% to $48.7 million in 2003 compared to $44.4 million in 2002,
mainly due to the strengthening of the euro versus the US dollar.

        COST OF REVENUES. Cost of revenues in 2003 increased by 2.1% and
amounted to $463.9 million (80.0% of revenues) compared to $454.2 million (80.1%
of revenues) in 2002. While cost of work performed by sub-contractors increased
by 25% compared to 2002, materials consumption and wages and salaries decreased
by 14% and 6% respectively.

        GROSS PROFIT. Gross profit in 2003 increased by 2.8% over 2002 and
totaled $116.3 million (20.0% of revenues), compared to $113.1 million (19.9% of
revenues) in 2002.

        SELLING AND MARKETING EXPENSES. Selling and marketing expenses increased
by 4.3 % to $ 65.4 million (11.3% of revenues) in 2003 compared to $62.7 million
(11.1% of revenues) in 2002. The increase in selling and marketing expenses is
attributed mainly to a $1.8 million increase in salaries and related expenses
due to the strengthening of the pound sterling and the NIS versus the dollar and
$1.0 million increase in lease expenses due to the increase in the number of
stores in the Israeli local retail chain and to the strengthening of the pound
sterling versus the dollar.

        GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
decreased from $21.4 million in 2002 to $16.7 million in 2003. The decrease in
general and administrative expenses is attributed mainly to a decrease in
provision for doubtful accounts receivable, which accounted for $3.9 million of
the decrease.

        CAPITAL GAIN (LOSS) FROM REALIZATION OF FIXED ASSETS. In 2003 Delta
Galil recorded a $3.9 million capital gain from the sale of real estate in
London, which was offset by $0.3 million of capital loss from realization of
other fixed assets, versus a loss of $0.1 million in 2002.

        RESTRUCTURING EXPENSES. Restructuring expenses, which are comprised in
large part of expenses relating to the closure of sewing plants, decreased from
$1.1 million in 2002 to $1.0 million in 2003.

        OPERATING INCOME. Operating income in 2003 increased by 32.6% compared
to 2002 and totaled $36.8 million (6.3% of revenues) compared to $27.8 million
(4.9% of revenues) in 2002. The increase in the operating profit margin is
primarily due to the capital gain from the sale of the real estate in London and
to the decrease in the general and administrative expenses as described above.

        FINANCIAL EXPENSES - NET. Financial expenses increased by 3.3% to $5.6
million in 2003 from $5.5 million in 2002. Financial expenses are comprised
mainly of interest and exchange differences.

                                      -10-
<PAGE>

        OTHER INCOME- NET. Other income in 2003 decreased by $0.7 million
compared to 2002, and consists of a $1.0 million capital gain from realization
of the investment in an associated company, as described above "Sales of Arad
Towels and Standard Textile (Europe) Ltd", offset by $0.7 million impairment of
other investments.

        TAXES ON INCOME. Income taxes for 2003 were provided for at an effective
tax rate of 23.4% compared to 24.8% in 2002. The decrease in the effective tax
rate in 2003 compared to 2002 is mainly due to an increase in pre-tax earnings
of subsidiaries that are subject to lower tax rates.

        SHARE IN PROFITS (LOSSES) OF ASSOCIATED COMPANIES. Delta Galil's share
in profits (losses) of associated companies includes its investment in Edomit
Ltd., which is accounted for by the equity method, and in 2002 also its
investment in STE. In 2003 this share amounted to a loss of $0.3 million in 2003
compared to a profit of $0.2 million in 2002.

        MINORITY INTEREST- NET. Delta Galil operates sewing facilities in Jordan
through a partially owned subsidiary - Century Wear Corporation (WLL). Minority
interests in profit of this subsidiary in 2003 amounted to $0.4 million compared
to $1.0 million in 2002. Starting April 2003, following the sale of 10% of Delta
Galil's holding in Delta Elastic Tapes, minority interest includes income of
$0.1 million relating to this activity.

        NET INCOME. Net income in 2003 increased by 40.4% and totaled $23.4
million (4.0% of sales) compared to $16.6 million (2.9% of sales) in 2002.


CRITICAL ACCOUNTING POLICIES

        To improve your understanding of Delta Galil's financial statements, it
is important to obtain some degree of familiarity with Delta Galil's principal
or significant accounting policies. These policies are described in Note 1 to
the Consolidated Financial Statements listed in Item 18. Delta Galil, in
conjunction with its audit committee and its external auditors, reviews its
financial reporting, disclosure practices and accounting policies annually to
ensure that the financial statements developed, in part, on the basis of these
accounting policies provide complete, accurate and transparent information
concerning the financial condition of Delta Galil. As part of this process,
Delta Galil has reviewed the selection and application of its critical
accounting policies and financial disclosure as at December 31, 2004, and it
believes that the Consolidated Financial Statements listed in Item 18 present
fairly, in all material respects, the consolidated financial position of Delta
Galil as at that date.

        In preparing Delta Galil's financial statements in accordance with GAAP,
Delta Galil's management must often make estimates and assumptions that may
affect the reported amounts of assets, liabilities, revenues, expenses and
related disclosures as at the date of the financial statements and during the
reporting period. Some of those judgments can be subjective and complex, and
consequently actual results may differ from those estimates. However, Delta
Galil believes that, given the facts and circumstances before it at the time of
making the relevant judgments, estimates or assumptions, it is unlikely that
applying any such other reasonable judgment would cause a material adverse
effect on Delta Galil's consolidated results of operations, financial position
or liquidity for the periods presented in the Consolidated Financial Statements
listed in Item 18.

        Delta Galil is also subject to risks and uncertainties that may cause
actual results to differ from estimates and assumptions, such as changes in the
economic and political environment, competition, foreign exchange, taxation and
governmental programs. Certain of these risks, uncertainties and assumptions are
discussed in Item 3 - Risk Factors.

        Delta Galil considers its most significant accounting policies to be
those relating to fixed assets and inventory valuation, both of which, as well
as Delta Galil's accounting policy relating to goodwill valuation are discussed
below.

    FIXED ASSETS VALUATION

        Fixed assets are stated at cost, net of related investment grants.
Depreciation is computed using the straight - line method on the basis of the
estimated useful life of the assets. Due to rapid changes in technology and in
the specifies of the business and due to the materiality of the fixed assets and
depreciation rates on its financial results, Delta Galil considers this to be a
critical issue. On January 1, 2002 Delta Galil

                                      -11-
<PAGE>

adopted FAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets". FAS 144 requires that long-lived assets be held and used by an entity,
be reviewed for impairment and, if necessary, written down to the estimated fair
value, whenever events or changes in circumstances indicate the carrying amount
of assets may not be recoverable through undiscounted future cash flows.

        Delta tests long-lived assets for impairment, in the event an indication
of impairment exists. An impairment loss would be recognized, and the assets
would be written down to their estimated fair values, if the sum of the expected
future cash flows (undiscounted and without interest charges) of the long-lived
assets is less than the carrying amount of such assets.

    INVENTORY VALUATION

        Inventory, which is a material part of Delta Galil's total assets, is
valued at the lower of cost or market value. Cost of raw and packaging materials
and purchased products is determined mainly on a "moving average" basis. Cost of
finished products and products in process is determined as follows: the raw
material and packaging component -is determined mainly on a "moving average"
basis; while labor and overhead is determined on an average basis over the
production period. If actual market prices for finished goods prove less
favorable than those projected by management, additional inventory write-downs
may be required. Inventory is written down for estimated obsolescence based upon
assumptions about future demand and market conditions. Likewise, favorable
future demand and market conditions could positively impact future operating
results if inventory that has been written down is sold.

    VALUATION OF INTANGIBLE ASSETS - GOODWILL

        Goodwill represents the excess of cost of investments in subsidiaries
acquired over the fair value of the net assets at acquisition. Until December
31, 2001, Goodwill was amortized in equal annual installments usually over a
40-year period, the maximum allowed period under U.S. GAAP. As from January 1,
2002, pursuant to FAS 142," Goodwill and Other Intangible Assets," goodwill is
no longer amortized but rather is tested for impairment annually. Delta
completed the transitional impairment review of goodwill on June 30, 2002, as
required by FAS 142. The various reporting units, for which separately
identifiable cash flow information is available, were identified and the fair
values of such reporting units were determined using the net income multiple of
comparable publicly traded companies in the textile industry . Consequently,
Delta has determined that there is no indication of impairment with respect to
goodwill as of January 1, 2002. Delta has selected September 30 as the date on
which it will perform its annual impairment test for indefinite life intangible
assets. As of December 31, 2004, based on the review made by Delta Galil, no
impairment was required.

NEW ACCOUNTING STANDARDS UNDER US GAAP

FAS 123 (revised 2004) Share-based Payment

In December 2004, the Financial Accounting Standards Board ("FASB") issued the
revised Statement of Financial Accounting Standards ("FAS") No. 123, Share-Based
Payment (FAS 123R), which addresses the accounting for share-based payment
transactions in which the company obtains employee services in exchange for (a)
equity instruments of the company or (b) liabilities that are based on the fair
value of the company's equity instruments or that may be settled by the issuance
of such equity instruments .In March 2005, the SEC issued Staff Accounting
Bulletin No. 107 (SAB 107) regarding the SEC's interpretation of FAS 123R.

FAS 123R eliminates the ability to account for employee share-based payment
transactions using APB Opinion No. 25 - "Accounting for Stock Issued to
Employees", and requires instead that such transactions be accounted for using
the grant-date fair value based method. This Statement will be effective for
public companies at the beginning of their next fiscal year that begins after
June 15, 2005 (first quarter of 2006 for the Company). Early adoption of FAS
123R is encouraged. This Statement applies to all awards granted or modified
after the Statement's effective date. In addition, compensation cost for the
unvested portion of previously granted awards that remain outstanding on the
Statement's effective date shall be recognized on or after the effective date,
as the related services are rendered, based on the awards' grant-date fair value
as previously calculated for the pro-forma disclosure under FAS 123.

Delta Galil estimates that there will not be any cumulative effect of adopting
FAS 123R, as of its adoption date by the company (1 January 2006), based on the
awards outstanding as of December 31, 2005. This estimate does not include the
impact of additional awards, which may be granted, or forfeitures, which may
occur subsequent to December 31, 2005 and prior to the adoption of FAS 123R.

Delta Galil expects that upon the adoption of FAS 123R, as of January 1, 2006,
Delta Galil will apply the modified prospective application transition method,
as permitted by the Statement. Under such transition method, upon the adoption
of FAS 123R, Delta Galil's financial statements for periods prior to the
effective date of the Statement will not be restated. Compensation expense for
outstanding awards for which the requisite service had not been rendered as of
the effective date will be recognized over the remaining service period using
the compensation cost calculated for pro-forma disclosure purposes under FAS
123.

Delta Galil does not expect this statement to have a material effect on the
company's financial statements or its result of operations in future periods.

FAS 151 Inventory Costs - an amendment of ARB 43, Chapter 4

In November 2004, the FASB issued FAS No. 151, "Inventory Costs - an Amendment
of ARB 43, Chapter 4" ("FAS 151"). This Statement amends the guidance in ARB No.
43, Chapter 4, "Inventory Pricing", to clarify the accounting for abnormal
amounts of idle facility expense, freight, handling costs, and wasted material.
This Statement requires that those items be recognized as current-period
charges. In addition, this Statement requires that allocation of fixed
production overheads to the costs of conversion be based on the normal capacity
of the production facilities. This Statement will be effective for inventory
costs incurred during fiscal years beginning after June 15, 2005 (January 1,
2006 for the company). Earlier application of FAS 151 is permitted. The
provisions of this Statement shall be applied prospectively. Delta Galil does
not expect this statement to have a material effect on its financial statements,
its results of operations or cash flows.

FAS 154 Accounting Changes and Error Corrections - a replacement of Accounting
Principles Board Opinion ("APB") No. 20 and FASB Statement No. 3.

In June 2005, the Financial Accounting Standards Board issued FAS No. 154,
"Accounting Changes and Error Corrections - a replacement of APB Opinion No. 20
and FASB Statement No. 3". This Statement generally requires retrospective
application to prior periods' financial statements of changes in accounting
principle. Previously, Opinion No. 20 required that most voluntary changes in
accounting principle were recognized by including the cumulative effect of
changing to the new accounting principle in net income of the period of the
change. FAS 154 applies to all voluntary changes in accounting principle. It
also applies to changes required by an accounting pronouncement in the unusual
instance that the pronouncement does not include specific transition provisions.
When a pronouncement includes specific transition provisions, those provisions
should be followed. This Statement shall be effective for accounting changes and
corrections of errors made in fiscal years beginning after December 15, 2005
(January 1, 2006 for the company). Delta Galil does not expect the adoption of
this statement will have a material impact on its results of operations,
financial position or cash flows.

                                      -12-
<PAGE>

FAS 153 In December 2004, the FASB issued FAS No. 153, "Exchanges of
Non-monetary Assets - An Amendment of APB Opinion No. 29" (FAS 153). FAS 153
amends APB Opinion No. 29, "Accounting for Non-monetary Transactions" (Opinion
29). The amendments made by FAS 153 are based on the principle that exchanges of
non-monetary assets should be measured based on the fair value of the assets
exchanged. Further, the amendments eliminate the exception for non-monetary
exchanges of similar productive assets and replace it with a general exception
for exchanges of non-monetary assets that do not have commercial substance. The
provisions in FAS 153 are effective for non-monetary asset exchanges occurring
in fiscal periods beginning after June 15, 2005 (July 1, 2005 for the Company).
Early application of the FAS 153 is permitted. The provisions of this Statement
shall be applied prospectively. Delta Galil does not expect the adoption of FAS
153 to have a material effect on its financial statements or its results of
operations.

FAS 155

In February 2006, the FASB issued FAS 155, accounting for certain Hybrid
Financial Instruments, an amendment of FASB statements No.133 and 140. This
statement permits fair value measurement for any hybrid financial instrument
that contains an embedded derivative that otherwise would require bifurcation.
This statement is effective for all financial instruments acquired or issued
after the beginning of an entity's first fiscal year that begins after September
15, 2006. Earlier adoption is permitted as of the beginning of an entity's
fiscal year, provided that no interim period financial statements have been
issued for the financial year. Management is currently evaluating the impact of
this statement, if any, on the Delta Galil's financial statements or its results
of operations.

FAS 156

In March 2006 the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Reporting No. 156 ("SFAS 156"). This Statement amends
FASB Statement No. 140, Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities, with respect to the accounting for
separately recognized servicing assets and servicing liabilities, and is
effective for financial periods beginning after September 15, 2006. Delta Galil
does not currently engage in transfers of financial fixed assets and accordingly
does not anticipate that the adoption of this statement will have a material
impact on its financial statements.


                                      -13-

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

        Delta Galil finances its operations mainly from cash flow from
operations, supplemented, if needed, by revolving short-term bank loans and
long-term bank loans. Delta Galil repays short-term bank loans if the cash flow
from operations exceeds the cash needs for operations and investment.

        Following is a breakdown of Delta Galil's cash flows for the last three
years in US $ millions:

<TABLE>
<CAPTION>
                                                                      YEAR ENDED DECEMBER 31
                                                               ------------------------------------
                                                                  2002         2003         2004
                                                               ----------   ----------   ----------
                                                                                         (RESTATED)
                                                                                         ----------
<S>                                                            <C>          <C>          <C>
Net cash flow provided by operating activities *.............    $26.3        $42.9        $22.4
Net cash flow used in investing activities **................    (19.7)       (18.4)       (68.9)
Net cash flow provided by financing activities (excluding
dividends to shareholders and cost of acquisition of
treasury shares).............................................     10.5        (11.8)        59.1
Dividends to shareholders....................................     (7.0)        (9.5)        (8.3)
Cost of acquisition of treasury shares.......................     (8.4)           -            -
Translation differences on cash equivalents of foreign.......                                0.1
currency consolidated subsidiary.............................        -            -
                                                               ----------   ----------   ----------
Increase in cash and cash equivalents........................     $1.7         $3.2         $4.4
                                                               ==========   ==========   ==========
</TABLE>

        * Net cash provided by operating activities has been decreased by $ 4.8
million due to a correction of an error in classification of payments made in
2004 relating to restructuring expenses recorded as part of the acquisition of
Auburn Hosiery Mills (see note 1A3 of the Notes to the Consolidated Financial
Statements).

        ** Net cash used in investing activities has been increased by $4,800
thousand due to the correction of an error in classification of payments made in
the year 2004, relating to restructuring expenses recorded as part of the
acquisition of Auburn Hosiery Mills (see note 1A3 of the Notes to the
Consolidated Financial Statements).

        In 2002, 2003 and 2004 Delta Galil generated excess cash flow from
operations of $26.3 million, $42.9 million and $22.4 million respectively. The
decrease in net cash flow provided by operating activities from $42.9 million in
2003 to $22.4 million in 2004 is mainly attributed to the decrease in net
income. The increase in the net cash flow used in investing activities is mainly
attributed to the acquisition of Burlen in the fourth quarter of 2004. Net cash
flow used in financing activities in 2004 amounted to $59.1 million while in
2003 the net cash flow provided by financing activities amounted to $11.8
million. The decrease in cash flow used in financing activities is attributed
mainly to the increase in bank debt in connection with the acquisition of
Burlen.

    DEBT

        Set forth in the table below are Delta Galil's bank debt for the last
three years in US $ millions:

<TABLE>
<CAPTION>
                                                            YEAR ENDED DECEMBER 31
                                                           2002      2003       2004
                                                           ----      ----       ----
<S>                                                      <C>        <C>        <C>
SHORT-TERM:
    Bank loans.......................................     $96.4      $94.5      $55.6
    Current maturities of long-term loans ...........      10.3       10.4       27.9
                                                        --------   --------   --------
       Total Short-term..............................     106.7      104.9       83.5
                                                        --------   --------   --------
LONG-TERM:
       Total Long-term bank loans....................      23.0       13.6       98.4
                                                        --------   --------   --------
       Total Debt....................................    $129.7     $118.5     $181.9
                                                        ========   ========   ========
</TABLE>

        Delta Galil has incurred bank debt mainly for acquisitions, working
capital, capital expenditures and general corporate purposes. Delta Galil's bank
loans bear interest at annual variable rates ranging from approximately 3.8% to
5.5% (mainly 3.8%) and are secured by liens on Delta Galil's assets. Delta
Galil's bank loans are issued under secured bank lines of credit of up to $332.4
million of which, as of December 31, 2004, Delta Galil had $150.5 million
available for additional borrowings under the same prevailing rates.

        Delta Galil's bank lines of credit permit either short-term or long-term
borrowings. All of Delta Galil's short-term loans have maturities of up to three
months. Part of Delta Galil's borrowings is for shorter periods in order to
maintain cash management flexibility. Long-term bank loans mature in periods up
to December 2009.

        Delta Galil USA Inc. is a party to a credit agreement, which was amended
as of December 2004, with Bank Leumi USA and Bank Hapoalim B.M. Borrowings under
the credit agreement are secured by substantially all of the assets of Delta
Galil USA Inc. The credit agreement provides for up to $130 million in loans of
which $70 million are term loans and the remainder is revolving credit. The
principal of the term loans are payable in 20 equal quarterly installment of
approximately $3.5 million each until December 1,

                                      -14-
<PAGE>

2009. As of December 31, 2004 $15.2 million of this credit line was unutilized.
Under this agreement Delta Galil USA is obliged to preserve certain financial
covenants.

    WORKING CAPITAL AND CAPITAL EXPENDITURES

        Working capital at December 31, 2004 was $127.4 million, compared to
$56.6 million at December 31, 2003. The increase is attributed to the
acquisition of Burlen and to the decrease in short-term loans. Delta Galil
believes that its working capital is sufficient for its present requirements.
Delta Galil has no material commitment for capital expenditures, but is
currently constructing a production facility in China in which it expects to
invest approximately $5.0 million in 2005.

        Set forth below are our contractual obligations and other commercial
commitments as of December 31, 2004:

<TABLE>
<CAPTION>
                                                     PAYMENTS DUE BY PERIOD
                                                     ----------------------
                                                 LESS THAN                 MORE THAN 5
CONTRACTUAL OBLIGATIONS                  TOTAL     1 YEAR     2- 4 YEARS      YEARS
                                        -------  ----------  ------------  -----------
                                                      (U.S. $ IN MILLIONS)
<S>                                      <C>        <C>         <C>          <C>
Long-Term Debt (1)...............        $137.9     $32.1        $82.8        $23.0
Capital Lease Obligations........           1.0       0.1          0.2          0.7
Operating Leases.................          43.3       7.6         19.1         16.6
Letter of credits and bank
guarantees.......................          32.0      26.5          2.7          2.8
                                         ------     -----       ------       ------
Total Contractual Cash
Obligations......................        $214.2     $66.3       $104.8        $43.1
                                         ======     =====       ======       ======
</TABLE>

(1) Includes expected interest expenses on long-term debt, based on interest
rates in effect as of December 31, 2004.

See Item 11: "Quantitative and Qualitative Disclosures About Market Risk"
regarding obligations related to forward currency contracts.


                                      -15-

<PAGE>

PART II

ITEM 15:        CONTROLS AND PROCEDURES

        Delta Galil's chief executive officer and chief financial officer, after
evaluating the effectiveness of Delta Galil's disclosure controls and procedures
(as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as
amended) as of December 31, 2004, have concluded that, as of such date, Delta
Galil's disclosure controls and procedures were effective. Information required
to be disclosed by us in reports that we file or submit under the Exchange Act
is accumulated and communicated to Delta Galil's management, including Delta
Galil's chief executive officer and chief financial officer, to allow timely
decisions regarding required disclosure and is recorded, processed, summarized
and reported within the periods specified by the SEC's rules and forms.

        There were no changes in Delta Galil's internal controls over financial
reporting identified with the evaluation thereof that occurred during the period
covered by this annual report that have materially affected, or are reasonably
likely to materially affect, Delta Galil's internal control over financial
reporting.

PART III

ITEM 17:        FINANCIAL STATEMENTS

        Not applicable


ITEM 18:        FINANCIAL STATEMENTS

        The Consolidated Financial Statements and related notes thereto required
by this item are contained on pages F-1 through F-54 of Amendment No. 1.


                                      -16-
<PAGE>

ITEM 19:        EXHIBITS

(A)     INDEX TO CONSOLIDATED FINANCIAL STATEMENTS                          PAGE
        ------------------------------------------                          ----
        Report of Independent Registered Public Accounting Firm............ F-2
        Consolidated Statements of Income for the Years Ended
          December 31, 2002, 2003 and 2004................................. F-3
        Consolidated Balance Sheets at December 31, 2002 and 2003.......... F-4
        Consolidated Statements of Changes in Shareholders' Equity for
          the Years Ended December 31, 2002, 2003 and 2004................. F-6
        Consolidated Statements of Cash Flows for the Years Ended
          December 31, 2002,2003 and 2004 (restated)....................... F-7
        Notes to Consolidated Financial Statements......................... F-10
        Reports of Independent Auditors with respect to consolidated
          subsidiaries..................................................... F-56

(B)     EXHIBITS

1.1     Memorandum of Association, as amended**

1.2     Articles of Association**

2.1     Form of Deposit Agreement and ADR*

4.1     Stock Purchase Agreement dated as of December 8, 2004 by and among
        Steven Klein, Kristina Nettesheim, and Gary Beggs, as selling
        shareholders and Delta Galil Industries Ltd. and Delta Galil USA Inc. as
        Purchaser relating to the acquisition of Burlen Corp. + ******

4.2     Second Amended and Related Credit and Security Agreement dated as of
        December 9, 2004 by and among Delta Galil USA Inc., as Borrower; Bank
        Leumi USA and Bank Hapoalim B.M., as Lenders and Bank Leumi USA, as
        Agent. ******

4.3     Agreement for Purchase and Sale of Stock of Auburn Hosiery Mills, Inc.
        dated October 30, 2003, by and among Delta Galil USA Inc., Delta Galil
        Industries Ltd., Delta Galil Holland B.V., CGW Holdings, Inc., GCI
        Spainco, S.L. and Kellwood Company ****

4.4     Option Plan to 13 employees of Delta Galil and/or its subsidiaries*

4.5     Option Plan to Arnon Tiberg*

4.6     Option Plan to 70 employees of Delta Galil and/or its subsidiaries***

4.7     Delta Galil Industries Ltd. 2002 Share Option Plan*****

4.8     Form of Indemnification Undertaking******

8.1     List of subsidiaries ******

12.1    Section 302 Certification of Dov Lautman

12.2    Section 302 Certification of Yossi Hajaj

13.1    Section 906 Certification of Dov Lautman

13.2    Section 906 Certification of Yossi Hajaj

14.1    Consent of Kesselman & Kesselman++

14.2    Consent of Baker Tilly++

14.3    Consents of Allied for Accounting & Auditing, Member Firm of Ernst &
        Young Global++

------------------------------------
* Previously filed as an exhibit to Delta Galil's Registration Statement on Form
F-1 (Registration No. 333-10062) filed with the Securities and Exchange
Commission on February 26, 1999 and incorporated herein by reference.
** Previously filed as an exhibit to Delta Galil's Annual Report on Form 20-F
(File No.0-30020) filed with the Securities and Exchange Commission on June 8,
2001 and incorporated herein by reference


                                      -17-
<PAGE>

*** Previously filed as an exhibit to Delta Galil's Registration Statement on
Form S-8 (Registration No. 333-12608) filed with the Securities and Exchange
Commission on September 26, 2000 and incorporated herein by reference.
**** Previously filed as an exhibit to Delta Galil's Annual Report on Form 20-F
(File No. 0-30020) filed with the Securities and Exchange Commission on June 23,
2004 and incorporated herein by reference.
***** Previously filed as an exhibit to Delta Galil's Registration Statement on
Form S-8 (Registration No. 353-102247) filed with the Securities and Exchange
Commission on December 30, 2002 and incorporated herein by reference.
****** Previously filed as an exhibit to Delta Galil's Annual Report on Form
20-F (File No. 0-30020) filed with the Securities and Exchange Commission on
June 26, 2003 and incorporated herein by reference.
******* Previously filed as an exhibit to Delta Galil's Annual Report on Form
20-F (File No. 0-30020) filed with the Securities and Exchange Commission on
June 27, 2005 and incorporated herein by reference.

++Previously filed as an Exhibit to Amendment No. 1 to Delta Galil's Annual
Report on Form 20-F/A (Filed No. 0-30020) filed with the Securities and Exchange
Commission on April 12, 2006.
+Portions of this exhibit have been omitted and have been filed separately with
the secretary of the Securities and Exchange Commission pursuant to a
confidential treatment request.


                                      -18-
<PAGE>

                                    SIGNATURE

        The registrant hereby certifies that it meets all of the requirements
for filing on Form 20-F/A and that it has duly caused and authorized the
undersigned to sign this annual report on its behalf.




                                        DELTA GALIL INDUSTRIES LTD.


                                        By: Yossi Hajaj
                                            -----------
                                        Name:  Yossi Hajaj
                                        Title: Chief Financial Officer


Date:   April 25, 2006




                                      -19-