##### 



Gildan Activewear Inc.
Consolidated Statements of Earnings
 Three months ended
    
    
    Twelve months endedOctober 2, 2005
    
    
    October 3, 2004
    
    
    October 2, 2005
    
    
    October 3, 2004(unaudited)
    
    
    (unaudited)
    
    
    (audited)
    
    
    (audited)Sales
    
    $
    180,672
    
    
    $
    145,611
    
    
    $
    653,851
    
    
    $
    533,368Cost of sales
    
    
    122,261
    
    
    
    100,562
    
    
    
    450,570
    
    
    
    378,696Gross profit
    
    
    58,411
    
    
    
    45,049
    
    
    
    203,281
    
    
    
    154,672Selling, general and administrative expenses
    
    
    21,150
    
    
    
    20,721
    
    
    
    74,896
    
    
    
    62,898Special charge (note 2)
    
    
    (1,160
    )
    
    
    
    
    
    
    10,726
    
    
    
    Earnings before the undernoted items
    
    
    38,421
    
    
    
    24,328
    
    
    
    117,659
    
    
    
    91,774Depreciation and amortization
    
    
    7,202
    
    
    
    6,577
    
    
    
    25,615
    
    
    
    22,275Interest expense
    
    
    924
    
    
    
    1,200
    
    
    
    4,615
    
    
    
    6,170Earnings of non-controlling interest
    
    
    (153
    )
    
    
    
    
    
    
    34
    
    
    
    Earnings before income taxes
    
    
    30,448
    
    
    
    16,551
    
    
    
    87,395
    
    
    
    63,329Income tax expense (recovery) (note 3)
    
    
    1,251
    
    
    
    (267
    )
    
    
    1,352
    
    
    
    3,078Net earnings
    
    $
    29,197
    
    
    $
    16,818
    
    
    $
    86,043
    
    
    $
    60,251Basic EPS
    
    $
    0.49
    
    
    $
    0.28
    
    
    $
    1.44
    
    
    $
    1.02Diluted EPS
    
    $
    0.48
    
    
    $
    0.28
    
    
    $
    1.43
    
    
    $
    1.01Weighted average number of shares outstanding (in thousands)Basic
    
    
    59,924
    
    
    
    59,270
    
    
    
    59,691
    
    
    
    59,182Diluted
    
    
    60,414
    
    
    
    59,651
    
    
    
    60,135
    
    
    
    59,671




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##### 



Gildan Activewear Inc.
Consolidated Statements of Cash Flows
 Three months ended
    
    
    Twelve months endedOctober 2, 2005
    
    
    October 3, 2004
    
    
    October 2, 2005
    
    
    October 3, 2004(unaudited)
    
    
    (unaudited)
    
    
    (audited)
    
    
    (audited)Cash flows from operating activities:Net earnings
    
    $
    29,197
    
    
    $
    16,818
    
    
    $
    86,043
    
    
    $
    60,251Adjustments for:Depreciation and amortization
    
    
    7,202
    
    
    
    6,577
    
    
    
    25,615
    
    
    
    22,275Future income taxes
    
    
    2,119
    
    
    
    1,166
    
    
    
    176
    
    
    
    2,947(Gain) loss on disposal and writedown of fixed assets
    
    
    (1,273
    )
    
    
    855
    
    
    
    7,373
    
    
    
    1,949Stock-based compensation expense
    
    
    469
    
    
    
    178
    
    
    
    1,050
    
    
    
    477Other
    
    
    1,967
    
    
    
    1,146
    
    
    
    2,586
    
    
    
    58639,681
    
    
    
    26,740
    
    
    
    122,843
    
    
    
    88,485Net changes in non-cash working capital balances:Accounts receivable
    
    
    3,858
    
    
    
    9,653
    
    
    
    (22,694
    )
    
    
    (20,236
    )Inventories
    
    
    (3,058
    )
    
    
    (3,118
    )
    
    
    (17,790
    )
    
    
    (13,112
    )Prepaid expenses and deposits
    
    
    2,032
    
    
    
    1,451
    
    
    
    (1,082
    )
    
    
    440Accounts payable and accrued liabilities
    
    
    6,542
    
    
    
    7,879
    
    
    
    11,979
    
    
    
    5,416Income taxes payable
    
    
    (406
    )
    
    
    (1,878
    )
    
    
    (6
    )
    
    
    (2,073
    )48,649
    
    
    
    40,727
    
    
    
    93,250
    
    
    
    58,920Cash flows from financing activities:Increase in bank indebtedness
    
    
    3,980
    
    
    
    
    
    
    
    3,980
    
    
    
    Net increase (decrease) in long-term debt
    
    
    3,265
    
    
    
    (484
    )
    
    
    (12,810
    )
    
    
    (17,014
    )Contribution by non-controlling interest
    
    
    
    
    
    
    
    
    
    
    2,500
    
    
    
    Proceeds from the issuance of shares
    
    
    875
    
    
    
    1,094
    
    
    
    5,872
    
    
    
    2,6648,120
    
    
    
    610
    
    
    
    (458
    )
    
    
    (14,350
    )Cash flows from investing activities:Purchase of fixed assets, net of disposals
    
    
    (19,431
    )
    
    
    (17,890
    )
    
    
    (86,124
    )
    
    
    (53,684
    )Proceeds from the sale of assets held for sale
    
    
    1,488
    
    
    
    
    
    
    
    4,087
    
    
    
    Decrease (increase) in other assets
    
    
    122
    
    
    
    54
    
    
    
    (1,811
    )
    
    
    (136
    )(17,821
    )
    
    
    (17,836
    )
    
    
    (83,848
    )
    
    
    (53,820
    )Effect of exchange rate changes on cash
and cash equivalents
    
    
    70
    
    
    
    76
    
    
    
    187
    
    
    
    581Net increase (decrease) in cash and cash equivalents
during the period
    
    
    39,018
    
    
    
    23,577
    
    
    
    9,131
    
    
    
    (8,669
    )Cash and cash equivalents, beginning of period
    
    
    30,784
    
    
    
    37,094
    
    
    
    60,671
    
    
    
    69,340Cash and cash equivalents, end of period
    
    $
    69,802
    
    
    $
    60,671
    
    
    $
    69,802
    
    
    $
    60,671




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##### 



Gildan Activewear Inc.
Consolidated Balance Sheets
 October 2, 2005
    
    
    October 3, 2004(audited)
    
    
    (audited)Current assets:Cash and cash equivalents
    
    $
    69,802
    
    
    $
    60,671Accounts receivable
    
    
    108,646
    
    
    
    85,317Inventories
    
    
    134,861
    
    
    
    116,615Prepaid expenses and deposits
    
    
    4,394
    
    
    
    3,243Future income taxes
    
    
    10,135
    
    
    
    8,149327,838
    
    
    
    273,995Fixed assets
    
    
    260,615
    
    
    
    211,693Assets held for sale
    
    
    5,027
    
    
    
    Other assets
    
    
    4,036
    
    
    
    3,127Total assets
    
    $
    597,516
    
    
    $
    488,815Current liabilities:Bank indebtedness
    
    $
    3,980
    
    
    $
    Accounts payable and accrued liabilities
    
    
    86,843
    
    
    
    74,607Income taxes payable
    
    
    2,206
    
    
    
    1,966Current portion of long-term debt
    
    
    19,859
    
    
    
    18,610112,888
    
    
    
    95,183Long-term debt
    
    
    27,288
    
    
    
    37,979Future income taxes
    
    
    31,386
    
    
    
    28,058Non-controlling interest
    
    
    5,394
    
    
    
    Shareholders equity:Share capital
    
    
    84,177
    
    
    
    78,170Contributed surplus
    
    
    1,596
    
    
    
    681Retained earnings
    
    
    308,539
    
    
    
    222,496Cumulative translation adjustment
    
    
    26,248
    
    
    
    26,248420,560
    
    
    
    327,595Total liabilities and shareholders equity
    
    $
    597,516
    
    
    $
    488,815




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##### 



Gildan Activewear Inc.  Notes to Interim consolidated financial statements
  1.
    
    The October 2, 2005 consolidated financial statements include the consolidation of
CanAm Yarns, LLC (formerly Cedartown Manufacturing LLC), the Companys 50% owned
joint-venture with Frontier Spinning Mills, Inc. Prior to fiscal 2005, the Company
accounted for its investment in CanAm Yarns, LLC (CanAm) using the proportionate
consolidation method. The consolidation of CanAm at October 4, 2004, the beginning of
Gildans 2005 fiscal year, increased total assets by $7.9 million and total liabilities by
$5.0 million, while creating a non-controlling interest of $2.9 million. Under generally
accepted accounting principles, the application of either the consolidation or the
proportionate consolidation method of accounting for equity interests results in the same
net earnings inclusion, and accordingly the Companys net earnings were not affected by
this change.2.
    
    During the second quarter of fiscal 2005, the Company closed its two Canadian
yarn-spinning operations. A major portion of the equipment was transferred to a new
yarn-spinning facility in Clarkton, North Carolina, which is operated by the Companys
joint-venture with Frontier Spinning Mills, Inc. For the twelve months ended October 2,
2005 the Company reported closure costs of $7.0 million after tax, or $0.12 per share,
which consist mainly of a writedown to their estimated fair value of assets held for sale,
as well as severance costs. In the fourth quarter of fiscal 2005 the Company recognized a
gain of $0.8 million after tax, or $0.01 per share, due to proceeds exceeding estimates on
assets held for sale.3.
    
    The income tax expense for the twelve months ended October 2, 2005 included the income
tax recovery arising from the special charge for the closure of the Canadian yarn-spinning
operations in the second quarter of the fiscal year. Excluding the impact of the income
tax recovery due to the closure costs, the income tax provision for twelve months ended
October 2, 2005, was $5.1 million, resulting in an income tax rate of 5.2%. In the fourth
quarter of fiscal 2004, the special charge for the Companys contractual obligation to H.
Greg Chamandy resulted in the recognition of a recovery of income taxes at the higher
Canadian tax rates. The tax rate for fiscal 2004, excluding the impact of the charge for
H. Greg Chamandy and the impact of the change in functional currency on cost of sales, was
6.3%.4.
    
    Adjusted net earnings and adjusted diluted E.P.S.
 (unaudited)
    
    
    (unaudited)
    
    
    (audited)
    
    
    (audited)Three months
    
    
    Three months
    
    
    Twelve months
    
    
    Twelve monthsended
    
    
    ended
    
    
    ended
    
    
    endedOct. 2, 2005
    
    
    Oct. 3, 2004
    
    
    Oct. 2, 2005
    
    
    Oct. 3, 2004Net earnings as reported
    
    $
    29,197
    
    
    $
    16,818
    
    
    $
    86,043
    
    
    $
    60,251Adjustments (net of tax)
    
    
    (793
    )
    
    
    3,184
    
    
    
    7,008
    
    
    
    6,435Adjusted net earnings
    
    $
    28,404
    
    
    $
    20,002
    
    
    $
    93,051
    
    
    $
    66,686Diluted E.P.S as reported
    
    $
    0.48
    
    
    $
    0.28
    
    
    $
    1.43
    
    
    $
    1.01Adjustment (net of tax)
    
    
    (0.01
    )
    
    
    0.05
    
    
    
    0.12
    
    
    
    0.11Adjusted diluted E.P.S.
    
    $
    0.47
    
    
    $
    0.33
    
    
    $
    1.55
    
    
    $
    1.12
 The adjustments for fiscal 2005 relate to the closure of the Canadian yarn-spinning
operations in the second quarter of fiscal 2005, as described in note 2 above. The
adjustment for the three months ended October 3, 2004 relates to a charge of $3.2 million,
net of taxes, to satisfy the Companys contractual commitments to H. Greg Chamandy, former
Chairman and Co-Chief Executive Officer. The adjustment for the twelve month period ended
October 3, 2004 relates to the impact of the functional currency change on cost of sales as
a result of revaluing opening inventories which were consumed in the first half of fiscal
2004 and the charge of $3.2 million, net of taxes, to satisfy the Companys contractual
commitments to H. Greg Chamandy.5.
    
    Certain comparative figures have been reclassified in order to conform to the current
years presentation.