Gildan Activewear (GIL) 6-K Gildan Activewear Announces Record Fourth Quarter and Full Year Sales and Earnings

Exhibit 99.2

Gildan Activewear Inc.
Consolidated Statements of Earnings
(In thousands of U.S. dollars, except per share data)

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

See accompanying notes to interim consolidated financial statements.

Gildan Activewear Inc.
Consolidated Statements of Cash Flows
(In thousands of U.S. dollars)

	Three months ended						Twelve months ended
	October 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		$	60,251
Adjustments for:
Depreciation and amortization		7,202			6,577			25,615			22,275
Future income taxes		2,119			1,166			176			2,947
(Gain) loss on disposal and writedown of fixed assets		(1,273	)		855			7,373			1,949
Stock-based compensation expense		469			178			1,050			477
Other		1,967			1,146			2,586			586
		39,681			26,740			122,843			88,485
Net 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	)		440
Accounts payable and accrued liabilities		6,542			7,879			11,979			5,416
Income taxes payable		(406	)		(1,878	)		(6	)		(2,073	)
		48,649			40,727			93,250			58,920
Cash 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			2,664
		8,120			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			581
Net 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			69,340
Cash and cash equivalents, end of period	$	69,802		$	60,671		$	69,802		$	60,671

See accompanying notes to interim consolidated financial statements.

Gildan Activewear Inc.
Consolidated Balance Sheets
(in thousands of U.S. dollars)

	October 2, 2005		October 3, 2004
	(audited)		(audited)
Current assets:
Cash and cash equivalents	$	69,802	$	60,671
Accounts receivable		108,646		85,317
Inventories		134,861		116,615
Prepaid expenses and deposits		4,394		3,243
Future income taxes		10,135		8,149
		327,838		273,995
Fixed assets		260,615		211,693
Assets held for sale		5,027		—
Other assets		4,036		3,127
Total assets	$	597,516	$	488,815
Current liabilities:
Bank indebtedness	$	3,980	$	—
Accounts payable and accrued liabilities		86,843		74,607
Income taxes payable		2,206		1,966
Current portion of long-term debt		19,859		18,610
		112,888		95,183
Long-term debt		27,288		37,979
Future income taxes		31,386		28,058
Non-controlling interest		5,394		—
Shareholders’ equity:
Share capital		84,177		78,170
Contributed surplus		1,596		681
Retained earnings		308,539		222,496
Cumulative translation adjustment		26,248		26,248
		420,560		327,595
Total liabilities and shareholders’ equity	$	597,516	$	488,815

See accompanying notes to interim consolidated financial statements.

Gildan Activewear Inc. — Notes to Interim consolidated financial statements
(tabular amounts in thousands of U.S. dollars, except per share data)

For complete notes to the annual consolidated financial statements, please refer to filings with the various securities regulatory authorities.

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 months
	ended			ended		ended		ended
	Oct. 2, 2005			Oct. 3, 2004		Oct. 2, 2005		Oct. 3, 2004
Net earnings as reported	$	29,197		$	16,818	$	86,043	$	60,251
Adjustments (net of tax)		(793	)		3,184		7,008		6,435
Adjusted net earnings	$	28,404		$	20,002	$	93,051	$	66,686
Diluted E.P.S as reported	$	0.48		$	0.28	$	1.43	$	1.01
Adjustment (net of tax)		(0.01	)		0.05		0.12		0.11
Adjusted 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.