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<SEC-DOCUMENT>0001204459-06-001186.txt : 20061222
<SEC-HEADER>0001204459-06-001186.hdr.sgml : 20061222
<ACCEPTANCE-DATETIME>20061222134435
ACCESSION NUMBER:		0001204459-06-001186
CONFORMED SUBMISSION TYPE:	40-F
PUBLIC DOCUMENT COUNT:		19
CONFORMED PERIOD OF REPORT:	20061001
FILED AS OF DATE:		20061222
DATE AS OF CHANGE:		20061222

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			GILDAN ACTIVEWEAR INC
		CENTRAL INDEX KEY:			0001061894
		STANDARD INDUSTRIAL CLASSIFICATION:	APPAREL & OTHER FINISHED PRODS OF FABRICS & SIMILAR MATERIAL [2300]
		IRS NUMBER:				000000000
		FISCAL YEAR END:			1003

	FILING VALUES:
		FORM TYPE:		40-F
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-14830
		FILM NUMBER:		061296314

	BUSINESS ADDRESS:	
		STREET 1:		725 MONTEE DE LIESSE
		STREET 2:		VILLE SAINT LAURENT
		CITY:			QUEBEC CANADA
		STATE:			A8
		ZIP:			00000
		BUSINESS PHONE:		5147352023

	MAIL ADDRESS:	
		STREET 1:		725 MONTEE DE LIESSE
		STREET 2:		ST LAURENT QUE
		CITY:			CANADA
		STATE:			A8
		ZIP:			00000
</SEC-HEADER>
<DOCUMENT>
<TYPE>40-F
<SEQUENCE>1
<FILENAME>gildanf40f.htm
<DESCRIPTION>40-F
<TEXT>
<html>

<head>

<title>Gildan Activewear Inc.: Form 40-F - Prepared by TNT Filings Inc.</title>

</head>

<body>

<b><font FACE="Times New Roman PS" SIZE="2"><hr color="#000000" size="5"></font>
<font FACE="Times New Roman PS" size="5">
<p align="center">SECURITIES AND EXCHANGE COMMISSION <br>
</font><font FACE="Times New Roman PS" SIZE="2">Washington, D.C. 20549 </p>
</font><font FACE="Times New Roman PS" size="5">
<p align="center">FORM 40-F </p>
</font></b>
<table class="MsoNormalTable" border="0" cellspacing="0" cellpadding="0" style="border-collapse: collapse" width="100%">
  <tr>
    <td valign="top" style="width:105;padding-left:5.4pt; padding-right:5.4pt; padding-top:0in; padding-bottom:0in" align="center">
    <p class="MsoNormal">
    <font style="font-size: 14.0pt; font-family: Wingdings">o</font></td>
    <td valign="top" style="width:851;padding-left:5.4pt; padding-right:5.4pt; padding-top:0in; padding-bottom:0in">
    <p class="MsoNormal"><font style="font-size:10.0pt">Registration statement
    pursuant to Section&nbsp;12 of the Securities Exchange Act of 1934</font></td>
  </tr>
  <tr>
    <td colspan="2" valign="top" style="width:970;padding-left:5.4pt; padding-right:5.4pt; padding-top:0in; padding-bottom:0in" align="center">
    &nbsp;</td>
  </tr>
  <tr>
    <td colspan="2" valign="top" style="width:970;padding-left:5.4pt; padding-right:5.4pt; padding-top:0in; padding-bottom:0in" align="center">
    <p class="Reline" style="margin-bottom:0in;margin-bottom:.0001pt" align="center">
    <font style="font-size: 10.0pt">or</font></td>
  </tr>
  <tr>
    <td valign="top" style="width:105;padding-left:5.4pt; padding-right:5.4pt; padding-top:0in; padding-bottom:0in" align="center">
    &nbsp;</td>
    <td valign="top" style="width:851;padding-left:5.4pt; padding-right:5.4pt; padding-top:0in; padding-bottom:0in">
    &nbsp;</td>
  </tr>
  <tr>
    <td valign="top" style="width:105;padding-left:5.4pt; padding-right:5.4pt; padding-top:0in; padding-bottom:0in" align="center">
    <p class="MsoNormal">
    <font style="font-size: 14.0pt; font-family: Wingdings">&#254;</font></td>
    <td valign="top" style="width:851;padding-left:5.4pt; padding-right:5.4pt; padding-top:0in; padding-bottom:0in">
    <p class="MsoNormal"><font style="font-size:10.0pt">Annual report pursuant
    to Section&nbsp;13(a) or 15(d) of the Securities Exchange Act of 1934</font></td>
  </tr>
</table>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="50%">&nbsp;</td>
    <td WIDTH="50%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="50%"><font FACE="Times New Roman PS" SIZE="2"><b>For Fiscal year
    ended: October 1, 2006</b></font></td>
    <td WIDTH="50%"><font FACE="Times New Roman PS" SIZE="2"><b>
    <p align="right">Commission File number: 01-14830</b></font></td>
  </tr>
</table>
<font FACE="Times New Roman" size="5"><b>
<p align="center">GILDAN ACTIVEWEAR INC. <br>
</b></font><font FACE="Times New Roman" SIZE="2"><i>(Exact name of registrant as
specified in its charter) </p>
</i><b>
<p align="center">Qu&#233;bec, Canada <br>
</b><i>(Province or other jurisdiction of incorporation or organization) </p>
</i><b>
<p align="center">2200, 2250, 2300 <br>
</b><i>(Primary standard industrial classification code number, if applicable)
</p>
</i><b>
<p align="center">Not Applicable <br>
</b><i>(I.R.S. employer identification number, if applicable) </p>
</i><b>
<p align="center">725 Mont&#233;e de Liesse, Montr&#233;al, Qu&#233;bec, Canada H4T 1P5, (514)
735-2023 <br>
</b><i>(Address and telephone number of registrant's principal executive office)</i>
</p>
<b>
<p align="center">Puglisi &amp; Associates, 850 Library Avenue, Suite 204, P.O. Box
885, Newark, Delaware 19715, (302) 738-6680 <br>
</b>(<i>Name, address and telephone number of agent for service in the United
States</i>) </p>
<p align="center">Securities registered pursuant to Section 12(b) of the Act:
</p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="50%" align="center"><font FACE="Times New Roman PSMT" SIZE="2">
    <u>Title of each class</u></font></td>
    <td WIDTH="50%" align="center"><font FACE="Times New Roman PSMT" SIZE="2">
    <u>Name of each exchange on which registered</u></font></td>
  </tr>
  <tr>
    <td WIDTH="50%" align="center"><font FACE="Times New Roman PS" SIZE="2"><b>
    Common Shares</b></font></td>
    <td WIDTH="50%" align="center"><font FACE="Times New Roman PS" SIZE="2"><b>
    The New York Stock Exchange</b></font></td>
  </tr>
  <tr>
    <td WIDTH="50%" align="center">&nbsp;</td>
    <td WIDTH="50%" align="center"><font FACE="Times New Roman PS" SIZE="2"><b>
    The Toronto Stock Exchange</b></font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
<p align="justify">Securities registered or to be registered pursuant to Section
12(g) of the Act: <b>None</b> Securities for which there is a reporting
obligation pursuant to Section 15(d) of the Act:<b> None </p>
</b>
<p align="center">For annual reports, indicate by check mark the information
filed with this form:</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    <td width="50%" align="center">
    <font style="font-family: Wingdings"><font size="2">&#254;</font></font><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Annual Information Form</font></td>
    <td width="50%" align="center">
    <font style="font-family: Wingdings"><font size="2">&#254;</font></font><font SIZE="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Audited Annual Financial Statements </font></td>
  </tr>
</table>
<p align="center">&nbsp;Indicate the number of outstanding shares of each of the
issuer's classes of capital or common stock as of the close of the period
covered by the annual report: </p>
<b>
<p align="center">Common Shares: <br>
60,113,834 </p>
</b>
<p ALIGN="JUSTIFY">Indicate by check mark whether the registrant by filing the
information contained in this form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934 (the &quot;Exchange Act&quot;). If &quot;Yes&quot; is marked, indicate the file number assigned
to the registrant in connection with such rule. </p>
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    <td width="50%">
    <p align="center"><font FACE="Times New Roman" SIZE="2">Yes&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    </font></td>
    <td width="50%">
    <p align="center"><font FACE="Times New Roman" SIZE="2">&nbsp;No&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <font style="font-family: Wingdings"><font size="2">&#254;</font></font></font></td>
  </tr>
</table>
<p ALIGN="JUSTIFY">Indicate by check mark whether the registrant: (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Exchange Act
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. </p>
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    <td width="50%">
    <p align="center"><font FACE="Times New Roman" SIZE="2">Yes&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <font style="font-family: Wingdings"><font size="2">&#254;</font></font></font></td>
    <td width="50%">
    <p align="center"><font FACE="Times New Roman" SIZE="2">No&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    </font></td>
  </tr>
  <tr>
    <td width="50%">&nbsp;</td>
    <td width="50%">&nbsp;</td>
  </tr>
</table>
</font><hr color="#000000" size="5"><p style="page-break-before: always">
<p align="center"><img border="0" src="gildan3.jpg" width="335" height="94"></p>
<font FACE="Times New Roman PS" SIZE="2"><b>
<p align="center">GILDAN ACTIVEWEAR INC. </p>
<p align="center">ANNUAL INFORMATION FORM </p>
<p align="center">for the year ended October 1, 2006</b></font><font FACE="Times New Roman PSMT" SIZE="2">
</p>
</font>
<p align="center">&nbsp;</p>
<p align="center">&nbsp;</p>
<font FACE="Times New Roman PS" SIZE="2"><b>
<p align="center">December 20, 2006 </p>
<hr color="#000000" size="5"><p style="page-break-before: always"></b></font><b>
<font FACE="Times New Roman PS" SIZE="2">
<p align="center">GILDAN ACTIVEWEAR INC. </p>
<p align="center">TABLE OF CONTENTS </font>
<font FACE="Times New Roman PS" SIZE="4"></p>
</font></b>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="3" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="5%">&nbsp;</td>
    <td WIDTH="85%">&nbsp;</td>
    <td WIDTH="10%" align="right"><font SIZE="2"><b>Page</b></font></td>
  </tr>
  <tr>
    <td WIDTH="5%"><font SIZE="2"><b>1.</b></font></td>
    <td WIDTH="85%"><font SIZE="2"><b>CORPORATE STRUCTURE</b></font></td>
    <td WIDTH="10%" align="right"><font SIZE="2"><b>1</b></font></td>
  </tr>
  <tr>
    <td WIDTH="5%">&nbsp;</td>
    <td WIDTH="85%"><font SIZE="2"><b>1.1</b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    </font><b><font SIZE="2">NAME, ADDRESS AND INCORPORATION</font></b></td>
    <td WIDTH="10%" align="right"><font SIZE="2"><b>1</b></font></td>
  </tr>
  <tr>
    <td WIDTH="5%">&nbsp;</td>
    <td WIDTH="85%"><font SIZE="2"><b>1.2</b> </font><b><font SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;
    INTERCORPORATE RELATIONSHIPS</font></b></td>
    <td WIDTH="10%" align="right"><font SIZE="2"><b>1</b></font></td>
  </tr>
  <tr>
    <td WIDTH="5%"><font SIZE="2"><b>2.</b></font></td>
    <td WIDTH="85%"><font SIZE="2"><b>GENERAL DEVELOPMENT OF THE BUSINESS</b></font></td>
    <td WIDTH="10%" align="right"><font SIZE="2"><b>3</b></font></td>
  </tr>
  <tr>
    <td WIDTH="5%">&nbsp;</td>
    <td WIDTH="85%"><font SIZE="2"><b>2.1</b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    </font><b><font SIZE="2">THREE YEAR HISTORY</font></b></td>
    <td WIDTH="10%" align="right"><font SIZE="2"><b>3</b></font></td>
  </tr>
  <tr>
    <td WIDTH="5%"><font SIZE="2"><b>3.</b></font></td>
    <td WIDTH="85%"><font SIZE="2"><b>DESCRIPTION OF THE BUSINESS</b></font></td>
    <td WIDTH="10%" align="right"><font SIZE="2"><b>5</b></font></td>
  </tr>
  <tr>
    <td WIDTH="5%">&nbsp;</td>
    <td WIDTH="85%"><font SIZE="2"><b>3.1</b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    </font><b><font SIZE="2">BUSINESS OVERVIEW</font></b></td>
    <td WIDTH="10%" align="right"><font SIZE="2"><b>5</b></font></td>
  </tr>
  <tr>
    <td WIDTH="5%">&nbsp;</td>
    <td WIDTH="85%"><font SIZE="2"><b>3.2</b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    </font><b><font SIZE="2">MANUFACTURING OPERATIONS</font></b></td>
    <td WIDTH="10%" align="right"><font SIZE="2"><b>12</b></font></td>
  </tr>
  <tr>
    <td WIDTH="5%">&nbsp;</td>
    <td WIDTH="85%"><font SIZE="2"><b>3.3</b> </font><b><font SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;
    RISK FACTORS</font></b></td>
    <td WIDTH="10%" align="right"><font SIZE="2"><b>14</b></font></td>
  </tr>
  <tr>
    <td WIDTH="5%">&nbsp;</td>
    <td WIDTH="85%"><font SIZE="2"><b>3.4</b> </font><b><font SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;
    EMPLOYEES</font></b></td>
    <td WIDTH="10%" align="right"><font SIZE="2"><b>14</b></font></td>
  </tr>
  <tr>
    <td WIDTH="5%"><font SIZE="2"><b>4.</b></font></td>
    <td WIDTH="85%"><font SIZE="2"><b>DIVIDEND POLICY</b></font></td>
    <td WIDTH="10%" align="right"><font SIZE="2"><b>15</b></font></td>
  </tr>
  <tr>
    <td WIDTH="5%"><font SIZE="2"><b>5.</b></font></td>
    <td WIDTH="85%"><font SIZE="2"><b>CAPITAL STRUCTURE</b></font></td>
    <td WIDTH="10%" align="right"><font SIZE="2"><b>15</b></font></td>
  </tr>
  <tr>
    <td WIDTH="5%"><font SIZE="2"><b>6.</b></font></td>
    <td WIDTH="85%"><font SIZE="2"><b>MARKET FOR SECURITIES</b></font></td>
    <td WIDTH="10%" align="right"><font SIZE="2"><b>16</b></font></td>
  </tr>
  <tr>
    <td WIDTH="5%"><font SIZE="2"><b>7.</b></font></td>
    <td WIDTH="85%"><font SIZE="2"><b>DIRECTORS AND OFFICERS</b></font></td>
    <td WIDTH="10%" align="right"><font SIZE="2"><b>17</b></font></td>
  </tr>
  <tr>
    <td WIDTH="5%"><font SIZE="2"><b>8.</b></font></td>
    <td WIDTH="85%"><font SIZE="2"><b>AUDIT COMMITTEE DISCLOSURE</b></font></td>
    <td WIDTH="10%" align="right"><font SIZE="2"><b>20</b></font></td>
  </tr>
  <tr>
    <td WIDTH="5%"><font SIZE="2"><b>9.</b></font></td>
    <td WIDTH="85%"><font SIZE="2"><b>LEGAL PROCEEDINGS</b></font></td>
    <td WIDTH="10%" align="right"><font SIZE="2"><b>21</b></font></td>
  </tr>
  <tr>
    <td WIDTH="5%"><font SIZE="2"><b>10.</b></font></td>
    <td WIDTH="85%"><font SIZE="2"><b>TRANSFER AGENT AND REGISTRAR</b></font></td>
    <td WIDTH="10%" align="right"><font SIZE="2"><b>21</b></font></td>
  </tr>
  <tr>
    <td WIDTH="5%"><font SIZE="2"><b>11.</b></font></td>
    <td WIDTH="85%"><font SIZE="2"><b>MATERIAL CONTRACTS</b></font></td>
    <td WIDTH="10%" align="right"><font SIZE="2"><b>21</b></font></td>
  </tr>
  <tr>
    <td WIDTH="5%"><font SIZE="2"><b>12.</b></font></td>
    <td WIDTH="85%"><font SIZE="2"><b>INTERESTS OF EXPERTS</b></font></td>
    <td WIDTH="10%" align="right"><font SIZE="2"><b>22</b></font></td>
  </tr>
  <tr>
    <td WIDTH="5%"><font SIZE="2"><b>13.</b></font></td>
    <td WIDTH="85%"><font SIZE="2"><b>FORWARD &#150; LOOKING INFORMATION</b></font></td>
    <td WIDTH="10%" align="right"><font SIZE="2"><b>22</b></font></td>
  </tr>
  <tr>
    <td WIDTH="5%"><font SIZE="2"><b>14.</b></font></td>
    <td WIDTH="85%"><font SIZE="2"><b>ADDITIONAL INFORMATION</b></font></td>
    <td WIDTH="10%" align="right"><font SIZE="2"><b>23</b></font></td>
  </tr>
  <tr>
    <td WIDTH="90%" COLSPAN="2"><font SIZE="2"><b>APPENDIX A - MANDATE OF THE
    AUDIT AND FINANCE COMMITTEE</b></font></td>
    <td WIDTH="10%" align="right"><font SIZE="2"><b>24</b></font></td>
  </tr>
  <tr>
    <td WIDTH="90%" COLSPAN="2">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
  </tr>
</table>
<hr color="#000000" size="5"><p style="page-break-before: always"><i><font FACE="Times New Roman" SIZE="2">
<p align="justify">Except as otherwise indicated, the information contained
herein is given as of December 20,<b> </b>2006, and all dollar amounts set forth
herein are expressed in U.S. dollars. </p>
<p ALIGN="JUSTIFY" style="text-indent: 26">In this annual information form, &quot;<b>Gildan</b>&quot;,
the &quot;<b>Corporation</b>&quot;, or the words &quot;<b>we</b>&quot;, &quot;<b>our</b>&quot; and &quot;<b>us</b>&quot;
refer, depending on the context, either to Gildan Activewear Inc. or to Gildan
Activewear Inc. together with its subsidiaries and joint ventures. </p>
<p align="justify" style="text-indent: 26">The information appearing in the
extracts of the documents listed below and specifically referred to in this
Annual Information Form is incorporated herein by reference: </p>
<p align="justify" style="text-indent: 26">-</font></i><font face="Times New Roman" size="2">
<i>&nbsp;&nbsp;&nbsp; 2006 Annual Report; and </p>
</i>
<p align="justify" style="text-indent: 26">- </font><i>
<font SIZE="2" face="Times New Roman">&nbsp;&nbsp;&nbsp; 2006 Notice of Annual
Meeting of Shareholders and Management Proxy Circular (the &quot;Circular&quot;). </p>
<p align="justify" style="text-indent: 26">The foregoing documents are available
on the SEDAR website at www.sedar.com, on the Edgar website at www.sec.gov and
on the Corporation's website at www.gildan.com. </p>
<p ALIGN="JUSTIFY" style="text-indent: 26">This Annual Information Form contains
certain forward-looking statements, which are based on Gildan's current
expectations, estimates, projections and assumptions and were made by Gildan in
light of its experience and its perception of historical trends. Please refer to
the cautionary statement at page 22 of this Annual Information Form. </p>
</font></i><font FACE="Times New Roman" SIZE="2"><b>
<p align="justify">1.</b> </font><b><font FACE="Times New Roman" SIZE="2">&nbsp;&nbsp;&nbsp;
CORPORATE STRUCTURE </p>
<p align="justify">1.1&nbsp;&nbsp; Name, Address and Incorporation </p>
</font></b><font FACE="Times New Roman" SIZE="2">
<p ALIGN="JUSTIFY" style="text-indent: 26">We were incorporated on May 8, 1984
pursuant to the <i>Canada Business Corporations Act</i> under the name of
Textiles Gildan Inc. At our inception, we focused our activities on the
manufacture of textiles and produced and sold finished fabric as a principal
product-line. In 1992, we redefined our operating strategy and, by 1994, our
operations focused exclusively on the manufacture and sale of activewear for the
wholesale imprinted sportswear market. </p>
<p ALIGN="JUSTIFY" style="text-indent: 26">In March 1995, we changed our name to
Gildan Activewear Inc./Les V&#234;tements de Sports Gildan Inc. In June 1998, in
conjunction with our initial public offering, we filed Articles of Amendment to,
among other things, remove the private company restrictions contained in our
charter documents and change the structure of our authorized share capital. </p>
<p ALIGN="JUSTIFY" style="text-indent: 26">In February 2004, we amended our
Articles in order to provide for the possibility of holding annual meetings of
shareholders at places outside Canada and to change the province or territory in
Canada where our registered office is to be situated from &quot;Montreal Urban
Community (Province of Qu&#233;bec)&quot; to &quot;Province of Qu&#233;bec&quot;. </p>
<p ALIGN="JUSTIFY" style="text-indent: 26">On February 2, 2005, we filed
Articles of Amendment in order to (i) create a new class of Common Shares (the
&quot;Common Shares&quot;), (ii) change each of the issued and outstanding Class A
Subordinate Voting Shares into one of the newly-created Common Shares, (iii)
remove the Class B Multiple Voting Shares and the Class A Subordinate Voting
Shares as well as the rights, privileges, restrictions and conditions attaching
thereto, (iv) change the French form of our name to &quot;Les V&#234;tements de Sport
Gildan Inc.&quot; and (v) decrease the maximum number of directors from fifteen (15)
to ten (10). </p>
<p align="justify" style="text-indent: 26">Our principal executive offices and
registered office are located at 725 Mont&#233;e de Liesse, Montreal, Qu&#233;bec, Canada
H4T 1P5, and our telephone number at that address is (514) 735-2023. </p>
<b>
<p align="justify">1.2&nbsp;&nbsp; Intercorporate Relationships </p>
</b>
<p align="justify" style="margin-left: 26">We have 40 directly or indirectly
wholly-owned subsidiaries, which include the following principal entities: </p>
</font><font FACE="Symbol MT" LANG="JA" SIZE="2">
<ul>
  <li>
  <p ALIGN="JUSTIFY"></font><font FACE="Times New Roman" SIZE="2"><i><b>Gildan
  Activewear SRL</b></i>, a Barbados corporation, which has overall
  responsibility for all of our international sales and related activities, such
  as contract manufacturing, warehousing, distribution, marketing and customer
  service; </li>
</ul>
</font><hr color="#000000" size="5"><p style="page-break-before: always"><font FACE="Symbol MT" LANG="JA" SIZE="2">
<ul>
  <li></font><font FACE="Times New Roman PS" SIZE="2"><i><b>Gildan Activewear
  San Jos&#233;, S.A.</b></i></font><font FACE="Times New Roman PSMT" SIZE="2">, a
  Honduran corporation, which operates a sewing facility in San Pedro Sula,
  Honduras;</font></li>
  <li><font FACE="Times New Roman PS" SIZE="2"><i><b>Gildan Activewear San
  Miguel, S.A.</b></i></font><font FACE="Times New Roman PSMT" SIZE="2">,</font><font FACE="Times New Roman PS" SIZE="2"><i><b>
  </b></i></font><font FACE="Times New Roman PSMT" SIZE="2">a Honduran
  corporation, which operates a sewing facility in Choloma, Honduras;</font></li>
  <li><font FACE="Times New Roman PS" SIZE="2"><i><b>Gildan Activewear San
  Antonio, S.A.</b></i></font><font FACE="Times New Roman PSMT" SIZE="2">, a
  Honduran corporation, which operates a sewing facility in Choloma, Honduras;</font></li>
  <li><font FACE="Times New Roman PS" SIZE="2"><i><b>Gildan Activewear
  Villanueva, S.A.</b></i></font><font FACE="Times New Roman PSMT" SIZE="2">, a
  Honduran corporation, which operates a sewing facility in Villanueva,
  Honduras;</font></li>
  <li><font FACE="Times New Roman PS" SIZE="2"><i><b>Gildan Activewear (Clercine),
  S.A.</b></i></font><font FACE="Times New Roman PSMT" SIZE="2">, a Haitian
  corporation, which operates a sewing facility in Port-au-Prince, Haiti and
  which will operate an integrated cutting, sewing and distribution centre in
  Port-au-Prince, Haiti;</font></li>
  <li><font FACE="Times New Roman PS" SIZE="2"><i><b>Gildan Activewear (Louverture),
  S.A.</b></i></font><font FACE="Times New Roman PSMT" SIZE="2">, a Haitian
  corporation, which operates a sewing facility in Port-au-Prince, Haiti;</font></li>
  <li><font FACE="Times New Roman PS" SIZE="2"><i><b>Gildan Activewear (San
  Marcos), S.A.</b></i></font><font FACE="Times New Roman PSMT" SIZE="2">, a
  Nicaraguan corporation, which operates a sewing facility in San Marcos,
  Nicaragua;</font></li>
  <li><font FACE="Times New Roman PS" SIZE="2"><i><b>Gildan Activewear (Rivas),
  S.A.</b></i></font><font FACE="Times New Roman PSMT" SIZE="2">, a Nicaraguan
  corporation, which operates a sewing facility in Rivas, Nicaragua;</font></li>
  <li><font FACE="Times New Roman PS" SIZE="2"><i><b>Gildan Activewear Casta&#241;os,
  S. de R.L. de C.V.</b></i></font><font FACE="Times New Roman PSMT" SIZE="2">,
  a Mexican corporation, which operates sewing facilities in Casta&#241;os and San
  Buenaventura, Mexico;</font></li>
  <li><font FACE="Times New Roman PS" SIZE="2"><i><b>Gildan Activewear Mexico,
  S.A. de C.V.</b></i></font><font FACE="Times New Roman PSMT" SIZE="2">, a
  Mexican corporation, which is responsible for sales and distribution in
  Mexico;</font></li>
  <li><font FACE="Times New Roman PS" SIZE="2"><i><b>Gildan Activewear Malone,
  Inc.</b></i></font><font FACE="Times New Roman PSMT" SIZE="2">, a New York
  corporation, which operates a cutting facility in Bombay, New York;</font></li>
  <li><font FACE="Times New Roman PS" SIZE="2"><i><b>Gildan Activewear Honduras
  Textiles Company, S.A.</b></i></font><font FACE="Times New Roman PSMT" SIZE="2">,
  a Honduran corporation, which operates our integrated textile manufacturing
  facility in Rio Nance, Honduras;</font></li>
  <li><font FACE="Times New Roman PS" SIZE="2"><i><b>Gildan Activewear (UK)
  Limited</b></i></font><font FACE="Times New Roman PSMT" SIZE="2">, a U.K.
  corporation, which is responsible for sales and distribution for our European
  and Asia/Pacific markets;</font></li>
  <li><font FACE="Times New Roman PS" SIZE="2"><i><b>Gildan Choloma Textiles,
  S.A.</b></i></font><font FACE="Times New Roman PSMT" SIZE="2">, a Honduran
  corporation, which will operate our second integrated textile manufacturing
  facility in Rio Nance, Honduras;</font></li>
  <li><font FACE="Times New Roman PS" SIZE="2"><i><b>Gildan Honduras Hosiery
  Factory, S.A.</b></i></font><font FACE="Times New Roman PSMT" SIZE="2">, a
  Honduran corporation, which will operate our integrated sock manufacturing
  facility in Rio Nance, Honduras;</font></li>
  <li><font FACE="Times New Roman PS" SIZE="2"><i><b>Gildan Activewear (Eden)
  Inc.</b></i></font><font FACE="Times New Roman PSMT" SIZE="2">, a North
  Carolina corporation, which operates our Eden, North Carolina distribution
  facility and which will operate our Martinsville, Virginia distribution
  facility;</font></li>
  <li><font FACE="Times New Roman PS" SIZE="2"><i><b>Gildan Activewear Dominican
  Republic Textile Company Inc.</b></i></font><font FACE="Times New Roman PSMT" SIZE="2">,
  a Barbados corporation, which operates our integrated textile manufacturing
  facility in Bella Vista, Dominican Republic;</font></li>
  <li><font FACE="Times New Roman PS" SIZE="2"><i><b>Gildan Activewear
  Properties (Dominican Republic) Inc.</b></i></font><font FACE="Times New Roman PSMT" SIZE="2">,
  a Barbados corporation, which owns the real estate where our integrated
  textile manufacturing facility is located in Bella Vista, Dominican Republic;
  and</font></li>
  <li><font FACE="Times New Roman PS" SIZE="2"><i><b>Kentucky Derby Hosiery Co.,
  Inc</b>.</i></font><font FACE="Times New Roman PSMT" SIZE="2">, a Kentucky
  corporation, which manufactures and sells socks (&quot;Kentucky Derby&quot;).</li>
</ul>
</font>
<p align="center"><font size="2">2</font></p>
<hr color="#000000" size="5"><p style="page-break-before: always"><font FACE="Times New Roman PSMT" SIZE="2">
<p ALIGN="JUSTIFY">In addition, in the first quarter of fiscal 2004, we formed a
joint venture company with Frontier Spinning Mills, Inc. (&quot;Frontier&quot;), a major
U.S. yarn manufacturer. This company, called CanAm Yarns, LLC (formerly
Cedartown Manufacturing, LLC) (&quot;CanAm&quot;), a Delaware limited liability company,
currently operates yarn-spinning facilities in Cedartown, Georgia and Clarkton,
North Carolina. Gildan and Frontier each own a 50% voting and equity interest in
CanAm. </p>
</font><font FACE="Times New Roman PS" SIZE="2"><b>
<p align="justify">2.</b> </font><b><font FACE="Times New Roman PS" SIZE="2">&nbsp;&nbsp;&nbsp;
GENERAL DEVELOPMENT OF THE BUSINESS </p>
<p align="justify">2.1&nbsp;&nbsp; Three Year History </p>
</font></b><font FACE="Times New Roman PS" SIZE="2">
<p ALIGN="JUSTIFY" style="text-indent: 26">Over the past three fiscal years, we
have continued to gain market share in our core market, the wholesale
distributor channel serving screenprinters in the United States, Canada and
Europe. We are also continuing with the next major stage of our growth strategy,
which is to develop Gildan as a leading consumer brand for high-volume, basic,
frequently replenished, non-fashion apparel, and have accelerated this strategy
with the acquisition of a U.S. sock manufacturer, Kentucky Derby. In addition,
we are continuing to invest in major capacity expansion projects to support our
sales growth objectives and have further developed our vertically-integrated
manufacturing hubs in Central America and the Caribbean Basin. For changes in
our business that are expected to occur during fiscal 2007, see &quot;Description of
the Business Business Overview Strategy&quot;. </p>
<b>
<p align="justify">Retail Market Initiative </p>
</b>
<p ALIGN="JUSTIFY" style="text-indent: 26">In fiscal 2005, as an initial step
into the retail market, we began selling our existing activewear products to
U.S. and Canadian regional retailers for sale without logos or decoration. In
fiscal 2006, we expanded our product-line to include underwear and basic
athletic socks. In addition, in the fourth quarter, we completed the acquisition
of Kentucky Derby, which is intended to enhance and accelerate our strategy to
enter the North American mass-market retail channel. </p>
<p ALIGN="JUSTIFY" style="text-indent: 26">In order to support our retail market
strategy, during fiscal 2006 we completed the construction of a new
state-of-the-art manufacturing facility at our Rio Nance manufacturing complex
in Honduras for the large-scale production of athletic socks and began the
construction of a third state-of-the-art integrated textile manufacturing
facility for the production of fleece. We expect to ramp up our sock facility to
full capacity by the second half of fiscal 2008 and begin production at our
fleece facility in the second half of fiscal 2007. </p>
<b>
<p align="justify">Acquisition of U.S. Sock Manufacturer </p>
</b>
<p ALIGN="justify" style="text-indent: 26">On July 6, 2006, we acquired 100% of
the common shares of Kentucky Derby, a U.S. sock manufacturer based in
Hopkinsville, Kentucky. The total purchase price of $20.4 million was paid in
cash at closing, with the exception of approximately $0.5 million, which was
settled through the issuance of Gildan Common Shares. </p>
<p ALIGN="justify" style="text-indent: 26">Kentucky Derby has annual sales in
excess of $130 million, consisting primarily of private label programs for U.S.
mass-market retailers. We intend to utilize Kentucky Derby's experience and
distribution with mass-market retailers to enhance our platform to develop Gildan as a consumer brand in basic athletic socks, underwear and activewear,
while continuing to focus on serving the needs of our customers in the wholesale
distribution channel and continuing to support Kentucky Derby's private label
programs and brand licenses. </p>
<p ALIGN="justify" style="text-indent: 26">We are currently in the process of
integrating Kentucky Derby and expect to achieve the full benefits of the
integration by the end of fiscal 2008. </p>
<b>
<p align="justify">Restructuring of Canadian and U.S. Textile Manufacturing
Operations </p>
</b>
<p ALIGN="justify" style="text-indent: 26">During fiscal 2006, consistent with
our ongoing strategy to enhance our overall cost structure by maximizing
large-scale production of basic t-shirts at our textile manufacturing operations
in Honduras and the Dominican Republic, we announced the restructuring of our
Canadian manufacturing operations, to take effect in December 2006. This
included the closure of our textile manufacturing facility in Valleyfield,
Qu&#233;bec and the reduction in the operations of our knitting facility in Montreal,
Qu&#233;bec, as well as our cutting facility in Bombay, New York. Also in fiscal
2006, we announced the closure and downsizing of sock manufacturing capacity
located in North Carolina and Virginia, which will be undertaken during the
first half of fiscal 2007. </p>
<p ALIGN="justify" style="text-indent: 26">We continue to significantly increase
our overall capacity through major new expansions in both our Central American
and Caribbean Basin manufacturing hubs and will continue on an ongoing basis to
evaluate the role and global <font FACE="Times New Roman" SIZE="2">
competitiveness of our Canadian textile and U.S. sock manufacturing facilities
within our overall capacity planning to support our growth strategy. </font></p>
<p align="center">3 </p>
<hr color="#000000" size="5"><p style="page-break-before: always"></font><font FACE="Times New Roman" SIZE="2"><b>
<p align="justify">Yarn-Spinning </p>
</b>
<p ALIGN="JUSTIFY" style="text-indent: 26">In the second quarter of fiscal 2005,
we closed our Canadian yarn-spinning plants in Long Sault, Ontario and Montreal,
Qu&#233;bec and transferred our Canadian yarn-spinning activities to the United
States. In order to be globally cost-competitive, we decided to focus on
expanding our textile operations in Central America and the Caribbean Basin and
utilizing our textile operations in Canada to produce shorter-run, higher-value
product-lines. This resulted in lower requirements for commodity yarns from our
Canadian yarn-spinning facilities, with the consequence that they were no longer
able to operate at an efficient level of capacity utilization. </font>
<font FACE="Times New Roman PS" SIZE="2"><b></p>
</b></font><font FACE="Times New Roman" SIZE="2">
<p ALIGN="JUSTIFY" style="text-indent: 26">In the first quarter of fiscal 2004,
we formed CanAm, a 50%/50%-owned joint venture company with Frontier, which
acquired all of the assets of an existing yarn-spinning facility located in
Cedartown, Georgia. The total cost of the equipment and real estate for the
acquisition of the Cedartown facility, including Frontier's 50% share of the
investment, amounted to $12.5 million. In fiscal 2005, concurrent with the
Canadian yarn-spinning plant closures, CanAm's yarn-spinning operations were
expanded to include a new yarn-spinning facility in Clarkton, North Carolina. In
conjunction with the development of the new Clarkton facility, CanAm acquired
certain assets of our yarn-spinning facility in Long Sault, Ontario, the
transfer of which occurred in the second quarter of fiscal 2005, and the new
Clarkton facility became fully operational by the end of the third quarter of
fiscal 2005. </font><b></p>
<font SIZE="2" face="Times New Roman">
<p align="justify">Textile Manufacturing </p>
</font></b><font FACE="Times New Roman" SIZE="2">
<p ALIGN="JUSTIFY" style="text-indent: 26">In fiscal 2004, we began construction
of an integrated knitting, bleaching, dyeing, finishing and cutting facility in
Bella Vista, Dominican Republic to support our projected continuing sales
growth. The Bella Vista facility began production in the third quarter of fiscal
2005 and is currently running at a comparable scale of production to our mature
first textile facility in Honduras. We will continue to maximize production
levels and cost efficiencies at this facility during fiscal 2007. </p>
<p align="justify" style="text-indent: 26">In fiscal 2004, we purchased property
in Nanda&#239;me, Nicaragua for development of an integrated textile facility. We
view the Nicaragua site as a strategic long-term asset for future capacity
expansion. </p>
<p ALIGN="JUSTIFY" style="text-indent: 26">During fiscal 2005, we purchased
additional land adjacent to our Rio Nance facility in Honduras for the purpose
of constructing two new integrated world-scale facilities, one for the
production of fleece, and one for the production of athletic socks. During
fiscal 2006, we completed the construction of the sock manufacturing facility
and began the construction of the fleece textile facility. We expect to ramp up
our sock facility to full capacity by the second half of fiscal 2008<b> </b>and
begin production at our fleece facility in the second half of fiscal 2007. </p>
<p align="justify" style="text-indent: 26">With the acquisition of Kentucky
Derby in the fourth quarter of fiscal 2006, we also operate sock manufacturing
facilities in North Carolina and Virginia. </p>
<b>
<p align="justify">Sewing </p>
</b>
<p align="justify" style="text-indent: 26">In fiscal 2005, we began production
in three new sewing facilities located in Choloma, Honduras, Rivas, Nicaragua
and Port-au-Prince, Haiti. </p>
<p ALIGN="JUSTIFY" style="text-indent: 26">In fiscal 2006, we commenced
operations in a new sewing facility located in Villanueva, Honduras. During the
last quarter of fiscal 2006, we signed lease agreements for an integrated
cutting, sewing and distribution facility in Port-au-Prince, Haiti, as well as
for a new building under construction in Rivas, Nicaragua. We expect to begin
production at these facilities in the first quarter and the second quarter of
fiscal 2007, respectively. In addition to our own facilities, we supplement our
production by using third party contractors in Haiti and the Dominican Republic.</font><b><font SIZE="2" face="Times New Roman">
</p>
<p align="justify">Distribution </p>
</font></b><font FACE="Times New Roman" SIZE="2">
<p ALIGN="JUSTIFY" style="text-indent: 26">In fiscal 2004, we supplemented our
existing third party distribution centre located in Bletchley-Milton Keynes,
United Kingdom, with three additional third party distribution centres located
in Brisbane, Australia, Meer, Belgium and Ontario, California. In fiscal 2004,
we also began a major expansion of our distribution centre in Eden, North
Carolina, which was completed in the second quarter of fiscal 2005.<b> </b>
</font><font FACE="Times New Roman PSMT" SIZE="2"></p>
</font><font FACE="Times New Roman PS" SIZE="2">
<p align="center">4</p>
<hr color="#000000" size="5"><p style="page-break-before: always"></font><font FACE="Times New Roman" SIZE="2">
<p align="justify" style="text-indent: 26">In fiscal 2006, we added a new
distribution centre in Choloma, Honduras to better serve our European customers
as well as two new third party distribution centres located in Monterrey, Mexico
and Mississauga, Ontario to better serve our Mexican and Canadian customers,
respectively. In September 2006, we announced the closure of our distribution
centre located in Montreal, Qu&#233;bec effective October 2006. </p>
<p align="justify" style="text-indent: 26">Finally, in August 2006, as part of
our overall plan to integrate the operations of Kentucky Derby and to support
future capacity requirements for our retail initiative, we announced plans to
invest approximately $7 million in a new 400,000 square foot retail distribution
centre in Martinsville, Virginia and to relocate and consolidate Kentucky
Derby's existing distribution centres at multiple sites in Danville, Virginia
and Mt. Airy, North Carolina to this single location. This new distribution
centre will be fully dedicated to supporting our retail distribution plans. The
relocation and consolidation of Kentucky Derby's distribution centres is
expected to result in improved operating efficiencies and lower transportation
costs, as well as faster customer response times. The installation of equipment
in this facility, together with the associated warehouse management information
system, is expected to be completed during the second quarter of fiscal 2007.
Our existing distribution centre in Eden, North Carolina will remain fully
dedicated to providing the capacity required for Gildan's anticipated future
growth in the wholesale distribution channel. </p>
<b>
<p align="justify">Capital Expenditures </p>
</b>
<p align="justify" style="text-indent: 26">In the last three fiscal years, we
have invested an aggregate of approximately $220 million in our manufacturing
and distribution operations in North America and offshore. </p>
<b>
<p align="justify">Share Structure </p>
</b>
<p align="justify" style="text-indent: 26">In February 2004, our Board of
Directors approved the conversion of all of the Corporation's Class B Multiple
Voting Shares into Class A Subordinate Voting Shares on a one-for-one basis and
without any conversion premium. The Class B Multiple Voting Shares were held by
H. Greg Chamandy, Glenn J. Chamandy and Edwin B. Tisch through their respective
holding companies. The conversion became effective on March 1, 2004. </p>
<p align="justify" style="text-indent: 26">At the annual and special meeting of
the shareholders on February 2, 2005, our shareholders approved a special
resolution to amend our Articles in order to change each of the issued and
outstanding Class A Subordinate Voting Shares into one newly-created Common
Share and to remove the Class B Multiple Voting Shares and the Class A Multiple
Voting Shares, effectively eliminating our dual class voting structure. </p>
<b>
<p align="justify">Shareholder Rights Plan </p>
</b>
<p align="justify" style="text-indent: 26">On December 1, 2004, our Board of
Directors adopted a shareholder rights plan, which became effective that same
day. At the annual and special meeting of the shareholders held on February 2,
2005, our shareholders approved a resolution confirming the ratification of the
shareholder rights plan. The objectives of the shareholder rights plan are to
provide the Board of Directors and the shareholders with adequate time to assess
any unsolicited take-over bid for the Corporation and where appropriate, give
the Board of Directors sufficient time to pursue other alternatives for
maximizing shareholder value. </p>
<b>
<p align="justify">Stock Split </p>
</b>
<p align="justify" style="text-indent: 26">On May 4, 2005, our Board of
Directors approved a two-for-one stock split effected in the form of a stock
dividend. The split was applicable to all shareholders of record on May 20,
2005. The Common Shares commenced trading on a post-split basis on May 18, 2005
on the Toronto Stock Exchange and on June 1, 2005 on the New York Stock
Exchange, in accordance with the respective requirements of these exchanges. The
stock split was intended to increase the liquidity of, and facilitate trading
in, our Common Shares. </p>
<b>
<p align="justify">3.</b> </font><b><font SIZE="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;
DESCRIPTION OF THE BUSINESS </p>
<p align="justify">3.1&nbsp;&nbsp; Business Overview </p>
</font></b><font FACE="Times New Roman" SIZE="2">
<p align="justify" style="text-indent: 26">We are a vertically-integrated
marketer and manufacturer of activewear, underwear and socks. We operate in one
business segment, being high-volume, basic, frequently replenished, non-fashion
apparel. We are the leading supplier of activewear for the wholesale imprinted
sportswear market in the United States and Canada, and also a leading supplier
for </font><font FACE="Times New Roman PSMT" SIZE="2">this market in Europe.
&quot;Imprinted&quot; sportswear is decorated with a screenprint or embroidered with a
logo, design or character before it reaches the end user. </p>
</font><font FACE="Times New Roman PS" SIZE="2">
<p align="center">5</p>
<hr color="#000000" size="5"><p style="page-break-before: always"></font><font FACE="Times New Roman PSMT" SIZE="2">
<p align="justify" style="text-indent: 26">In fiscal 2005, as part of our growth
strategy, we began to implement a major new initiative to sell our products into
the mass-market retail channel in North America. In conjunction with these
plans, in fiscal 2006, we expanded our product-line to include underwear and
basic athletic socks. In the fourth quarter of fiscal 2006, we enhanced and
accelerated our retail market initiative by acquiring Kentucky Derby, a U.S.
sock manufacturer, and intend to use this strategic acquisition as a platform to
build the Gildan brand in athletic socks, underwear and activewear. </p>
<p align="justify" style="text-indent: 26">Over the past several years, we have
significantly increased our sales and earnings. From fiscal 1993 through fiscal
2006, our sales have grown from $24.0 million to $773.2 million, representing a
compounded annual growth rate of 30.6%. Sales in the fourth quarter of fiscal
2006 included the sales of our new subsidiary, Kentucky Derby. </p>
</font><font FACE="Times New Roman PS" SIZE="2"><b>
<p align="justify">Strategy </p>
</b></font><font FACE="Times New Roman PSMT" SIZE="2">
<p align="justify" style="text-indent: 26">We believe that our success in
developing our vertically-integrated manufacturing hubs has allowed us to
provide our customers with low prices, consistent product quality and a reliable
supply chain, and has been the main reason that we have been able to rapidly
increase our market presence and establish our market leadership in the
imprinted sportswear market. These are the same factors that management believes
will allow Gildan to be successful in building a consumer brand in the retail
channel. </p>
<p align="justify" style="text-indent: 26">We believe that our
vertically-integrated manufacturing operations allow us to provide a combination
of competitive prices and premium quality products and to deliver superior value
to our customers. We are able to price our products competitively because of our
success in reducing operating costs. We accomplish this by:</p>
<ul>
  <li>
  <p align="justify">investing in modern, automated equipment and facilities;</li>
  <li>
  <p align="justify">increasing our capacity through the development of
  integrated regional hubs in Central America and the Caribbean Basin, where we
  benefit from strategic locations and favourable international trade
  agreements; and</li>
  <li>
  <p align="justify">focusing on producing a narrow range of basic, high-volume
  product-lines, which allows us to maximize production efficiencies.</li>
</ul>
<p align="justify" style="text-indent: 26">We intend to continue to expand
capacity through the acquisition of modern, automated equipment for all aspects
of our manufacturing process to maximize productivity and achieve high
efficiency rates. </p>
<p align="justify" style="text-indent: 26">We are implementing a five-year plan
to approximately triple our unit sales volumes and continue to achieve
significant manufacturing efficiencies. Our growth strategy comprises the
following four initiatives:</p>
<p align="justify" style="text-indent: 26"></font>
<font FACE="Times New Roman PS" SIZE="2"><i><b>Continue to increase market share
in the U.S. wholesale imprinted sportswear market in all product categories. </b>
</i></font><font FACE="Times New Roman PSMT" SIZE="2">During fiscal 2006, we
further increased our leading market share position in the U.S. wholesale
distributor network in the t-shirt and sport shirts categories as reported in
the S.T.A.R.S Report produced by ACNielsen Market Decisions (the &quot;S.T.A.R.S.
Report&quot;). In addition, we gained significant share in the fleece category,
reaching the number two market share position. We believe we will continue to
increase market share in this channel due to our competitive strengths and the
addition of low cost production capacity.</font></p>
<p align="justify" style="text-indent: 26"><i><b>
<font FACE="Times New Roman PS" SIZE="2">Leverage our successful business model
to enter the mass-market retail channel and develop Gildan as a consumer brand.
</font></b></i><font FACE="Times New Roman PSMT" SIZE="2">We plan to continue to
sell the same basic undecorated activewear apparel products into the retail
channel, as well as our new complementary products, underwear and athletic
socks, which also leverage our existing core competencies, successful business
model and competitive strengths. Our goal is to continue to provide a value
proposition, which combines quality, service and competitive pricing. We intend
to follow the same pricing strategy as in the wholesale market, by using our
cost efficiencies to lower selling prices. Our main competitors in the retail
channel for basic family apparel products are essentially the same as in the
wholesale channel.</font></p>
<p align="justify" style="text-indent: 26">
<font FACE="Times New Roman PSMT" SIZE="2">During fiscal 2006, we expanded our
presence in the retail channel, particularly with U.S. regional retailers.
Following our recent acquisition of Kentucky Derby, we intend to use Kentucky
Derby's experience and distribution with mass-market retailers to build Gildan
as a consumer brand in athletic socks, underwear and activewear in the
mass-market retail channel. </font></p>
<font FACE="Times New Roman PS" SIZE="2">
<p align="center">6</p>
<hr color="#000000" size="5"><p style="page-break-before: always"></font><i><b><font FACE="Arial" SIZE="2">
<p align="justify" style="text-indent: 26"></font>
<font FACE="Times New Roman PS" SIZE="2">Increase penetration in Europe and
other international markets. </font></b></i>
<font FACE="Times New Roman PSMT" SIZE="2">We expect to pursue further market
penetration within our existing served wholesale markets in Europe, Mexico and
Australia, in addition to pursuing further international market expansion
opportunities. During fiscal 2006, we began to sell Gildan products in Mexico.
</p>
</font><i><b><font FACE="Arial" SIZE="2">
<p align="justify" style="text-indent: 26"></font>
<font FACE="Times New Roman PS" SIZE="2">Support unit sales growth and maintain
pricing competitiveness through continued significant investments in low-cost
production capacity. </font></b></i><font FACE="Times New Roman PSMT" SIZE="2">
To support our projected continuing sales growth, in fiscal 2006 we ramped up
our new Dominican Republic facility to close to full capacity. In addition, we
completed the construction of our sock facility in Honduras, which we expect to
ramp up to full capacity by the second half of fiscal 2008. We also began
construction of a world-scale integrated facility for the production of fleece,
which is expected to begin production in the second half of fiscal 2007. Our
land and infrastructure in Central America and the Caribbean Basin can
accommodate further major capacity expansion on the same sites. During the next
five years, we expect to invest approximately $400 million in capital
expenditures to support our projected sales growth. All of the organic capacity
expansions that we plan to undertake over the next five years are expected to be
financed by internally generated funds. </p>
<p align="justify" style="text-indent: 26">We are subject to a variety of
business risks that may affect our ability to maintain our current market share
and profitability, as well as our ability to achieve our long-term strategic
objectives. These risks are described in the &quot;Risks and Uncertainties&quot; section
of the management's discussion and analysis on pages 37 to 40 of the 2006 Annual
Report. As well, the nature of our growth strategy involves risks related to
certain assumptions underlying unit sales growth, production capacity growth and
cost reductions, among others. Notably, our planned growth in market share
depends to a significant extent on the successful start-up and ramp-up of new
offshore facilities. There can be no assurances that we will achieve our planned
market share growth, retail market penetration or capacity increases. </font>
<font FACE="Times New Roman PS" SIZE="2"><i></p>
</i><b>
<p align="justify">Market Overview </p>
</b></font><font FACE="Times New Roman PSMT" SIZE="2">
<p align="justify" style="text-indent: 26">Our target market for activewear,
underwear and socks is characterized by low fashion risk compared to many other
apparel markets, since products are basic and produced in a limited range of
sizes, colours and styles, and since logos and designs for the screenprint
market are not imprinted or embroidered by manufacturers. </p>
<p align="justify" style="text-indent: 26">While the majority of our sales are
currently derived from the sale of activewear through the wholesale distribution
channel, in fiscal 2006 we continued to expand our entry into the retail
channel, concentrating on regional retailers that we can service well with the
production capacity that we have available. As we ramp up our major capacity
expansion projects in the Caribbean Basin and Central America, we will
increasingly be in a position to service major mass-market retailers. We believe
that providing a superior value proposition predicated on reliable product
quality and comfort, combined with efficient customer service and competitive
pricing, the same factors that contribute to our success in the wholesale
channel, will allow us to be successful in penetrating the retail channel.</p>
<p align="justify" style="text-indent: 26">We believe that growth for our
activewear products has been driven by several market trends, such as the
following:</p>
<ul>
  <li>
  <p align="justify">continued use of activewear for event merchandising (such
  as concerts, festivals, etc.);</li>
  <li>
  <p align="justify">continued evolution of the entertainment/sports licensing
  and merchandising businesses;</li>
  <li>
  <p align="justify">the growing use of activewear for uniform applications;</li>
  <li>
  <p align="justify">the growing use of activewear for corporate promotions;</li>
  <li>
  <p align="justify">continued increase in use of activewear products for travel
  and tourism;</li>
  <li>
  <p align="justify">an increased emphasis on physical fitness; and</li>
  <li>
  <p align="justify">a greater use and acceptance of casual dress in the
  workplace.</li>
</ul>
</font><font FACE="Times New Roman PS" SIZE="2">
<p align="center">7</p>
<hr color="#000000" size="5"><p style="page-break-before: always"></font><font FACE="Times New Roman PSMT" SIZE="2">
<p align="justify" style="text-indent: 26">In addition, reductions in
manufacturing costs, combined with quality enhancements in activewear apparel,
such as pre-shrunk fabrics, improved fabric weight, blends and construction,
have provided consumers with superior products at lower prices. </p>
</font><font FACE="Times New Roman PS" SIZE="2"><b>
<p align="justify">Products </p>
</b></font><font FACE="Times New Roman PSMT" SIZE="2">
<p align="justify" style="text-indent: 26">We specialize in the large-scale
marketing and manufacturing of basic, non-fashion apparel products for customers
requiring an efficient supply chain and consistent product quality for
high-volume, automatic replenishment programs. Our product offering focuses on
core basic activewear styles sold in various fabrics, weights and colours for
the adult, ladies and youth markets. Silhouettes include basic t-shirts, long
sleeve t-shirts, sleeveless t-shirts, ringer tees, tank tops, pocket t-shirts,
basic sport shirts, pocketed sport shirts, crewneck sweatshirts, hooded
sweatshirts and sweatpants. Each product category is serviced by various labels
(each indicative of a specific quality level or fabric type), such as Ultra
Cotton<sup>&#174;</sup>, Heavy Cotton</font><font FACE="Symbol MT" LANG="JA" SIZE="2">
</font><font FACE="Times New Roman PSMT" SIZE="2">, Ultra Blend<sup>&#174;</sup> and
Heavy Blend</font><font FACE="Symbol MT" LANG="JA" SIZE="2"> </font>
<font FACE="Times New Roman PSMT" SIZE="2">. We offer 100% cotton as well as
blended cotton and polyester products. In fiscal 2006, we also introduced a
variety of styles of men's and boys' underwear and athletic socks into our
product-line. Typically, our product offering is characterized by low fashion
risk, since products are basic and produced in a limited range of sizes, colours
and styles. Our products for the wholesale channel for screenprinters are
produced and sold without logos and designs. </p>
</font><font FACE="Times New Roman PS" SIZE="2"><i><b>
<p align="justify">T-shirts </p>
</b></i></font><font FACE="Times New Roman PSMT" SIZE="2">
<p align="justify" style="text-indent: 26">T-shirts represented 77% of our sales
in fiscal 2006 and 80% in fiscal 2005. Our primary t-shirt offerings are the
Gildan Activewear Ultra Cotton<sup>&#174;</sup> t-shirt (6.1 oz. per sq. yd.), the
Gildan Activewear Heavyweight Cotton</font><font FACE="Symbol MT" LANG="JA" SIZE="2">
</font><font FACE="Times New Roman PSMT" SIZE="2">t-shirt (5.5 oz. per sq. yd.)
and the Gildan Activewear Ultra Blend<sup>&#174;</sup> t-shirt (5.6 oz. per sq. yd.).
Each of these t-shirt lines incorporates styles with enhanced features, such as
double stitched necklines, seamless collars, taped neck and shoulders,
quarter-turned bodies and superior knit surfaces to enhance printability of the
fabrics. A variety of silhouettes complement the basic adult t-shirt styles
within each label offering. </p>
<p align="justify" style="text-indent: 26">For the nine-month period ended
September 30,</font><font FACE="Times New Roman PS" SIZE="2"><b> </b></font>
<font FACE="Times New Roman PSMT" SIZE="2">2006, we maintained our number one
position in the U.S. wholesale distributor network in the t-shirt category as
reported in the S.T.A.R.S. Report. The data in the S.T.A.R.S. Report for the
period includes information provided by the largest wholesale distributor, which
has renewed its participation in the S.T.A.R.S. Report. </p>
</font><font FACE="Times New Roman PS" SIZE="2"><i><b>
<p align="justify">Fleece Products </p>
</b></i></font><font FACE="Times New Roman PSMT" SIZE="2">
<p align="justify" style="text-indent: 26">In fiscal 2006 and fiscal 2005,
fleece products represented 14% and 12% of our sales, respectively. Our primary
offerings in the fleece category are crewneck sweatshirts, sweatpants and hooded
sweatshirts in adult and youth sizes in three distinct fabric contents and
weights. We maintained the number two position in the U.S. wholesale distributor
network in the overall fleece category for the nine-month period ended September
30,</font><font FACE="Times New Roman PS" SIZE="2"><b> </b></font>
<font FACE="Times New Roman PSMT" SIZE="2">2006 as reported in the S.T.A.R.S.
Report. Significant growth in this fleece category was driven by our
volume-priced Heavy Blend</font><font FACE="Symbol MT" LANG="JA" SIZE="2">
</font><font FACE="Times New Roman PSMT" SIZE="2">collection, featuring 50%
cotton/50% polyester fabric in a 7.75 oz. per sq. yd. weight. Our Ultra Blend<sup>&#174;</sup>
collection features 50% cotton /50% polyester fabric in a 9.3 oz. per sq. yd.
weight and is the volume leader in this segment. We remain the leader in the
U.S. wholesale distributor network in the high-cotton category, as reported in
the S.T.A.R.S. Report for the nine-month period ended September 30, 2006. This
segment is well serviced with our Ultra Cotton<sup>&#174;</sup> products featuring
80% cotton/20% polyester blend and a 9.5 oz. per sq. yd. weight. </p>
</font><font FACE="Times New Roman PS" SIZE="2"><i><b>
<p align="justify">Sport Shirts </p>
</b></i></font><font FACE="Times New Roman PSMT" SIZE="2">
<p align="justify" style="text-indent: 26">In fiscal 2006 and fiscal 2005, sport
shirts represented approximately 6% and 8% of our sales, respectively. We
produce sport shirts in a variety of weights, sizes, colours and styles, with or
without a pocket. Our sport shirts include the 100% cotton Ultra Cotton<sup>&#174;</sup>
sport shirt in jersey fabric (6.1 oz. per sq. yd.) and piqu&#233; fabric (7.0 oz. per
sq. yd.) and the 50% cotton/50% polyester Gildan Activewear Ultra Blend<sup>&#174;</sup>
sport shirt in blended jersey fabric (5.6 oz. per sq. yd.) and piqu&#233; fabric (6.5
oz. per sq. yd.). We also offer the Gildan Activewear Ultra Cotton<sup>&#174;</sup>
fashion sport shirt (7.0 oz. per sq. yd.), in piqu&#233; fabric featuring fashion
collars and cuffs in racing, jacquard, pin stripe and wide stripe styles. We
maintained our position as the leader in the U.S. wholesale distributor network
in the sport shirt category, as reported in the S.T.A.R.S. Report for the
nine-month period ended September 30, 2006. </p>
</font><font FACE="Times New Roman PS" SIZE="2">
<p align="center">8</p>
<hr color="#000000" size="5"><p style="page-break-before: always"></font><font SIZE="2" face="Times New Roman"><i><b>
<p align="justify">Other Products </p>
</b></i>
<p ALIGN="JUSTIFY" style="text-indent: 26">Since fiscal 2006, we began to sell
men's and boys' packaged underwear and basic athletic socks and, with the
acquisition of Kentucky Derby, we are now selling socks in a variety of sizes,
styles and colours in the infants', children's, girls', boys', ladies' and men's
markets. </p>
<b>
<p align="justify">Marketing and Sales </p>
</b>
<p ALIGN="JUSTIFY" style="text-indent: 26">We market our products directly to
wholesale distributors and retail customers through our sales force. For our
wholesale customers, we do not maintain regional sales offices; instead, our
sales personnel work from home. Our small sales force is trained to manage
relationships with a limited number of regional wholesale distributors. With the
acquisition of Kentucky Derby, we now have a sales office in Hopkinsville,
Kentucky, which has a small sales force that manages the customer relationships
with our retail accounts. </p>
<p ALIGN="JUSTIFY" style="text-indent: 26">Our wholesale activewear marketing
strategy concentrates primarily on the wholesale distribution channel catering
to screenprinters, embroiderers and advertising specialty distributors. We also
promote our products through appearances at tradeshows and trade magazine
advertising and also engage in various forms of co-operative advertising with
our major customers, including print advertising, catalogues and mailings and
product sampling programs. Our marketing strategy in the retail channel will be
based on delivering consistent, reliable product quality to our customers at
lower prices rather than consumer advertising. </p>
<b>
<p align="justify">Customers </p>
</b>
<p ALIGN="JUSTIFY" style="text-indent: 26">In fiscal 2006, we sold our products
in the United States, Canada and Europe and other markets, which accounted for
88.0%, 6.5% and 5.5% of total sales, respectively. For a breakdown of our total
sales by geographic market for each of the last three financial years, reference
is made to Note 20(b) (ii) to the audited annual consolidated financial
statements of the Corporation included in our 2006 Annual Report, which is
incorporated herein by reference. </p>
<p ALIGN="JUSTIFY" style="text-indent: 26">Due to wholesaler and retailer
consolidation, the customer base to which we sell and are targeting to sell our
products is composed of a relatively small number of significant customers. We
currently sell our products to approximately 180 customers. In fiscal 2006, our
largest customer accounted for 28.2% of total sales, and our top ten customers
accounted for 66.0% of total sales. </p>
<p ALIGN="JUSTIFY" style="text-indent: 26">The large majority of total sales in
fiscal 2006 were made through our wholesale distributors. Although we have
long-term ongoing relationships with our distributor network, our contracts with
our customers do not require them to purchase a minimum quantity of our
products. Instead, we meet with them at the beginning of each fiscal year to
ascertain their projected requirements and then plan our production and
marketing strategy accordingly. Our wholesale distributor customers then send
purchase orders to us during the course of the fiscal year. </p>
<p align="justify" style="text-indent: 26">We have begun selling a full Gildan
brand product-line of activewear, underwear and athletic socks without logos or
decoration to U.S. and Canadian regional retailers and U.S. mass-market
retailers. </p>
<b>
<p align="justify">Raw Materials </p>
</b>
<p ALIGN="JUSTIFY" style="text-indent: 26">Cotton and polyester fibres are the
main raw materials used in the manufacturing of our products. Cotton is used in
the manufacturing of 100% cotton yarn while polyester is added in the
manufacturing of cotton-polyester blend yarn. Polyester pricing is negotiated on
an annual basis, while cotton fibre pricing is fixed in the futures markets. </p>
<p ALIGN="JUSTIFY" style="text-indent: 26">During fiscal 2006, all of our yarn
requirements for all of our product-lines were met by our long-term supply
agreements with Frontier and Parkdale America, LLC (&quot;Parkdale&quot;), as well as by
our jointly-owned CanAm yarn-spinning facilities in Cedartown, Georgia and
Clarkton, North Carolina. We expect that our yarn requirements will continue to
be met by these sources. </p>
<p align="justify" style="text-indent: 26">We also purchase chemicals, dyestuffs
and trims through a variety of suppliers. These products have historically been
available in sufficient supply. </p>
</font><font FACE="Times New Roman PS" SIZE="2">
<p align="center">9</p>
<hr color="#000000" size="5"><p style="page-break-before: always"></font><font SIZE="2" face="Times New Roman"><b>
<p align="justify">Quality Control </p>
</b>
<p ALIGN="JUSTIFY" style="text-indent: 26">Our quality control team has adopted
strict standards and procedures to ensure the quality of our products. This team
enforces plant-specific quality control standards at the facilities we own and
monitors quality control at the facilities run by offshore contractors. As a
result of our quality control team's efforts, we have not experienced any
significant quality claims from our customers or end users. </p>
<b>
<p align="justify">Management Information Systems </p>
</b>
<p ALIGN="JUSTIFY" style="text-indent: 26">Our Enterprise Resource Planning (ERP)
system supports all of our operations in the areas of finance, manufacturing and
customer service. This system is centralized and is accessed from all of our
locations through secure networks. Our ERP system is linked to servers
supporting both local processes and specialized applications, including payroll
and distribution. We continue to leverage our existing ERP system by developing
new functionality in the areas of supply chain, forecasting and strategic
network optimization. Due to our increasing dependence on the availability of
our computer systems to support our operations, we plan to continue in fiscal
2007 to implement initiatives to enhance our information technology (IT)
processes and infrastructure based on the Information Technology Infrastructure
Library (ITIL), a framework of best practices approaches intended to facilitate
the delivery of high quality IT services. </p>
<b>
<p align="justify">Seasonality </p>
</b>
<p ALIGN="JUSTIFY" style="text-indent: 26">The activewear business is seasonal.
Typically, demand for t-shirts is highest in the third quarter of each fiscal
year, when distributors purchase inventory for the peak summer selling season,
and lowest in the first quarter of each fiscal year. Demand for our sock
products is typically highest in the first and fourth quarters of each fiscal
year, stimulated largely by the need to support requirements for the
back-to-school period and peak retail selling during the Christmas holiday
season. </p>
<p align="justify" style="text-indent: 26">As a result of the historical
seasonal trends, we produce and store finished goods inventory in the first half
of the fiscal year in order to meet the expected demand for delivery in the
second half of the fiscal year. </p>
<b>
<p align="justify">Competition </p>
</b>
<p ALIGN="JUSTIFY" style="text-indent: 26">The apparel market for our products
is highly competitive. Competition is generally based upon price, with reliable
quality and service also being key requirements for success. Our primary
competitors in North America are the major U.S.-based manufacturers of basic
branded activewear for the wholesale and retail channels, such as Fruit of the
Loom, Inc., Hanesbrands Inc., the Jerzees division of Russell Corporation, which
was recently acquired by Berkshire Hathaway Inc., which owns Fruit of the Loom,
Inc., Delta Apparel Inc. and Anvil Knitwear, Inc. </p>
<p ALIGN="JUSTIFY" style="text-indent: 26">The competition in the European
wholesale imprinted activewear market is similar to that in North America as we
compete primarily with the European divisions of the larger U.S.-based
manufacturers. In Europe, we also have large competitors that do not have
integrated manufacturing operations and source products from contractors in
Asia. </p>
<p ALIGN="JUSTIFY" style="text-indent: 26">For the first nine months of fiscal
2006, our market share in the U.S. wholesale distributor network was 43.7% in
the overall t-shirt category, 32.2% in the sport shirt category and 30.8% in the
fleece category. All U.S. market share data is based on the S.T.A.R.S. Report.
</p>
<b>
<p align="justify">Trade Regulatory Environment </p>
</b>
<p ALIGN="JUSTIFY" style="text-indent: 26">Although textile and apparel
industries worldwide have historically enjoyed significant protections, in
recent years trade liberalization and trade preference programs have diminished
this protection somewhat. Our increasingly globalized production and sourcing
and our increased market coverage have helped us to benefit from changes in the
international regulatory climate. </p>
<i><b>
<p align="justify">United States </p>
</b></i>
<p ALIGN="JUSTIFY" style="text-indent: 26">Qualifying imports into the United
States enjoy the benefits of free trade agreements with Australia, Bahrain,
Chile, Israel, Jordan, Morocco and Singapore, as well as the benefits of the
North American Free Trade Agreement (&quot;NAFTA&quot;) and the U.S.-Dominican
Republic-Central America Free Trade Agreement (&quot;CAFTA&quot;). </p>
</font><font FACE="Times New Roman PS" SIZE="2">
<p align="center">10</p>
<hr color="#000000" size="5"><p style="page-break-before: always"></font><font FACE="Times New Roman PSMT" SIZE="2">
<p align="justify" style="text-indent: 26">NAFTA is an agreement among Canada,
the United States and Mexico that grants duty-free treatment to originating
textile and apparel goods. None of the benefits of NAFTA apply to our goods sewn
outside the NAFTA countries. </p>
<p ALIGN="JUSTIFY" style="text-indent: 26">CAFTA presently includes the United
States, El Salvador, Guatemala, Honduras and Nicaragua, and is expected to
include Costa Rica and the Dominican Republic within the next year. In the
meantime, these two countries are included in the Caribbean Basin Trade
Partnership Act (&quot;CBTPA&quot;) discussed below. All CAFTA originating textile and
apparel goods traded among the CAFTA countries are duty-free. The garments we
knit and sew in CAFTA countries from U.S. yarn are thus CAFTA originating and
duty-free when imported into the United States. CAFTA permits the use of
safeguards in the form of reinstatement of normal duties if increased imports
cause or threaten to cause substantial injury to a domestic industry. </p>
<p ALIGN="JUSTIFY" style="text-indent: 26">Textiles and apparel imported into
the United States have also benefited from U.S. preference grants under programs
such as the CBTPA, the African Growth and Opportunity Act (&quot;AGOA&quot;) and the
Andean Trade Promotion and Drug Eradication Act (&quot;ATPDEA&quot;). Our Haiti production
is covered under the CBTPA. These programs allow duty-free entry of apparel
articles into the United States, subject to certain origin rules and other
restrictions. The Corporation and its competitors have participated in these
programs. ATPDEA and certain features of AGOA expire within the next year, but
Congress is considering extensions. CAFTA replaces CBTPA in countries
participating in CAFTA. </p>
<p align="justify" style="text-indent: 26">A potential obstacle to the U.S.
importation of textiles and apparel is the safeguard regime that limits imports
of Chinese textiles and apparel, through a system of absolute quotas for the
years 2006, 2007 and 2008. </p>
</font><font FACE="Times New Roman PS" SIZE="2"><i><b>
<p align="justify">Canada </p>
</b></i></font><font FACE="Times New Roman PSMT" SIZE="2">
<p ALIGN="JUSTIFY" style="text-indent: 26">Textile and apparel imports into
Canada benefit from both free trade agreements and preference programs. Canada
is part of NAFTA with Mexico and the United States, and Canada has a separate
bilateral free trade agreement with Chile. Textile and apparel products
originating from approximately 48 Least Developed Countries (&quot;LDCs&quot;) are also
allowed into Canada duty-free and quota-free under certain rules of origin. </p>
</font><font FACE="Times New Roman PS" SIZE="2"><i><b>
<p align="justify">Mexico </p>
</b></i></font><font FACE="Times New Roman PSMT" SIZE="2">
<p ALIGN="JUSTIFY" style="text-indent: 26">Imports into Mexico may receive the
benefit of NAFTA, the benefits of bilateral free trade agreements with Bolivia,
Chile, Costa Rica, the European Union, Israel, Japan, Nicaragua and Uruguay, and
the benefits of two additional regional trade agreements: one among Colombia,
Mexico and Venezuela, and one among El Salvador, Guatemala, Honduras and Mexico.
</p>
</font><font FACE="Times New Roman PS" SIZE="2"><i><b>
<p align="justify">European Union </p>
</b></i></font><font FACE="Times New Roman PSMT" SIZE="2">
<p ALIGN="JUSTIFY" style="text-indent: 26">In addition to free trade
arrangements among the individual countries in the European Union, the European
Union has preferential trade agreements with other European countries and with
countries outside of Europe. Of significance to the Corporation is the free
trade agreement between the European Union and Mexico. The European Union also
has a Generalized System of Preferences program that permits duty-free entry
into the European Union of qualifying articles, including apparel, from
developing countries. </p>
<p align="justify" style="text-indent: 26">A safeguard agreement limiting
imports of Chinese textile and apparel into the European Union will expire at
the end of 2007. </p>
</font><font FACE="Times New Roman PS" SIZE="2"><i><b>
<p align="justify">Australia </p>
</b></i></font><font FACE="Times New Roman PSMT" SIZE="2">
<p align="justify" style="text-indent: 26">Australia has a free trade agreement
with the United States. Additionally, Australia has introduced legislation
similar to the legislation in force in Canada to allow duty-free and quota-free
entry of textiles and apparel articles from LDCs. </p>
</font><font FACE="Times New Roman PS" SIZE="2"><b>
<p align="justify">Intellectual Property </p>
</b></font><font FACE="Times New Roman PSMT" SIZE="2">
<p ALIGN="JUSTIFY" style="text-indent: 26">We own several registered trademarks
including, among others, &quot;Gildan&quot; in Canada and the United States, the Gildan
&quot;logo&quot; in Canada, and &quot;Gildan Activewear&quot; in Canada, the United States and many
countries in Europe, Central America, South America and Asia, as well as in
Australia. Applications for the registration of a number of other trademarks,
including &quot;Gildan Activewear&quot; and &quot;Gildan&quot;, are pending in several countries. We
have and intend to continue to maintain <font FACE="Times New Roman" SIZE="2">
our trademarks and the relevant registrations, and will actively pursue the
registration of trademarks in Canada, the United States and abroad. </font></p>
</font><font FACE="Times New Roman PS" SIZE="2">
<p align="center">11</p>
<hr color="#000000" size="5"><p style="page-break-before: always"></font><font FACE="Times New Roman" SIZE="2"><b>
<p align="justify">Environmental Regulation </p>
</b>
<p ALIGN="JUSTIFY" style="text-indent: 26">All of our operations are subject to
various environmental and occupational health and safety laws and regulations.
Because we monitor, control and manage environmental issues, we believe that we
are in compliance in all material respects with the regulatory requirements of
those jurisdictions in which our facilities are located. In line with our
commitment to the environment as well as to the health and safety of our
employees, we will continue to make expenditures to comply with these
requirements, and we do not believe that compliance will have a material adverse
effect on our business. As is the case with manufacturers in general, if a
release of hazardous substances occurs on or from our properties or any
associated offsite disposal locations, or if contamination from prior activities
is discovered at any of our properties, we may be held liable. While the amount
of such liability could be material, we endeavour to conduct our operations in a
manner that reduces such risks.</font><b><font SIZE="2" face="Times New Roman">
</p>
<p align="justify">3.2&nbsp;&nbsp;&nbsp;&nbsp; Manufacturing Operations </p>
<p align="justify">Textile Operations </p>
</font></b><font FACE="Times New Roman" SIZE="2"><i>
<p ALIGN="JUSTIFY" style="text-indent: 26">Yarn-Spinning</i>. We currently
conduct yarn-spinning operations at facilities located in Cedartown, Georgia and
Clarkton, North Carolina through CanAm, our 50%/50%-owned joint venture with
Frontier. These yarn-spinning facilities supply our textile manufacturing
facilities with 100% cotton U.S. origin yarn. </p>
<i>
<p ALIGN="JUSTIFY" style="text-indent: 26">Knitting</i>. We currently conduct
knitting operations at our knitting facility in Montreal, Qu&#233;bec. We operate
circular and flat knitting machines at this facility, producing jersey, piqu&#233;,
fleece and ribbing in body-sized fabrics in tubular form using cotton and
cotton/polyester yarns. We also conduct knitting operations in our integrated
textile facility in Rio Nance, Honduras, and at our integrated textile facility
in Bella Vista, Dominican Republic. At these facilities, we operate circular and
flat knitting machines, producing jersey, piqu&#233; and ribbing in body-sized
fabrics in tubular form using cotton and cotton/polyester yarns. Our second
integrated textile facility in Rio Nance is expected to begin knitting, dyeing,
finishing and cutting operations for the production of fleece in the second half
of fiscal 2007. </p>
<i>
<p ALIGN="JUSTIFY" style="text-indent: 26">Dyeing and Finishing</i>. Knitted
fabric produced at our facility in Montreal, Qu&#233;bec is batched for bleaching and
dyeing and is taken to our dyeing and finishing facilities in Montreal, Qu&#233;bec
and, until December 2006, to our dyeing and finishing facility in Valleyfield,
Qu&#233;bec. Bleaching, dyeing and finishing operations in our integrated textile
facilities in Rio Nance, Honduras and Bella Vista, Dominican Republic process
all the fabric knitted in each respective facility. </p>
<i>
<p ALIGN="JUSTIFY" style="text-indent: 26">Cutting</i>. All of the fabric
produced at the Montreal dyeing and finishing facility and, until December 2006,
the Valleyfield dyeing and finishing facility, is shipped to our automated
cutting facility located in Bombay, New York. Cutting operations in our
integrated textile facilities in Rio Nance, Honduras and Bella Vista, Dominican
Republic, cut all bleached and dyed fabric produced in each respective facility,
thereby leveraging our existing manufacturing infrastructure and also reducing
transportation costs. </p>
<i>
<p ALIGN="JUSTIFY" style="text-indent: 26">Sock Production.</i> During fiscal
2006, we completed the construction of our new integrated sock manufacturing
facility in Rio Nance, Honduras for the production of athletic socks and we
began production in this facility in early fiscal 2007. With the acquisition of
Kentucky Derby in the fourth quarter of fiscal 2006, we also conduct knitting
and finishing operations for the production of socks in Mt. Airy, North Carolina
and knitting operations in Hillsville, Virginia. We also utilize third party
contractors to complement our product offering and fulfill our customer needs.<b>
</b></font><font FACE="Times New Roman PSMT" SIZE="2"></p>
</font><font FACE="Times New Roman" SIZE="2"><b>
<p align="justify">Sewing Operations </p>
</b>
<p ALIGN="JUSTIFY" style="text-indent: 26">We conduct our sewing operations
primarily through our four facilities in Honduras, our two facilities in Mexico,
our three facilities in Haiti and our two facilities in Nicaragua. In addition
to these eleven facilities, we supplement our production by using third party
contractors in Haiti and the Dominican Republic. These facilities provide us
with substantially all of our market sewing assembly requirements. </p>
</font><font FACE="Times New Roman PS" SIZE="2">
<p align="center">12</p>
<hr color="#000000" size="5"><p style="page-break-before: always"></font><font FACE="Times New Roman" SIZE="2"><b>
<p align="justify">Distribution Operations </p>
</b>
<p ALIGN="JUSTIFY" style="text-indent: 26">We distribute our products to
wholesale customers in the United States from a distribution centre in Eden,
North Carolina as well as from a distribution centre operated by a third party
in Ontario, California. The North Carolina facility maintains our distribution
operations close to our customers, providing us with the space needed for
continuing growth. The third party warehouse in California was added in fiscal
2004 for the purpose of providing next day service to customers on the U.S. west
coast. </p>
<p ALIGN="JUSTIFY" style="text-indent: 26">In the fourth quarter of fiscal 2006,
we announced plans to invest approximately $7 million in a new 400,000 square
foot retail distribution centre in a leased building in Martinsville, Virginia
and to relocate and consolidate Kentucky Derby's existing distribution centres
at multiple sites in Danville, Virginia and Mt. Airy, North Carolina to this
single location. This new distribution centre will be fully dedicated to
supporting our retail distribution plans. The relocation and consolidation of
Kentucky Derby's distribution centres is expected to result in improved
operating efficiencies and lower transportation costs, as well as faster
customer response times. The installation of equipment in this facility,
together with the associated warehouse management information system, is
expected to be completed during the second quarter of fiscal 2007. Our existing
distribution centre in Eden, North Carolina will remain fully dedicated to
providing the capacity required for Gildan's anticipated future growth in the
wholesale distribution channel. </p>
<p ALIGN="JUSTIFY" style="text-indent: 26">As of the beginning of the first
quarter of fiscal 2007, our Canadian wholesale and retail customers are serviced
from a third party distribution centre located in Mississauga, Ontario. This
distribution centre in Mississauga replaces our distribution centre in Montreal,
Qu&#233;bec, which was closed effective October 2006, and provides us with greater
flexibility in meeting our Canadian customers' needs. </p>
<p ALIGN="JUSTIFY" style="text-indent: 26">Customers in Europe are serviced from
distribution centres operated by third parties in Meer, Belgium and
Bletchley-Milton Keynes, United Kingdom and, as of the fourth quarter of fiscal
2006, from our new distribution centre in Choloma, Honduras. Customers in
Australia are serviced from a distribution centre operated by a third party in
Brisbane, Australia. In fiscal 2006, we began utilizing a new distribution
centre operated by a third party in Monterrey, Mexico to service our Mexican
customers. </p>
<b>
<p align="justify">Properties </p>
</b>
<p align="justify" style="text-indent: 26">The following table sets forth the
location and use of each of our principal properties: </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="35%">
    <p style="margin-left: 26">&nbsp;</td>
    <td WIDTH="50%">&nbsp;</td>
    <td WIDTH="15%"><font SIZE="2"><b>Owned</b></font></td>
  </tr>
  <tr>
    <td WIDTH="35%"><font SIZE="2"><b>
    <p style="margin-left: 26"><u>Location</u></b></font></td>
    <td WIDTH="50%"><font SIZE="2"><b><u>Use</u></b></font></td>
    <td WIDTH="15%"><font SIZE="2"><b><u>or Leased</u></b></font></td>
  </tr>
  <tr>
    <td WIDTH="35%" bgcolor="#E6E6E6"><font SIZE="2">
    <p style="margin-left: 26">Montreal, Qu&#233;bec</font></td>
    <td WIDTH="50%" bgcolor="#E6E6E6"><font SIZE="2">Executive offices</font></td>
    <td WIDTH="15%" bgcolor="#E6E6E6"><font SIZE="2">Owned</font></td>
  </tr>
  <tr>
    <td WIDTH="35%"><font SIZE="2">
    <p style="margin-left: 26">Montreal, Qu&#233;bec</font></td>
    <td WIDTH="50%"><font SIZE="2">Knitting facility</font></td>
    <td WIDTH="15%"><font SIZE="2">Owned</font></td>
  </tr>
  <tr>
    <td WIDTH="35%" bgcolor="#E6E6E6"><font SIZE="2">
    <p style="margin-left: 26">St. Michael, Barbados</font></td>
    <td WIDTH="50%" bgcolor="#E6E6E6"><font SIZE="2">Executive offices</font></td>
    <td WIDTH="15%" bgcolor="#E6E6E6"><font SIZE="2">Owned</font></td>
  </tr>
  <tr>
    <td WIDTH="35%"><font SIZE="2">
    <p style="margin-left: 26">Valleyfield, Qu&#233;bec</font></td>
    <td WIDTH="50%"><font SIZE="2">Dyeing and finishing facility <sup>(1)</sup></font></td>
    <td WIDTH="15%"><font SIZE="2">Owned</font></td>
  </tr>
  <tr>
    <td WIDTH="35%" bgcolor="#E6E6E6"><font SIZE="2">
    <p style="margin-left: 26">Montreal, Qu&#233;bec</font></td>
    <td WIDTH="50%" bgcolor="#E6E6E6"><font SIZE="2">Dyeing and finishing facility</font></td>
    <td WIDTH="15%" bgcolor="#E6E6E6"><font SIZE="2">Owned</font></td>
  </tr>
  <tr>
    <td WIDTH="35%"><font SIZE="2">
    <p style="margin-left: 26">Bombay, New York</font></td>
    <td WIDTH="50%"><font SIZE="2">Cutting facility</font></td>
    <td WIDTH="15%"><font SIZE="2">Leased</font></td>
  </tr>
  <tr>
    <td WIDTH="35%" bgcolor="#E6E6E6"><font SIZE="2">
    <p style="margin-left: 26">Rio Nance, Honduras</font></td>
    <td WIDTH="50%" bgcolor="#E6E6E6"><font SIZE="2">Knitting, dyeing, finishing and cutting
    facility</font></td>
    <td WIDTH="15%" bgcolor="#E6E6E6"><font SIZE="2">Owned</font></td>
  </tr>
  <tr>
    <td WIDTH="35%"><font SIZE="2">
    <p style="margin-left: 26">Rio Nance, Honduras</font></td>
    <td WIDTH="50%"><font SIZE="2">Knitting, dyeing, finishing and cutting
    facility <sup>(2)</sup></font></td>
    <td WIDTH="15%"><font SIZE="2">Owned</font></td>
  </tr>
  <tr>
    <td WIDTH="35%" bgcolor="#E6E6E6"><font SIZE="2">
    <p style="margin-left: 26">Rio Nance, Honduras</font></td>
    <td WIDTH="50%" bgcolor="#E6E6E6"><font SIZE="2">Integrated sock manufacturing facility <sup>
    (3)</sup></font></td>
    <td WIDTH="15%" bgcolor="#E6E6E6"><font SIZE="2">Owned</font></td>
  </tr>
  <tr>
    <td WIDTH="35%"><font SIZE="2">
    <p style="margin-left: 26">Bella Vista, Dominican Republic</font></td>
    <td WIDTH="50%"><font SIZE="2">Knitting, dyeing, finishing and cutting
    facility</font></td>
    <td WIDTH="15%"><font SIZE="2">Owned</font></td>
  </tr>
  <tr>
    <td WIDTH="35%" bgcolor="#E6E6E6"><font SIZE="2">
    <p style="margin-left: 26">San Pedro Sula, Honduras</font></td>
    <td WIDTH="50%" bgcolor="#E6E6E6"><font SIZE="2">Sewing facility</font></td>
    <td WIDTH="15%" bgcolor="#E6E6E6"><font SIZE="2">Leased</font></td>
  </tr>
  <tr>
    <td WIDTH="35%"><font SIZE="2">
    <p style="margin-left: 26">Choloma, Honduras</font></td>
    <td WIDTH="50%"><font SIZE="2">Sewing facility</font></td>
    <td WIDTH="15%"><font SIZE="2">Leased</font></td>
  </tr>
  <tr>
    <td WIDTH="35%" bgcolor="#E6E6E6"><font SIZE="2">
    <p style="margin-left: 26">Choloma, Honduras</font></td>
    <td WIDTH="50%" bgcolor="#E6E6E6"><font SIZE="2">Sewing facility</font></td>
    <td WIDTH="15%" bgcolor="#E6E6E6"><font SIZE="2">Leased</font></td>
  </tr>
  <tr>
    <td WIDTH="35%"><font SIZE="2">
    <p style="margin-left: 26">Choloma, Honduras</font></td>
    <td WIDTH="50%"><font SIZE="2">Wholesale distribution facility</font></td>
    <td WIDTH="15%"><font SIZE="2">Leased</font></td>
  </tr>
  <tr>
    <td WIDTH="35%" bgcolor="#E6E6E6"><font SIZE="2">
    <p style="margin-left: 26">Villanueva, Honduras</font></td>
    <td WIDTH="50%" bgcolor="#E6E6E6"><font SIZE="2">Sewing facility</font></td>
    <td WIDTH="15%" bgcolor="#E6E6E6"><font SIZE="2">Leased</font></td>
  </tr>
  <tr>
    <td WIDTH="35%"><font SIZE="2">
    <p style="margin-left: 26">Casta&#241;os, Mexico</font></td>
    <td WIDTH="50%"><font SIZE="2">Sewing facility</font></td>
    <td WIDTH="15%"><font SIZE="2">Owned</font></td>
  </tr>
  <tr>
    <td WIDTH="35%" bgcolor="#E6E6E6"><font SIZE="2">
    <p style="margin-left: 26">San Buenaventura, Mexico</font></td>
    <td WIDTH="50%" bgcolor="#E6E6E6"><font SIZE="2">Sewing facility</font></td>
    <td WIDTH="15%" bgcolor="#E6E6E6"><font SIZE="2">Leased</font></td>
  </tr>
  <tr>
    <td WIDTH="35%"><font SIZE="2">
    <p style="margin-left: 26">San Marcos, Nicaragua</font></td>
    <td WIDTH="50%"><font SIZE="2">Sewing facility</font></td>
    <td WIDTH="15%"><font SIZE="2">Leased</font></td>
  </tr>
  <tr>
    <td WIDTH="35%" bgcolor="#E6E6E6"><font SIZE="2">
    <p style="margin-left: 26">Rivas, Nicaragua</font></td>
    <td WIDTH="50%" bgcolor="#E6E6E6"><font SIZE="2">Sewing facility</font></td>
    <td WIDTH="15%" bgcolor="#E6E6E6"><font SIZE="2">Leased</font></td>
  </tr>
  <tr>
    <td WIDTH="35%"><font SIZE="2">
    <p style="margin-left: 26">Rivas, Nicaragua</font></td>
    <td WIDTH="50%"><font SIZE="2">Sewing facility <sup>(4)</sup></font></td>
    <td WIDTH="15%"><font SIZE="2">Leased</font></td>
  </tr>
  <tr>
    <td WIDTH="35%" bgcolor="#E6E6E6"><font SIZE="2">
    <p style="margin-left: 26">Port-au-Prince, Haiti</font></td>
    <td WIDTH="50%" bgcolor="#E6E6E6"><font SIZE="2">Sewing facility</font></td>
    <td WIDTH="15%" bgcolor="#E6E6E6"><font SIZE="2">Leased</font></td>
  </tr>
  <tr>
    <td WIDTH="35%"><font SIZE="2">
    <p style="margin-left: 26">Port-au-Prince, Haiti</font></td>
    <td WIDTH="50%"><font SIZE="2">Sewing facility</font></td>
    <td WIDTH="15%"><font SIZE="2">Leased</font></td>
  </tr>
  <tr>
    <td WIDTH="35%" bgcolor="#E6E6E6"><font SIZE="2">
    <p style="margin-left: 26">Port-au-Prince, Haiti</font></td>
    <td WIDTH="50%" bgcolor="#E6E6E6"><font SIZE="2">Cutting, sewing and distribution facility
    <sup>(5)</sup></font></td>
    <td WIDTH="15%" bgcolor="#E6E6E6"><font SIZE="2">Leased</font></td>
  </tr>
  <tr>
    <td WIDTH="35%"><font SIZE="2">
    <p style="margin-left: 26">Montreal, Qu&#233;bec</font></td>
    <td WIDTH="50%"><font SIZE="2">Distribution facility <sup>(6)</sup></font></td>
    <td WIDTH="15%"><font SIZE="2">Owned</font></td>
  </tr>
  <tr>
    <td WIDTH="35%" bgcolor="#E6E6E6"><font SIZE="2">
    <p style="margin-left: 26">Eden, North Carolina</font></td>
    <td WIDTH="50%" bgcolor="#E6E6E6"><font SIZE="2">Wholesale distribution facility</font></td>
    <td WIDTH="15%" bgcolor="#E6E6E6"><font SIZE="2">Owned</font></td>
  </tr>
  <tr>
    <td WIDTH="35%"><font SIZE="2">
    <p style="margin-left: 26">Cedartown, Georgia</font></td>
    <td WIDTH="50%"><font SIZE="2">Yarn-spinning facility</font></td>
    <td WIDTH="15%"><font SIZE="2">Owned<sup>(7)</sup></font></td>
  </tr>
  <tr>
    <td WIDTH="35%" bgcolor="#E6E6E6"><font SIZE="2">
    <p style="margin-left: 26">Clarkton, North Carolina</font></td>
    <td WIDTH="50%" bgcolor="#E6E6E6"><font SIZE="2">Yarn-spinning facility</font></td>
    <td WIDTH="15%" bgcolor="#E6E6E6"><font SIZE="2">Leased<sup>(7)</sup></font></td>
  </tr>
  <tr>
    <td WIDTH="35%"><font SIZE="2">
    <p style="margin-left: 26">Hopkinsville, Kentucky</font></td>
    <td WIDTH="50%"><font SIZE="2">Offices <sup>(8)</sup></font></td>
    <td WIDTH="15%"><font SIZE="2">Owned</font></td>
  </tr>
  <tr>
    <td WIDTH="35%" bgcolor="#E6E6E6"><font SIZE="2">
    <p style="margin-left: 26">Mt. Airy, North Carolina</font></td>
    <td WIDTH="50%" bgcolor="#E6E6E6"><font SIZE="2">Manufacturing, warehousing and offices <sup>
    (9)</sup></font></td>
    <td WIDTH="15%" bgcolor="#E6E6E6"><font SIZE="2">Owned</font></td>
  </tr>
  <tr>
    <td WIDTH="35%"><font SIZE="2">
    <p style="margin-left: 26">Mt. Airy, North Carolina</font></td>
    <td WIDTH="50%"><font SIZE="2">Manufacturing, warehousing and offices <sup>
    (10)</sup></font></td>
    <td WIDTH="15%"><font SIZE="2">Leased</font></td>
  </tr>
  <tr>
    <td WIDTH="35%" bgcolor="#E6E6E6"><font SIZE="2">
    <p style="margin-left: 26">Hillsville, Virginia</font></td>
    <td WIDTH="50%" bgcolor="#E6E6E6"><font SIZE="2">Manufacturing, warehousing and offices <sup>
    (11)</sup></font></td>
    <td WIDTH="15%" bgcolor="#E6E6E6"><font SIZE="2">Owned</font></td>
  </tr>
</table>
<font FACE="Times New Roman PS" SIZE="2">
<p align="center">13</p>
<hr color="#000000" size="5"><p style="page-break-before: always"></font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="35%">
    <p style="margin-left: 26">&nbsp;</td>
    <td WIDTH="50%">&nbsp;</td>
    <td WIDTH="15%"><font FACE="Times New Roman" SIZE="2"><b>Owned</b></font></td>
  </tr>
  <tr>
    <td WIDTH="35%"><font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 26"><u>Location</u></b></font></td>
    <td WIDTH="50%"><font FACE="Times New Roman" SIZE="2"><b><u>Use</u></b></font></td>
    <td WIDTH="15%"><font FACE="Times New Roman" SIZE="2"><b><u>or Leased</u></b></font></td>
  </tr>
  <tr>
    <td WIDTH="35%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 26">Bentonville, Arkansas</font></td>
    <td WIDTH="50%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Offices</font></td>
    <td WIDTH="15%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Leased</font></td>
  </tr>
  <tr>
    <td WIDTH="35%"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 26">Danville, Virginia</font></td>
    <td WIDTH="50%"><font FACE="Times New Roman" SIZE="2">Manufacturing and
    warehousing <sup>(12)</sup></font></td>
    <td WIDTH="15%"><font FACE="Times New Roman" SIZE="2">Owned</font></td>
  </tr>
  <tr>
    <td WIDTH="35%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 26">Danville, Virginia</font></td>
    <td WIDTH="50%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Manufacturing</font></td>
    <td WIDTH="15%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Leased</font></td>
  </tr>
  <tr>
    <td WIDTH="35%"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 26">Shanghai, China</font></td>
    <td WIDTH="50%"><font FACE="Times New Roman" SIZE="2">Offices</font></td>
    <td WIDTH="15%"><font FACE="Times New Roman" SIZE="2">Leased</font></td>
  </tr>
  <tr>
    <td WIDTH="35%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 26">Martinsville, Virginia</font></td>
    <td WIDTH="50%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Retail distribution
    facility</font></td>
    <td WIDTH="15%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Leased</font></td>
  </tr>
</table>
<font SIZE="2" face="Times New Roman">
<p style="margin-left: 26">________________________ <br>
</font><font face="Times New Roman" style="font-size: 9pt">(1)&nbsp;&nbsp;&nbsp;&nbsp;
This facility was closed effective December 2006. <br>
(2)&nbsp;&nbsp;&nbsp;&nbsp; This facility is expected to begin production in the
second half of fiscal 2007. <br>
(3)&nbsp;&nbsp;&nbsp;&nbsp; This facility began production in early fiscal 2007.
<br>
(4)&nbsp;&nbsp;&nbsp;&nbsp; Under construction. <br>
(5)&nbsp;&nbsp;&nbsp;&nbsp; This facility is expected to begin operations in the
first quarter of fiscal 2007. <br>
(6)&nbsp;&nbsp;&nbsp;&nbsp; This facility was closed effective October 2006. <br>
(7)&nbsp;&nbsp;&nbsp;&nbsp; Jointly with Frontier. <br>
(8)&nbsp;&nbsp;&nbsp;&nbsp; Two locations. <br>
(9)&nbsp;&nbsp;&nbsp;&nbsp; Five locations. <br>
(10)&nbsp;&nbsp; Eight locations. <br>
(11)&nbsp;&nbsp; Two locations. <br>
(12)&nbsp;&nbsp; Three locations. </p>
</font><font SIZE="2" face="Times New Roman">
<p style="text-indent: 26" align="justify">We believe that all of these
facilities, whether owned or leased, are well maintained and in good operating
condition. </p>
<p ALIGN="JUSTIFY" style="text-indent: 26">Our revolving term credit facility
and senior notes are secured by a first ranking moveable hypothec and security
interest on most of our assets located at a majority of our facilities. The
lenders under the term credit facility and the noteholders, among others, are
party to an intercreditor agreement, which provides that the lenders and the
noteholders shall in all respects be <i>pari passu</i> first and senior liens in
respect of our assets. </p>
<b>
<p>Labour Practices </p>
</b>
<p ALIGN="JUSTIFY" style="text-indent: 26">We have invested significant time and
resources in ensuring that the working conditions in all our facilities meet or
exceed the standards imposed by Canadian occupational health and safety laws. In
addition to having our own Code of Conduct, which is available on our website at
www.gildan.com, we have obtained WRAP (Worldwide Responsible Apparel Production)
certification for most of our sewing plants in Honduras, for our main Mexican
sewing facility, and for our two sewing plants in Nicaragua. To ensure that
these employment standards are appropriate, we have worked with the Canadian
International Development Agency, a Canadian federal governmental agency, to
secure the services of professionals who specialize in social/gender analysis
and environmental audits with respect to developing nations. We also
contractually obligate our third party contractors to follow prescribed
employment policies as well as our Code of Conduct. </font>
<font FACE="Times New Roman PS" SIZE="2"><b></p>
</b></font><font FACE="Times New Roman" SIZE="2">
<p ALIGN="JUSTIFY" style="text-indent: 26">In November 2003, we joined the Fair
Labor Association (&quot;FLA&quot;) as a Participating Company. The FLA is recognized
internationally as one of the most highly respected verification agencies and
promotes adherence to international labour standards and improving working
conditions. We have developed a comprehensive action plan to obtain FLA
accreditation in 2007. </p>
<p ALIGN="JUSTIFY" style="text-indent: 26">Since fiscal 2005, we have engaged
V&#233;rit&#233;, an internationally respected training and auditing organization to carry
out a comprehensive and ongoing program of training and auditing at all of our
Gildan-owned and contractor manufacturing facilities. In addition, this year we
recruited an internationally respected Director of Corporate Social
Responsibility to develop our training, auditing and compliance programs. </p>
<b>
<p>3.3&nbsp;&nbsp; Risk Factors </p>
</b>
<p style="text-indent: 26">Please see the &quot;Risks and Uncertainties&quot; section of
our management's discussion and analysis on pages 37 to 40 of the 2006 Annual
Report. </p>
<b>
<p>3.4&nbsp;&nbsp; Employees </p>
</b>
<p ALIGN="JUSTIFY" style="text-indent: 26">As at October 1, 2006, we employed
14,509 full-time employees. Of these employees, 308 Canadian employees at our
Valleyfield, Qu&#233;bec and Montreal, Qu&#233;bec dyeing and finishing facilities are
covered by collective bargaining agreements that have each been renewed for
three years. We closed the Valleyfield facility effective December 2006. We
consider our relations with our employees to be very good and, as of the date
hereof, we have not experienced any work stoppages that have had a material
impact on our operations. </p>
</font><font FACE="Times New Roman PS" SIZE="2">
<p align="center">14</p>
<hr color="#000000" size="5"><p style="page-break-before: always"></font><font SIZE="2" face="Times New Roman"><b>
<p align="justify">4.</b> </font><b><font FACE="Times New Roman" SIZE="2">&nbsp;&nbsp;&nbsp;
DIVIDEND POLICY </p>
</font></b><font FACE="Times New Roman" SIZE="2">
<p style="text-indent: 26" align="justify">We do not currently pay dividends
because we retain all of our earnings to maximize our financing capacity to
develop and expand our business. The Board of Directors periodically reviews the
Corporation's policy towards paying dividends. Although our revolving term
credit facility and senior notes require compliance with lending covenants in
order to pay dividends, these covenants are not currently, and are not expected
to be, a constraint to the future payment of dividends. </p>
<b>
<p align="justify">5.</b> </font><b><font SIZE="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;
CAPITAL STRUCTURE </p>
<p align="justify">First Preferred Shares </p>
<i>
<p align="justify">Issuance in Series </p>
</i></font></b><font FACE="Times New Roman" SIZE="2">
<p style="text-indent: 26" align="justify">The First Preferred Shares are
issuable in series and the Board of Directors has the right, from time to time,
to fix the number of, and to determine the designation, rights, privileges,
restrictions and conditions attaching to, the First Preferred Shares of each
series subject to the limitations, if any, set out in the Articles of the
Corporation. </p>
<i><b>
<p align="justify">Rank </p>
</b></i>
<p style="text-indent: 26" align="justify">The First Preferred Shares rank
senior to the Second Preferred Shares and the Common Shares with respect to the
payment of dividends, return of capital and the distribution of assets in the
event of the liquidation, dissolution or winding-up of Gildan. The First
Preferred Shares in each series rank equally with the First Preferred Shares of
any other series. </p>
<i><b>
<p align="justify">Voting Rights </p>
</b></i>
<p style="text-indent: 26" align="justify">Unless the Articles otherwise provide
with respect to any series of the First Preferred Shares, the holders of the
First Preferred Shares are not entitled to receive any notice of or attend any
meeting of the shareholders of Gildan and are not entitled to vote at any such
meeting. </p>
</font><b><font FACE="Times New Roman" SIZE="2">
<p align="justify">Second Preferred Shares </p>
<i>
<p align="justify">Issuance in Series </p>
</i></font></b><font FACE="Times New Roman" SIZE="2">
<p style="text-indent: 26" align="justify">The Second Preferred Shares are
issuable in series and the Board of Directors has the right, from time to time,
to fix the number of, and to determine the designation, rights, privileges,
restrictions and conditions attaching to, the Second Preferred Shares of each
series subject to the limitations, if any, set out in the Articles of the
Corporation. </p>
<i><b>
<p align="justify">Rank </p>
</b></i>
<p style="text-indent: 26" align="justify">The Second Preferred Shares are
subject and subordinate to the rights, privileges, restrictions and conditions
attaching to the First Preferred Shares. The Second Preferred Shares rank senior
to the Common Shares with respect to payment of dividends, return of capital and
distribution of assets in the event of the liquidation, dissolution or
winding-up of Gildan. The Second Preferred Shares in each series rank equally
with the Second Preferred Shares of any other series. </p>
<i><b>
<p align="justify">Voting Rights </p>
</b></i>
<p style="text-indent: 26" align="justify">Unless the Articles otherwise provide
with respect to any series of the Second Preferred Shares, the holders of the
Second Preferred Shares are not entitled to receive any notice of or attend any
meeting of the shareholders of Gildan and are not entitled to vote at any such
meeting. </p>
<b>
<p align="justify">Common Shares </p>
</b>
<p style="text-indent: 26" align="justify">Following the conversion of all of
the Corporation's Class B Multiple Voting Shares into Class A Subordinate Voting
Shares, the Corporation's shareholders approved a special resolution on February
2, 2005 to amend the Corporation's Articles in order to change each of the
issued and outstanding Class A Subordinate Voting Shares into one newly-created
Common Share and to remove the Class B Multiple Voting Shares and the Class A
Subordinate Voting Shares.<b> </p>
</b></font><font FACE="Times New Roman PS" SIZE="2">
<p align="center">15</p>
<hr color="#000000" size="5"><p style="page-break-before: always"></font><font FACE="Times New Roman" SIZE="2">
<p align="justify" style="text-indent: 26">The Common Shares are subject to and
subordinate to the rights, privileges, restrictions and conditions attaching to
the First Preferred Shares and the Second Preferred Shares. Each holder of
Common Shares shall have the right to receive any dividend declared by the
Corporation and the right to receive the remaining property and assets of the
Corporation on dissolution. </p>
<p align="justify" style="text-indent: 26">Each holder of Common Shares is
entitled to receive notice of and to attend all meetings of shareholders of the
Corporation, except meetings of which only holders of another particular class
or series shall have the right to vote. Each Common Share shall entitle the
holder thereof to one (1) vote. </p>
<b>
<p align="justify">6.</b>&nbsp;&nbsp;&nbsp;&nbsp; </font><b>
<font FACE="Times New Roman" SIZE="2">MARKET FOR SECURITIES </p>
</font></b><font FACE="Times New Roman" SIZE="2">
<p align="justify" style="text-indent: 26">The Common Shares of the Corporation
are listed on the New York Stock Exchange (the &quot;NYSE&quot;) and the Toronto Stock
Exchange (the &quot;TSX&quot;) under the symbol &quot;GIL&quot;. The Class A Subordinate Voting
Shares (now the Common Shares), which were issued at an offering price of $1.75
(Cdn$2.57), began trading on the TSX, the Montreal Exchange (the &quot;ME&quot;) and the
American Stock Exchange (&quot;AMEX&quot;) on June 17, 1998. Prior to that date, there was
no public market for the Class A Subordinate Voting Shares. On September 1,
1999, the Class A Subordinate Voting Shares (now the Common Shares) commenced
trading on the NYSE. We delisted such shares from AMEX on August 31, 1999. As a
result of a restructuring of Canada's stock exchanges, which took effect on
December 7, 1999, we are no longer listed on the ME. </p>
<p align="justify" style="text-indent: 26">The table below shows the monthly
price range per share and the trading volume of the Common Shares for the fiscal
year ended October 1, 2006 on the TSX (in Cdn$) and on the NYSE (in US$). </p>
</font>
<table BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="985" colspan="8" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" bgcolor="#E6E6E6">
    <p style="margin-left: 5; margin-right: 5"><b><font size="2">COMMON SHARES</font></b></td>
  </tr>
  <tr>
    <td WIDTH="492" colspan="4" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" bgcolor="#E6E6E6">
    <p style="margin-left: 5; margin-right: 5"><b><font size="2">Toronto Stock
    Exchange (TSX)</font></b></td>
    <td WIDTH="493" COLSPAN="4" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" bgcolor="#E6E6E6">
    <font SIZE="2"><b>
    <p style="margin-left: 5; margin-right: 5">New York Stock Exchange (NYSE)</b></font></td>
  </tr>
  <tr>
    <td WIDTH="192" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" bgcolor="#E6E6E6">
    <p align="left" style="margin-left: 5; margin-right: 5"><b><font size="2">
    Month</font></b></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" bgcolor="#E6E6E6">
    <p style="margin-left: 5; margin-right: 5"><b><font size="2">High</font></b></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" bgcolor="#E6E6E6">
    <p style="margin-left: 5; margin-right: 5"><b><font size="2">Low</font></b></td>
    <td WIDTH="122" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" bgcolor="#E6E6E6">
    <p style="margin-left: 5; margin-right: 5"><b><font size="2">Trading Volume</font></b></td>
    <td WIDTH="192" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" bgcolor="#E6E6E6">
    <p align="left" style="margin-left: 5; margin-right: 5"><b><font size="2">
    Month</font></b></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" bgcolor="#E6E6E6">
    <p style="margin-left: 5; margin-right: 5"><b><font size="2">High</font></b></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" bgcolor="#E6E6E6">
    <p style="margin-left: 5; margin-right: 5"><b><font size="2">Low</font></b></td>
    <td WIDTH="123" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" bgcolor="#E6E6E6">
    <p style="margin-left: 5; margin-right: 5"><b><font size="2">Trading Volume</font></b></td>
  </tr>
  <tr>
    <td WIDTH="192" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">October 3 to 31, 2005</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">46.70</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">37.29</font></td>
    <td WIDTH="122" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">4,561,600</font></td>
    <td WIDTH="192" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">October 3 to 31, 2005</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">39.78</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">32.03</font></td>
    <td WIDTH="123" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">3,021,100</font></td>
  </tr>
  <tr>
    <td WIDTH="192" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">November 2005</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">45.50</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">40.50</font></td>
    <td WIDTH="122" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">4,643,000</font></td>
    <td WIDTH="192" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">November 2005</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">38.55</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">34.45</font></td>
    <td WIDTH="123" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">2,852,400</font></td>
  </tr>
  <tr>
    <td WIDTH="192" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">December 2005</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">51.09</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">45.00</font></td>
    <td WIDTH="122" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">3,871,600</font></td>
    <td WIDTH="192" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">December 2005</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">43.58</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">38.55</font></td>
    <td WIDTH="123" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">2,320,400</font></td>
  </tr>
  <tr>
    <td WIDTH="192" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">January 2006</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">56.44</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">50.02</font></td>
    <td WIDTH="122" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">3,876,800</font></td>
    <td WIDTH="192" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">January 2006</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">49.21</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">43.00</font></td>
    <td WIDTH="123" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">3,265,600</font></td>
  </tr>
  <tr>
    <td WIDTH="192" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">February 2006</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">59.17</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">54.56</font></td>
    <td WIDTH="122" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">3,504,700</font></td>
    <td WIDTH="192" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">February 2006</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">51.52</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">47.76</font></td>
    <td WIDTH="123" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">2,708,500</font></td>
  </tr>
  <tr>
    <td WIDTH="192" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">March 2006</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">61.23</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">53.80</font></td>
    <td WIDTH="122" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">4,920,300</font></td>
    <td WIDTH="192" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">March 2006</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">53.03</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">46.00</font></td>
    <td WIDTH="123" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">5,059,700</font></td>
  </tr>
  <tr>
    <td WIDTH="192" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">April 2006</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">58.08</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">51.21</font></td>
    <td WIDTH="122" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">6,104,300</font></td>
    <td WIDTH="192" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">April 2006</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">50.17</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">44.06</font></td>
    <td WIDTH="123" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">4,235,200</font></td>
  </tr>
  <tr>
    <td WIDTH="192" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">May 2006</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">55.00</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">45.55</font></td>
    <td WIDTH="122" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">6,290,900</font></td>
    <td WIDTH="192" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">May 2006</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">49.00</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">40.03</font></td>
    <td WIDTH="123" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">4,819,900</font></td>
  </tr>
  <tr>
    <td WIDTH="192" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">June 2006</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">53.00</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">42.26</font></td>
    <td WIDTH="122" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">5,860,300</font></td>
    <td WIDTH="192" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">June 2006</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">47.54</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">38.24</font></td>
    <td WIDTH="123" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">5,337,300</font></td>
  </tr>
  <tr>
    <td WIDTH="192" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">July 2006</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">52.99</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">44.00</font></td>
    <td WIDTH="122" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">5,066,200</font></td>
    <td WIDTH="192" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">July 2006</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">47.42</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">39.03</font></td>
    <td WIDTH="123" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">4,461,800</font></td>
  </tr>
  <tr>
    <td WIDTH="192" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">August 2006</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">55.95</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">47.15</font></td>
    <td WIDTH="122" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">3,998,400</font></td>
    <td WIDTH="192" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">August 2006</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">50.51</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">41.72</font></td>
    <td WIDTH="123" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">4,074,100</font></td>
  </tr>
  <tr>
    <td WIDTH="192" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">September 2006</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">58.12</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">53.19</font></td>
    <td WIDTH="122" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">3,891,800</font></td>
    <td WIDTH="192" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">September 2006</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">51.93</font></td>
    <td WIDTH="89" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">47.26</font></td>
    <td WIDTH="123" align="center" style="border-style: solid; border-width: 2; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5; margin-right: 5">2,965,700</font></td>
  </tr>
</table>
<font FACE="Times New Roman PS" SIZE="2">
<p align="center">16</p>
<hr color="#000000" size="5"><p style="page-break-before: always"></font><font FACE="Times New Roman" SIZE="2"><b>
<p>7.</b> </font><b><font FACE="Times New Roman" SIZE="2">&nbsp;&nbsp;&nbsp;
DIRECTORS AND OFFICERS </p>
</font></b><font FACE="Times New Roman" SIZE="2">
<p ALIGN="JUSTIFY" style="text-indent: 26">Listed below is certain information
about the current directors of Gildan. The directors have served in their
respective capacities since their election and/or appointment and will continue
to serve until the next annual meeting of shareholders or until a successor is
duly elected. </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="35%" style="border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman PS" SIZE="2"><b>Name and Municipality of
    Residence</b></font></td>
    <td WIDTH="4%" style="border-bottom-style: solid; border-bottom-width: 3" align="center">
    <font FACE="Times New Roman PS" SIZE="2"><b>Age</b></font></td>
    <td WIDTH="37%" style="border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman PS" SIZE="2"><b>
    <p style="margin-left: 10; margin-right: 10">Principal Occupation</b></font></td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman PS" SIZE="2"><b>
    <p style="margin-left: 10; margin-right: 10">Director Since</b></font></td>
  </tr>
  <tr>
    <td WIDTH="35%">&nbsp;</td>
    <td WIDTH="4%" align="center">&nbsp;</td>
    <td WIDTH="37%">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="25%">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="35%"><font FACE="Times New Roman PS" SIZE="2">Robert M. Baylis
    <sup>(2)(3)(4)</sup></font></td>
    <td WIDTH="4%" align="center">&nbsp;</td>
    <td WIDTH="37%" rowspan="2" valign="bottom">
    <font FACE="Times New Roman PS" SIZE="2">
    <p style="margin-left: 10; margin-right: 10">Corporate Director</font></td>
    <td WIDTH="25%">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="35%"><font FACE="Times New Roman PS" SIZE="2">Darien,
    Connecticut, United States</font></td>
    <td WIDTH="4%" align="center"><font FACE="Times New Roman PS" SIZE="2">68</font></td>
    <td WIDTH="25%"><font FACE="Times New Roman PS" SIZE="2">
    <p style="margin-left: 10; margin-right: 10">February 1999</font></td>
  </tr>
  <tr>
    <td WIDTH="35%">&nbsp;</td>
    <td WIDTH="4%" align="center">&nbsp;</td>
    <td WIDTH="37%" valign="bottom">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="25%">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="35%"><font FACE="Times New Roman PS" SIZE="2">Glenn J. Chamandy</font></td>
    <td WIDTH="4%" align="center">&nbsp;</td>
    <td WIDTH="37%" rowspan="2" valign="bottom">
    <font FACE="Times New Roman PS" SIZE="2">
    <p style="margin-left: 10; margin-right: 10">President and Chief Executive
    Officer of the Corporation</font></td>
    <td WIDTH="25%">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="35%"><font FACE="Times New Roman PS" SIZE="2">Montreal, Qu&#233;bec,
    Canada</font></td>
    <td WIDTH="4%" align="center"><font FACE="Times New Roman PS" SIZE="2">45</font></td>
    <td WIDTH="25%"><font FACE="Times New Roman PS" SIZE="2">
    <p style="margin-left: 10; margin-right: 10">May 1984</font></td>
  </tr>
  <tr>
    <td WIDTH="35%">&nbsp;</td>
    <td WIDTH="4%" align="center">&nbsp;</td>
    <td WIDTH="37%" valign="bottom">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="25%">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="35%"><font FACE="Times New Roman PS" SIZE="2">William D. Anderson<sup>(1)(3)</sup></font></td>
    <td WIDTH="4%" align="center">&nbsp;</td>
    <td WIDTH="37%" rowspan="2" valign="bottom">
    <p style="margin-left: 10; margin-right: 10">
    <font FACE="Times New Roman PS" SIZE="2">Corporate Director</font></td>
    <td WIDTH="25%">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="35%"><font FACE="Times New Roman PS" SIZE="2">Montreal, Qu&#233;bec,
    Canada</font></td>
    <td WIDTH="4%" align="center"><font FACE="Times New Roman PS" SIZE="2">57</font></td>
    <td WIDTH="25%"><font FACE="Times New Roman PS" SIZE="2">
    <p style="margin-left: 10; margin-right: 10">June 2006</font></td>
  </tr>
  <tr>
    <td WIDTH="35%">&nbsp;</td>
    <td WIDTH="4%" align="center">&nbsp;</td>
    <td WIDTH="37%" valign="bottom">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="25%">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="35%"><font FACE="Times New Roman PS" SIZE="2">Sheila O'Brien
    (2)(3)</font></td>
    <td WIDTH="4%" align="center">&nbsp;</td>
    <td WIDTH="37%" rowspan="2" valign="bottom">
    <font FACE="Times New Roman PS" SIZE="2">
    <p style="margin-left: 10; margin-right: 10">President, Belvedere
    Investments (private investment company)</font></td>
    <td WIDTH="25%">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="35%"><font FACE="Times New Roman PS" SIZE="2">Calgary, Alberta,
    Canada</font></td>
    <td WIDTH="4%" align="center"><font FACE="Times New Roman PS" SIZE="2">59</font></td>
    <td WIDTH="25%"><font FACE="Times New Roman PS" SIZE="2">
    <p style="margin-left: 10; margin-right: 10">June 2005</font></td>
  </tr>
  <tr>
    <td WIDTH="35%">&nbsp;</td>
    <td WIDTH="4%" align="center">&nbsp;</td>
    <td WIDTH="37%" valign="bottom">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="25%">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="35%"><font FACE="Times New Roman PS" SIZE="2">Pierre Robitaille<sup>(1)(2)</sup></font></td>
    <td WIDTH="4%" align="center">&nbsp;</td>
    <td WIDTH="37%" rowspan="2" valign="bottom">
    <font FACE="Times New Roman PS" SIZE="2">
    <p style="margin-left: 10; margin-right: 10">Business Advisor and Corporate
    Director</font></td>
    <td WIDTH="25%">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="35%"><font FACE="Times New Roman PS" SIZE="2">St-Lambert, Qu&#233;bec,
    Canada</font></td>
    <td WIDTH="4%" align="center"><font FACE="Times New Roman PS" SIZE="2">63</font></td>
    <td WIDTH="25%"><font FACE="Times New Roman PS" SIZE="2">
    <p style="margin-left: 10; margin-right: 10">February 2003</font></td>
  </tr>
  <tr>
    <td WIDTH="35%">&nbsp;</td>
    <td WIDTH="4%" align="center">&nbsp;</td>
    <td WIDTH="37%" valign="bottom">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="25%">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="35%"><font FACE="Times New Roman PS" SIZE="2">Richard P. Strubel
    <sup>(1)(3)</sup></font></td>
    <td WIDTH="4%" align="center">&nbsp;</td>
    <td WIDTH="37%" rowspan="2" valign="bottom">
    <font FACE="Times New Roman PS" SIZE="2">
    <p style="margin-left: 10; margin-right: 10">Corporate Director</font></td>
    <td WIDTH="25%">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="35%"><font FACE="Times New Roman PS" SIZE="2">Chicago, Illinois,
    United States</font></td>
    <td WIDTH="4%" align="center"><font FACE="Times New Roman PS" SIZE="2">67</font></td>
    <td WIDTH="25%"><font FACE="Times New Roman PS" SIZE="2">
    <p style="margin-left: 10; margin-right: 10">February 1999</font></td>
  </tr>
  <tr>
    <td WIDTH="35%">&nbsp;</td>
    <td WIDTH="4%" align="center">&nbsp;</td>
    <td WIDTH="37%" valign="bottom">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="25%">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="35%"><font FACE="Times New Roman PS" SIZE="2">Gonzalo F.
    Valdes-Fauli<sup>(1)(2)</sup></font></td>
    <td WIDTH="4%" align="center">&nbsp;</td>
    <td WIDTH="37%" rowspan="2" valign="bottom">
    <font FACE="Times New Roman PS" SIZE="2">
    <p style="margin-left: 10; margin-right: 10">Chairman of BroadSpan Capital
    LLC (an investment banking firm)</font></td>
    <td WIDTH="25%">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="35%"><font FACE="Times New Roman PS" SIZE="2">Key Biscayne,
    Florida, United States</font></td>
    <td WIDTH="4%" align="center"><font FACE="Times New Roman PS" SIZE="2">60</font></td>
    <td WIDTH="25%"><font FACE="Times New Roman PS" SIZE="2">
    <p style="margin-left: 10; margin-right: 10">October 2004</font></td>
  </tr>
  <tr>
    <td WIDTH="35%" style="border-bottom-style: none; border-bottom-width: medium">
    <font face="Times New Roman PS" size="2">_________________________</font></td>
    <td WIDTH="4%">&nbsp;</td>
    <td WIDTH="37%" valign="bottom">&nbsp;</td>
    <td WIDTH="25%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="100%" COLSPAN="4"><font FACE="Times New Roman PS" SIZE="2">(1)&nbsp;&nbsp;
    Member of the Audit and Finance Committee.</font></td>
  </tr>
  <tr>
    <td WIDTH="100%" COLSPAN="4"><font FACE="Times New Roman PS" SIZE="2">(2)&nbsp;&nbsp;
    Member of the Corporate Governance Committee.</font></td>
  </tr>
  <tr>
    <td WIDTH="100%" COLSPAN="4"><font FACE="Times New Roman PS" SIZE="2">(3)&nbsp;&nbsp;
    Member of the Human Resources and Compensation Committee.</font></td>
  </tr>
  <tr>
    <td WIDTH="101%" colspan="4"><font FACE="Times New Roman" SIZE="2">(4)&nbsp;&nbsp;
    Chairman of the Board.</font></td>
  </tr>
</table>
<font FACE="Times New Roman PSMT" SIZE="2">
<p style="text-indent: 26">Listed below is certain information about the current
executive officers of Gildan. </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="392" style="border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 5; margin-right: 5">Name and Municipality of
    Residence</b></font></td>
    <td WIDTH="120" align="center" style="border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 5; margin-right: 5">Age</b></font></td>
    <td WIDTH="473" style="border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 5; margin-right: 5">Position Held Within the
    Corporation</b></font></td>
  </tr>
  <tr>
    <td WIDTH="392">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="120" align="center">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="473" valign="bottom">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="392"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Glenn J. Chamandy <sup>(1) (2)</sup></font></td>
    <td WIDTH="120" align="center">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="473" rowspan="2" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">President, Chief Executive
    Officer and Director</font></td>
  </tr>
  <tr>
    <td WIDTH="392"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Montreal, Qu&#233;bec, Canada</font></td>
    <td WIDTH="120" align="center"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">45</font></td>
  </tr>
  <tr>
    <td WIDTH="392">&nbsp;</td>
    <td WIDTH="120" align="center">&nbsp;</td>
    <td WIDTH="473" valign="bottom">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="392"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Laurence G. Sellyn <sup>(1) (2)</sup></font></td>
    <td WIDTH="120" align="center">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="473" rowspan="2" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Executive Vice-President, Chief
    Financial and Administrative Officer</font></td>
  </tr>
  <tr>
    <td WIDTH="392"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Beaconsfield, Qu&#233;bec, Canada</font></td>
    <td WIDTH="120" align="center"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">57</font></td>
  </tr>
  <tr>
    <td WIDTH="392">&nbsp;</td>
    <td WIDTH="120" align="center">&nbsp;</td>
    <td WIDTH="473" valign="bottom">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="392"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Michael R. Hoffman <sup>(1)</sup></font></td>
    <td WIDTH="120" align="center">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="473" rowspan="2" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">President, Gildan Activewear SRL</font></td>
  </tr>
  <tr>
    <td WIDTH="392"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">St. James, Barbados</font></td>
    <td WIDTH="120" align="center"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">44</font></td>
  </tr>
  <tr>
    <td WIDTH="392">&nbsp;</td>
    <td WIDTH="120" align="center">&nbsp;</td>
    <td WIDTH="473" valign="bottom">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="392"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Georges Sam Yu Sum <sup>(1) (2)</sup></font></td>
    <td WIDTH="120" align="center">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="473" rowspan="2" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Executive Vice-President,
    Operations</font></td>
  </tr>
  <tr>
    <td WIDTH="392"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Montreal, Qu&#233;bec, Canada</font></td>
    <td WIDTH="120" align="center"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">49</font></td>
  </tr>
  <tr>
    <td WIDTH="392">&nbsp;</td>
    <td WIDTH="120" align="center">&nbsp;</td>
    <td WIDTH="473" valign="bottom">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="392"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Gregg Thomassin <sup>(1) (2)</sup></font></td>
    <td WIDTH="120" align="center">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="473" rowspan="2" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Executive Vice-President,
    Corporate Controller</font></td>
  </tr>
  <tr>
    <td WIDTH="392"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Baie D'Urf&#233;, Qu&#233;bec, Canada</font></td>
    <td WIDTH="120" align="center"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">47</font></td>
  </tr>
  <tr>
    <td WIDTH="392">&nbsp;</td>
    <td WIDTH="120" align="center">&nbsp;</td>
    <td WIDTH="473" valign="bottom">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="392"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Benito Masi <sup>(1) (2)</sup></font></td>
    <td WIDTH="120" align="center">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="473" rowspan="2" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Executive Vice-President,
    Manufacturing</font></td>
  </tr>
  <tr>
    <td WIDTH="392"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Laval, Qu&#233;bec, Canada</font></td>
    <td WIDTH="120" align="center"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">51</font></td>
  </tr>
  <tr>
    <td WIDTH="392">&nbsp;</td>
    <td WIDTH="120" align="center">&nbsp;</td>
    <td WIDTH="473" valign="bottom">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="392"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Cam Gentile <sup>(1) (2)</sup></font></td>
    <td WIDTH="120" align="center">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="473" rowspan="2" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Executive Vice-President,
    Organizational Development and Change Management</font></td>
  </tr>
  <tr>
    <td WIDTH="392"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Hudson, Qu&#233;bec, Canada</font></td>
    <td WIDTH="120" align="center"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">64</font></td>
  </tr>
  <tr>
    <td WIDTH="392">&nbsp;</td>
    <td WIDTH="120" align="center">&nbsp;</td>
    <td WIDTH="473" valign="bottom">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="392"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Claude Guay <sup>(1) (2)</sup></font></td>
    <td WIDTH="120" align="center">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="473" rowspan="2" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Executive Vice-President, Chief
    Information Officer</font></td>
  </tr>
  <tr>
    <td WIDTH="392"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Montreal, Qu&#233;bec, Canada</font></td>
    <td WIDTH="120" align="center"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">45</font></td>
  </tr>
  <tr>
    <td WIDTH="392">&nbsp;</td>
    <td WIDTH="120" align="center">&nbsp;</td>
    <td WIDTH="473" valign="bottom">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="392"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Eric R. Lehman<sup>(1) (2)</sup></font></td>
    <td WIDTH="120" align="center">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="473" rowspan="2" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Executive Vice-President, Supply
    Chain</font></td>
  </tr>
  <tr>
    <td WIDTH="392"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Kennesaw, Georgia, USA</font></td>
    <td WIDTH="120" align="center"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">45</font></td>
  </tr>
  <tr>
    <td WIDTH="392">&nbsp;</td>
    <td WIDTH="120" align="center">&nbsp;</td>
    <td WIDTH="473" valign="bottom">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="392"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">William H. Nichol, Jr. <sup>(1)</sup></font></td>
    <td WIDTH="120" align="center">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="473" rowspan="2" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">President, Retail Sales Division</font></td>
  </tr>
  <tr>
    <td WIDTH="392"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Hopkinsville, Kentucky, USA</font></td>
    <td WIDTH="120" align="center"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">55</font></td>
  </tr>
  <tr>
    <td WIDTH="392">
    <p style="margin-left: 5; margin-right: 5">
    <font face="Times New Roman PS" size="2">_________________________</font></td>
    <td WIDTH="120" align="center">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="473" valign="bottom">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="392"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">(1) Executive Management
    Committee.</font></td>
    <td WIDTH="120" align="center">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="473" valign="bottom">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="392"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">(2) Officer of the Corporation.</font></td>
    <td WIDTH="120" align="center">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="473" valign="bottom">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
  </tr>
</table>
<font FACE="Times New Roman PS" SIZE="2">
<p align="center">17</p>
<hr color="#000000" size="5"><p style="page-break-before: always"><i>
<p align="justify" style="text-indent: 26">Glenn J. Chamandy </i></font>
<font FACE="Times New Roman PSMT" SIZE="2">is one of the founders of the
Corporation and has been involved in various Chamandy family textile and apparel
businesses for over twenty years. Prior to February 2004, Mr. Chamandy held the
position of President and Chief Operating Officer. He was then named President
and Co-Chief Executive Officer and, in August 2004, he was appointed to the
position of President and Chief Executive Officer.</font><font FACE="Times New Roman PS" SIZE="2"><i>
</p>
<p align="justify" style="text-indent: 26">Robert M. Baylis</i></font><font FACE="Times New Roman PSMT" SIZE="2">,
Chairman of the Board of the Corporation, serves as a director of several large
corporations, including the New York Life Insurance Company (life insurance
provider), Host Hotels &amp; Resorts Inc</font><font FACE="Times New Roman PS" SIZE="2"><i>.
</i></font><font FACE="Times New Roman PSMT" SIZE="2">(luxury hotels and
resorts), Covance Inc. (drug development products and services provider) and
Partner Re Ltd. (multi-line reinsurance provider). He is also a trustee of the
Rubin Museum of Art in New York City, a corporation member of the Woods Hole
Oceanographic Institution, an overseer of the University of Pennsylvania Museum,
and a member of the Advisory Council of the Economics Department of Princeton
University. He was formerly a director of Gryphon Holdings, Inc. (insurance) and
of the Wharton International Forum, an executive education program. Mr. Baylis
retired from Credit Suisse First Boston as Vice-Chairman in 1996, after
thirty-three years with this investment banking firm and its associated
corporations, including a term as the Chairman and Chief Executive Officer of
Credit Suisse First Boston (Pacific). Mr. Baylis was educated at Harvard
Business School and is a chartered financial analyst.</font><font FACE="Times New Roman PS" SIZE="2"><i>
</p>
<p align="justify" style="text-indent: 26">William D. Anderson</i></font><font FACE="Times New Roman PSMT" SIZE="2">
has had a career as a business leader in Canada spanning over thirty years. Mr.
Anderson joined the Bell Canada organization in 1992, where from 1998 to 2001 he
served as Chief Financial Officer of BCE Inc., Canada's largest
telecommunications company. From 2001 to 2005, Mr. Anderson served as President
of BCE Ventures (the strategic investment unit of BCE Inc.) and he was the
Chairman and Chief Executive Officer of Bell Canada International Inc. (a
subsidiary of BCE that was formed to invest in telecommunications operations
outside Canada), where he continues to serve as a member of the board. Prior to
joining the Bell Canada organization, Mr. Anderson was in public practice for
nearly twenty years with the accounting firm KPMG, where he was a partner for
eleven years. Mr. Anderson also serves on the boards of directors of TransAlta
Corporation (power generation and energy marketing) and Four Seasons Hotels Inc.
(luxury hotels and resorts). Mr. Anderson was educated at the University of
Western Ontario and is a member of the Institute of Chartered Accountants of
Ontario.</font><font FACE="Times New Roman PS" SIZE="2"><i> </p>
<p align="justify" style="text-indent: 26">Sheila O'Brien, CM</i></font><font FACE="Times New Roman PSMT" SIZE="2">
is President of Belvedere Investments, a private investment company, and is also
a business consultant and corporate director. She has had a thirty-year career
as a senior executive in the oil and gas and petrochemical sectors in the areas
of human resources, investor relations and public and government relations.
Prior to 2004, Ms. O'Brien was Senior Vice-President, Human Resources, Public
Affairs, Investor and Government Relations at NOVA Chemicals Corporation, a
producer of commodity plastics and chemicals, where she was the architect of a
corporate restructuring practice that was designated a world wide best practice
by Watson Wyatt Consulting Firm. She has also been active on the boards of
directors of over thirty public sector and not-for-profit organizations and was
awarded the Order of Canada for her community leadership in 1998. Ms. O'Brien is
a member of the Board of Trustees of Transforce Income Trust (a Canadian
transportation company) and MaRS (a Toronto-based biotechnology accelerator). In
addition to her corporate career, she has worked in a senior executive capacity
at the University of Calgary. She is a graduate of the MTC program at the
University of Western Ontario and completed a one-year sabbatical on creativity
and innovation at various U.S. schools in 1990. </font></p>
<p align="justify" style="text-indent: 26">
<font FACE="Times New Roman PS" SIZE="2"><i>Pierre Robitaille</i></font><font FACE="Times New Roman PSMT" SIZE="2">
is a business advisor and a corporate director. Mr. Robitaille previously
pursued his career at SNC-Lavalin Group Inc., a global engineering-construction
firm, where he was Executive Vice-President and Chief Financial Officer from
1990 to 1998. Prior to this, Mr. Robitaille was in public practice for more than
twenty years with the public accounting and management consulting firm of Ernst
&amp; Whinney, where he held the positions of Managing Partner of the Montreal
office, President of the firm in Qu&#233;bec, and member of its national board of
directors. Mr. Robitaille also serves on the boards of directors of Nav Canada
(civil air navigation services provider), Swiss Re Company of Canada and Swiss
Re Life &amp; Health Co. Canada (reinsurance companies) and National Public
Relations Capital Partnership Inc. (national public relations consulting firm).
Mr. Robitaille is a Fellow member of the Qu&#233;bec Order of Chartered Accountants.
He was educated at HEC-University of Montreal and McGill Business School. </font>
</p>
<p align="justify" style="text-indent: 26">
<font FACE="Times New Roman PS" SIZE="2"><i>Richard P. Strubel</i></font><font FACE="Times New Roman PSMT" SIZE="2">
is a corporate director and is Vice-Chairman of the Board of Cardean Learning
Group (formerly known as Unext), a provider of advanced education over the
Internet, where from 1999 to 2004 he served as President and Chief Operating
Officer. From 1990 to 1999, Mr. Strubel was Managing Director of Tandem
Partners, Inc., a privately-held management services firm, and from 1984 to
1994, he served as President and Chief Executive Officer of Microdot, Inc. Prior
to that, Mr. Strubel served as President of Northwest Industries, then a
NYSE-listed company, which included Fruit of the Loom and BVD among its
operating entities. Mr. Strubel also serves on the boards of directors of the
mutual funds of Goldman Sachs &amp; Co., Goldman Sachs Hedge Fund Partners and
Mutual Funds of Northern Trust. Mr. Strubel is also Trustee of the University of
Chicago and Chairman of its Audit Committee. Mr. Strubel was educated at Harvard
Business School.</p>
</font><font FACE="Times New Roman PS" SIZE="2"><i>
<p align="justify" style="text-indent: 26">Gonzalo F. Valdes-Fauli</i></font><font FACE="Times New Roman PSMT" SIZE="2">
is Chairman of the Board of BroadSpan Capital LLC, an investment banking firm
specializing in financial advisory services. Mr. Valdes-Fauli retired from
Barclays Bank PLC (a major UK-based global </font>
<font FACE="Times New Roman" SIZE="2">bank) in 2001, where he held the position
of Vice-Chairman, Barclays Capital, and Group CEO, Latin America. Mr. Valdes-Fauli
also serves on the boards of directors of Blue Cross Shield of Florida (health
insurance provider), where he is Lead Chairman, and Republic Bank of Dominican
Republic (financial services provider), where he is Chairman of the Board. He is
also Trustee Emeritus of the University of Miami. Mr. Valdes-Fauli holds a
Master's Degree in international finance from Thunderbird Graduate School for
International Management.</font></p>
<font FACE="Times New Roman PS" SIZE="2">
<p align="center">18</p>
<hr color="#000000" size="5"><p style="page-break-before: always"></font><font FACE="Times New Roman" SIZE="2"><i>
<p align="justify" style="text-indent: 26">Laurence G. Sellyn </i>was appointed
to the position of Executive Vice-President, Chief Financial and Administrative
Officer of the Corporation in November 2005. He joined Gildan as Executive
Vice-President, Finance and Chief Financial Officer of the Corporation in April
1999. He is a Fellow of the Institute of Chartered Accountants of England and
Wales. Prior to joining Gildan, Mr. Sellyn served as Senior Vice-President,
Finance and Corporate Development and Chief Financial Officer of Wajax Limited,
an industrial distribution company, where he was employed from October 1992 to
March 1999. Prior to joining Wajax, he was employed by Domtar Inc., where he
held various positions, including Corporate Controller and Vice-President,
Business Planning and Development. </p>
<i>
<p align="justify" style="text-indent: 26">Michael R. Hoffman</i> joined Gildan
in November 1997. He served as Vice-President, Sales and Marketing for the
international division until his appointment as President of Gildan Activewear
SRL in February 2001. Prior to joining Gildan, Mr. Hoffman was employed by Fruit
of the Loom, Inc., where he last served as Divisional Vice-President of the
Activewear Division. </p>
<i>
<p align="justify" style="text-indent: 26">Georges Sam Yu Sum</i> has been
Executive Vice-President, Operations of the Corporation since 2000. From 1998 to
2000, he served as Vice-President, Operations of the Corporation and from 1995
to 1998, he served as Director of Operations of the Corporation. Prior to
joining Gildan in 1995, Mr. Sam Yu Sum spent sixteen years with Dominion
Textiles, where he served in various managerial capacities, from manufacturing
to sales. </p>
<i>
<p align="justify" style="text-indent: 26">Gregg Thomassin</i> joined Gildan in
February 1999 as Corporate Controller and was appointed to the position of
Executive Vice-President in November 2003. He previously held the position of
Vice-President, Finance and Administration with various manufacturing companies.
Mr. Thomassin is a Canadian Chartered Accountant. </p>
<i>
<p align="justify" style="text-indent: 26">Benito Masi</i> has been involved in
apparel manufacturing in North America for over twenty-five years. He joined
Gildan in 1986, where he held various positions. He was appointed
Vice-President, Apparel Manufacturing in February 2001 and his title was changed
to Vice-President, Corporate Apparel Operations in September 2003. In August
2004, he was appointed Executive Vice-President, Apparel Manufacturing and was
appointed Executive Vice-President, Manufacturing in January 2005. </p>
<i>
<p align="justify" style="text-indent: 26">Cam Gentile </i>joined the
Corporation in 2006 as Executive Vice-President, Organizational Development and
Change Management. He has over thirty years of experience in the pulp and paper
industry in senior management positions at Domtar Inc., Transcontinental
Printing Inc., Paperboard Industries International Inc. and Uniboard Canada Inc.
He is currently a member of the Order of Engineers of Qu&#233;bec, President and
Chairman of the Board of Directors of the Qu&#233;bec Institute of Graphic
Communications, a member of the External Advisory Board to the Faculty of Arts
and Science of Concordia University, as well as Vice-President and member of the
board directors of Village Theatre in Hudson, Qu&#233;bec. </p>
<i>
<p align="justify" style="text-indent: 26">Claude Guay</i> joined the
Corporation as Executive Vice-President, Chief Information Officer in October
2006. His career spans more than twenty years in international executive
management at IBM Corporation and Accovia Inc., as well as at MTI Services, a
company he founded in 2005. Mr. Guay is a graduate of Industrial Engineering
from l'&#201;cole Polytechnique de Montr&#233;al and has been a professional engineer
since 1984. He also acts as the Networking Officer for the Qu&#233;bec Chapter Board
of Directors of the Young Presidents' Organization. </p>
<i>
<p align="justify" style="text-indent: 26">Eric R. Lehman</i> joined the
Corporation in December 2006 as Executive Vice-President, Supply Chain. He has
over twenty years of experience in the supply chain function with major national
apparel brands. Prior to joining Gildan, Mr. Lehman was employed by Russell
Corporation, where he last served as Vice President of Supply Chain. Prior to
that, he held senior supply chain planning positions at both Fruit of the Loom,
Inc. and the Hanes Division of Sara Lee Corporation. </p>
<i>
<p align="justify" style="text-indent: 26">William H. Nichol, Jr. </i>assumed
the position of President, Retail Sales Division, upon the Corporation's
acquisition of Kentucky Derby. Previously, Mr. Nichol served as Chairman and
Chief Executive Officer of Kentucky Derby since 1985. Mr. Nichol is
President-elect of The Hosiery Association, a national trade association that
represents the manufacturers of more than 85% of the hosiery produced in the
United States. </p>
</font><font FACE="Times New Roman PS" SIZE="2">
<p align="center">19</p>
<hr color="#000000" size="5"><p style="page-break-before: always"></font><font FACE="Times New Roman" SIZE="2">
<p align="justify" style="text-indent: 26">As at December 20, 2006, the
executive officers and directors of the Corporation as a group own 5,656,272
Common Shares, which represents 9.40% of the voting rights attached to all
Common Shares. </p>
<b>
<p align="justify">8.</b> </font><b><font SIZE="2" face="Times New Roman">&nbsp;&nbsp;&nbsp;
AUDIT COMMITTEE DISCLOSURE </p>
<p align="justify">Mandate of the Audit and Finance Committee </p>
</font></b><font FACE="Times New Roman" SIZE="2">
<p align="justify" style="text-indent: 26">The mandate of the Audit and Finance
Committee is included herewith as Appendix A. </p>
<b>
<p align="justify">Composition of the Audit and Finance Committee </p>
</b>
<p ALIGN="JUSTIFY" style="text-indent: 26">The Audit and Finance Committee is
composed of four independent and financially literate directors, as those terms
are defined in the rules of the Canadian Securities Administrators and the U.S.
Securities and Exchange Commission as well as the standards of the NYSE. Their
education and experience that is relevant to the performance of their
responsibilities as members of the Audit and Finance Committee is as follows:
</p>
<i><b>
<p ALIGN="JUSTIFY" style="text-indent: 26">Pierre Robitaille</b></i> &#150; Mr.
Robitaille is a business advisor and corporate director. He is retired from
SNC-Lavalin Group Inc., a global engineering-construction firm, where he was
Executive Vice-President and Chief Financial Officer from 1990 to 1998. Prior to
this, Mr. Robitaille was in public practice for more than twenty years with the
public accounting and management consulting firm of Ernst &amp; Whinney, where he
held the positions of Managing Partner of the Montreal office, President of the
firm in Qu&#233;bec and member of the firm's national board of directors. Mr. Robitaille is a member of the boards of directors of Swiss Re Company of Canada
and Swiss Re Life &amp; Health Co. Canada (national reinsurance companies), Nav
Canada (civil air navigation services provider) and National Public Relations
Capital Partnership Inc. (national public relations consulting firm). Over the
course of his career, he has acquired competence in the audit of major public
and private companies and a familiarity with internal controls and financial
reporting procedures. Mr. Robitaille is a Fellow member of the Qu&#233;bec Order of
Chartered Accountants. He was educated at HEC-University of Montreal and McGill
Business School. </p>
<i><b>
<p ALIGN="JUSTIFY" style="text-indent: 26">William D. Anderson</b></i> &#150; Mr.
Anderson is a chartered accountant and has had a business career spanning over
thirty years. From 1998 to 2001, he served as Chief Financial Officer of BCE
Inc., Canada's largest telecommunications company. Most recently, Mr. Anderson
served as President of BCE Ventures (the strategic investment unit of BCE Inc.)
and previously he was the Chairman and Chief Executive Officer of Bell Canada
International Inc. (a subsidiary of BCE that was formed to invest in
telecommunications operations outside Canada). Prior to joining the Bell Canada
organization in 1992, Mr. Anderson was in public practice for nearly twenty
years with the accounting firm KPMG, where he was a partner for eleven years.
Mr. Anderson also serves on the boards of directors of TransAlta Corporation
(power generation and energy marketing) and Four Seasons Hotels Inc. (luxury
hotels and resorts). Mr. Anderson was educated at the University of Western
Ontario and is a member of the Institute of Chartered Accountants of Ontario.
</p>
<i><b>
<p ALIGN="JUSTIFY" style="text-indent: 26">Richard P. Strubel</b></i> &#150; Mr.
Strubel is a corporate director and is Vice-Chairman of the Board of Cardean
Learning Group, where he previously served as President and Chief Operating
Officer. Prior to that, Mr. Strubel served as Managing Director of Tandem
Partners, Inc., a privately-held management services firm, President and Chief
Executive Officer of Microdot, Inc. and President of Northwest Industries, then
a NYSE-listed company with sales in excess of $3 billion. Mr. Strubel is also a
trustee of all the institutional and retail mutual funds managed by Goldman
Sachs &amp; Co., as well as the institutional funds of the Northern Trust Company
and serves as a member of the audit committees of these mutual fund families.
Mr. Strubel has more than twenty-five years of experience in executive positions
overseeing large operating corporations. Mr. Strubel is also Trustee of the
University of Chicago and Chairman of its Audit Committee. He was educated at
Harvard Business School. </p>
<i><b>
<p ALIGN="JUSTIFY" style="text-indent: 26">Gonzalo F. Valdes-Fauli</b></i> &#150; Mr.
Valdes-Fauli is a retired Vice-Chairman of Barclays Capital, the investment
banking division of Barclays Bank, London, England. Mr. Valdes-Fauli served as a
member of the management committee of Barclays Capital from 1988 to 2001. He was
Group CEO of Barclays Bank Latin America from 1988 to 2001. He is Chairman of
BroadSpan Capital LLC and Chairman of Republic Bank, Dominican Republic. Mr.
Valdes-Fauli also serves on the board of directors of Blue Cross Blue Shield of
Florida, where he is Lead Chairman. Mr. Valdes-Fauli is a Trustee Emeritus of
the University of Miami. He has more than thirty years of experience in finance
and holds a Master's Degree in international finance from Thunderbird Graduate
School for International Management. </p>
</font><font FACE="Times New Roman PS" SIZE="2">
<p align="center">20</p>
<hr color="#000000" size="5"><p style="page-break-before: always"></font><font SIZE="2" face="Times New Roman"><b>
<p align="justify">Pre-Approval of Non-Audit Services </p>
</b>
<p align="justify" style="text-indent: 26">In accordance with the Canadian
Institute of Chartered Accountants' independence standards for auditors, the <i>
Sarbanes-Oxley Act of 2002</i> and rules of the U.S. Securities and Exchange
Commission, the Corporation is restricted from engaging the auditors to provide
certain non-audit services to the Corporation and its subsidiaries, including
bookkeeping or other services related to the accounting records or financial
statements, information technology services, valuation services, actuarial
services, internal audit services, corporate finance services, management
functions, human resources functions, legal services and expert services
unrelated to the audit. The Corporation does engage the auditors from time to
time to provide certain non-audit services other than the restricted services.
All non-audit services must be specifically pre-approved by the Audit and
Finance Committee. </p>
<b>
<p align="justify">External Auditor Service Fees </p>
</b>
<p align="justify" style="text-indent: 26">The aggregate fees billed by KPMG LLP,
Chartered Accountants (&quot;KPMG&quot;), the Corporation's external auditor, for various
audit-related and non-audit services rendered for the fiscal years 2006 and 2005
were as follows: </p>
<i>
<p align="justify" style="text-indent: 26">Audit Fees </i>&#151; The aggregate audit
fees billed by KPMG for professional services rendered for the annual audit of
the Corporation's consolidated financial statements, quarterly reviews of the
Corporation's financial statements and services provided in connection with
statutory and regulatory filings or engagements were Cdn$1,196,100 for fiscal
2006 and Cdn$687,287 for fiscal 2005. The audit fees for fiscal 2006 include
fees relating to KPMG's audit of management's assessment of internal control
over financial reporting. </p>
<i>
<p align="justify" style="text-indent: 26">Audit-Related Fees </i>&#151; The
aggregate audit-related fees billed by KPMG were Cdn$94,025 for fiscal 2006 and
Cdn$74,700 for fiscal 2005. These services consisted of miscellaneous assurance
services. </p>
<i>
<p align="justify" style="text-indent: 26">Tax Fees</i> &#151; The aggregate tax fees
billed by KPMG were Cdn$322,785 for fiscal 2006 and Cdn$262,659 for fiscal 2005.
These services consisted of tax compliance, including the review of tax returns,
assistance regarding income, capital and sales tax audits, the preparation of
annual transfer pricing studies, tax advisory services relating to domestic and
international taxation and customs and duties. </p>
<i>
<p align="justify" style="text-indent: 26">All Other Fees </i>&#151; The aggregate
fees billed by KPMG for all other professional services rendered were
Cdn$169,860 for fiscal 2006 for services associated with financial due diligence
and Cdn$3,178 for fiscal 2005 for services associated with the assistance of
statutory filing requirements. </p>
<b>
<p align="justify">9.</b> </font><b><font FACE="Times New Roman" SIZE="2">&nbsp;&nbsp;&nbsp;
LEGAL PROCEEDINGS </p>
</font></b><font FACE="Times New Roman" SIZE="2">
<p align="justify" style="text-indent: 26">The Corporation is a party to claims
and litigation arising in the normal course of its operations. Management does
not expect the resolution of these matters to have a materially adverse effect
on the financial position or results of operations of the Corporation. </p>
</font><b><font FACE="Times New Roman" SIZE="2">
<p align="justify">10.&nbsp;&nbsp; TRANSFER AGENT AND REGISTRAR </p>
</font></b><font FACE="Times New Roman" SIZE="2">
<p align="justify" style="text-indent: 26">The transfer agent and registrar of
the Corporation is Computershare Investor Services Inc., having offices in
Montreal and Toronto at which the register of transfer of the Common Shares is
held. The co-transfer agent and co-registrar of the Corporation is Computershare
Trust Company, Inc., having an office in New York.</font><b><font SIZE="2" face="Times New Roman">
</p>
<p align="justify">11.&nbsp;&nbsp; MATERIAL CONTRACTS </p>
</font></b><font FACE="Times New Roman" SIZE="2">
<p align="justify" style="text-indent: 26">The Corporation has not entered into
any material contract outside the ordinary course of business. </p>
</font><font FACE="Times New Roman PS" SIZE="2">
<p align="center">21</p>
<hr color="#000000" size="5"><p style="page-break-before: always"></font><b><font FACE="Times New Roman PS" SIZE="2">
<p align="justify">12.&nbsp;&nbsp; INTERESTS OF EXPERTS </p>
</font></b><font FACE="Times New Roman PS" SIZE="2">
<p ALIGN="JUSTIFY" style="text-indent: 26">KPMG, the external auditors of the
Corporation, reported on the fiscal 2006 audited consolidated financial
statements of the Corporation, which were filed with the securities regulatory
authorities. We are advised that, as at the date hereof, the members of KPMG are
independent in accordance with the Code of Ethics of Chartered Accountants
(Qu&#233;bec). </p>
</font><b><font FACE="Times New Roman PS" SIZE="2">
<p align="justify">13.&nbsp;&nbsp; FORWARD &#150; LOOKING INFORMATION </p>
</font></b><font FACE="Times New Roman PS" SIZE="2">
<p ALIGN="JUSTIFY" style="text-indent: 26">Certain statements included in this
Annual Information Form may constitute &quot;forward-looking statements&quot; within the
meaning of the U.S. <i>Private Securities Litigation Reform Act of 1995</i> and
Canadian securities legislation and regulations, and are subject to important
risks, uncertainties and assumptions. This forward-looking information includes,
amongst others, information with respect to our objectives and the strategies to
achieve these objectives, as well as information with respect to our beliefs,
plans, expectations, anticipations, estimates and intentions. Forward-looking
statements generally can be identified by the use of forward-looking terminology
such as &quot;may&quot;, &quot;will&quot;, &quot;expect&quot;, &quot;intend&quot;, &quot;estimate&quot;, &quot;anticipate&quot;, &quot;plan&quot;,
&quot;foresee&quot;, &quot;believe&quot; or &quot;continue&quot; or the negatives of these terms or variations
of them or similar terminology. We refer you to the Corporation's filings with
the Canadian securities regulatory authorities and the U.S. Securities and
Exchange Commission, as well as the &quot;Risks and Uncertainties&quot; section of the
management's discussion and analysis on pages 37 to 40 of the 2006 Annual
Report, for a discussion of the various factors that may affect the
Corporation's future results. Material factors and assumptions that were applied
in drawing a conclusion or making a forecast or projection are also set out
throughout this document. </p>
<p ALIGN="JUSTIFY" style="text-indent: 26">The results or events predicted in
such forward-looking information may differ materially from actual results or
events. Material factors, which could cause actual results or events to differ
materially from a conclusion, forecast or projection in such forward-looking
information, include, but are not limited to: </p>
</font><font FACE="Symbol MT" LANG="JA" SIZE="2">
<ul>
  <li>
  <p ALIGN="justify"></font><font SIZE="2" face="Times New Roman PS">general
  economic conditions such as currency exchange rates, commodity prices and
  other factors over which we have no control;</font></li>
  <li>
  <p ALIGN="justify"><font SIZE="2" face="Times New Roman PS">the impact of
  economic and business conditions, industry trends and other external and
  political factors in the countries in which we operate;</font></li>
  <li>
  <p ALIGN="justify"><font SIZE="2" face="Times New Roman PS">the intensity of
  competitive activity;</font></li>
  <li>
  <p ALIGN="justify"><font SIZE="2" face="Times New Roman PS">changes in
  environmental, tax, trade and other laws and regulations;</font></li>
  <li>
  <p ALIGN="justify"><font SIZE="2" face="Times New Roman PS">our ability to
  implement our strategies and plans;</font></li>
  <li>
  <p ALIGN="justify"><font SIZE="2" face="Times New Roman PS">our ability to
  complete and successfully integrate acquisitions;</font></li>
  <li>
  <p ALIGN="justify"><font SIZE="2" face="Times New Roman PS">changes in
  customer demand for our products and our ability to maintain customer
  relationships and grow our business;</font></li>
  <li>
  <p ALIGN="justify"><font SIZE="2" face="Times New Roman PS">the seasonality of
  our business;</font></li>
  <li>
  <p ALIGN="justify"><font SIZE="2" face="Times New Roman PS">our ability to
  attract and retain key personnel;</font></li>
  <li>
  <p ALIGN="justify"><font SIZE="2" face="Times New Roman PS">changes in
  accounting policies; and</font></li>
  <li>
  <p ALIGN="justify"><font SIZE="2" face="Times New Roman PS">disruption to
  manufacturing and distribution activities due to the impact of weather,
  natural disasters and other unforeseen adverse events.</li>
</ul>
<p ALIGN="JUSTIFY" style="text-indent: 26">This may cause the Corporation's
actual performance and financial results in future periods to differ materially
from any estimates or projections of future performance or results expressed or
implied by such forward-looking statements. Forward-looking statements do not
take into account the effect that transactions or non-recurring or other special
items announced or occurring after the statements are made have on the
Corporation's business. For example, they do not include the effect of
dispositions, acquisitions, other business transactions, asset writedowns or
other charges announced or occurring after forward-looking statements are made.
The financial impact of such transactions and non-recurring and other special
items can be complex and necessarily depends on the facts particular to each of
them. </p>
<p ALIGN="JUSTIFY" style="text-indent: 26">We believe that the expectations
represented by our forward-looking statements are reasonable, yet there can be
no assurance that such expectations will prove to be correct. Furthermore, the
forward-looking statements contained in this Annual Information Form are made as
of the date hereof, and we do not undertake any obligation to update publicly or
to revise any of the included forward-looking statements, whether as a result of
new information, future events or otherwise unless required by applicable
legislation or regulation. The forward-looking statements contained in this
Annual Information Form are expressly qualified by this cautionary statement.
</p>
<p align="center">22</p>
<hr color="#000000" size="5"><p style="page-break-before: always"></font><b><font FACE="Times New Roman" SIZE="2">
<p>14.&nbsp;&nbsp; ADDITIONAL INFORMATION </p>
</font></b><font FACE="Times New Roman" SIZE="2">
<p ALIGN="JUSTIFY" style="text-indent: 26">Additional information, including
directors' and officers' remuneration and indebtedness, principal holders of the
Corporation's securities and securities authorized for insurance under the
Corporation's equity compensation plans is contained in the Circular, and
additional financial information is provided in the Corporation's comparative
consolidated financial statements and management's discussion and analysis for
its most recently completed financial year, both of which are contained in the
2006 Annual Report. </p>
<p ALIGN="JUSTIFY" style="text-indent: 26">Copies of these documents and
additional information relating to Gildan may be found on the SEDAR website at
www.sedar.com and the Edgar website at www.sec.gov and may also be obtained upon
request to the Secretary of Gildan at the following address: </p>
<p style="margin-left: 26">725 Mont&#233;e de Liesse <br>
Montreal, Qu&#233;bec <br>
H4T 1P5 <br>
Telephone: (514) 735-2023 </p>
<p style="text-indent: 26" align="justify">The documents mentioned above, as
well as Gildan's news releases, are also available on the Corporation's website
at www.gildan.com. </p>
</font>
<p>&nbsp;</p>
<p>&nbsp;</p>
<font SIZE="2" face="Times New Roman PS">
<p align="center">23</p>
<hr color="#000000" size="5"><p style="page-break-before: always"></font><font FACE="Times New Roman PS" SIZE="2"><b>
<p align="center">APPENDIX A - MANDATE OF THE AUDIT AND FINANCE COMMITTEE </p>
</b></font><font FACE="Times New Roman PSMT" SIZE="2">
<p ALIGN="JUSTIFY">The following description of the mandate of the Audit and
Finance Committee of the Corporation complies with applicable Canadian laws and
regulations, such as the rules of the Canadian Securities Administrators, and
with the disclosure and listing requirements of the Toronto Stock Exchange
(collectively, the &quot;</font><font FACE="Times New Roman PS" SIZE="2"><b>Canadian
Corporate Governance Standards</b></font><font FACE="Times New Roman PSMT" SIZE="2">&quot;),
as they exist on the date hereof. In addition, this mandate complies with
applicable U.S. laws, such as the </font>
<font FACE="Times New Roman PS" SIZE="2"><i>Sarbanes-Oxley Act of 2002</i></font><font FACE="Times New Roman PSMT" SIZE="2">,</font><font FACE="Times New Roman PS" SIZE="2"><i>
</i></font><font FACE="Times New Roman PSMT" SIZE="2">and rules and regulations
adopted thereunder, and with the New York Stock Exchange's corporate governance
standards (collectively, the &quot;</font><font FACE="Times New Roman PS" SIZE="2"><b>US
Corporate Governance Standards</b></font><font FACE="Times New Roman PSMT" SIZE="2">&quot;),
as they exist on the date hereof. The mandate of the Audit and Finance Committee
of the Corporation (the &quot;</font><font FACE="Times New Roman PS" SIZE="2"><b>Audit
Committee</b></font><font FACE="Times New Roman PSMT" SIZE="2">&quot;) shall be
reviewed annually by the Board in order to ensure on-going compliance with such
standards. </p>
</font><font FACE="Times New Roman PS" SIZE="2"><b>
<p align="justify">1.</b></font> <font FACE="Times New Roman PS" SIZE="2"><b>&nbsp;&nbsp;&nbsp;
MEMBERSHIP AND QUORUM</b></font></p>
<ul>
  <li>
  <p align="justify"><font FACE="Times New Roman PSMT" SIZE="2">a minimum of
  three directors;</font></li>
  <li>
  <p align="justify"><font FACE="Times New Roman PSMT" SIZE="2">only
  &quot;independent&quot; (as contemplated by Canadian Corporate Governance Standards and
  US Corporate Governance Standards) directors shall be appointed, the whole as
  determined by the Board; no affiliate of the Corporation or any of its
  subsidiaries (including any person who, directly or indirectly, controls or is
  controlled by, or is under common control with the Corporation, or any
  director, executive officer, partner, member, principal or designee of such
  affiliate) may serve on the Audit Committee; a member of the Audit Committee
  shall receive no compensation from the Corporation or any of its affiliates
  other than compensation as a director and committee member of the Corporation;
  prohibited compensation includes fees paid, directly or indirectly, for
  services as a consultant or as legal or financial advisor, regardless of the
  amount;</font></li>
  <li>
  <p align="justify"><font FACE="Times New Roman PSMT" SIZE="2">each member must
  be &quot;financially literate&quot; (as contemplated by Canadian Corporate Governance
  Standards and US Corporate Governance Standards), as determined by the Board;</font></li>
  <li>
  <p align="justify"><font FACE="Times New Roman PSMT" SIZE="2">at least one
  member must be an &quot;audit committee financial expert&quot; (as contemplated by US
  Corporate Governance Standards), as determined by the Board;</font></li>
  <li>
  <p align="justify"><font FACE="Times New Roman PSMT" SIZE="2">members of the
  Audit Committee shall be appointed annually by the Board upon recommendation
  of the Corporation's Corporate Governance Committee; such members may be
  removed or replaced, and any vacancies on the Audit Committee shall be filled
  by the Board upon recommendation of the Corporation's Corporate Governance
  Committee; membership on the Audit Committee shall automatically end at such
  time the Board determines that a member ceases to be &quot;independent&quot; as
  determined in the manner set forth above;</font></li>
  <li>
  <p align="justify"><font FACE="Times New Roman PSMT" SIZE="2">quorum of
  majority of members.</li>
</ul>
</font><font FACE="Times New Roman PS" SIZE="2"><b>
<p>2.</b></font> <font FACE="Times New Roman PS" SIZE="2"><b>&nbsp;&nbsp;&nbsp;
Frequency and Timing of Meetings</b></font></p>
<ul>
  <li><font FACE="Times New Roman PSMT" SIZE="2">normally contemporaneously with
  the Corporation's Board meetings;</font></li>
  <li><font FACE="Times New Roman PSMT" SIZE="2">at least four times a year and
  as necessary.</li>
</ul>
</font><font FACE="Times New Roman PS" SIZE="2"><b>
<p>3.</b></font> <font FACE="Times New Roman PS" SIZE="2"><b>&nbsp;&nbsp;&nbsp;
MANDATE </p>
</b></font><font FACE="Times New Roman PSMT" SIZE="2">
<p style="margin-left: 26">The responsibilities of the Audit Committee include
the following: </p>
</font><font SIZE="2" face="Times New Roman PS">
<p align="center">24</p>
<hr color="#000000" size="5"><p style="page-break-before: always"><i>
<p style="margin-left: 26">(a)&nbsp;&nbsp;&nbsp;&nbsp; Overseeing financial
reporting</i></font><font FACE="Times New Roman PSMT" SIZE="2"> </p>
</font><font FACE="Symbol MT" LANG="JA" SIZE="2">
<blockquote>
  <ul>
    <li>
    <p ALIGN="JUSTIFY"></font><font FACE="Times New Roman PSMT" SIZE="2">
    monitoring the integrity and quality of the Corporation's accounting and
    financial reporting process, disclosure controls and procedures, and systems
    of internal control, through independent discussions with management, the
    external auditors and the internal auditors;</font></li>
    <li>
    <p ALIGN="JUSTIFY"><font FACE="Times New Roman PSMT" SIZE="2">reviewing,
    with management and the external auditors, the annual audited consolidated
    financial statements as well as the report of the auditors thereon to be
    included in the Annual Report of the Corporation, including the
    Corporation's MD&amp;A disclosure, prior to their release, filing and
    distribution;</font></li>
    <li>
    <p ALIGN="JUSTIFY"><font FACE="Times New Roman PSMT" SIZE="2">reviewing,
    with management and the external auditors, quarterly consolidated financial
    statements of the Corporation and accompanying information including the
    Corporation's MD&amp;A disclosure, prior to their release, filing and
    distribution;</font></li>
    <li>
    <p ALIGN="JUSTIFY"><font FACE="Times New Roman PSMT" SIZE="2">reviewing with
    management and external auditors the financial information contained in
    prospectuses, offering memoranda, Annual Information Form, Annual Report,
    Management Proxy Circular, Forms 6-K (including Supplemental Disclosure) and
    40-F and any other document required to be disclosed or filed by the
    Corporation before their public disclosure or filing with regulatory
    authorities in Canada or the United States of America;</font></li>
    <li>
    <p ALIGN="JUSTIFY"><font FACE="Times New Roman PSMT" SIZE="2">reviewing,
    with management, the level and type of financial information provided from
    time to time, to financial markets, including any earnings press releases,
    as well as financial information and earnings guidance provided to analysts
    and rating agencies;</font></li>
    <li>
    <p ALIGN="JUSTIFY"><font FACE="Times New Roman PSMT" SIZE="2">reviewing with
    management that adequate procedures are in place for the review of the
    Corporation's disclosure of financial information extracted or derived from
    the Corporation's financial statements and periodically assessing the
    adequacy of those procedures;</font></li>
    <li>
    <p ALIGN="JUSTIFY"><font FACE="Times New Roman PSMT" SIZE="2">reviewing,
    with the external auditors and management, the quality, appropriateness and
    disclosure of the Corporation's accounting principles and policies,
    underlying assumptions and reporting practices, and any proposed changes
    thereto;</font></li>
    <li>
    <p ALIGN="JUSTIFY"><font FACE="Times New Roman PSMT" SIZE="2">reviewing any
    analysis or other written communications prepared by management, the
    internal auditors or external auditors setting forth significant financial
    reporting issues and judgments made in connection with the preparation of
    the financial statements, including analyses of the effect of alternative
    generally accepted accounting principles methods;</font></li>
    <li>
    <p ALIGN="JUSTIFY"><font FACE="Times New Roman PSMT" SIZE="2">reviewing the
    external auditors' quarterly review engagement report;</font></li>
    <li>
    <p ALIGN="JUSTIFY"><font FACE="Times New Roman PSMT" SIZE="2">reviewing the
    compliance of management certification of financial reports with applicable
    legislation;</font></li>
    <li>
    <p ALIGN="JUSTIFY"><font FACE="Times New Roman PSMT" SIZE="2">reviewing the
    potential impact of any litigation, claim or other contingency and any
    regulatory or accounting initiatives that could have a material effect upon
    the financial position or operating results of the Corporation and the
    appropriateness of the disclosure thereof in the documents reviewed by the
    Audit Committee;</font></li>
    <li>
    <p ALIGN="JUSTIFY"><font FACE="Times New Roman PSMT" SIZE="2">reviewing the
    results of the external audit, any significant problems encountered in
    performing the audit, and management's response and/or action plan related
    to any Management Letter issued by the external auditors and any significant
    recommendations contained therein;</font></li>
    <li>
    <p ALIGN="JUSTIFY"><font FACE="Times New Roman PSMT" SIZE="2">reviewing at
    least annually the Corporation's communications policy and monitoring the
    Corporation's communications with analysts, investors, the media and the
    public.</font></li>
  </ul>
</blockquote>
<font SIZE="2" face="Times New Roman PS">
<p align="center">25</p>
<hr color="#000000" size="5"><p style="page-break-before: always"></font><font FACE="Times New Roman PSMT" SIZE="2">
<p style="margin-left: 26">(b) <i>&nbsp;&nbsp;&nbsp; Monitoring risk management
and internal controls</i></p>
<blockquote>
  <ul>
    <li>
    <p align="justify">receiving periodically management's report assessing the
    adequacy and effectiveness of the Corporation's disclosure controls and
    procedures and systems of internal control;</li>
    <li>
    <p align="justify">reviewing insurance coverage (annually and as may
    otherwise be appropriate);</li>
    <li>
    <p align="justify">taking reasonable measures to ensure that appropriate
    systems are in place to identify business risks and opportunities and
    overseeing the implementation of processes to manage these risks and
    opportunities;</li>
    <li>
    <p align="justify">reviewing policy parameters for normal derivative
    transactions to hedge interest rate and foreign exchange risks and any
    transaction not within the parameters;</li>
    <li>
    <p align="justify">assisting the Board with the oversight of the
    Corporation's compliance with, and reviewing the Corporation's processes to
    ensure compliance with, applicable legal and regulatory requirements;</li>
    <li>
    <p align="justify">while ensuring confidentiality and anonymity,
    establishing procedures for the receipt, retention and treatment of
    complaints or concerns received by the Corporation regarding accounting,
    internal accounting controls or auditing matters or employee concerns
    regarding accounting or auditing matters;</li>
    <li>
    <p align="justify">requesting the performance of any specific audit, as
    required.</li>
  </ul>
</blockquote>
<i>
<p style="margin-left: 26">(c)&nbsp;&nbsp;&nbsp;&nbsp; Monitoring internal
auditors</p>
<blockquote>
  <ul>
    <li>
    <p align="justify"></i>ensuring that the internal auditors have a functional
    reporting relationship with the Audit Committee;</li>
    <li>
    <p align="justify">ensuring that the internal auditors have access to all
    levels of management in order to carry out their duties;</li>
    <li>
    <p align="justify">regularly monitoring the internal audit function's
    performance, its responsibilities, staffing and budget;</li>
    <li>
    <p align="justify">approving the appointment and termination of the
    Corporation's chief internal auditor;</li>
    <li>
    <p align="justify">ensuring that the internal auditors are accountable to
    the Audit Committee and to the Board.</li>
  </ul>
</blockquote>
<i>
<p style="margin-left: 26">(d)&nbsp;&nbsp;&nbsp;&nbsp; Monitoring external
auditors</p>
<blockquote>
  <ul>
    <li></i>recommending the retention and, if appropriate, the removal of
    external auditors (both subject to shareholder approval), their
    compensation, as well as evaluating and monitoring their qualifications,
    performance and independence;</li>
    <li>overseeing all relationships between the external auditors and the
    Corporation including, determining which non-audit services the external
    auditors are prohibited from providing, approving, or pre-approving policies
    defining audit and permitted non-audit services provided by the external
    auditors, overseeing the disclosure of all audit and permitted non-audit
    services provided by the external auditors, and reviewing the total amount
    of fees paid by the Corporation to the external auditors for all audit and
    non-audit services;</li>
    <li>ensuring that the external auditors report directly to the Audit
    Committee and that they are accountable to the Audit Committee and to the
    Board;</li>
  </ul>
</blockquote>
</font><font SIZE="2" face="Times New Roman PS">
<p align="center">26</p>
<hr color="#000000" size="5"><p style="page-break-before: always"></font><font FACE="Symbol MT" LANG="JA" SIZE="3">
<blockquote>
  <ul>
    <li>
    <p ALIGN="JUSTIFY"></font><font FACE="Times New Roman" SIZE="2">directly
    overseeing the external auditors and discussing with them the quality and
    not just the acceptability of the Corporation's accounting principles,
    including (i) all critical accounting policies and practices used, (ii) any
    alternative treatments of financial information that have been discussed
    with management, the ramification of their use and the treatment preferred
    by the external auditors, as well as (iii) any other material written
    communications between the Corporation and the external auditors (including
    any disagreement with management and the resolution thereof);</font></li>
    <li>
    <p ALIGN="JUSTIFY"><font FACE="Times New Roman" SIZE="2">reviewing at least
    annually, a report by the external auditors describing their internal
    quality-control procedures; any material issues raised by their most recent
    internal quality-control review of their firm, or peer review, or by any
    inquiry or investigation by governmental or professional authorities, within
    the preceding five years, respecting one or more audits carried out by them,
    to the extent available, and any steps taken to deal with any such issues;</font></li>
    <li>
    <p ALIGN="JUSTIFY"><font FACE="Times New Roman" SIZE="2">reviewing at least
    annually, the formal written statement from the external auditors stating
    all relationships the external auditors have with the Corporation and
    confirming their independence, and holding discussions with the external
    auditors as to any relationship or services that may impact their
    objectivity or independence;</font></li>
    <li>
    <p ALIGN="JUSTIFY"><font FACE="Times New Roman" SIZE="2">reviewing hiring
    policies for employees or former employees of the Corporation's firm of
    external auditors;</font></li>
    <li>
    <p ALIGN="JUSTIFY"><font FACE="Times New Roman" SIZE="2">taking all
    reasonable steps to ensure the rotation of lead, concurring and other audit
    partners, to the extent required by Canadian Corporate Governance Standards
    and US Corporate Governance Standards.</li>
  </ul>
</blockquote>
<i>
<p style="margin-left: 26" align="justify">(e)&nbsp;&nbsp;&nbsp;&nbsp; Reviewing
financings</i> </p>
</font><font FACE="Symbol MT" LANG="JA" SIZE="3">
<blockquote>
  <ul>
    <li>
    <p align="justify"></font><font FACE="Times New Roman" SIZE="2">reviewing
    the adequacy of the Corporation's financing, including terms and conditions.</li>
  </ul>
</blockquote>
<i>
<p align="justify" style="margin-left: 26">(f)&nbsp;&nbsp;&nbsp;&nbsp;
Evaluating the performance of the Audit Committee</i> </p>
</font><font FACE="Symbol MT" LANG="JA" SIZE="3">
<blockquote>
  <ul>
    <li>
    <p align="justify"></font><font SIZE="2" face="Times New Roman">ensuring
    that processes are in place to annually evaluate the performance of the
    Audit Committee.</li>
  </ul>
</blockquote>
<p ALIGN="JUSTIFY">Because of the Audit Committee's demanding role and
responsibilities, the Board chair, together with the Corporate Governance
Committee chair, reviews any invitation to Audit Committee members to join the
audit committee of another publicly-listed entity. Where a member of the Audit
Committee simultaneously serves on the audit committee of more than three public
companies, including the Corporation, the Board determines whether such
simultaneous service impairs the ability of such member to effectively serve on
the Audit Committee and either requires a correction to the situation or
discloses in the Corporation's Management Proxy Circular that there is no such
impairment. </p>
<p ALIGN="JUSTIFY">As appropriate, the Audit Committee may obtain advice and
assistance from outside legal, accounting or other advisors and set and pay
their compensation, and so advise the Board chair and, if appropriate, the
external auditors; the Audit Committee makes arrangements for the appropriate
funding for payment of the external auditors and any advisors retained by it. In
addition, the Corporation will provide appropriate funding for the Audit
Committee, including the payment of all outside legal, accounting and other
advisors retained by the Audit Committee. </p>
<p ALIGN="JUSTIFY">The internal auditors and the external auditors will have at
all times a direct line of communication with the Audit Committee. In addition,
each must meet separately with the Audit Committee, without management, twice a
year and more frequently as required, during which the Corporation's financial
statements and control environment must be discussed; the Audit Committee must
also meet separately with management twice a year, and more frequently as
required. </p>
<p align="justify">The Audit Committee shall report annually to the Board on the
adequacy of its mandate. In addition, the chair of the Audit Committee shall
report regularly to the Board on the business of the Audit Committee. </p>
</font><font SIZE="2" face="Times New Roman PS">
<p align="center">27</p>
<hr color="#000000" size="5"><p style="page-break-before: always"></font><font FACE="Times New Roman PSMT" SIZE="2">
<p ALIGN="JUSTIFY"><font SIZE="2" face="Times New Roman">Nothing contained in
the above mandate is intended to transfer to the Audit Committee the Board's
responsibility to ensure the Corporation's compliance with applicable laws or
regulations or to expand applicable standards of liability under </font>
statutory or regulatory requirements for the directors or the members of the
Audit Committee. Even though the Audit Committee has a specific mandate and its
members may have financial experience, they do not have the obligation to act as
auditors or to perform auditing, or to determine that the Corporation's
financial statements are complete and accurate and are in accordance with
generally accepted accounting principles. Such matters are the responsibility of
management, the internal auditors and the external auditors. Members of the
Audit Committee are entitled to rely, absent knowledge to the contrary, on (i)
the integrity of the persons and organizations from whom they receive
information, (ii) the accuracy and completeness of the information provided, and
(iii) representations made by management as to the non-audit services provided
to the Corporation by the external auditors. The Audit Committee's oversight
responsibilities are not established to provide an independent basis to
determine that (i) management has maintained appropriate accounting and
financial reporting principles or appropriate internal controls and procedures,
or (ii) the Corporation's financial statements have been prepared and, if
applicable, audited in accordance with generally accepted accounting principles.
</p>
<p align="center">* * * * * * * </p>
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<p>&nbsp;</p>
<font SIZE="2" face="Times New Roman PS">
<p align="center">28</p>
</font>

<hr color="#000000" size="5"><p style="page-break-before: always"><font FACE="Times New Roman" SIZE="2"><b>
<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; A.&nbsp;&nbsp;&nbsp;
Undertaking </p>
</b>
<p ALIGN="JUSTIFY" style="text-indent: 52">Gildan Activewear Inc. (the
&quot;Registrant&quot;) undertakes to make available, in person or by telephone,
representatives to respond to inquiries made by the staff of the Securities and
Exchange Commission (&quot;SEC&quot;), and to furnish promptly, when requested to do so by
the SEC staff, information relating to the securities in relation to which the
obligation to file an annual report on Form 40-F arises or transactions in said
securities. </p>
<b>
<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; B.&nbsp;&nbsp;&nbsp;
Consent to Service of Process </p>
</b>
<p align="justify" style="text-indent: 52">The Registrant has previously filed
with the SEC a written irrevocable consent and power of attorney on Form F-X in
connection with the Class A Subordinate Voting Shares (now Common Shares). </p>
<b>
<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; C.&nbsp;&nbsp;&nbsp;
Evaluation of disclosure controls and procedures </p>
</b>
<p ALIGN="JUSTIFY" style="text-indent: 52">Our disclosure controls and
procedures are designed to ensure that information required to be disclosed in
our reports filed with the SEC is recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and forms and is
accumulated and communicated to our management, including our principal
executive officer and our principal financial officer, as appropriate, to allow
timely decisions regarding required disclosure. </p>
<p ALIGN="JUSTIFY" style="text-indent: 52">An evaluation was carried out under
the supervision of, and with the participation of, our management, including our
principal executive officer and our principal financial officer, of the
effectiveness of our disclosure controls and procedures (as such term is defined
in the Securities Exchange Act of 1934 (the &quot;Exchange Act&quot;), as amended, Rules
13a-15(e) and 15d-15(e)) as of the end of the period covered by this Annual
Report on Form 40-F. Based on that evaluation, our principal executive officer
and our principal financial officer concluded that our disclosure controls and
procedures were effective as of the end of such period. </p>
<b>
<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; D.&nbsp;&nbsp;&nbsp;
Management's annual report on internal control over financial reporting </p>
</b>
<p align="justify" style="text-indent: 52">Our management is responsible for
establishing and maintaining adequate internal control over financial reporting,
as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.
</p>
<p ALIGN="JUSTIFY" style="text-indent: 52">Our internal control over financial
reporting includes those policies and procedures that: (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of our assets; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting
principles, and that our receipts and expenditures are being made only in
accordance with authorizations of our management and directors; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of our assets that could have a material effect
on the financial statements. </p>
<p ALIGN="JUSTIFY" style="text-indent: 52">Under the supervision and with the
participation of our principal executive officer and our principal financial
officer, management conducted an evaluation of the effectiveness of our internal
control over financial reporting, as of October 1, 2006, based on the framework
set forth in<b> </b><i>Internal Control-Integrated Framework</i> issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based
on its evaluation under this framework, management concluded that our internal
control over financial reporting was effective as of that date. </p>
<p ALIGN="JUSTIFY" style="text-indent: 52">Management's assessment of the
effectiveness of our internal control over financial reporting as of October 1,
2006 excluded Kentucky Derby Hosiery Co., Inc. (&quot;KDH&quot;), which we acquired on
July 6, 2006. KDH is a wholly-owned subsidiary of ours whose total assets and
total sales represented less than 11% of our consolidated total assets and less
than 4% of our consolidated sales, respectively, as of and for the year ended
October 1, 2006. Companies are allowed to exclude acquisitions from their
assessment of internal control over financial reporting during the first year of
an acquisition while integrating the acquired company under guidelines
established by the SEC. </p>
<b>
<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; E.&nbsp;&nbsp;&nbsp;&nbsp;
Attestation report of the registered public accounting firm. </p>
</b>
<p align="justify" style="text-indent: 52">KPMG LLP (&quot;KPMG&quot;), an independent
registered public accounting firm, who audited and reported on our financial
statements attached as Exhibit 99.2 to this Annual Report on Form 40-F, has
issued an attestation report on </font>
<font FACE="Times New Roman PSMT" SIZE="2">management's assessment of our
internal control over financial reporting as of October 1, 2006. The attestation
report is included on page 47 of the financial statements attached as Exhibit
99.2</font><font FACE="Times New Roman PSMT"> </font>
<font FACE="Times New Roman PSMT" SIZE="2">to this Annual Report on Form 40-F.
</p>
<hr color="#000000" size="5"><p style="page-break-before: always"></font><font FACE="Times New Roman PS" SIZE="2"><b>
<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F.&nbsp;&nbsp;&nbsp;&nbsp;
Changes in internal controls over financial reporting. </p>
</b></font><font FACE="Times New Roman PSMT" SIZE="2">
<p ALIGN="JUSTIFY" style="text-indent: 52">We made improvements to our internal
controls over financial reporting during the period covered by this Annual
Report on Form 40-F in preparation for our first annual management report on
internal control over financial reporting. </p>
<p ALIGN="JUSTIFY" style="text-indent: 52">The design of any system of controls
and procedures is based in part upon certain assumptions about the likelihood of
certain events. There can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions, regardless of
how remote.</font><font FACE="Times New Roman PSMT"> </p>
</font><font FACE="Times New Roman PS" SIZE="2"><b>
<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; G.&nbsp;&nbsp;&nbsp;&nbsp;
Audit Committee Financial Experts </p>
</b></font><font FACE="Times New Roman PSMT" SIZE="2">
<p ALIGN="JUSTIFY" style="text-indent: 52">The Registrant's board of directors
has determined that it has at least three (3) audit committee financial experts
serving on its audit committee. Mr. Pierre Robitaille, Mr. Gonzalo F. Valdes-Fauli
and Mr. William D. Anderson have been determined to be such audit committee
financial experts and are independent, as that term is defined by the New York
Stock Exchange's listing standards applicable to the Registrant. The SEC has
indicated that the designation of Mr. Robitaille, Mr. Valdes-Fauli and Mr.
Anderson as audit committee financial experts does not make Mr. Robitaille, Mr.
Valdes-Fauli and Mr. Anderson &quot;experts&quot; for any purpose, impose any duties,
obligations or liability on Mr. Robitaille, Mr. Valdes-Fauli and Mr. Anderson
that are greater than those imposed on members of the audit committee and board
of directors who do not carry this designation or affect the duties, obligations
or liability of any other member of the audit committee. </p>
</font><font FACE="Times New Roman PS" SIZE="2"><b>
<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; H.&nbsp;&nbsp;&nbsp;&nbsp;
Code of Ethics </p>
</b></font><font FACE="Times New Roman PSMT" SIZE="2">
<p ALIGN="JUSTIFY" style="text-indent: 52">The Registrant has adopted a Code of
Ethics and Business Conduct (the &quot;Code of Conduct&quot;) that applies to all
employees and officers, including its principal executive officer, principal
financial officer and principal accounting officer. The Code of Conduct is
available at the Registrant's Internet website, <u><font color="#0000FF">
www.gildan.com</font></u>, and is available in print to any shareholder who
requests it. </p>
</font><font FACE="Times New Roman PS" SIZE="2"><b>
<p align="justify">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; I.&nbsp;&nbsp;&nbsp;&nbsp;
Principal Accountant Fees and Services</b></font><font FACE="Times New Roman PSMT" SIZE="2">
</p>
<p ALIGN="JUSTIFY" style="text-indent: 52">In addition to retaining KPMG to
report upon the annual consolidated financial statements of the Registrant, the
Registrant retained KPMG to provide various audit-related and non-audit services
in fiscal 2006. The aggregate fees billed for professional services by KPMG for
each of the last two (2) fiscal years, were as follows: </p>
</font><font FACE="Times New Roman PS" SIZE="2"><i>
<p ALIGN="JUSTIFY" style="margin-left: 26">Audit Fees </i></font>
<font FACE="Times New Roman PSMT" SIZE="2">&#151; The aggregate audit fees billed by
KPMG for professional services rendered for the annual audit of the Registrant's
consolidated financial statements, quarterly reviews of the Registrant's
financial statements and services provided in connection with statutory and
regulatory filings or engagements were CDN$1,196,100 for fiscal 2006 and
CDN$687,287 for fiscal 2005. The audit fees for fiscal 2006 include fees
relating to KPMG's audit of management's assessment of internal control over
financial reporting. </p>
</font><font FACE="Times New Roman PS" SIZE="2"><i>
<p align="justify" style="margin-left: 26">Audit-Related Fees </i></font>
<font FACE="Times New Roman PSMT" SIZE="2">&#151; The aggregate audit-related fees
billed by KPMG were CDN$94,025 for fiscal 2006 and CDN$74,700 for fiscal 2005.
These services consisted of miscellaneous assurance services. </p>
</font><font FACE="Times New Roman PS" SIZE="2"><i>
<p ALIGN="JUSTIFY" style="margin-left: 26">Tax Fees</i></font><font FACE="Times New Roman PSMT" SIZE="2">
&#151; The aggregate tax fees billed by KPMG were CDN$322,785 for fiscal 2006 and
CDN$262,659 for fiscal 2005. These services consisted of tax compliance,
including the review of tax returns, assistance regarding income, capital and
sales tax audits, the preparation of annual transfer pricing studies, tax
advisory services relating to domestic and international taxation and customs
and duties. </p>
</font><font FACE="Times New Roman PS" SIZE="2"><i>
<p ALIGN="JUSTIFY" style="margin-left: 26">All Other Fees </i></font>
<font FACE="Times New Roman PSMT" SIZE="2">&#151; The aggregate fees billed by KPMG
for all other professional services rendered were CDN$169,860 for fiscal 2006
for services associated with financial due diligence and CDN$3,178 for fiscal
2005 for services associated with the assistance of statutory filing
requirements. </p>
<p align="justify" style="text-indent: 52">All fees billed to the Registrant by
KPMG in fiscal 2006 were pre-approved by the Registrant's Audit and Finance
Committee pursuant to the procedures and policies set forth in the Audit and
Finance Committee mandate and pursuant to applicable legislation. The mandate of the Audit and Finance
Committee is available on the Registrant's Internet website at
<font color="#0000FF"><u>www.gildan.com</u></font>. </p>
</font><hr color="#000000" size="5"><p style="page-break-before: always"><font FACE="Times New Roman PSMT" SIZE="2">
</font><font FACE="Times New Roman PS" SIZE="2"><b>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; J.&nbsp;&nbsp;&nbsp;&nbsp;
Off-Balance Sheet Arrangements </p>
</b><i>
<p style="text-indent: 52" align="justify">Operating leases and commitments </p>
</i></font><font FACE="Times New Roman PSMT" SIZE="2">
<p ALIGN="JUSTIFY" style="text-indent: 52">The Registrant has no commitments
that are not reflected in its balance sheets except for operating leases and
other purchase obligations, which are included in the table of contractual
obligations on page 32 of its MD&amp;A (see Exhibit 99.1). As disclosed in Note 13
to the Registrant's Consolidated Financial Statements (see Exhibit 99.2), the
Registrant has issued standby letters of credit and corporate guarantees
primarily from various servicing agreements amounting to $37.4 million at
October 1, 2006. </p>
</font><font FACE="Times New Roman PS" SIZE="2"><i>
<p style="text-indent: 52" align="justify">Derivative Financial Instruments </p>
</i></font><font FACE="Times New Roman PSMT" SIZE="2">
<p ALIGN="JUSTIFY" style="text-indent: 52">From time to time, the Registrant
uses forward foreign exchange contracts, primarily in Canadian dollars, British
pounds and Euros, to hedge cash flows related to sales and operating expenses in
foreign currencies (non-U.S. dollar). A forward foreign exchange contract
represents an obligation to exchange a foreign currency with a counterparty at a
predetermined rate. Credit risk exists in the event of failure by a counterparty
to meet its obligations. The Registrant reduces this risk by dealing only with
highly rated counterparties, normally major North American and European
financial institutions. The Registrant's exposure to foreign currency
fluctuations is described in more detail in the &quot;Risks and Uncertainties&quot;
section of its MD&amp;A beginning on page 37 (see Exhibit 99.1). </p>
<p style="text-indent: 52" align="justify">The Registrant does not use
derivative financial instruments for speculative purposes. Forward foreign
exchange contracts are entered into with maturities not exceeding twenty-four
months. </p>
<p style="text-indent: 52" align="justify">For the years ended October 1, 2006
and October 2, 2005, net earnings included recognized gains relating to
derivative financial instruments of $4.6 million and $5.8 million, respectively.
</p>
<p align="justify">The following table summarizes the Registrant's commitments
to buy and sell foreign currencies as at October 1, 2006 and October 2, 2005:
</p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="330" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="131" align="right" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 10; margin-right: 10">Notional</font></td>
    <td WIDTH="185" align="right" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 10; margin-right: 10">Exchange</font></td>
    <td WIDTH="195" align="right" style="border-top-style: solid; border-top-width: 1">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="144" align="right" style="border-right-style: none; border-right-width: medium; border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 10; margin-right: 10">Notional US dollar</font></td>
  </tr>
  <tr>
    <td WIDTH="330" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="131" align="right"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 10; margin-right: 10">Amount</font></td>
    <td WIDTH="185" align="right"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 10; margin-right: 10">Rate</font></td>
    <td WIDTH="195" align="right"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 10; margin-right: 10">Maturity</font></td>
    <td WIDTH="144" align="right" style="border-right-style: none; border-right-width: medium">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 10; margin-right: 10">Equivalent</font></td>
  </tr>
  <tr>
    <td WIDTH="330" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="131" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="185" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="195" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="144" align="right" style="border-right-style: none; border-right-width: medium; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="330" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="131" align="right" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 10; margin-right: 10">(in thousands)</font></td>
    <td WIDTH="185" align="right" style="border-top-style: solid; border-top-width: 1">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="195" align="right" style="border-top-style: solid; border-top-width: 1">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="144" align="right" style="border-right-style: none; border-right-width: medium; border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 10; margin-right: 10">(in thousands)</font></td>
  </tr>
  <tr>
    <td WIDTH="330" style="border-left-style: solid; border-left-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 10; margin-right: 10">2006:</b></font></td>
    <td WIDTH="131" align="right">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="185" align="right">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="195" align="right">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="144" align="right" style="border-right-style: none; border-right-width: medium">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="330" style="border-left-style: solid; border-left-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 10; margin-right: 10">Buy contracts:</font></td>
    <td WIDTH="131" align="right">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="185" align="right">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="195" align="right">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="144" align="right" style="border-right-style: none; border-right-width: medium">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="330" style="border-left-style: solid; border-left-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 36; margin-right: 10">Foreign exchange contracts:</font></td>
    <td WIDTH="131" align="right"><font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 10; margin-right: 10">&#128;9,756</b></font></td>
    <td WIDTH="185" align="right"><font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 10; margin-right: 10">1.2056 to 1.2696</b></font></td>
    <td WIDTH="195" align="right"><font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 10; margin-right: 10">Oct. 2006 - June 2007</b></font></td>
    <td WIDTH="144" align="right" style="border-right-style: none; border-right-width: medium">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 10; margin-right: 10">$11,934</b></font></td>
  </tr>
  <tr>
    <td WIDTH="330" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="131" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 10; margin-right: 10">CDN$6,250</b></font></td>
    <td WIDTH="185" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 10; margin-right: 10">0.8961</b></font></td>
    <td WIDTH="195" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 10; margin-right: 10">Oct. 2006</b></font></td>
    <td WIDTH="144" align="right" style="border-right-style: none; border-right-width: medium; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 10; margin-right: 10">5,600</b></font></td>
  </tr>
  <tr>
    <td WIDTH="330" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="131" align="right" style="border-top-style: solid; border-top-width: 1">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="185" align="right" style="border-top-style: solid; border-top-width: 1">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="195" align="right" style="border-top-style: solid; border-top-width: 1">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="144" align="right" style="border-right-style: none; border-right-width: medium; border-top-style: solid; border-top-width: 1">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="330" style="border-left-style: solid; border-left-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 10; margin-right: 10">2005:</b></font></td>
    <td WIDTH="131" align="right">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="185" align="right">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="195" align="right">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="144" align="right" style="border-right-style: none; border-right-width: medium">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="330" style="border-left-style: solid; border-left-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 10; margin-right: 10">Sell contracts:</font></td>
    <td WIDTH="131" align="right">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="185" align="right">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="195" align="right">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="144" align="right" style="border-right-style: none; border-right-width: medium">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="330" style="border-left-style: solid; border-left-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 36; margin-right: 10">Foreign exchange contracts:</font></td>
    <td WIDTH="131" align="right"><font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 10; margin-right: 10">&#128;9,276</b></font></td>
    <td WIDTH="185" align="right"><font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 10; margin-right: 10">1.3450 to 1.3721</b></font></td>
    <td WIDTH="195" align="right"><font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 10; margin-right: 10">Oct. 2005 - Sept. 2006</b></font></td>
    <td WIDTH="144" align="right" style="border-right-style: none; border-right-width: medium">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 10; margin-right: 10">$12,620</b></font></td>
  </tr>
  <tr>
    <td WIDTH="330" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="131" align="right"><b>
    <font FACE="Times New Roman PS" LANG="JA" SIZE="1">
    <p style="margin-left: 10; margin-right: 10"></font>
    <font SIZE="2">&#163;</font><font FACE="Times New Roman" SIZE="2">4,490</font></b></td>
    <td WIDTH="185" align="right"><font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 10; margin-right: 10">1.8707 to 1.8909</b></font></td>
    <td WIDTH="195" align="right"><font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 10; margin-right: 10">Oct. 2005 - Sept.2006</b></font></td>
    <td WIDTH="144" align="right" style="border-right-style: none; border-right-width: medium">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 10; margin-right: 10">8,439</b></font></td>
  </tr>
  <tr>
    <td WIDTH="330" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="131" align="right"><font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 10; margin-right: 10">CDN$2,800</b></font></td>
    <td WIDTH="185" align="right"><font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 10; margin-right: 10">0.8610</b></font></td>
    <td WIDTH="195" align="right"><font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 10; margin-right: 10">Oct. 2005</b></font></td>
    <td WIDTH="144" align="right" style="border-right-style: none; border-right-width: medium">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 10; margin-right: 10">2,410</b></font></td>
  </tr>
  <tr>
    <td WIDTH="330" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="131" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="185" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="195" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="144" align="right" style="border-right-style: none; border-right-width: medium; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="330" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1; border-bottom-style: none; border-bottom-width: medium">&nbsp;</td>
    <td WIDTH="131" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: none; border-bottom-width: medium">&nbsp;</td>
    <td WIDTH="185" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: none; border-bottom-width: medium">&nbsp;</td>
    <td WIDTH="195" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: none; border-bottom-width: medium">&nbsp;</td>
    <td WIDTH="144" align="right" style="border-right-style: none; border-right-width: medium; border-top-style: solid; border-top-width: 1; border-bottom-style: none; border-bottom-width: medium">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="330" style="border-left-style: solid; border-left-width: 1; border-top-style: none; border-top-width: medium">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 10; margin-right: 10">Buy contracts:</font></td>
    <td WIDTH="131" align="right" style="border-top-style: none; border-top-width: medium">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="185" align="right" style="border-top-style: none; border-top-width: medium">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="195" align="right" style="border-top-style: none; border-top-width: medium">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="144" align="right" style="border-right-style: none; border-right-width: medium; border-top-style: none; border-top-width: medium">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="330" style="border-left-style: solid; border-left-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 36; margin-right: 10">Foreign exchange contracts:</font></td>
    <td WIDTH="131" align="right"><font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 10; margin-right: 10">CDN$21,400</b></font></td>
    <td WIDTH="185" align="right"><font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 10; margin-right: 10">0.7997 to 0.8216</b></font></td>
    <td WIDTH="195" align="right"><font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 10; margin-right: 10">Oct. 2005 - Aug. 2006</b></font></td>
    <td WIDTH="144" align="right" style="border-right-style: none; border-right-width: medium">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 10; margin-right: 10">$17,348</b></font></td>
  </tr>
  <tr>
    <td WIDTH="330" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-left: 10; margin-right: 10">&nbsp;</td>
    <td WIDTH="131" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <b><font FACE="Times New Roman PS" LANG="JA" SIZE="1">
    <p style="margin-left: 10; margin-right: 10"><font FACE="Times New Roman" SIZE="2">
    &#128;</font></font><font FACE="Times New Roman" SIZE="2">2,150</font></b></td>
    <td WIDTH="185" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 10; margin-right: 10">1.2039</b></font></td>
    <td WIDTH="195" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 10; margin-right: 10">Oct. 2005</b></font></td>
    <td WIDTH="144" align="right" style="border-right-style: none; border-right-width: medium; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 10; margin-right: 10">2,588</b></font></td>
  </tr>
  <tr>
    <td WIDTH="330" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 10">&nbsp;</td>
    <td WIDTH="131" align="right" style="border-bottom-style: solid; border-bottom-width: 10">&nbsp;</td>
    <td WIDTH="185" align="right" style="border-bottom-style: solid; border-bottom-width: 10">&nbsp;</td>
    <td WIDTH="195" align="right" style="border-bottom-style: solid; border-bottom-width: 10">&nbsp;</td>
    <td WIDTH="144" align="right" style="border-right-style: none; border-right-width: medium; border-bottom-style: solid; border-bottom-width: 10">&nbsp;</td>
  </tr>
</table>
<font FACE="Times New Roman PSMT" SIZE="2">
<p style="text-indent: 52">The fair value of the forward foreign exchange
contracts, based on quoted market values, was $0.5 million as at October 1, 2006
and $3.0 million as at October 2, 2005. </p>
</font><hr color="#000000" size="5"><p style="page-break-before: always"><font FACE="Times New Roman PS" SIZE="2"><b>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; K.&nbsp;&nbsp;&nbsp;&nbsp; Tabular
Disclosure of Contractual Obligations </p>
</b></font><font FACE="Times New Roman PSMT" SIZE="2">
<p style="text-indent: 52">See page 32 of Exhibit 99.1. </p>
</font><font FACE="Times New Roman PS" SIZE="2"><b>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; L.&nbsp;&nbsp;&nbsp;&nbsp;
Corporate Governance Guidelines </p>
</b></font><font FACE="Times New Roman PSMT" SIZE="2">
<p ALIGN="JUSTIFY" style="text-indent: 52">The Registrant has adopted Corporate
Governance Guidelines as well as mandates for its board of directors and each of
its three committees which are available at the Registrant's Internet website,
<u><font color="#0000FF">www.gildan.com</font></u>, and are available in print
to any shareholder who requests them. </p>
</font><font FACE="Times New Roman PS" SIZE="2"><b>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; M.&nbsp;&nbsp;&nbsp;&nbsp;
Identification of the Audit Committee </p>
<p ALIGN="JUSTIFY" style="text-indent: 52"></b></font>
<font FACE="Times New Roman PSMT" SIZE="2">The Registrant has a standing Audit
Committee established in accordance with Section 3 (a) (58) (A) of the Exchange
Act. The members of the Registrant's Audit Committee are Pierre Robitaille,
William D. Anderson, Richard P. Strubel and Gonzalo F. Valdez-Fauli. See the
Audit Committee Disclosure section of our Annual Information Form included
herein for additional information. </p>
</font>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<hr color="#000000" size="5"><p style="page-break-before: always"><font FACE="Times New Roman" SIZE="2"><b>
<p align="center">SIGNATURES </p>
</b>
<p ALIGN="JUSTIFY" style="text-indent: 52">Pursuant to the requirements of the
Exchange Act, the Registrant certifies that it meets all of the requirements for
filing on Form 40-F and has duly caused this annual report to be signed on its
behalf by the undersigned, thereto duly authorized. </p>
<p style="text-indent: 52">DATED: December 20, 2006 </p>
</font>
<div align="right">
  <table CELLSPACING="0" BORDER="0" WIDTH="50%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
    <tr>
      <td COLSPAN="2"><font FACE="Times New Roman PS" SIZE="2"><b>GILDAN
      ACTIVEWEAR INC.</b></font></td>
    </tr>
    <tr>
      <td WIDTH="17%">&nbsp;</td>
      <td WIDTH="83%">&nbsp;</td>
    </tr>
    <tr>
      <td WIDTH="17%">&nbsp;</td>
      <td WIDTH="83%">&nbsp;</td>
    </tr>
    <tr>
      <td WIDTH="17%"><font FACE="Times New Roman PSMT" SIZE="2">By:</font></td>
      <td WIDTH="83%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman PSMT" SIZE="2">/s/ Lindsay Matthews</font></td>
    </tr>
    <tr>
      <td WIDTH="17%"><font FACE="Times New Roman PSMT" SIZE="2">Name:</font></td>
      <td WIDTH="83%" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman PSMT" SIZE="2">Lindsay Matthews</font></td>
    </tr>
    <tr>
      <td WIDTH="17%"><font FACE="Times New Roman PSMT" SIZE="2">Title:</font></td>
      <td WIDTH="83%"><font FACE="Times New Roman PSMT" SIZE="2">Director, Legal
      Services and Corporate</font></td>
    </tr>
    <tr>
      <td WIDTH="17%">&nbsp;</td>
      <td WIDTH="83%"><font FACE="Times New Roman PSMT" SIZE="2">Secretary</font></td>
    </tr>
  </table>
</div>
<p>&nbsp;</p>
<hr color="#000000" size="5"><p style="page-break-before: always"><font FACE="Times New Roman PS" SIZE="2"><b>
<p align="center">EXHIBIT INDEX </p>
</b></font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="15%">&nbsp;</td>
    <td WIDTH="85%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="15%"><font FACE="Times New Roman PS" SIZE="2"><b><u>Exhibit No.</u></b></font></td>
    <td WIDTH="85%"><font FACE="Times New Roman PS" SIZE="2"><b>
    <p align="center"><u>Description</u></b></font></td>
  </tr>
  <tr>
    <td WIDTH="15%" valign="top">&nbsp;</td>
    <td WIDTH="85%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="15%" valign="top"><font FACE="Times New Roman PSMT" SIZE="2">
    <a href="exh991.htm" style="text-decoration: none">99.1</a></font></td>
    <td WIDTH="85%" align="justify"><font FACE="Times New Roman PSMT" SIZE="2">
    <a href="exh991.htm" style="text-decoration: none">Management's Discussion and Analysis of the Registrant for the year ended
    October 1, 2006</a></font></td>
  </tr>
  <tr>
    <td WIDTH="15%" valign="top">&nbsp;</td>
    <td WIDTH="85%" align="justify">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="15%" valign="top"><font FACE="Times New Roman PSMT" SIZE="2">
    <a href="exh992.htm" style="text-decoration: none">99.2</a></font></td>
    <td WIDTH="85%" align="justify"><font FACE="Times New Roman PSMT" SIZE="2">
    <a href="exh992.htm" style="text-decoration: none">Audited comparative consolidated financial statements of the Registrant as
    at and for the year ended October 1, 2006</a></font></td>
  </tr>
  <tr>
    <td WIDTH="15%" valign="top">&nbsp;</td>
    <td WIDTH="85%" align="justify">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="15%" valign="top"><font FACE="Times New Roman PSMT" SIZE="2">
    <a href="exh993.htm" style="text-decoration: none">99.3</a></font></td>
    <td WIDTH="85%" align="justify"><font FACE="Times New Roman PSMT" SIZE="2">
    <a href="exh993.htm" style="text-decoration: none">Consent of KPMG LLP</a></font></td>
  </tr>
  <tr>
    <td WIDTH="15%" valign="top">&nbsp;</td>
    <td WIDTH="85%" align="justify">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="15%" valign="top"><font FACE="Times New Roman PSMT" SIZE="2">99.4</font></td>
    <td WIDTH="85%" align="justify"><font FACE="Times New Roman PSMT" SIZE="2">
    Schedule &quot;D&quot; &#150; Statement of Corporate Governance Practices to the
    Registrant's Notice of Annual Meeting of Shareholders and Management Proxy
    Circular dated as of December 8, 2006 (incorporated by reference to Exhibit
    99.1 of the Registrant's Form 6-K (file no. 001-14830) furnished to the
    Securities and Exchange Commission on December 22, 2006)</font></td>
  </tr>
  <tr>
    <td WIDTH="15%" valign="top">&nbsp;</td>
    <td WIDTH="85%" align="justify">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="15%" valign="top"><font FACE="Times New Roman PSMT" SIZE="2">
    <a href="exh995.htm" style="text-decoration: none">99.5</a></font></td>
    <td WIDTH="85%" align="justify"><font FACE="Times New Roman PSMT" SIZE="2">
    <a href="exh995.htm" style="text-decoration: none">Reconciliation to United States GAAP.</a></font></td>
  </tr>
  <tr>
    <td WIDTH="15%" valign="top">&nbsp;</td>
    <td WIDTH="85%" align="justify">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="15%" valign="top"><font FACE="Times New Roman PSMT" SIZE="2">
    <a href="exh996.htm" style="text-decoration: none">99.6</a></font></td>
    <td WIDTH="85%" align="justify"><font FACE="Times New Roman PSMT" SIZE="2">
    <a href="exh996.htm" style="text-decoration: none">Officers' Certifications Required by Rule 13a-14(a) or Rule 15d-14(a)</a></font></td>
  </tr>
  <tr>
    <td WIDTH="15%" valign="top">&nbsp;</td>
    <td WIDTH="85%" align="justify">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="15%" valign="top"><font FACE="Times New Roman PSMT" SIZE="2">
    <a href="exh997.htm" style="text-decoration: none">99.7</a></font></td>
    <td WIDTH="85%" align="justify"><font FACE="Times New Roman PSMT" SIZE="2">
    <a href="exh997.htm" style="text-decoration: none">Officers' Certifications Required by Rule 13a-14(b) or Rule 15d-14(b) and
    Section 1350 of Chapter 63 of Title 18 of the United States Code</a></font></td>
  </tr>
</table>
<p>&nbsp;</p>
<hr color="#000000" size="5">

</body>

</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>exh991.htm
<DESCRIPTION>EX-99.1
<TEXT>
<html>

<head>
<title>Gildan Activewear Inc.: Exhibit 99.1 - Prepared By TNT Filings Inc.</title>
</head>

<body>

<p>&nbsp;</p>
<hr color="#000000" size="5">

    <font FACE="Akzidenz Grotesk BE" SIZE="2">
    <p align="right">Gildan 2006 Annual Report &#149; <b>21</b></font><table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td bgcolor="#111111" width="493" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2" color="#FFFFFF"><b>MD&amp;A</b></font></td>
    <td width="493" style="border-bottom-style: solid; border-bottom-width: 1" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td width="986" colspan="2"><font SIZE="2"><i>Management's Discussion and
    Analysis of Financial Condition and Results of Operations</i></font></td>
  </tr>
  <tr>
    <td width="986" colspan="2">&nbsp;</td>
  </tr>
</table>
<font SIZE="2"><i>
<div style="border-style: solid; border-width: 1; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1">
  <p ALIGN="JUSTIFY">This Management's discussion and analysis (MD&amp;A) comments
  on Gildan's operations, performance and financial condition as at and for the
  years ended October 1, 2006 and October 2, 2005, compared to the preceding
  years. For a complete understanding of our business environment, trends, risks
  and uncertainties and the effect of accounting estimates on our results of
  operations and financial condition, this MD&amp;A should be read together with the
  audited Consolidated Financial Statements and the related notes. This MD&amp;A is
  dated December 13, 2006. All amounts in this report are in U.S. dollars,
  unless otherwise noted. </p>
  <p ALIGN="JUSTIFY">All financial information contained in this MD&amp;A and in the
  Consolidated Financial Statements has been prepared in accordance with
  Canadian generally accepted accounting principles (GAAP), except for certain
  information discussed in the paragraph entitled </i>&quot;Non-GAAP Financial
  Measures</font><i><font size="2">&quot; on page 24 of this MD&amp;A. The audited
  Consolidated Financial Statements and this MD&amp;A were reviewed by Gildan's
  Audit and Finance Committee and were approved by our Board of Directors.</p>
  <p ALIGN="JUSTIFY">Additional information about Gildan, including our 2006
  Annual Information Form, is available on our website at www.gildan.com, on the
  SEDAR website at www.sedar.com, and on the EDGAR section of the U.S.
  Securities and Exchange Commission website (which includes the Annual Report
  on Form 40-F) at www.sec.gov.</p>
  <p>This document contains forward-looking statements, which are qualified by
  reference to, and should be read together with the &quot;Forward-looking
  Statements&quot; cautionary notice on page 43.</p>
  <p>In this MD&amp;A, &quot;Gildan&quot;, the &quot;Company&quot;, or the words &quot;we&quot;, &quot;us&quot;, &quot;our&quot;
  refer, depending on the context, either to Gildan Activewear Inc. or to Gildan
  Activewear Inc. together with its subsidiaries and joint venture. <br>
&nbsp;</div>
</font></i><font SIZE="2"><b>
<p>Our Business</p>
</b>
<p ALIGN="JUSTIFY">Gildan is a vertically-integrated marketer and manufacturer
of activewear, underwear and socks. The Company operates in one business
segment, being high-volume, basic, frequently replenished, non-fashion apparel.
We are the leading supplier of activewear for the wholesale imprinted sportswear
market in the U.S. and Canada, and also a leading supplier for this market in
Europe. In 2005, as part of our growth strategy, we began to implement a major
new initiative to sell our products into the mass-market retail channel in North
America. In conjunction with these plans, in fiscal 2006, we expanded our
product-line to include underwear and athletic socks. </p>
<p ALIGN="JUSTIFY">Effective July 6, 2006, Gildan completed the acquisition of
Kentucky Derby Hosiery Co., Inc. (Kentucky Derby), a U.S. hosiery manufacturer
with corporate headquarters in Hopkinsville, Kentucky. This acquisition is
intended to enhance and accelerate Gildan's strategy to enter the North American
mass-market retail channel. Gildan intends to use Kentucky Derby's experience
and distribution with mass-market retailers to enhance its platform to develop Gildan as a consumer brand in basic athletic socks, underwear and activewear,
while continuing to focus on serving the needs of our customers in the wholesale
distribution channel and continuing to support Kentucky Derby's private label
programs and brand licenses.</p>
<b>
<p>Our Products</p>
</b>
<p ALIGN="JUSTIFY">We specialize in large-scale marketing and manufacturing of
basic, non-fashion apparel products for customers requiring an efficient supply
chain and consistent product quality for high-volume automatic replenishment
programs. Our product offering focuses on core basic activewear styles sold in
various fabrics, weights and colours. In fiscal 2006, we also introduced a
variety of styles of men's and boys' underwear and athletic socks into our
product-line. Typically, our product offering is characterized by low fashion
risk, since products are basic and produced in a limited range of sizes, colours
and styles. Our products for the wholesale channel for screenprinters are
produced and sold without logos and designs. </p>
<p ALIGN="JUSTIFY">We sell activewear, namely T-shirts, sport shirts and fleece,
in large quantities to wholesale distributors as undecorated &quot;blanks&quot;, which are
subsequently decorated by screenprinters with designs and logos. Consumers
ultimately purchase the Company's products, with the Gildan label, in venues
such as sports, entertainment and corporate events, and travel and tourism
destinations. Other end-uses include work uniforms and similar applications to
convey individual, group and team identity. </p>
<p ALIGN="JUSTIFY">In the retail channel, we have complemented our activewear
product-line by introducing in 2006 a variety of styles of men's and boys'
underwear and athletic socks. </p>
<b>
<p>Our Manufacturing and Distribution Facilities</p>
</b>
<p ALIGN="JUSTIFY">To support our sales in the various markets, we have built
and are continuing to build modern manufacturing facilities located in Central
America and the Caribbean Basin. We also operate manufacturing facilities in
North America. We established our largest manufacturing hub in Central America
in Rio Nance, Honduras with our first offshore integrated knitting, bleaching,
dyeing, finishing and cutting facility, which became operational in 2002. During
2005, we purchased additional land adjacent to our Rio Nance facility for the
purpose of constructing two new integrated world-scale facilities, one for the
production of fleece, and one for the production of athletic socks. During 2006,
we completed the construction of the sock manufacturing facility, and began the
construction of the fleece textile facility. We expect to ramp up our sock
facility to full capacity by the second half of fiscal 2008 and begin production
at our fleece facility in the second half of fiscal 2007. </p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'>
<font FACE="Akzidenz Grotesk BE" SIZE="2">
<p>
    <font FACE="Times New Roman" SIZE="2"><b>&nbsp;22</b> &#149; Gildan 2006 Annual
    Report </font></p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td bgcolor="#111111" width="493" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2" color="#FFFFFF"><b>MD&amp;A</b></font></td>
    <td width="493" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td width="986" colspan="2"><font SIZE="2"><i>Management's Discussion and
    Analysis of Financial Condition and Results of Operations</i></font></td>
  </tr>
</table>
<font SIZE="2">
<p ALIGN="JUSTIFY">Following the success of our first Rio Nance facility and the
need to add capacity to support our projected continuing sales growth in
activewear and underwear, Gildan established a manufacturing hub in Bella Vista,
Dominican Republic. The Dominican Republic facility began production in fiscal
2005 and is currently running at a comparable scale of production to our mature
textile facility in Honduras. We will continue to maximize production levels and
cost efficiencies at the Dominican Republic facility during fiscal 2007.</p>
<p ALIGN="JUSTIFY">During the course of this fiscal year, consistent with our
ongoing strategy to enhance our overall cost structure by maximizing large-scale
production of basic T-shirts at our textile manufacturing operations in Honduras
and the Dominican Republic, we announced the restructuring of our Canadian
manufacturing operations, to take effect in December 2006. This included the
closure of our textile manufacturing facility in Valleyfield, Quebec, and the
reduction in the operations of our knitting facility in Montreal, Quebec, as
well as our cutting facility in Bombay, New York. Also, in fiscal 2006, we
announced the closure and downsizing of sock manufacturing capacity located in
North Carolina and Virginia, which will be undertaken during the first half of
fiscal 2007. We continue to significantly increase our overall capacity through
major new expansions in both our Central American and Caribbean Basin
manufacturing hubs, and will continue on an ongoing basis to evaluate the role
and global competitiveness of our Canadian textile and U.S. sock manufacturing
facilities within our overall capacity planning to support our growth strategy.</p>
<p ALIGN="JUSTIFY">Our sewing facilities are primarily located in Central
America, Mexico and the Caribbean Basin. We also utilize third-party contractors
to complement our vertically-integrated production.</p>
<p ALIGN="JUSTIFY">CanAm Yarns, LLC (CanAm), our joint-venture company with
Frontier Spinning Mills, Inc. (Frontier), operates yarn-spinning facilities in
Georgia and North Carolina. CanAm's yarn-spinning operations, together with
supply agreements currently in place with Frontier and other third-party yarn
providers, serve to meet our yarn requirements.</p>
<p ALIGN="JUSTIFY">We distribute our products in the U.S. primarily out of our
company-owned distribution centre in Eden, North Carolina, and use third-party
warehouses in Canada, Mexico, Europe and Australia to service our customers in
these markets. </p>
<p ALIGN="JUSTIFY">In addition, during the year, as part of our overall plan to
integrate the operations of Kentucky Derby and to support future capacity
requirements for our retail initiative, we announced plans to invest
approximately $7 million in a new 400,000 square foot retail distribution centre
in Martinsville, Virginia and to relocate and consolidate Kentucky Derby's
existing distribution centres, at multiple sites in Virginia and North Carolina,
to this single location. This new distribution centre will be fully dedicated to
supporting our retail distribution plans. The relocation and consolidation of
Kentucky Derby's distribution centres will result in improved operating
efficiencies and lower transportation costs, as well as faster customer response
times. The installation of equipment in this facility, together with the
associated warehouse management system, is expected to be completed during the
second quarter of fiscal 2007. Our existing distribution centre in Eden, North
Carolina will remain fully dedicated to providing the capacity required for Gildan's anticipated further growth in the wholesale distribution channel. </p>
<p>Our corporate head office is located in Montreal, Canada and we employ over
15,000 full-time employees worldwide.</p>
<b>
<p>Market Overview</p>
</b>
<p ALIGN="JUSTIFY">Our target market for activewear, underwear and socks is
characterized by low fashion risk compared to many other apparel markets, since
products are basic and produced in a limited range of sizes, colours and styles,
and since logos and designs for the screenprint market are not imprinted or
embroidered by manufacturers. </p>
<p ALIGN="JUSTIFY">The apparel market for our products is highly competitive.
Competition is generally based upon price, with reliable quality and service
also being key requirements for success. Our primary competitors in North
America are the major U.S.-based manufacturers of basic branded activewear for
the wholesale and retail channels, such as Fruit of the Loom, Inc., Hanesbrands
Inc., the Jerzees division of Russell Corporation, which was recently acquired
by Berkshire Hathaway Inc. which owns Fruit of the Loom, Inc., Delta Apparel,
Inc., and Anvil Knitwear, Inc. The competition in the European wholesale
imprinted active-wear market is similar to that in North America, as we compete
primarily with the European divisions of the larger U.S.-based manufacturers. In
Europe, we also have large competitors which do not have integrated
manufacturing operations and source products from contractors in Asia.</p>
<p ALIGN="JUSTIFY">Due to wholesaler and retailer consolidation, the customer
base to which we sell and are targeting to sell our products is composed of a
relatively small number of significant customers. </p>
<p ALIGN="JUSTIFY">While the majority of our sales is currently derived from the
sale of activewear through the wholesale distribution channel, in 2006 we
continued to expand our entry into the retail channel, concentrating on regional
retailers that we can service well with the production capacity that we have
available. As we ramp up our major capacity expansion projects in the Caribbean
Basin and Central America, we will increasingly be in a position to service
major mass-market retailers. We believe that providing a superior value
proposition predicated on reliable product quality and comfort, combined with
efficient customer service and competitive pricing, the same factors that
contribute to our success in the wholesale channel, will allow us to be
successful in penetrating the retail channel.</p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'>
    <font FACE="Akzidenz Grotesk BE" SIZE="2">
    <p align="right">Gildan 2006 Annual Report &#149; <b>23</b></font><table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td bgcolor="#111111" width="493" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2" color="#FFFFFF"><b>MD&amp;A</b></font></td>
    <td width="493" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td width="986" colspan="2"><font SIZE="2"><i>Management's Discussion and
    Analysis of Financial Condition and Results of Operations</i></font></td>
  </tr>
</table>
<font SIZE="2">
<p>We believe that growth for our activewear products has been driven by several
market trends such as the following:</p>
<ul>
  <li>
  <p ALIGN="justify">continued use of activewear for event merchandising (such
  as concerts, festivals, etc.); </li>
  <li>
  <p ALIGN="justify">continued evolution of the entertainment/sports licensing
  and merchandising businesses; </li>
  <li>
  <p ALIGN="justify">the growing use of activewear for uniform applications;
  </li>
  <li>
  <p ALIGN="justify">the growing use of activewear for corporate promotions;
  </li>
  <li>
  <p ALIGN="justify">continued increase in use of activewear products for travel
  and tourism; </li>
  <li>
  <p ALIGN="justify">an increased emphasis on physical fitness; and </li>
  <li>
  <p ALIGN="justify">a greater use and acceptance of casual dress in the
  workplace.</li>
</ul>
<p ALIGN="JUSTIFY">In addition, reductions in manufacturing costs, combined with
quality enhancements in activewear apparel, such as pre-shrunk fabrics, improved
fabric weight, blends and construction have provided consumers with superior
products at lower prices. </p>
<b>
<p>Strategy and Financial Objectives </p>
</b>
<p ALIGN="JUSTIFY">We believe that our success in developing our
vertically-integrated manufacturing hubs has allowed us to provide our customers
with low prices, consistent product quality and a reliable supply chain, and has
been the main reason that we have been able to rapidly increase our market
presence and establish our market leadership in the imprinted sportswear market.
These are the same factors that management believes will allow Gildan to be
successful in building a consumer brand in the retail channel.</p>
<p ALIGN="JUSTIFY">We believe that our vertically-integrated manufacturing
operations allow us to provide a combination of competitive prices and premium
quality products and to deliver superior value to our customers. We are able to
price our products competitively because of our success in reducing operating
costs. We accomplish this by:</p>
<ul>
  <li>
  <p ALIGN="justify">investing in modern, automated equipment and facilities;</li>
  <li>
  <p ALIGN="justify">increasing our capacity through the development of
  integrated regional hubs in Central America and the Caribbean Basin, where we
  benefit from strategic locations and favourable international trade
  agreements; and</li>
  <li>
  <p ALIGN="justify">focusing on producing a narrow range of basic, high-volume
  product-lines, which allows us to maximize production efficiencies.</li>
</ul>
<p ALIGN="JUSTIFY">We intend to continue to expand capacity through the
acquisition of modern, automated equipment for all aspects of our manufacturing
process to maximize productivity and achieve high efficiency rates.</p>
</font><font FACE="Akzidenz Grotesk BE" SIZE="2">
<p ALIGN="JUSTIFY">We are implementing a five-year plan to approximately triple
our unit sales volumes and continue to achieve significant manufacturing
efficiencies. Our growth strategy comprises the following four initiatives: </p>
</font><font SIZE="2"><b>
<p style="text-indent: -26; margin-left: 26">1.</b> <b>&nbsp;&nbsp;&nbsp;
Continue to increase market share in the U.S. wholesale imprinted sportswear
market in all product categories</p>
</b>
<p ALIGN="JUSTIFY" style="margin-left: 26">During fiscal 2006, we further
increased our leading market share position in the U.S. wholesale distributor
network in the T-shirt and sport shirts categories as reported in the S.T.A.R.S.
Report produced by ACNielsen Market Decisions. In addition, we gained
significant share in the fleece category, reaching the number two market share
position. We believe we will continue to increase market share in this channel
due to our competitive strengths and the addition of low cost production
capacity.</p>
<b>
<p style="text-indent: -26; margin-left: 26">2.</b> <b>&nbsp;&nbsp;&nbsp;
Leverage our successful business model to enter the mass-market retail channel
and develop Gildan as a consumer brand</p>
</b>
<p ALIGN="JUSTIFY" style="margin-left: 26">We plan to continue to sell the same
basic undecorated activewear apparel products into the retail channel, as well
as our new complementary products, underwear and athletic socks, which also
leverage our existing core competencies, successful business model and
competitive strengths. Our goal is to continue to provide a value proposition,
which combines quality, service and competitive pricing. We intend to follow the
same pricing strategy as in the wholesale market, by using our cost efficiencies
to lower selling prices. Our main competitors in the retail channel for basic
family apparel products are essentially the same as in the wholesale channel.
</p>
<p ALIGN="JUSTIFY" style="margin-left: 26">During 2006, we expanded our presence
in the retail channel, particularly with U.S. regional retailers. Following our
recent acquisition of Kentucky Derby, we intend to use Kentucky Derby's
experience and distribution with mass-market retailers to build Gildan as a
consumer brand in athletic socks, underwear and activewear in the mass-market
retail channel.</p>
<b>
<p style="text-indent: -26; margin-left: 26">3.</b> <b>&nbsp;&nbsp;&nbsp;
Increase penetration in Europe and other international markets</p>
</b>
<p ALIGN="JUSTIFY" style="margin-left: 26">We expect to pursue further market
penetration within our existing served wholesale markets in Europe, Mexico and
Australia, in addition to pursuing further international market expansion
opportunities. During fiscal 2006, we began to sell Gildan products in Mexico.
</p>
<b>
<p ALIGN="JUSTIFY" style="text-indent: -26; margin-left: 26">4.</b> <b>&nbsp;&nbsp;&nbsp;
Support unit sales growth and maintain pricing competitiveness through continued
significant investments in low-cost production capacity</p>
</b>
<p ALIGN="JUSTIFY" style="margin-left: 26">To support our projected continuing
sales growth, in fiscal 2006 we ramped up our new Dominican Republic facility to
close to full capacity. In addition, we completed the construction of our sock
facility in Honduras, which we expect to ramp up to full capacity by the second
half of fiscal 2008. We also began construction of a world-scale integrated
facility for the<font FACE="Akzidenz Grotesk BE" SIZE="2"> production of fleece,
which is expected to begin production in the second half of fiscal 2007. Our
land and infrastructure in Central America and the Caribbean Basin can
accommodate major capacity expansion on the same sites. We currently expect to
invest approximately $400 million during the next five years in capital
expenditures to support our projected sales growth. All of the organic capacity
expansions that we plan to undertake over the next five years are expected to be
financed by internally generated funds.</p>
</font></font><hr color="#000000" size="5"><p Style='page-break-before:always'>
<font FACE="Akzidenz Grotesk BE" SIZE="2">
<p>
    <font FACE="Times New Roman" SIZE="2"><b>&nbsp;24</b> &#149; Gildan 2006 Annual
    Report </font></p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td bgcolor="#111111" width="493" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2" color="#FFFFFF"><b>MD&amp;A</b></font></td>
    <td width="493" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td width="986" colspan="2"><font SIZE="2"><i>Management's Discussion and
    Analysis of Financial Condition and Results of Operations</i></font></td>
  </tr>
</table>
<font FACE="Akzidenz Grotesk BE" SIZE="2">
<p ALIGN="JUSTIFY">We are subject to a variety of business risks that may affect
our ability to maintain our current market share and profitability, as well as
our ability to achieve our long-term strategic objectives. These risks are
described in the &quot;Risks and Uncertainties&quot; section of this MD&amp;A beginning on
page 37. As well, the nature of the Company's growth strategy involves risks
related to certain assumptions underlying unit sales growth, production capacity
growth and cost reductions, among others. Notably, our planned growth in market
share depends to a significant extent on the successful start-up and ramp-up of
new offshore facilities. There can be no assurances that we will achieve our
planned market share growth, retail market penetration or capacity increases.
</p>
</font><b><font SIZE="2">
<p>Operating Results </p>
<p>Selected Annual Information</font></b><font size="2"><i><br>
(in $ millions, except per share amounts)</p>
</i></font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="46%" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">&nbsp;</td>
    <td WIDTH="18%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2"><b>2006</b></font></td>
    <td WIDTH="18%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">2005</font></td>
    <td WIDTH="18%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">2004</font></td>
  </tr>
  <tr>
    <td WIDTH="46%" style="border-top-style: solid; border-top-width: 1" valign="bottom">&nbsp;</td>
    <td WIDTH="18%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">&nbsp;</td>
    <td WIDTH="18%" align="right" valign="bottom">&nbsp;</td>
    <td WIDTH="18%" align="right" valign="bottom">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="46%" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">Sales</font></td>
    <td WIDTH="18%" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2"><b>773.2</b></font></td>
    <td WIDTH="18%" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">653.9</font></td>
    <td WIDTH="18%" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">533.4</font></td>
  </tr>
  <tr>
    <td WIDTH="46%" style="border-bottom: 1px solid #000000" valign="bottom"><font SIZE="2">Cost
    of sales</font></td>
    <td WIDTH="18%" align="right" style="border-bottom: 1px solid #000000" valign="bottom">
    <font SIZE="2"><b>521.1</b></font></td>
    <td WIDTH="18%" align="right" style="border-bottom: 1px solid #000000" valign="bottom">
    <font SIZE="2">450.6</font></td>
    <td WIDTH="18%" align="right" style="border-bottom: 1px solid #000000" valign="bottom">
    <font SIZE="2">378.7</font></td>
  </tr>
  <tr>
    <td WIDTH="46%" style="border-bottom: 1px solid #000000" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">
    Gross profit</font></td>
    <td WIDTH="18%" align="right" style="border-bottom: 1px solid #000000" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2"><b>252.1</b></font></td>
    <td WIDTH="18%" align="right" style="border-bottom: 1px solid #000000" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2">203.3</font></td>
    <td WIDTH="18%" align="right" style="border-bottom: 1px solid #000000" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2">154.7</font></td>
  </tr>
  <tr>
    <td WIDTH="46%" valign="bottom"><font SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Selling, general and
    administrative expenses</font></td>
    <td WIDTH="18%" align="right" valign="bottom"><font SIZE="2"><b>84.4</b></font></td>
    <td WIDTH="18%" align="right" valign="bottom"><font SIZE="2">73.8</font></td>
    <td WIDTH="18%" align="right" valign="bottom"><font SIZE="2">58.3</font></td>
  </tr>
  <tr>
    <td WIDTH="46%" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2">Restructuring and other charges</font></td>
    <td WIDTH="18%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2"><b>20.4</b></font></td>
    <td WIDTH="18%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2">11.8</font></td>
    <td WIDTH="18%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2">4.6</font></td>
  </tr>
  <tr>
    <td WIDTH="46%" style="border-top-style: solid; border-top-width: 1" valign="bottom">&nbsp;</td>
    <td WIDTH="18%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <font SIZE="2"><b>147.3</b></font></td>
    <td WIDTH="18%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <font SIZE="2">117.7</font></td>
    <td WIDTH="18%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <font SIZE="2">91.8</font></td>
  </tr>
  <tr>
    <td WIDTH="46%" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">Depreciation and amortization</font></td>
    <td WIDTH="18%" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2"><b>32.4</b></font></td>
    <td WIDTH="18%" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">25.6</font></td>
    <td WIDTH="18%" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">22.3</font></td>
  </tr>
  <tr>
    <td WIDTH="46%" valign="bottom"><font SIZE="2">Interest, net</font></td>
    <td WIDTH="18%" align="right" valign="bottom"><font SIZE="2"><b>3.1</b></font></td>
    <td WIDTH="18%" align="right" valign="bottom"><font SIZE="2">4.6</font></td>
    <td WIDTH="18%" align="right" valign="bottom"><font SIZE="2">6.2</font></td>
  </tr>
  <tr>
    <td WIDTH="46%" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Non-controlling interest in
    income of consolidated joint venture</font></td>
    <td WIDTH="18%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2"><b>0.2</b></font></td>
    <td WIDTH="18%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2">0.1</font></td>
    <td WIDTH="18%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="46%" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <font SIZE="2">Earnings before income taxes</font></td>
    <td WIDTH="18%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <font SIZE="2"><b>111.6</b></font></td>
    <td WIDTH="18%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <font SIZE="2">87.4</font></td>
    <td WIDTH="18%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <font SIZE="2">63.3</font></td>
  </tr>
  <tr>
    <td WIDTH="46%" style="border-bottom: 1px solid #000000" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">
    Income taxes</font></td>
    <td WIDTH="18%" align="right" style="border-bottom: 1px solid #000000" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2"><b>4.8</b></font></td>
    <td WIDTH="18%" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6"><font SIZE="2">1.4</font></td>
    <td WIDTH="18%" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6"><font SIZE="2">3.1</font></td>
  </tr>
  <tr>
    <td WIDTH="46%" style="border-bottom: 1px solid #000000" valign="bottom"><font SIZE="2">Net
    earnings</font></td>
    <td WIDTH="18%" align="right" style="border-bottom: 1px solid #000000" valign="bottom">
    <font SIZE="2"><b>106.8</b></font></td>
    <td WIDTH="18%" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">86.0</font></td>
    <td WIDTH="18%" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">60.2</font></td>
  </tr>
  <tr>
    <td WIDTH="46%" valign="bottom" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="18%" align="right" valign="bottom" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="18%" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="18%" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="46%" valign="bottom"><font SIZE="2">Basic EPS<sup>(1)</sup></font></td>
    <td WIDTH="18%" align="right" valign="bottom"><font SIZE="2"><b>1.78</b></font></td>
    <td WIDTH="18%" align="right" valign="bottom"><font SIZE="2">1.44</font></td>
    <td WIDTH="18%" align="right" valign="bottom"><font SIZE="2">1.02</font></td>
  </tr>
  <tr>
    <td WIDTH="46%" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">Diluted EPS<sup>(1)</sup></font></td>
    <td WIDTH="18%" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2"><b>1.76</b></font></td>
    <td WIDTH="18%" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">1.43</font></td>
    <td WIDTH="18%" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">1.01</font></td>
  </tr>
  <tr>
    <td WIDTH="46%" valign="bottom">&nbsp;</td>
    <td WIDTH="18%" align="right" valign="bottom">&nbsp;</td>
    <td WIDTH="18%" align="right" valign="bottom">&nbsp;</td>
    <td WIDTH="18%" align="right" valign="bottom">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="46%" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">Total assets</font></td>
    <td WIDTH="18%" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2"><b>723.3</b></font></td>
    <td WIDTH="18%" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">597.5</font></td>
    <td WIDTH="18%" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">488.8</font></td>
  </tr>
  <tr>
    <td WIDTH="46%" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">Total long-term liabilities<sup>(2)</sup></font></td>
    <td WIDTH="18%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2"><b>47.1</b></font></td>
    <td WIDTH="18%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">64.1</font></td>
    <td WIDTH="18%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">66.0</font></td>
  </tr>
</table>
<i><font SIZE="2">
<p>Certain minor rounding variances exist between the financial statements and
this summary.</p>
<p>(1) All earnings per share data reflect the effect of the stock split as
described on page 33.<br>
(2) Includes long-term debt, future income taxes and non-controlling interest in
consolidated joint venture.</font></p>
</i><b>
<p><font size="2">Operating Results for the year ended October 1, 2006, compared
to the year ended October 2, 2005</font></p>
</b>
<p><u><font size="2">Non-GAAP Financial Measures</font></u></p>
<p ALIGN="JUSTIFY"><font size="2">We use non-GAAP measures to assess our
operating performance. Securities regulations require that companies caution
readers that earnings and other measures adjusted to a basis other than GAAP do
not have standardized meanings and are unlikely to be comparable to similar
measures used by other companies. Accordingly, they should not be considered in
isolation. We use non-GAAP measures such as adjusted net earnings, adjusted
diluted EPS, EBITDA, free cash flow, total indebtedness and net debt to measure
our performance from one period to the next without the variation caused by
certain adjustments that could potentially distort the analysis of trends in our
operating performance, and because we believe such measures provide meaningful
information on the Company's financial condition and operating results. </font>
</p>
<p ALIGN="JUSTIFY"><font size="2">We refer the reader to page 41 for the
definition and complete reconciliation of all non-GAAP financial measures used
and presented by the Company to the most directly comparable GAAP financial
measures.</font></p>
<p><u><font size="2">Business Acquisition</font></u></p>
<p ALIGN="JUSTIFY"><font size="2">Effective July 6, 2006, we acquired 100% of
the common shares of Kentucky Derby, a U.S. hosiery manufacturer with corporate
headquarters in Hopkinsville, Kentucky. The total purchase price of $20.4
million, including transaction costs, was paid in cash except for approximately
$0.5 million, which was settled through the issuance of common shares of Gildan.
We accounted for this acquisition using the purchase method and the results of
Kentucky Derby have been consolidated with those of Gildan from the date of
acquisition. Please refer to Note 3 to the Consolidated Financial Statements for
a summary of the estimated fair value of the assets acquired and liabilities
assumed at the date of acquisition.</font></p>
<p><u><font size="2">Sales</font></u></p>
<p ALIGN="JUSTIFY"><font size="2">Sales for fiscal 2006 reached $773.2 million,
up 18.2% from $653.9 million in fiscal 2005. The increase in sales was due
mainly to a 14.5% increase in unit sales volumes for our activewear products,
combined with the impact of a higher-valued product-mix, partially offset by an
approximate 2.5% decline in activewear unit selling prices compared to last
year. In addition, sales in the fourth quarter of this fiscal year included
$30.0 million from the acquisition of Kentucky Derby, which was effective July
6, 2006. Excluding the acquisition of Kentucky Derby, sales were up 13.7%.
</font></p>
<p ALIGN="JUSTIFY"><font size="2">Market growth and share data presented for the
U.S. wholesale distributor channel is based on the S.T.A.R.S. Report produced by
ACNielsen Market Decisions. The S.T.A.R.S. data for the nine months ended
September 30, 2006, includes information provided by the largest wholesale
distributor, which has renewed its participation in the report. In order to
calculate year-over-year growth rates, S.T.A.R.S. has adjusted comparative data
for the nine months ended September 30, 2005.</font></p>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
    <font FACE="Akzidenz Grotesk BE" SIZE="2">
    <p align="right">Gildan 2006 Annual Report &#149; <b>25</b></font><table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td bgcolor="#111111" width="493" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2" color="#FFFFFF"><b>MD&amp;A</b></font></td>
    <td width="493" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td width="986" colspan="2"><font SIZE="2"><i>Management's Discussion and
    Analysis of Financial Condition and Results of Operations</i></font></td>
  </tr>
</table>
<font FACE="Akzidenz Grotesk BE" SIZE="2">
<p>The table below summarizes the S.T.A.R.S. data for the nine months ended
September 30, 2006:</p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="20%">&nbsp;</td>
    <td WIDTH="55%" COLSPAN="2" align="right"><font SIZE="2"><b>Nine months
    ended</b></font></td>
    <td WIDTH="27%" align="right"><font SIZE="2"><b>Nine months ended</b></font></td>
  </tr>
  <tr>
    <td WIDTH="20%">&nbsp;</td>
    <td WIDTH="55%" COLSPAN="2" align="right"><font SIZE="2"><b>September 30,</b></font></td>
    <td WIDTH="27%" align="right"><font SIZE="2"><b>September 30, 2006</b></font></td>
  </tr>
  <tr>
    <td WIDTH="20%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="55%" COLSPAN="2" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>2006 vs 2005</b></font></td>
    <td WIDTH="27%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="20%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="55%" COLSPAN="2" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>Unit Growth</b></font></td>
    <td WIDTH="27%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>Gildan Market</b></font></td>
  </tr>
  <tr>
    <td WIDTH="20%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="26%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>Industry</b></font></td>
    <td WIDTH="27%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>Gildan</b></font></td>
    <td WIDTH="27%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>Share</b></font></td>
  </tr>
  <tr>
    <td WIDTH="20%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="26%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="27%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="27%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="20%" bgcolor="#E6E6E6"><font SIZE="2">All Products</font></td>
    <td WIDTH="26%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4"><font SIZE="2">2.1%</font></td>
    <td WIDTH="27%" align="right" bgcolor="#E6E6E6"><font SIZE="2"><b>16.6%</b></font></td>
    <td WIDTH="27%" align="right" bgcolor="#E6E6E6"><font SIZE="2"><b>42.6%</b></font></td>
  </tr>
  <tr>
    <td WIDTH="20%"><font SIZE="2">T-shirts</font></td>
    <td WIDTH="26%" align="right">
    <p style="margin-right: 4"><font SIZE="2">2.4%</font></td>
    <td WIDTH="27%" align="right"><font SIZE="2"><b>16.9%</b></font></td>
    <td WIDTH="27%" align="right"><font SIZE="2"><b>43.7%</b></font></td>
  </tr>
  <tr>
    <td WIDTH="20%" bgcolor="#E6E6E6"><font SIZE="2">Sport shirts</font></td>
    <td WIDTH="26%" align="right" bgcolor="#E6E6E6"><font SIZE="2">(3.2%)</font></td>
    <td WIDTH="27%" align="right" bgcolor="#E6E6E6"><font SIZE="2"><b>1.9%</b></font></td>
    <td WIDTH="27%" align="right" bgcolor="#E6E6E6"><font SIZE="2"><b>32.2%</b></font></td>
  </tr>
  <tr>
    <td WIDTH="20%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">Fleece</font></td>
    <td WIDTH="26%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">
    <font SIZE="2">1.4%</font></td>
    <td WIDTH="27%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>23.7%</b></font></td>
    <td WIDTH="27%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>30.8%</b></font></td>
  </tr>
</table>
<font FACE="Akzidenz Grotesk BE" SIZE="2">
<p ALIGN="JUSTIFY">The increase in our unit sales volumes was due to continuing
market share penetration, primarily in the T-shirt and fleece categories, and
2.1% growth in overall industry unit shipments in the nine months ended
September 30, 2006. In the T-shirt category, we grew unit volumes by 16.9% for
the nine months ended September 30, 2006, and increased our leading share in
this category to 43.7%. We maintained our position as the leading brand in sport
shirts with a 32.2% market share, where our volume grew by 1.9%, compared with
an overall decline of 3.2% for the industry. In the fleece category, our volume
growth significantly exceeded that of the industry. We grew our share to 30.8%
and reached the number two market share position.</p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="46%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>Sales</b></font></td>
  </tr>
  <tr>
    <td WIDTH="46%" style="border-top-style: solid; border-top-width: 1">
    <font SIZE="2"><i>(in millions of dozens)<sup>(1)</sup></i></font></td>
  </tr>
</table>
<p align="center"><img border="0" src="exh9911.gif" width="318" height="252"></p>
<font SIZE="2"><i>
<p>(1) activewear and underwear</p>
</i>
<p ALIGN="JUSTIFY">We maintained a leading market share position in Canada and
continued to expand our international business. In Europe, our unit sales
increased 9.3% over fiscal 2005, and, in the fourth quarter, we added three
major new distributors in the U.K. During fiscal 2006, we introduced our
products in the wholesale distributor market in Mexico and continued to expand
our distributor network in this market.</p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Akzidenz Grotesk BE" SIZE="2"><b>U.S. Industry Growth</b></font></td>
  </tr>
  <tr>
    <td style="border-top-style: solid; border-top-width: 1">
    <font FACE="Akzidenz Grotesk BE" SIZE="2"><i>(based on unit sales (%))</i></font></td>
  </tr>
</table>
<p align="center"><img border="0" src="exh9912.gif" width="304" height="292"></p>
<font SIZE="2">
<p><u>Gross Profit</u></p>
<p ALIGN="JUSTIFY">Gross profit is the result of our sales less cost of sales.
Gross margin reflects gross profit as a percentage of sales. Our cost of sales
includes all raw material costs, manufacturing conversion costs, sourcing costs
and transportation costs incurred until the receipt of finished goods at our
distribution facilities, but excludes depreciation expense. Cost of sales also
includes costs relating to purchasing, receiving and inspection activities,
manufacturing administration, third-party manufacturing services, insurance,
internal transfers of finished goods, and customs and duties. Our gross margins
may not be comparable to other companies, since some entities include
depreciation expense and distribution costs in cost of sales, whereas we include
them in depreciation and amortization and selling, general and administrative
expenses, respectively. </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Akzidenz Grotesk BE" SIZE="2"><b>Gross Margins</b></font></td>
  </tr>
  <tr>
    <td style="border-top-style: solid; border-top-width: 1">
    <font FACE="Akzidenz Grotesk BE" SIZE="2"><i>(%)</i></font></td>
  </tr>
</table>
<p align="center"><img border="0" src="exh9913.gif" width="267" height="268"></p>
<font FACE="Akzidenz Grotesk BE" SIZE="2"><i>
<p>(1) Before the impact of the change in functional currency on cost of sales.
See page 41.</p>
</i></font><hr color="#000000" size="5"><p Style='page-break-before:always'>
<font FACE="Akzidenz Grotesk BE" SIZE="2">
<p>
    <font FACE="Times New Roman" SIZE="2"><b>&nbsp;26</b> &#149; Gildan 2006 Annual
    Report </font></p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td bgcolor="#111111" width="493" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2" color="#FFFFFF"><b>MD&amp;A</b></font></td>
    <td width="493" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td width="986" colspan="2"><font SIZE="2"><i>Management's Discussion and
    Analysis of Financial Condition and Results of Operations</i></font></td>
  </tr>
</table>
<font SIZE="2">
<p ALIGN="JUSTIFY">Gross profit for fiscal 2006 was $252.1 million, or 32.6% of
sales, compared to $203.3 million, or 31.1% of sales during fiscal 2005. The
gross margin improvement in fiscal 2006 was due primarily to manufacturing
efficiencies, lower cotton costs, and a favourable product-mix. In addition, the
margin improvement reflected the impact of the reversal of a prior year reserve
of $1.1 million for litigation related to cotton purchase contracts in fiscal
2001, which was resolved in Gildan's favour in the second quarter of this fiscal
year. The positive variances in gross margin for the year were partly offset by
the impacts of lower net selling prices, higher energy and transportation costs,
and from the mix impact of the higher proportion of the lower margin sock sales
following our recent acquisition of Kentucky Derby.</p>
<p ALIGN="JUSTIFY">We continued to reduce our overall manufacturing costs by
increasing the scale of production at our Dominican Republic textile facility,
which ramped up to close to full capacity by the end of fiscal 2006. </p>
<p><u>Selling, General and Administrative Expenses </u></p>
<p ALIGN="JUSTIFY">Our selling, general and administrative (SG&amp;A) expenses
include costs incurred subsequent to the receipt of finished goods at our
distribution facilities, excluding depreciation expense and costs of
inter-warehouse transfers of finished goods. The principal components of our SG&amp;A
expenses include warehousing and handling costs, the cost of shipping goods to
customers, selling and administrative personnel costs, advertising and marketing
expenses, leased facilities and equipment, professional fees, and other general
and administrative expenses. </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Akzidenz Grotesk BE" SIZE="2"><b>SG&amp;A</b></font></td>
  </tr>
  <tr>
    <td style="border-top-style: solid; border-top-width: 1">
    <font FACE="Akzidenz Grotesk BE" SIZE="2"><i>(percentage of sales (%))</i></font></td>
  </tr>
</table>
<p align="center"><img border="0" src="exh9915.gif" width="174" height="270"></p>
<font SIZE="2">
<p ALIGN="JUSTIFY">SG&amp;A expenses were $84.4 million, or 10.9% of sales during
fiscal 2006, compared to $73.8 million, or 11.3% of sales during fiscal 2005.
The increase in SG&amp;A expenses compared to last year stemmed primarily from
higher volume-driven distribution costs, professional fees for the compliance
with the requirements of Section 404 of the U.S. <i>Sarbanes Oxley Act of 2002</i>,
and the impact of the stronger Canadian dollar, combined with the cost of
ongoing organizational development to support our</font><font FACE="Akzidenz Grotesk BE" SIZE="2">
growth strategy. In addition, SG&amp;A expenses included the acquisition of Kentucky
Derby in the fourth quarter this fiscal year, which accounted for $4.4 million
of the year-over-year increase. The increase in SG&amp;A expenses for the year was
partially offset by an adjustment to the reserve for doubtful accounts in the
second quarter of this fiscal year. </p>
<p><u>Restructuring and Other Charges</u></p>
<p ALIGN="JUSTIFY">The following table summarizes the components of
restructuring and other charges for the years ended October 1, 2006, October 2,
2005 and October 3, 2004:</p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="45%"><font SIZE="2"><i>(in $ millions)</i></font></td>
    <td WIDTH="18%" align="right">&nbsp;</td>
    <td WIDTH="18%" align="right">&nbsp;</td>
    <td WIDTH="19%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="45%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="18%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>2006</b></font></td>
    <td WIDTH="18%" align="right" style="border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">2005</font></td>
    <td WIDTH="19%" align="right" style="border-bottom-style: solid; border-bottom-width: 1"><font SIZE="2">2004</font></td>
  </tr>
  <tr>
    <td WIDTH="45%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="18%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="18%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="19%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="45%" bgcolor="#E6E6E6"><font SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Canadian textile manufacturing
    restructuring</font></td>
    <td WIDTH="18%" align="right" bgcolor="#E6E6E6"><font SIZE="2"><b>18.9</b></font></td>
    <td WIDTH="18%" align="right" bgcolor="#E6E6E6"><font SIZE="2">&#150;</font></td>
    <td WIDTH="19%" align="right" bgcolor="#E6E6E6"><font SIZE="2">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="45%"><font SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Restructuring of yarn-spinning
    facilities</font></td>
    <td WIDTH="18%" align="right"><font SIZE="2"><b>&#150;</b></font></td>
    <td WIDTH="18%" align="right"><font SIZE="2">10.7</font></td>
    <td WIDTH="19%" align="right"><font SIZE="2">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="45%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Charge to comply with
    employment contract</font></td>
    <td WIDTH="18%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2"><b>1.5</b></font></td>
    <td WIDTH="18%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">1.1</font></td>
    <td WIDTH="19%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">4.6</font></td>
  </tr>
  <tr>
    <td WIDTH="45%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="18%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>20.4</b></font></td>
    <td WIDTH="18%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">11.8</font></td>
    <td WIDTH="19%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">4.6</font></td>
  </tr>
</table>
<font SIZE="2"><i>
<p>Canadian Textile Manufacturing Restructuring </p>
</i>
<p ALIGN="JUSTIFY">In September 2006, we announced a restructuring of our
Canadian manufacturing operations to take effect in December 2006, involving the
closure of our textile manufacturing facility in Valleyfield, Quebec and the
downsizing of our knitting facility in Montreal, Quebec. We recorded a charge of
$18.9 million relating to this restructuring and our concurrent re-assessment of
the recoverability of the carrying values of our remaining Canadian textile
manufacturing and related assets. Under our business model, there are
essentially no tax recoveries with respect to this charge. The components of
this charge include employee severance of $2.1million with respect to the
Valleyfield and Montreal textile facilities, an asset impairment loss of $15.1
million relating to all of the Canadian textile and related manufacturing fixed
assets, and other costs of $1.7 million. The Company was required to recognize
asset impairment charges to reduce the carrying value of the fixed assets to
fair value, because the carrying value of the assets exceeded the future cash
flows which they were projected to generate during the balance of their
estimated economic lives. As at October 1, 2006, all amounts accrued for
severance and other costs remained unpaid and are included in &quot;Accounts payable
and accrued liabilities&quot;.</p>
<i>
<p>Restructuring of Yarn-Spinning Facilities</p>
</i>
<p ALIGN="JUSTIFY">During fiscal 2005, we closed our two Canadian yarn-spinning
facilities, and relocated a major portion of our yarn-spinning equipment to a
North Carolina spinning facility operated by CanAm. We recorded a charge of
$10.7 million during fiscal 2005 for the costs associated with this closure. The
components of the charge included a writedown to fair value of the fixed assets
not transferred to CanAm of $6.8 million, employee severance of $3.7 million,
and other costs of $0.2 million. </p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'>
    <font FACE="Akzidenz Grotesk BE" SIZE="2">
    <p align="right">Gildan 2006 Annual Report &#149; <b>27</b></font><table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td bgcolor="#111111" width="493" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2" color="#FFFFFF"><b>MD&amp;A</b></font></td>
    <td width="493" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td width="986" colspan="2"><font SIZE="2"><i>Management's Discussion and
    Analysis of Financial Condition and Results of Operations</i></font></td>
  </tr>
</table>
<font SIZE="2">
<p ALIGN="JUSTIFY">The fixed assets not transferred to CanAm were classified as
held for sale at their estimated fair values. Proceeds from assets held for sale
of $4.1 million and $5.0 million were received, respectively in fiscal 2005 and
in fiscal 2006. Severance costs were paid in full in fiscal 2005.</p>
<i>
<p>Charge to Comply With Employment Contract</p>
</i>
<p ALIGN="JUSTIFY">During fiscal 2004, we expensed $4.6 million representing
management's best estimate of the cost of financial obligations pursuant to an
employment contract with the former Chairman and Co-Chief Executive Officer of
the Company. The employment contract includes variable components related to the
Company's financial and operating performance to fiscal 2009. This resulted in
charges of $1.5 million in fiscal 2006 and $1.1 million in fiscal 2005.</p>
<p><u>Depreciation and Interest Expenses</u></p>
<p ALIGN="JUSTIFY">Depreciation and amortization expense increased to $32.4
million in fiscal 2006, compared to $25.6 million in fiscal 2005. The increase
in depreciation expense in fiscal 2006 was due to a higher capital asset base
resulting from continued capital spending to support capacity expansion, in
particular the Dominican Republic facility. </p>
<p ALIGN="JUSTIFY">Net interest expense amounted to $3.1 million during fiscal
2006, down from $4.6 million in fiscal 2005. The decrease in net interest
expense resulted from higher investment income and the reduction in overall
debt, following the scheduled principal repayments made on the Company's Senior
Notes. The increase in investment income was due to higher average cash balances
during the year combined with higher interest rate returns compared to last
year. </p>
<p><u>Income Taxes </u></p>
<p ALIGN="JUSTIFY">Income tax expense for the year ended October 1, 2006, was
$4.8 million, up $3.4 million from $1.4 million in fiscal 2005. The income tax
expense for fiscal 2006 and fiscal 2005 included an income tax recovery of $0.4
million and $3.9 million, respectively, related to restructuring and other
charges, as discussed on page 26. Excluding the impact of restructuring and
other charges in both years, the income tax provision for the year ended October
1, 2006 was $5.2 million, resulting in an effective income tax rate of 3.9%,
compared to an income tax provision of $5.3 million in fiscal 2005, reflecting
an effective income tax rate of 5.3%. The decline in the effective income tax
rate was mainly due to a higher proportion of our total sales being derived from
our international operations and sourced from our offshore textile facilities.
</p>
<p><u>Net Earnings</u></p>
<p ALIGN="JUSTIFY">Net earnings for fiscal 2006 were $106.8 million and diluted
earnings per share (EPS) were $1.76, up respectively 24.2% and 23.1% compared to
net earnings of $86.0 million, or $1.43 per share in fiscal 2005. Net earnings
for fiscal 2006 included restructuring and other charges of $20.0 million after
tax, or $0.33 per share. Net earnings for fiscal 2005 included<font FACE="Akzidenz Grotesk BE" SIZE="2">
restructuring and other charges of $7.9 million after tax, or $0.13 per share.
Excluding the impact of these restructuring and other charges, adjusted net
earnings of $126.8 million, or $2.09 per share on a diluted basis in fiscal
2006, increased 35.0% and 34.0%, respectively, compared to adjusted net earnings
of $93.9 million, or $1.56 per share in fiscal 2005. The increase in adjusted
net earnings and adjusted diluted EPS resulted mainly from the continued strong
growth in unit sales volumes and higher gross margins, which more than offset
increases in SG&amp;A and depreciation expenses. </p>
</font></font>
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    <td width="50%" align="center">
    <img border="0" src="exh9916.gif" width="383" height="300"></td>
    <td width="50%" align="center">
    <img border="0" src="exh9917.gif" width="376" height="301"></td>
  </tr>
</table>
<font FACE="Akzidenz Grotesk BE" SIZE="2"><i>
<p ALIGN="JUSTIFY">(1) Adjusted net earnings and adjusted diluted EPS are before
impact of restructuring and other charges and impact of change to U.S. dollar as
functional currency. See page 24.<br>
(2) Adjusted net earnings and adjusted diluted EPS are before impact of
restructuring and other charges. See page 24.</p>
</i></font><hr color="#000000" size="5"><p Style='page-break-before:always'>
<font FACE="Akzidenz Grotesk BE" SIZE="2">
<p>
    <font FACE="Times New Roman" SIZE="2"><b>&nbsp;28</b> &#149; Gildan 2006 Annual
    Report </font></p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td bgcolor="#111111" width="493" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2" color="#FFFFFF"><b>MD&amp;A</b></font></td>
    <td width="493" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td width="986" colspan="2"><font SIZE="2"><i>Management's Discussion and
    Analysis of Financial Condition and Results of Operations</i></font></td>
  </tr>
</table>
<font SIZE="2"><b>
<p>Operating Results for the year ended October 2, 2005, compared to the year
ended October 3, 2004</p>
</b>
<p ALIGN="JUSTIFY"><u>Change in Functional and Reporting Currency in Fiscal 2004
</u></p>
<p ALIGN="JUSTIFY">Effective October 6, 2003, we adopted the U.S. dollar as our
functional currency since a significant portion of our revenues, expenses,
assets and liabilities are denominated in U.S. dollars and our sales and
manufacturing operations are increasingly international in scope. Effective the
same date, the U.S. dollar was adopted as our reporting currency. This resulted
in a translated value for opening inventories and fixed assets that was
approximately $23 million higher than the amount that would have resulted from
the application of exchange rates prevailing at the dates these assets were
manufactured or acquired. This upward revaluation of inventories and fixed
assets was reflected directly in opening shareholders' equity as part of the
$26.2 million positive balance of cumulative translation adjustments. These
increases result in a corresponding offsetting negative impact on earnings as
inventories were consumed and fixed assets are depreciated. During fiscal 2004,
an additional $3.3 million was reflected in cost of sales as opening inventories
were consumed.</p>
<p><u>Sales</u></p>
<p ALIGN="JUSTIFY">Sales for fiscal 2005 reached $653.9 million, up 22.6% from
$533.4 million in fiscal 2004. The increase in sales was due mainly to an 18.2%
increase in unit sales over the prior year, combined with a higher-valued
product-mix.</p>
<p ALIGN="JUSTIFY">During fiscal 2005, Gildan continued to expand its European
business and maintained a leading market share position in Canada. The Company
also introduced its products in Australia during fiscal 2004, with immediate
success in achieving market penetration. </p>
<p><u>Gross Profit</u></p>
<p ALIGN="JUSTIFY">Gross profit for fiscal 2005 was $203.3 million, or 31.1% of
sales, compared to $154.7 million, or 29.0% of sales during fiscal 2004. Gross
profit in fiscal 2004, excluding the adjustment due to the change in functional
currency, was $158.0 million, or 29.6% of sales. The increase in gross margin
percentage was the result of a higher valued product-mix, higher average selling
prices, lower raw material costs and ongoing manufacturing efficiencies offset
by higher transportation and energy costs and start up inefficiencies for the
new Dominican Republic textile facility.</p>
<p ALIGN="JUSTIFY">We continued to reduce our overall manufacturing costs by
increasing the output from our Honduran textile operations. Our Dominican
Republic textile facility commenced operations in the third quarter of fiscal
2005 and continued to ramp up capacity in fiscal 2006. </p>
<p><u>Selling, General and Administrative Expenses</u></p>
<p ALIGN="JUSTIFY">SG&amp;A expenses were $73.8 million or 11.3% of sales during
fiscal 2005, compared to $58.3 million or 10.9% of sales during fiscal 2004. The
increase in SG&amp;A expenses in fiscal 2005 was mainly due to higher volume-related
selling and distribution costs combined with additional costs for the
implementation of a new warehouse management system, the stronger Canadian
dollar, the overall strengthening of our management and administrative
infrastructure to support our growth strategy, and higher performance-related
compensation costs.</p>
<p><u>Depreciation and Interest Expenses</u></p>
<p ALIGN="JUSTIFY">Depreciation and amortization expense was $25.6 million in
fiscal 2005, compared to $22.3 million in fiscal 2004. The increase in
depreciation expense in fiscal 2005 was the result of our continued investment
in capital expenditures to add capacity for long-term sales growth.</p>
<p ALIGN="JUSTIFY">Net interest expense was $4.6 million during fiscal 2005,
down from $6.2 million in fiscal 2004. The decrease in net interest expense was
the result of the reduction in overall debt following the scheduled principal
repayments made on our Senior Notes, offset slightly by the impact of an
increase in the long-term debt of our joint venture in fiscal 2005.</p>
<p><u>Income Taxes</u></p>
<p ALIGN="JUSTIFY">Income tax expense for fiscal 2005 included an income tax
recovery of $3.9 million from restructuring and other charges. Excluding the
impact of restructuring and other charges, the income tax provision for fiscal
2005 was $5.3 million, resulting in an effective income tax rate of 5.3%. The
income tax expense for fiscal 2004 included an income tax recovery of $1.4
million arising from restructuring and other charges. Excluding this tax
recovery, the effective income tax rate for fiscal 2004 was 6.3%. The decline in
the effective income tax rate was the result of a higher proportion of
international sales compared to prior years, which are taxed at relatively lower
rates.</p>
<p><u>Net Earnings</u></p>
<p ALIGN="JUSTIFY">Net earnings for fiscal 2005 were $86.0 million or $1.43 per
share on a diluted basis, compared to $60.2 million, or diluted EPS of $1.01 in
fiscal 2004, up respectively 42.9% and 41.6%. Before restructuring and other
charges, adjusted net earnings for fiscal 2005 were $93.9 million or $1.56 per
share. These results were up 40.8% and 39.3%, respectively from net earnings of
$66.7 million or $1.12 per share in fiscal 2004, after adjusting 2004 earnings
to remove the $3.3 million after-tax impact of the functional currency change on
cost of sales as a result of revaluing opening inventories, and the after-tax
impact of restructuring and other charges. The increase in net earnings on this
basis was primarily due to the 22.6% increase in sales revenue together with
higher gross margins, partially offset by higher SG&amp;A and depreciation expenses.</p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'>
    <font FACE="Akzidenz Grotesk BE" SIZE="2">
    <p align="right">Gildan 2006 Annual Report &#149; <b>29</b></font><table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td bgcolor="#111111" width="493" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2" color="#FFFFFF"><b>MD&amp;A</b></font></td>
    <td width="493" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td width="986" colspan="2"><font SIZE="2"><i>Management's Discussion and
    Analysis of Financial Condition and Results of Operations</i></font></td>
  </tr>
</table>
<font SIZE="2"><b>
<p>Summary of Quarterly Results </p>
</b>
<p ALIGN="JUSTIFY">The table below sets forth certain summarized unaudited
quarterly financial data for the eight most recently completed quarters. This
quarterly information is unaudited but has been prepared on the same basis as
the annual audited Consolidated Financial Statements. The operating results for
any quarter are not necessarily indicative of the results to be expected for any
period.</p>
<p ALIGN="JUSTIFY">The activewear business is seasonal and we have historically
experienced quarterly fluctuations in operating results. Typically, demand for
our T-shirts is highest in the third quarter of each fiscal year, when
distributors purchase inventory for the peak summer selling season, and lowest
in the first quarter of each fiscal year. The seasonality of specific
product-lines is consistent with that experienced by other companies in the
activewear industry. While we began selling socks in the fourth quarter of
fiscal 2006, demand for our sock products is typically highest in the first and
fourth quarters of each fiscal year, stimulated largely by the need to support
requirements for the back-to-school period and peak retail selling during the
Christmas holiday season. Management anticipates that the seasonality we have
historically experienced will continue in the future, although it is expected to
be somewhat mitigated by our product diversification. As a result of the
historical seasonal sales trends, we produce and store finished goods inventory
in the first half of the fiscal year in order to meet the expected demand for
delivery in the second half of the fiscal year. </p>
<b>
<p>Fourth Quarter Results </p>
</b>
<p ALIGN="JUSTIFY">Sales in the fourth quarter amounted to $235.2 million, up
30.2% from $180.7 million in the fourth quarter of last year. The increase in
sales revenues was due to $30.0 million of sock sales resulting from the
acquisition of Kentucky Derby, which was effective from July 6, 2006, a 13.7%
increase in unit sales volumes for activewear and the impact of a higher-valued
activewear product-mix, partially offset by a close to 3% reduction in unit
selling prices for active-wear compared to last year. The growth in activewear
unit sales was due to continuing market share penetration in all product
categories in the U.S. distributor channel. </p>
<p ALIGN="JUSTIFY">Gross margins in the fourth quarter of fiscal 2006 were
30.6%, versus 32.3% in the fourth quarter of 2005. The decrease in gross margins
was entirely attributable to the impact of lower margins from the sale of socks,
which do not yet reflect the anticipated cost synergies from the planned
rationalization of</font><font FACE="Akzidenz Grotesk BE" SIZE="2"> our sock
manufacturing operations. Excluding the impact of Kentucky Derby, gross margins
in the fourth quarter of fiscal 2006 were 32.5%. The slight increase in gross
margins for activewear reflected favourable manufacturing efficiencies and
higher-valued product-mix compared to last year, essentially offset by lower
selling prices.</p>
<p ALIGN="JUSTIFY">Selling, general and administrative expenses in the fourth
quarter were $23.6 million, or 10.1% of sales, compared to $20.1 million, or
11.1% of sales, in the fourth quarter of last year. The increase in SG&amp;A
expenses was due to the impact of the acquisition of Kentucky Derby, higher
volume-related distribution costs and professional fees for compliance with
Section 404 of the U.S. </font><font FACE="Akzidenz Grotesk BE" SIZE="2"><i>
Sarbanes Oxley Act of 2002</i>, partly offset by severance costs incurred in the
fourth quarter of fiscal 2005 and lower performance-related compensation costs
in the fourth quarter of this fiscal year. The increase of $1.9 million in
depreciation and amortization expenses was due to our continuing investments in
capacity expansion, combined with the impact of the Kentucky Derby acquisition.</p>
<p ALIGN="JUSTIFY">The income tax rate for the fourth quarter of fiscal 2006 was
6.3% compared to an income tax rate of 4.1% in the fourth quarter of fiscal
2005. Excluding the impact of restructuring and other charges in both years, the
effective income tax rate for the fourth quarter of fiscal 2006 was 4.0%
compared to an effective income tax rate of 3.4% for fiscal 2005. </p>
<p ALIGN="JUSTIFY">We achieved net earnings of $16.8 million and diluted EPS of
$0.28, after recording restructuring and other charges in the quarter totaling
$20.0 million after tax, or $0.33 per share. The restructuring and other charges
comprised $0.31 per share for the restructuring of the Company's Canadian
manufacturing facilities, which was announced on September 27, 2006, and $0.02
per share to reflect the variable component of Gildan's contractual obligations
towards its former Chairman and Co-Chief Executive Officer. Before reflecting
the restructuring and other charges, net earnings and diluted EPS for the fourth
quarter of fiscal 2006 amounted to $36.8 million or $0.61 per share, up
respectively 25.6% and 27.1% from net earnings of $29.3 million and diluted EPS
of $0.48 in the fourth quarter of fiscal 2005. Excluding the impact of the
Kentucky Derby acquisition in the quarter, which was $0.01 per share dilutive to
EPS, the increase in net earnings and EPS before the restructuring and other
charges was primarily due to continuing strong growth in unit sales volumes,
favourable manufacturing efficiencies, a higher-valued product-mix for
activewear, and lower SG&amp;A expenses, partially offset by lower selling prices
and higher depreciation expense. </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="31%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="34%" align="center" colspan="4" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>2006</b></font></td>
    <td WIDTH="36%" align="center" colspan="4" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">2005</font></td>
  </tr>
  <tr>
    <td WIDTH="31%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><i>(in $ millions, except per share amounts)</i></font></td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>Q4</b></font></td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>Q3</b></font></td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>Q2</b></font></td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>Q1</b></font></td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">Q4</font></td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">Q3</font></td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">Q2</font></td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">Q1</font></td>
  </tr>
  <tr>
    <td WIDTH="31%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="31%" bgcolor="#E6E6E6"><font SIZE="2">Sales</font></td>
    <td WIDTH="8%" align="right" bgcolor="#E6E6E6"><font SIZE="2"><b>235.2</b></font></td>
    <td WIDTH="8%" align="right" bgcolor="#E6E6E6"><font SIZE="2"><b>233.9</b></font></td>
    <td WIDTH="8%" align="right" bgcolor="#E6E6E6"><font SIZE="2"><b>183.8</b></font></td>
    <td WIDTH="8%" align="right" bgcolor="#E6E6E6"><font SIZE="2"><b>120.3</b></font></td>
    <td WIDTH="9%" align="right" bgcolor="#E6E6E6"><font SIZE="2">180.7</font></td>
    <td WIDTH="9%" align="right" bgcolor="#E6E6E6"><font SIZE="2">198.9</font></td>
    <td WIDTH="9%" align="right" bgcolor="#E6E6E6"><font SIZE="2">165.3</font></td>
    <td WIDTH="9%" align="right" bgcolor="#E6E6E6"><font SIZE="2">109.0</font></td>
  </tr>
  <tr>
    <td WIDTH="31%"><font SIZE="2">Net earnings</font></td>
    <td WIDTH="8%" align="right"><font SIZE="2"><b>16.8</b></font></td>
    <td WIDTH="8%" align="right"><font SIZE="2"><b>42.8</b></font></td>
    <td WIDTH="8%" align="right"><font SIZE="2"><b>31.0</b></font></td>
    <td WIDTH="8%" align="right"><font SIZE="2"><b>16.2</b></font></td>
    <td WIDTH="9%" align="right"><font SIZE="2">29.2</font></td>
    <td WIDTH="9%" align="right"><font SIZE="2">34.1</font></td>
    <td WIDTH="9%" align="right"><font SIZE="2">14.3</font></td>
    <td WIDTH="9%" align="right"><font SIZE="2">8.4</font></td>
  </tr>
  <tr>
    <td WIDTH="31%" bgcolor="#E6E6E6"><font SIZE="2">Net earnings per share</font></td>
    <td WIDTH="8%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="8%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="8%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="8%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="9%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="9%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="9%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="9%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="31%"><font SIZE="2">
    <p style="margin-left: 26">Basic EPS</font></td>
    <td WIDTH="8%" align="right"><font SIZE="2"><b>0.28</b></font></td>
    <td WIDTH="8%" align="right"><font SIZE="2"><b>0.71</b></font></td>
    <td WIDTH="8%" align="right"><font SIZE="2"><b>0.52</b></font></td>
    <td WIDTH="8%" align="right"><font SIZE="2"><b>0.27</b></font></td>
    <td WIDTH="9%" align="right"><font SIZE="2">0.49</font></td>
    <td WIDTH="9%" align="right"><font SIZE="2">0.57</font></td>
    <td WIDTH="9%" align="right"><font SIZE="2">0.24</font></td>
    <td WIDTH="9%" align="right"><font SIZE="2">0.14</font></td>
  </tr>
  <tr>
    <td WIDTH="31%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">
    <p style="margin-left: 26">Diluted EPS</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2"><b>0.28</b></font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2"><b>0.71</b></font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2"><b>0.51</b></font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2"><b>0.27</b></font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">0.48</font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">0.57</font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">0.24</font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">0.14</font></td>
  </tr>
</table>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
<font FACE="Akzidenz Grotesk BE" SIZE="2">
<p>
    <font FACE="Times New Roman" SIZE="2"><b>&nbsp;30</b> &#149; Gildan 2006 Annual
    Report </font></p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td bgcolor="#111111" width="493" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2" color="#FFFFFF"><b>MD&amp;A</b></font></td>
    <td width="493" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td width="986" colspan="2"><font SIZE="2"><i>Management's Discussion and
    Analysis of Financial Condition and Results of Operations</i></font></td>
  </tr>
</table>
<font FACE="Akzidenz Grotesk BE" SIZE="2">
<p ALIGN="JUSTIFY">During the fourth quarter of fiscal 2006, we generated cash
flow of $33.6 million from operating activities, after using $17.0 million to
finance seasonal accounts receivable and $9.0 million to meet seasonal and
replenishment inventory requirements for the sock business and to support
transitional outsourcing programs. We also used cash of $26.2 million for
capital expenditures, mainly for our major capacity expansion projects in
Honduras and the Dominican Republic, and $19.9 million for the acquisition of
Kentucky Derby. In addition, we repaid $21.3 million of the total amount of
$27.4 million of Kentucky Derby's debt assumed at the date of the acquisition.</p>
</font><font SIZE="2"><b>
<p>Financial Condition</p>
</b>
<p ALIGN="JUSTIFY">On October 1, 2006, accounts receivable were $165.9 million
compared to $108.6 million at the end of fiscal 2005. The increase was due to a
13.7% increase in activewear sales in the fourth quarter over the prior year,
the inclusion of $16.2 million accounts receivable from the acquisition of
Kentucky Derby, and an increase in days sales outstanding on our trade
receivables. The increase in days sales outstanding resulted mainly from the
increased success of our long-sleeve and fleece programs which are traditionally
sold with extended payment terms in the summer months, in line with industry
practice. Days sales outstanding are expected to return to more normal levels by
the first quarter of fiscal 2007.</p>
<p ALIGN="JUSTIFY">Inventories were $200.7 million representing an increase of
$65.8 million from $134.9 million at the end of fiscal 2005. Inventories at the
end of fiscal 2006 included $39.3 million from the acquisition of Kentucky Derby
in the fourth quarter of fiscal 2006. The remaining increase in inventory over
fiscal 2005 was primarily attributable to the 13.7% increase in activewear sales
compared to last year and a higher level of finished goods inventories required
to meet our anticipated sales demand in fiscal 2007. Additionally,
year-over-year inventory requirements have increased due to the broadening of
our product-line to support greater penetration in fleece, more T-shirt styles
and the introduction of underwear, combined with increased geographical coverage
requiring more inventory to be allocated to regional warehouses. </p>
<p ALIGN="JUSTIFY">Fixed assets, which are net of accumulated depreciation,
including asset impairment losses, amounted to $302.7 million at the end of
fiscal 2006, up $42.1 million from last year. This increase was primarily due to
net capital expenditures of $80.2 million, mainly for capacity expansion
projects in the Dominican Republic and Honduras, partially offset by
depreciation and asset impairment losses of $46.2 million. </p>
</font><font FACE="Akzidenz Grotesk BE" SIZE="2">
<p ALIGN="JUSTIFY">At the end of fiscal 2006, intangible assets of $9.5 million
represented the unamortized value of customer contracts and customer
relationships related to the acquisition of Kentucky Derby in the fourth quarter
of fiscal 2006. </p>
<p ALIGN="JUSTIFY">Total assets were $723.3 million on October 1, 2006, compared
to $597.5 million at the end of the previous year. Working capital was $261.0
million compared to $214.9 million on October2, 2005. The current ratio at the
end of fiscal 2006 was 2.8 compared to 2.9 at the end of fiscal 2005.</p>
</font>
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    <td width="50%" align="center">
    <img border="0" src="exh9918.gif" width="375" height="351"></td>
    <td width="50%" align="center">
    <img border="0" src="exh9919.gif" width="373" height="318"></td>
  </tr>
</table>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
    <font FACE="Akzidenz Grotesk BE" SIZE="2">
    <p align="right">Gildan 2006 Annual Report &#149; <b>31</b></font><table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td bgcolor="#111111" width="493" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2" color="#FFFFFF"><b>MD&amp;A</b></font></td>
    <td width="493" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td width="986" colspan="2"><font SIZE="2"><i>Management's Discussion and
    Analysis of Financial Condition and Results of Operations</i></font></td>
  </tr>
</table>
<b><font SIZE="2">
<p>Liquidity and Capital Resources </p>
<p>Cash Flows</p>
</font></b><font SIZE="2">
<p ALIGN="JUSTIFY">Cash flows from operating activities in fiscal 2006 were
$94.7 million, compared to $93.2 million for the previous year, reflecting
higher operating earnings, partly offset by higher inventory and accounts
receivable requirements. Excluding the acquired inventory of Kentucky Derby,
inventories for the year increased $35.4 million compared to an increase of
$17.8 million in fiscal 2005. Excluding the acquired accounts receivable of
Kentucky Derby, accounts receivable for the year increased by $41.1 million,
compared to an increase of $22.7 million a year ago. </p>
<p ALIGN="JUSTIFY">Cash flows used in investing activities were $96.1 million in
fiscal 2006, compared to cash outflows of $83.8 million in fiscal 2005. The
increase in cash used in investing activities was mainly due to the acquisition
of Kentucky Derby in the fourth quarter of fiscal 2006 for cash consideration of
$19.9 million, partly offset by lower net capital expenditures in fiscal 2006
compared to last year. Net capital expenditures for fiscal 2006 were $80.2
million, down $5.9 million from fiscal 2005. The major capital investment
projects for fiscal 2006 included the new textile facility in the Dominican
Republic, as well as the sock manufacturing facility and the textile facility
for the production of fleece in Honduras. While capital expenditures in fiscal
2006 for the textile facilities in the Dominican Republic and Honduras were up
from fiscal 2005, total capital expenditures were higher in fiscal 2005 due to
investments for the expansion of our U.S. distribution centre and the expansion
of our yarn-spinning joint venture with Frontier. </p>
<p ALIGN="JUSTIFY">Free cash flow<sup>1 </sup>amounted to $18.5 million in
fiscal 2006, compared to free cash flow of $9.4 million in fiscal 2005, mainly
as a result of higher operating earnings and lower capital expenditures, partly
offset by higher working capital requirements. </p>
<p ALIGN="JUSTIFY">Cash flows used in financing activities in fiscal 2006
amounted to $39.4 million, compared to $0.5 million in fiscal 2005, primarily as
a result of a higher net repayment of total indebtedness<sup>2 </sup>in fiscal
2006, higher proceeds from the issuance of shares in fiscal 2005, and a cash
contribution of $2.5 million received in fiscal 2005 from our joint venture
partner. During fiscal 2006, we repaid $23.9 million of long-term debt
consisting of the $17.5 million third scheduled principal repayment on our
Senior Notes, which was made on June 10, 2006, and a $4.0 million repayment of
Kentucky Derby long-term debt, following our acquisition of Kentucky Derby in
the fourth quarter of fiscal 2006. In addition, we repaid $17.3 million of
Kentucky Derby bank indebtedness. The balance of the debt repayment in fiscal
2006</font><font FACE="Akzidenz Grotesk BE" SIZE="2"> related to a reduction in
the long-term debt and bank indebtedness of our joint venture. The debt
repayment during fiscal 2005 consisted of the second scheduled repayment of our
Senior Notes, which was partly offset by an increase in the long-term debt and
bank indebtedness of our joint venture. </p>
<p ALIGN="JUSTIFY">We ended fiscal 2006 with cash and cash equivalents of $29.0
million compared to $69.8 million at the end of fiscal 2005. At the end of both
fiscal 2005 and fiscal 2006, our revolving bank facility was unutilized. Bank
indebtedness included in our Consolidated Financial Statements at the end of
fiscal 2006 is attributable to our joint venture. Total indebtedness at
October1, 2006 amounted to $37.3 million compared to $51.1 million at October 2,
2005. The decline in total indebtedness is mainly due to the third scheduled
principal repayment of $17.5 million on our Senior Notes, which was made on June
10, 2006, partly offset by the assumption of long-term debt related to the
acquisition of Kentucky Derby.</p>
</font><font FACE="Akzidenz Grotesk BE" SIZE="2"><b>
<p>Liquidity and Capital Resources </p>
</b>
<p ALIGN="JUSTIFY">In recent years, we have funded our operations and capital
requirements with cash generated from operations. A revolving credit facility
has been periodically utilized to finance seasonal peak working capital
requirements. Our primary use of funds on an ongoing basis is related to capital
expenditures for new manufacturing facilities, inventory financing, accounts
receivable funding, and scheduled payments of principal and interest on our
Senior Notes. </p>
<p ALIGN="JUSTIFY">As a result of the seasonal nature of the apparel business,
working capital requirements are variable throughout the year. Our need for
working capital typically grows throughout the first two quarters as inventories
are built up for the peak selling period in the third quarter.</p>
<p ALIGN="JUSTIFY">Anticipated sales growth in 2007 is expected to result in
increased working capital requirements, mainly to finance trade accounts
receivable and inventory. For fiscal 2007, we expect to incur approximately $110
million in capital expenditures. We believe our cash flow from operating
activities together with our unused credit facilities will provide us with
sufficient liquidity and capital resources in fiscal 2007 to fund our
anticipated working capital requirements, capital expenditures and the June 2007
final principal repayment on our Senior Notes. </p>
<p ALIGN="JUSTIFY">In order to maximize flexibility to finance our ongoing
growth and expansion and to be able to take advantage of additional new
opportunities, we do not currently pay a dividend. Periodically, the merits of
introducing a dividend are re-evaluated by our Board of Directors. </p>
</font><font SIZE="2"><i>
<p style="text-indent: -26; margin-left: 26">1</i>&nbsp;&nbsp;&nbsp;&nbsp;
</font><i><font size="2">Cash flows from operating activities including net
changes in non-cash working capital balances, less cash from investing
activities excluding business acquisitions. See pages 41-42.</p>
<p style="text-indent: -26; margin-left: 26">2</font></i><font size="2"> <i>&nbsp;&nbsp;&nbsp;
See pages 41-42.</i></font></p>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
<font FACE="Akzidenz Grotesk BE" SIZE="2">
<p>
    <font FACE="Times New Roman" SIZE="2"><b>&nbsp;32</b> &#149; Gildan 2006 Annual
    Report </font></p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td bgcolor="#111111" width="493" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2" color="#FFFFFF"><b>MD&amp;A</b></font></td>
    <td width="493" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td width="986" colspan="2"><font SIZE="2"><i>Management's Discussion and
    Analysis of Financial Condition and Results of Operations</i></font></td>
  </tr>
</table>
<font SIZE="2"><b>
<p>Off-Balance Sheet Arrangements </p>
</b>
<p ALIGN="JUSTIFY">We have no commitments that are not reflected in our balance
sheets except for operating leases and other purchase obligations, which are
included in the table of contractual obligations below. As disclosed in Note 13
to our Consolidated Financial Statements, we have issued corporate guarantees
and standby letters of credit arising from various servicing agreements
amounting to $37.4 million at October 1, 2006.</p>
<p><u>Derivative Financial Instruments</u></p>
</font>
<p ALIGN="JUSTIFY"><font size="2">From time to time, we use forward foreign
exchange contracts, primarily in Canadian dollars, British pounds and Euros, to
hedge cash flows related to sales and operating expenses denominated in foreign
currencies (non-U.S. dollar). </font></p>
<p><font size="2">A forward foreign exchange contract represents an obligation
to buy or sell foreign currency with a counterparty. Credit risk exists</font><font FACE="Akzidenz Grotesk BE"><font size="2">
in the event of failure by a counterparty to meet its obligations. We reduce
this risk by dealing only with highly rated counter-parties, normally major
European and North American financial institutions. Our exposure to foreign
currency fluctuations is described in more detail in the &quot;Risks and
Uncertainties&quot; section of this MD&amp;A.</font></p>
<p ALIGN="JUSTIFY"><font size="2">We do not use derivative financial instruments
for speculative purposes. Forward foreign exchange contracts are entered into
with maturities not exceeding twenty-four months.</font></p>
<p ALIGN="JUSTIFY"><font size="2">For fiscal 2006 and 2005, net earnings
included recognized gains relating to derivative financial instruments of $4.6
million and $5.8million, respectively, which primarily related to hedging
activities.</font></p>
<p><font size="2">The following table summarizes our commitments to buy and sell
foreign currencies as at October 1, 2006 and October 2, 2005:</font></p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="24%"><font SIZE="2"><i>(in thousands)</i></font></td>
    <td WIDTH="7%" align="right">&nbsp;</td>
    <td WIDTH="13%" align="right"><font SIZE="2">Notional</font></td>
    <td WIDTH="18%" align="right">&nbsp;</td>
    <td WIDTH="24%" align="right">&nbsp;</td>
    <td WIDTH="14%" align="right"><font SIZE="2">Notional U.S.</font></td>
  </tr>
  <tr>
    <td WIDTH="24%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="7%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">amount</font></td>
    <td WIDTH="18%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">Exchange rate</font></td>
    <td WIDTH="24%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">Maturity</font></td>
    <td WIDTH="14%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">equivalent</font></td>
  </tr>
  <tr>
    <td WIDTH="24%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="7%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="18%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="24%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="14%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="24%" bgcolor="#E6E6E6"><font SIZE="2"><b>2006</b></font></td>
    <td WIDTH="7%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="18%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="24%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="14%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="24%"><font SIZE="2"><b>Buy contracts:</b></font></td>
    <td WIDTH="7%" align="right">&nbsp;</td>
    <td WIDTH="13%" align="right">&nbsp;</td>
    <td WIDTH="18%" align="right">&nbsp;</td>
    <td WIDTH="24%" align="right">&nbsp;</td>
    <td WIDTH="14%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="24%" bgcolor="#E6E6E6"><font SIZE="2"><b>&nbsp;&nbsp;&nbsp; Foreign exchange
    contracts</b></font></td>
    <td WIDTH="7%" align="right" bgcolor="#E6E6E6"><font SIZE="2">&#128;</font></td>
    <td WIDTH="13%" align="right" bgcolor="#E6E6E6"><font SIZE="2"><b>9,756</b></font></td>
    <td WIDTH="18%" align="right" bgcolor="#E6E6E6"><font SIZE="2"><b>1.2056 to 1.2696</b></font></td>
    <td WIDTH="24%" align="right" bgcolor="#E6E6E6"><font SIZE="2"><b>October 2006 to June 2007</b></font></td>
    <td WIDTH="14%" align="right" bgcolor="#E6E6E6"><font SIZE="2"><b>$11,934</b></font></td>
  </tr>
  <tr>
    <td WIDTH="24%">&nbsp;</td>
    <td WIDTH="7%" align="right"><font SIZE="2"><b>CA$</b></font></td>
    <td WIDTH="13%" align="right"><font SIZE="2"><b>6,250</b></font></td>
    <td WIDTH="18%" align="right"><font SIZE="2"><b>0.8961</b></font></td>
    <td WIDTH="24%" align="right"><font SIZE="2"><b>October 2006</b></font></td>
    <td WIDTH="14%" align="right"><font SIZE="2"><b>5,600</b></font></td>
  </tr>
  <tr>
    <td WIDTH="24%" bgcolor="#E6E6E6"><font SIZE="2">2005</font></td>
    <td WIDTH="7%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="18%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="24%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="14%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="24%"><font SIZE="2">Buy contracts:</font></td>
    <td WIDTH="7%" align="right">&nbsp;</td>
    <td WIDTH="13%" align="right">&nbsp;</td>
    <td WIDTH="18%" align="right">&nbsp;</td>
    <td WIDTH="24%" align="right">&nbsp;</td>
    <td WIDTH="14%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="24%" bgcolor="#E6E6E6"><font SIZE="2">&nbsp;&nbsp;&nbsp; Foreign exchange contracts</font></td>
    <td WIDTH="7%" align="right" bgcolor="#E6E6E6"><font SIZE="2">&#128;</font></td>
    <td WIDTH="13%" align="right" bgcolor="#E6E6E6"><font SIZE="2">2,150</font></td>
    <td WIDTH="18%" align="right" bgcolor="#E6E6E6"><font SIZE="2">1.2039</font></td>
    <td WIDTH="24%" align="right" bgcolor="#E6E6E6"><font SIZE="2">October 2005</font></td>
    <td WIDTH="14%" align="right" bgcolor="#E6E6E6"><font SIZE="2">$ 2,588</font></td>
  </tr>
  <tr>
    <td WIDTH="24%">&nbsp;</td>
    <td WIDTH="7%" align="right"><font SIZE="2">CA$</font></td>
    <td WIDTH="13%" align="right"><font SIZE="2">21,400</font></td>
    <td WIDTH="18%" align="right"><font SIZE="2">0.7997 to 0.8216</font></td>
    <td WIDTH="24%" align="right"><font SIZE="2">October 2005 to August 2006</font></td>
    <td WIDTH="14%" align="right"><font SIZE="2">17,348</font></td>
  </tr>
  <tr>
    <td WIDTH="24%" bgcolor="#E6E6E6"><font SIZE="2">Sell contracts:</font></td>
    <td WIDTH="7%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="18%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="24%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="14%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="24%"><font SIZE="2">&nbsp;&nbsp;&nbsp; Foreign exchange contracts</font></td>
    <td WIDTH="7%" align="right"><font SIZE="2">&#128;</font></td>
    <td WIDTH="13%" align="right"><font SIZE="2">9,276</font></td>
    <td WIDTH="18%" align="right"><font SIZE="2">1.3450 to 1.3721</font></td>
    <td WIDTH="24%" align="right"><font SIZE="2">October 2005 to September 2006</font></td>
    <td WIDTH="14%" align="right"><font SIZE="2">$12,620</font></td>
  </tr>
  <tr>
    <td WIDTH="24%" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="7%" align="right" bgcolor="#E6E6E6"><font SIZE="2">&#163;</font></td>
    <td WIDTH="13%" align="right" bgcolor="#E6E6E6"><font SIZE="2">4,490</font></td>
    <td WIDTH="18%" align="right" bgcolor="#E6E6E6"><font SIZE="2">1.8707 to 1.8909</font></td>
    <td WIDTH="24%" align="right" bgcolor="#E6E6E6"><font SIZE="2">October 2005 to September 2006</font></td>
    <td WIDTH="14%" align="right" bgcolor="#E6E6E6"><font SIZE="2">8,439</font></td>
  </tr>
  <tr>
    <td WIDTH="24%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="7%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">CA$</font></td>
    <td WIDTH="13%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">2,800</font></td>
    <td WIDTH="18%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">0.8610</font></td>
    <td WIDTH="24%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">October 2005</font></td>
    <td WIDTH="14%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">2,410</font></td>
  </tr>
</table>
<font FACE="Akzidenz Grotesk BE" SIZE="2"><b>
<p>Contractual Obligations</p>
</b>
<p ALIGN="JUSTIFY">In the normal course of business, we enter into contractual
obligations that will require us to disburse cash over future periods. The
following table sets forth our contractual obligations for the following items
as at October 1, 2006:</p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="27%"><font SIZE="2">Payments due by period</font></td>
    <td WIDTH="14%" align="right">&nbsp;</td>
    <td WIDTH="14%" align="right">&nbsp;</td>
    <td WIDTH="15%" align="right">&nbsp;</td>
    <td WIDTH="15%" align="right">&nbsp;</td>
    <td WIDTH="15%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="27%">&nbsp;</td>
    <td WIDTH="14%" align="right">&nbsp;</td>
    <td WIDTH="14%" align="right"><font SIZE="2"><b>Less than</b></font></td>
    <td WIDTH="15%" align="right"><font SIZE="2"><b>1 to 3</b></font></td>
    <td WIDTH="15%" align="right"><font SIZE="2"><b>4 to 5</b></font></td>
    <td WIDTH="15%" align="right"><font SIZE="2"><b>After</b></font></td>
  </tr>
  <tr>
    <td WIDTH="27%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><i>(in $ millions)</i></font></td>
    <td WIDTH="14%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>Total</b></font></td>
    <td WIDTH="14%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>1 year</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>years</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>years</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>5 years</b></font></td>
  </tr>
  <tr>
    <td WIDTH="27%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="14%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="14%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="27%" bgcolor="#E6E6E6"><font SIZE="2">Long-term debt</font></td>
    <td WIDTH="14%" align="right" bgcolor="#E6E6E6"><font SIZE="2">33.9</font></td>
    <td WIDTH="14%" align="right" bgcolor="#E6E6E6"><font SIZE="2">21.8</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E6E6E6"><font SIZE="2">6.5</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E6E6E6"><font SIZE="2">4.1</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E6E6E6"><font SIZE="2">1.5</font></td>
  </tr>
  <tr>
    <td WIDTH="27%"><font SIZE="2">Fixed interest payments</font></td>
    <td WIDTH="14%" align="right"><font SIZE="2">1.3</font></td>
    <td WIDTH="14%" align="right"><font SIZE="2">1.3</font></td>
    <td WIDTH="15%" align="right"><font SIZE="2">&#150;</font></td>
    <td WIDTH="15%" align="right"><font SIZE="2">&#150;</font></td>
    <td WIDTH="15%" align="right"><font SIZE="2">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="27%" bgcolor="#E6E6E6"><font SIZE="2">Operating leases</font></td>
    <td WIDTH="14%" align="right" bgcolor="#E6E6E6"><font SIZE="2">34.7</font></td>
    <td WIDTH="14%" align="right" bgcolor="#E6E6E6"><font SIZE="2">10.0</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E6E6E6"><font SIZE="2">9.4</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E6E6E6"><font SIZE="2">6.3</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E6E6E6"><font SIZE="2">9.0</font></td>
  </tr>
  <tr>
    <td WIDTH="27%"><font SIZE="2">Purchase obligations</font></td>
    <td WIDTH="14%" align="right"><font SIZE="2">128.4</font></td>
    <td WIDTH="14%" align="right"><font SIZE="2">128.4</font></td>
    <td WIDTH="15%" align="right"><font SIZE="2">&#150;</font></td>
    <td WIDTH="15%" align="right"><font SIZE="2">&#150;</font></td>
    <td WIDTH="15%" align="right"><font SIZE="2">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="27%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">Other obligations</font></td>
    <td WIDTH="14%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">17.5</font></td>
    <td WIDTH="14%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">17.5</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">&#150;</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">&#150;</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="27%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>Total Contractual Obligations</b></font></td>
    <td WIDTH="14%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>215.8</b></font></td>
    <td WIDTH="14%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>179.0</b></font></td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>15.9</b></font></td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>10.4</b></font></td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>10.5</b></font></td>
  </tr>
</table>
<font SIZE="2">
<p ALIGN="JUSTIFY">We expect that cash flow from our operating earnings,
together with our year-end cash balances and unutilized bank facilities, will be
sufficient to meet foreseeable cash needs for fiscal 2007.</p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'>
<font FACE="Akzidenz Grotesk BE" SIZE="2"><b>
    <p align="right">Gildan 2006 Annual Report &#149; 33<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td bgcolor="#111111" width="493" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2" color="#FFFFFF"><b>MD&amp;A</b></font></td>
    <td width="493" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td width="986" colspan="2"><font SIZE="2"><i>Management's Discussion and
    Analysis of Financial Condition and Results of Operations</i></font></td>
  </tr>
</table>
<p>Contingent Liability </p>
</b>
<p ALIGN="JUSTIFY">In November 2002, one of our Mexican subsidiaries (&quot;Gildan
Mexico&quot;) received a tax assessment from a regional taxation office relating to
duties for the 2000 fiscal year for approximately $6.0 million. The substance of
the assessment was that the Mexican tax authorities adopted the position that
Canadian-made textiles shipped to Gildan Mexico for sewing processing had not
subsequently been exported from Mexico. Gildan Mexico appealed the assessment
and was successful in obtaining a judgement in its favour. Notwithstanding the
judgement, the regional Mexican taxation office issued a new assessment in March
2005, and increased the assessed amount to approximately $7.1 million, primarily
comprised of interest and late payment penalties. Shortly after receiving the
second assessment, Gildan Mexico again filed an appeal. In July 2006, Gildan
Mexico received notification that its appeal of the second assessment for fiscal
2000 was unsuccessful. We have received legal opinions that the tax assessment
is without merit under Mexican law governing re-export from maquiladora
operations. Additionally, Gildan Mexico, a maquiladora operation, has provided
documentation to establish that the textiles imported into Mexico for sewing
were subsequently exported to the United States and Canada. We are pursuing all
available avenues to resolve this matter in our favour. At the present time, the
Mexican authorities are not attempting to enforce payment of this tax
assessment. We expect to be successful in our efforts to clarify and resolve
this matter and, accordingly, no provision has been made in the accounts for
this potential liability.</p>
<b>
<p>Outstanding Share Data </p>
</b>
<p>Our common shares are listed on the New York Stock Exchange and the Toronto
Stock Exchange (GIL).</p>
<p ALIGN="JUSTIFY">As of November 30, 2006, there were 60,138,612 common shares
issued and outstanding along with 501,343 stock options and 453,872 dilutive
restricted share units outstanding. Each stock option entitles the holder to
purchase one common share at the end of the vesting period at a pre-determined
option price. Each restricted share unit entitles the holder to receive one
common share from treasury at the end of the vesting period, without any
monetary consideration being paid to the Company. However, the vesting of 50% of
the restricted share grant is dependent upon the financial performance of the
Company relative to a benchmark group of Canadian publicly-listed companies. </p>
<p ALIGN="JUSTIFY">The Board of Directors has approved the renewal of the
Company's normal course issuer bid, subject to obtaining final approval from the
Toronto Stock Exchange, in order to repurchase a maximum of 1,000,000 common
shares in the open market commencing December 22, 2006 and ending December 21,
2007. This represents less than 2.0% of the total common shares issued and
outstanding. No shares had been repurchased under the previous bid. </p>
<p>Stock Split</p>
<p ALIGN="JUSTIFY">On May 4, 2005, the Board of Directors of the Company
declared a two-for-one stock split, effected in the form of a stock dividend,
applicable to all of our issued and outstanding common shares and payable to
shareholders of record on May 20, 2005. All earnings per share data in this MD&amp;A
are stated after the stock split.</p>
</font><b><font FACE="Akzidenz Grotesk BE" SIZE="2">
<p>Outlook </p>
<p>Recap of Fiscal 2006 Guidance </p>
</font></b><font FACE="Akzidenz Grotesk BE" SIZE="2">
<p ALIGN="JUSTIFY">Our original diluted EPS guidance for the 2006 fiscal year
was approximately $1.85. This guidance was based on anticipated sales growth of
approximately 20% and an assumed reduction in average selling prices of
approximately 1.5%. This represented diluted EPS growth of 29.4% over fiscal
2005 reported EPS, and 18.6% growth over adjusted diluted EPS of $1.56 excluding
restructuring and other charges from the prior year EPS. </p>
<p ALIGN="JUSTIFY">On February 1, 2006, when we reported our results for our
first fiscal quarter, we increased our guidance for fiscal 2006 diluted EPS to
approximately $1.90, due to more favourable than anticipated results in the
first fiscal quarter. The increase in adjusted diluted EPS was primarily
attributable to more favourable selling price realizations in the first quarter
of the fiscal year.</p>
<p ALIGN="JUSTIFY">On May 4, 2006, when we reported our second quarter results,
we further increased our adjusted diluted EPS guidance for fiscal 2006 to $1.96
as a result of more favourable results in the second quarter of the year. The
projected diluted EPS for the second half of fiscal 2006 reflected our revised
assumption of a 2% reduction in pricing compared with the second half of last
year and lower unit sales volumes than previously projected. However, these
factors were expected to be offset by the benefit of more favourable product mix
and by increased manufacturing efficiencies.</p>
<p ALIGN="JUSTIFY">On June 20, 2006, in conjunction with the announcement of the
acquisition of Kentucky Derby, we increased our full year guidance to diluted
EPS of $2.00 due to more favourable product mix.</p>
<p ALIGN="JUSTIFY">On August 3, 2006, when we announced our third quarter
results, we further increased our full year diluted EPS guidance to reflect more
favourable than anticipated third quarter results and the assumed continuation
in the fourth quarter of more favourable manufacturing efficiencies and
product-mix, partially offset by the projected continuation of more unfavourable
industry pricing. The revised diluted EPS guidance of $2.07 included a $0.02
charge to comply with the employment contract of the former Chairman and
Co-Chief Executive Officer of the Company. Before this charge, adjusted diluted
EPS for fiscal 2006 was projected at $2.09. </p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'>
<font FACE="Akzidenz Grotesk BE" SIZE="2">
<p>
    <font FACE="Times New Roman" SIZE="2"><b>&nbsp;34</b> &#149; Gildan 2006 Annual
    Report </font></p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="2"><b>
    <td bgcolor="#111111" width="493" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2" color="#FFFFFF"><b>MD&amp;A</b></font></td>
    <td width="493" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    </b></font>
  </tr>
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="2"><b>
    <td width="986" colspan="2"><font SIZE="2"><i>Management's Discussion and
    Analysis of Financial Condition and Results of Operations</i></font></td>
    </b></font>
  </tr>
</table>
<font FACE="Akzidenz Grotesk BE" SIZE="2">
<p ALIGN="JUSTIFY">On September 27, 2006, prior to participating at an investor
conference, we announced the restructuring of our Canadian manufacturing
facilities and reconfirmed our annual diluted EPS guidance before restructuring
and other charges. Adjusted diluted EPS guidance of $2.09 reflected projected
EPS for fiscal 2006 before the anticipated charge of $0.28 for the announced
restructuring of our Canadian manufacturing facilities and the $0.02 charge to
comply with the employment contract of the former Chairman and Co-Chief
Executive Officer of the Company. </p>
<p ALIGN="JUSTIFY">Our actual diluted EPS for fiscal 2006 was $1.76, or $2.09
excluding the impact of restructuring and other charges, in line with our
guidance for the year. </p>
</font><font FACE="Akzidenz Grotesk BE" SIZE="2"><b>
<p>Outlook 2007</p>
</b>
<p ALIGN="JUSTIFY">We are projecting diluted EPS of approximately $2.55 for
fiscal 2007. Our fiscal 2007 guidance continues to include approximately $0.06
per share of accelerated depreciation to reflect the change in the estimated
economic lives of our remaining Canadian textile and related manufacturing
assets. Prior to this additional depreciation charge, adjusted diluted EPS for
fiscal 2007 is projected to be approximately $2.61, up from $2.56 per share
originally projected on September 27, 2006. The projected $0.05 per share impact
of the acquisition of Kentucky Derby was not included in the original guidance.
</p>
<p ALIGN="JUSTIFY">Our guidance for fiscal 2007 assumes that the acquisition of
Kentucky Derby has a negligible impact on EPS until the fourth quarter of the
fiscal year. By the end of fiscal 2007, the annualized impact of cost reductions
from the integration of Kentucky Derby into Gildan is expected to be in excess
of $0.15 per share. We continue to project that we will achieve annual cost
reduction synergies of $0.30 per share, once the integration process is
completed during fiscal 2008 and we have achieved a globally competitive cost
structure for our sock manufacturing operations. </p>
<p ALIGN="JUSTIFY">Our guidance for fiscal 2007 assumes growth in sales of
approximately 26% compared to fiscal 2006, to approximately $970 million. Unit
sales growth is projected at over 55%, including approximately 25 million dozens
of socks. Our guidance is also based on an assumed year-over-year reduction in
activewear selling prices of approximately 2.5% in fiscal 2007 as we continue to
drive further market share penetration and enter the mass-market retail channel.</p>
<p ALIGN="JUSTIFY">Diluted EPS for the first quarter of fiscal 2007, before the
additional depreciation charge, are projected to be the same as in the first
quarter of fiscal 2006, at $0.27. Higher unit sales volume growth in the first
quarter is projected to be offset by lower gross margins and higher SG&amp;A
expenses. In particular, the first quarter is impacted by significant
year-over-year increases in cotton costs, compared with a low point in cotton
prices in the first quarter of last year. Also, the positive impact of unit
volume growth is lower than in other quarters, as the first quarter is
seasonally the lowest sales volume quarter of the fiscal year.</p>
</font><font SIZE="2">
<p ALIGN="JUSTIFY">After the first quarter, in addition to the more significant
impact of sales volume growth, gross margins for activewear are expected to
increase, both relative to the first quarter as well as to the corresponding
quarters in fiscal 2006. In the second half of fiscal 2007, cotton costs are
expected to be comparable to the second half of fiscal 2006. Also, throughout
fiscal 2007 we expect to realize significant manufacturing efficiencies from the
continuing ramp-up of the Dominican Republic textile facility and the
rationalization of our Canadian textile manufacturing announced on September 27,
2006, which are expected to more than offset the projected 2.5% reduction in
selling prices. In addition, gross margins for the sock business are expected to
increase in successive quarters as the Company progresses with the integration
of Kentucky Derby.</p>
<p ALIGN="JUSTIFY">We are projecting capital expenditures of approximately $110
million in fiscal 2007, which we expect to fully finance out of our
internally-generated cash flow from operating activities. </p>
<p>We hereby refer to the Forward-Looking Statements cautionary notice on page
43.</p>
<b>
<p>Critical Accounting Estimates </p>
</b>
<p ALIGN="JUSTIFY">Our significant accounting policies are described in Note 2
to our audited Consolidated Financial Statements. The preparation of financial
statements in conformity with Canadian GAAP requires estimates and assumptions
that affect our results of operations and financial position. By their nature,
these judgements are subject to an inherent degree of uncertainty and are based
upon historical experience, trends in the industry and information available
from outside sources. On an ongoing basis, management reviews its estimates and
actual results could differ from those estimates.</p>
<p ALIGN="JUSTIFY">Management believes that the following accounting estimates
are most significant to assist in understanding and evaluating our financial
results.</p>
<b>
<p>Sales Promotional Programs</p>
</b>
<p ALIGN="JUSTIFY">At the time of sale, estimates are made for customer price
discounts and rebates based upon 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 and other known
factors, and exclude sales taxes. If actual price discounts, rebates or returns
differ from estimates, significant adjustments to net sales could be required in
future periods.</p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'>
<font FACE="Akzidenz Grotesk BE" SIZE="2"><b>
    <p align="right">Gildan 2006 Annual Report &#149; 35</b></font><table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="2"><b>
    <td bgcolor="#111111" width="493" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2" color="#FFFFFF"><b>MD&amp;A</b></font></td>
    <td width="493" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    </b></font>
  </tr>
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="2"><b>
    <td width="986" colspan="2"><font SIZE="2"><i>Management's Discussion and
    Analysis of Financial Condition and Results of Operations</i></font></td>
    </b></font>
  </tr>
</table>
<font SIZE="2"><b>
<p>Trade Accounts Receivable</p>
</b>
<p ALIGN="JUSTIFY">Trade accounts receivable consist of amounts due from our
normal business activities. We maintain an allowance for doubtful accounts to
provide for credit losses. Our extension of credit and our determination of the
allowance for doubtful accounts involve judgement and is based on an evaluation
of each customer's financial condition and payment history. We regularly monitor
our credit risk exposure to our customers and take steps to mitigate the risk of
loss. </p>
<p ALIGN="JUSTIFY">If the financial condition of our customers were to
deteriorate causing an impairment of their ability to make payments, additional
provisions for bad debts may be required in future periods. On the other hand,
if our ultimate recovery on the accounts we have reserved or written off exceeds
our estimates, we may decrease our reserves.</p>
<b>
<p>Fixed Assets</p>
</b>
<p ALIGN="JUSTIFY">Our fixed assets are stated at cost less accumulated
depreciation, including asset impairment losses. Depreciation is calculated
using the straight-line method over the estimated useful lives of the assets.</p>
<p ALIGN="JUSTIFY">On a regular basis, we review the estimated useful lives of
our fixed assets. Assessing the reasonableness of the estimated useful lives of
fixed assets requires judgement and is based on currently available information.
We also review our fixed assets for potential impairment whenever events and
changes in circumstances indicate that the carrying amounts of such assets may
not be recoverable. Impairment losses are 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
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. In estimating future cash flows, the Company uses its
best estimates based on internal plans, which incorporate management's
judgements as to the remaining service potential of the fixed assets. Changes in
circumstances, such as technological advances and changes to our business
strategy can result in actual useful lives and future cash flows differing
significantly from our estimates. Revisions to the estimated useful lives of
fixed assets or future cash flows constitute a change in accounting estimate and
are applied prospectively.</p>
<b>
<p>Cotton and Yarn Procurements</p>
</b>
<p ALIGN="JUSTIFY">We contract 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 our products. These contracts are not used for
trading purposes. We commit to fixed prices on a percentage of our cotton and
yarn requirements up to eighteen months in the future. If market prices for
cotton and yarn fall significantly below the committed future purchase prices,
we estimate the costs of cotton and yarn that are not recoverable in future
sales of finished goods, and record a charge to earnings.</p>
<b>
<p>Income Taxes</p>
</b>
<p ALIGN="JUSTIFY">We utilize 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 our audited Consolidated Financial Statements. </p>
<p ALIGN="JUSTIFY">Our future income tax assets are recognized only to the
extent that, in management's opinion, it is more likely than not that the future
income tax assets will be realized. If the realization is not considered to be
more likely than not, a valuation allowance is provided. Management's opinion is
based on certain estimates or assumptions. In addition, income tax rules and
regulations in the countries in which the Company operates and income tax
treaties between these countries are subject to interpretation, and require
estimates and assumptions in determining the Company's consolidated income tax
provision that may be challenged by the taxation authorities. If these estimates
or assumptions change in the future, we may be required to reduce or increase
the value of the future income tax assets and liabilities resulting in a
significant income tax expense or recovery in future periods. We evaluate our
future income tax assets and liabilities on a quarterly basis.</p>
</font><b><font SIZE="2">
<p>Recent Accounting Pronouncements </p>
<p>Comprehensive Income / Financial Instruments / Hedges</p>
</font></b><font SIZE="2">
<p ALIGN="JUSTIFY">During 2005, the Canadian Institute of Chartered Accountants
(CICA) released new accounting standards for the recognition, measurement and
disclosure of financial instruments, hedges and comprehensive income, as
follows: </p>
<ul>
  <li>1530, Comprehensive Income;</li>
  <li>3855, Financial Instruments &#150; Recognition and Measurement; and</li>
  <li>3865, Hedges</li>
</ul>
<p ALIGN="JUSTIFY">Under these new standards, all financial assets should be
measured at fair value with the exception of loans, receivables and investments
that are intended to be held to maturity and certain equity investments, which
should be measured at cost. Similarly, all financial liabilities should be
measured at fair value when they are held for trading or when they are
derivatives.</p>
<p ALIGN="JUSTIFY">Gains and losses on financial instruments measured at fair
value will be recognized in the income statement in the periods they arise with
the exception of gains and losses arising from:</p>
<ul>
  <li>financial assets held for sale, for which unrealized changes in fair value
  are initially reported in other comprehensive income and subsequently
  reclassified to net income when the financial assets are sold or become
  impaired; and</li>
</ul>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'>
<font FACE="Akzidenz Grotesk BE" SIZE="2">
<p>
    <font FACE="Times New Roman" SIZE="2"><b>&nbsp;36</b> &#149; Gildan 2006 Annual
    Report </font></p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="2"><b>
    <td bgcolor="#111111" width="493" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2" color="#FFFFFF"><b>MD&amp;A</b></font></td>
    <td width="493" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    </b></font>
  </tr>
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="2"><b>
    <td width="986" colspan="2"><font SIZE="2"><i>Management's Discussion and
    Analysis of Financial Condition and Results of Operations</i></font></td>
    </b></font>
  </tr>
</table>
<font SIZE="2">
<ul>
  <li>certain financial instruments that qualify as hedging items under the
  application of hedge accounting, for which unrealized changes in fair value
  are initially reported in other comprehensive income and subsequently
  reclassified to net income when the offsetting loss or gain on the hedged item
  affects net income.</li>
</ul>
<p ALIGN="JUSTIFY">Other comprehensive income comprises revenues, expenses,
gains and losses that are excluded from net income under generally accepted
accounting principles, but are added to or deducted from net income in computing
and reporting comprehensive income. Unrealized gains and losses on qualifying
hedging instruments, translation of self-sustaining foreign operations, and
unrealized gains or losses on financial instruments held for sale will be
included in other comprehensive income and reclassified to net income when
realized. Comprehensive income and its components will be a new financial
statement required under the new standards. </p>
<p ALIGN="JUSTIFY">These new standards will be effective for our 2007 fiscal
year. We do not expect the adoption of these standards to have any material
impact on our results of operations or financial position. </p>
<b>
<p>Equity</p>
</b>
<p ALIGN="JUSTIFY">The CICA has issued Handbook Section 3251, Equity, which
establishes standards for the presentation of equity and changes in equity
during the reporting period. The main feature of this Section is a requirement
for an enterprise to present separately each of the changes in equity during the
period, including comprehensive income, as well as components of equity at the
end of the period. This new standard is effective for interim and annual
financial statements relative to fiscal years beginning on or after October 1,
2006 and therefore will be effective for our 2007 fiscal year. We do not expect
the adoption of this standard to have any material impact on our results of
operations or financial position. </p>
<b>
<p>Related Party Transactions </p>
</b>
<p ALIGN="JUSTIFY">We have transactions with Frontier which manages the
operations of CanAm. These transactions are in the normal course of operations
and are measured at the exchange amount, which is the amount of consideration
established and agreed to by the related parties. Total purchases of yarn from
Frontier were $100.4 million in fiscal 2006 (2005 &#150; $106.8 million), along with
$0.8 million relating to management fees (2005 &#150; $0.6 million). As at October 1,
2006, we had an outstanding payable to Frontier of $18.9 million (2005 &#150; $15.6
million).</p>
<p>During fiscal 2005, Frontier contributed $2.5 million in cash to CanAm.</p>
<b>
<p>Disclosure Controls </p>
</b>
<p ALIGN="JUSTIFY">Our disclosure controls and procedures are designed to ensure
that information required to be disclosed in our reports filed with securities
regulatory authorities is recorded, processed, summarized, and reported within
prescribed time periods and is accumulated and communicated to our management,
including our Chief Executive Officer and our Chief Financial Officer, as
appropriate, to allow timely decisions regarding required disclosure.</p>
<p ALIGN="JUSTIFY">An evaluation was carried out under the supervision of, and
with the participation of, our management, including our Chief Executive Officer
and our Chief Financial Officer, of the effectiveness of our disclosure controls
and procedures as of October 1, 2006. Based on that evaluation, our Chief
Executive Officer and our Chief Financial Officer concluded that our disclosure
controls and procedures were effective as of the end of such period.</p>
</font><b><font SIZE="2">
<p>Internal Control Over Financial Reporting</p>
<p>Management's Annual Report on Internal Control Over Financial Reporting</p>
</font></b><font SIZE="2">
<p ALIGN="JUSTIFY">Our management is responsible for establishing and
maintaining adequate internal control over financial reporting, as such term is
defined in Rules 13a-15(f) and 15d-15(f) under the U.S.<i> Securities Exchange
Act of 1934</i>. </p>
<p ALIGN="JUSTIFY">Our internal control over financial reporting includes those
policies and procedures that: (1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of our assets; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that our receipts
and expenditures are being made only in accordance with authorizations of our
management and directors; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of our assets that could have a material effect on the financial statements. </p>
<p ALIGN="JUSTIFY">Under the supervision and with the participation of our Chief
Executive Officer and our Chief Financial Officer, management conducted an
evaluation of the effectiveness of our internal control over financial
reporting, as of October 1, 2006, based on the framework set forth in <i>
Internal Control-Integrated Framework </i>issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based on its evaluation under
this framework, management concluded that our internal control over financial
reporting was effective as of that date. </p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'>
<font FACE="Akzidenz Grotesk BE" SIZE="2"><b>
    <p align="right">Gildan 2006 Annual Report &#149; 37</b></font><table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="2"><b>
    <td bgcolor="#111111" width="493" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2" color="#FFFFFF"><b>MD&amp;A</b></font></td>
    <td width="493" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    </b></font>
  </tr>
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="2"><b>
    <td width="986" colspan="2"><font SIZE="2"><i>Management's Discussion and
    Analysis of Financial Condition and Results of Operations</i></font></td>
    </b></font>
  </tr>
</table>
<font SIZE="2">
<p ALIGN="JUSTIFY">Management's assessment of the effectiveness of our internal
control over financial reporting as of October 1, 2006 excluded Kentucky Derby,
which we acquired on July 6, 2006. Kentucky Derby is a wholly-owned subsidiary
of ours whose total assets and total net sales represented less than 11% of our
consolidated total assets and less than 4% of our consolidated net sales,
respectively, as of and for the year ended October 1, 2006. Companies are
allowed to exclude acquisitions from their assessment of internal control over
financial reporting during the first year of an acquisition while integrating
the acquired company under guidelines established by the Securities and Exchange
Commission.</p>
<b>
<p>Attestation Report of Registered Public Accounting Firm</p>
</b>
<p ALIGN="JUSTIFY">KPMG LLP, an independent registered public accounting firm,
which audited and reported on our financial statements in this Annual Report,
has issued an attestation report on management's assessment of our internal
control over financial reporting as of October 1, 2006. </p>
<b>
<p>Changes in Internal Controls Over Financial Reporting</p>
</b>
<p ALIGN="JUSTIFY">During fiscal 2006, we made improvements to our internal
controls over financial reporting in preparation for our first annual management
report on internal controls over financial reporting.</p>
<p ALIGN="JUSTIFY">The design of any system of controls and procedures is based
in part upon certain assumptions about the likelihood of certain events. There
can be no assurance that any design will succeed in achieving its stated goals
under all potential future conditions, regardless of how remote.</p>
<b>
<p>Risks and Uncertainties</p>
</b>
<p ALIGN="JUSTIFY">The Company is subject to a variety of business risks. The
risks described below are risks that could materially affect our business,
financial condition and results of operations, but are not necessarily the only
ones facing the Company. Additional risks that are not currently known to us or
that we currently deem immaterial, could also materially and adversely affect
our business. </p>
<i>
<p>Our ability to implement our strategies and plans</p>
</i>
<p ALIGN="JUSTIFY">While we believe we can leverage our existing core
competencies and successful business model in the mass-market retail channel, we
cannot assure you that our strategy to develop our vertically-integrated
manufacturing hubs, which has allowed us to provide our customers with low
prices, consistent product quality and a reliable supply chain, and has been the
main reason that we have been able to rapidly increase our market presence and
establish our market leadership in the imprinted sportswear market, will be
successful in the retail channel.</p>
<p ALIGN="JUSTIFY">In addition to our recent acquisition of Kentucky Derby, we
may invest in business acquisitions that we assess to be complementary to our
business or that could contribute to the acceleration of our growth strategy,
and from which we would expect to realize</p>
<p ALIGN="JUSTIFY">economic benefits through the integration of such
acquisitions into our operations. There can be no assurance that we would be
successful in completing and integrating such acquisitions into our own
operations or that we would realize the anticipated benefits from such
acquisitions. </p>
<i>
<p>Our industry is competitive</p>
</i>
<p ALIGN="JUSTIFY">The apparel market for our products is highly competitive.
Competition is generally based upon price, with reliable quality and service
also being key requirements for success. Our primary competitors in North
America are the major U.S.-based manufacturers of basic branded activewear for
the wholesale and retail channels, such as Fruit of the Loom, Inc., Hanesbrands
Inc., the Jerzees division of Russell Corporation, which was recently acquired
by Berkshire Hathaway Inc. which owns Fruit of the Loom, Inc., Delta Apparel,
Inc., and Anvil Knitwear, Inc. The competition in the European wholesale
imprinted activewear market is similar to that in North America, as we compete
primarily with the European divisions of the larger U.S.-based manufacturers. In
Europe, we also have large competitors that do not have integrated manufacturing
operations and source products from contractors in Asia. In addition, we face
the threat of increasing global competition.</p>
<p ALIGN="JUSTIFY">Our ability to remain competitive in the areas of quality,
price, service, marketing, product development, manufacturing and distribution
will, in large part, determine our future success. We cannot assure you that we
will be able to continue to compete successfully. </p>
<i>
<p>Our industry is subject to pricing pressures </p>
</i>
<p ALIGN="JUSTIFY">Prices in our industry have been declining over the past
several years primarily as a result of passing cost reductions through into
lower selling prices. Such cost reductions result from factors which include the
relocation of manufacturing operations to lower-cost labour environments
offshore, the addition of new capacity using state-of-the-art manufacturing
technology, and lower raw material costs. </p>
<p ALIGN="JUSTIFY">In the future, our financial performance may be negatively
affected if we are forced to reduce our prices and we cannot reduce our
production costs, or if our production costs increase and we cannot increase our
prices.</p>
<i>
<p>Our success depends on our ability to anticipate evolving consumer
preferences and trends</p>
</i>
<p ALIGN="JUSTIFY">While we currently focus on basic, non-fashion products, the
apparel industry, particularly within the retail channel, is subject to evolving
consumer preferences and trends. Our success may be impacted by changes in
consumer preferences which do not fit with Gildan's core competency of
large-scale marketing and manufacturingof basic, non-fashion apparel products
for customers requiring an efficient supply chain and consistent product quality
for high-volume automatic replenishment programs. This could have a material
adverse effect on our business, results of operations and financial condition.
</p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'>
<font FACE="Akzidenz Grotesk BE" SIZE="2">
<p>
    <font FACE="Times New Roman" SIZE="2"><b>&nbsp;38</b> &#149; Gildan 2006 Annual
    Report </font></p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="2"><b>
    <td bgcolor="#111111" width="493" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2" color="#FFFFFF"><b>MD&amp;A</b></font></td>
    <td width="493" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    </b></font>
  </tr>
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="2"><b>
    <td width="986" colspan="2"><font SIZE="2"><i>Management's Discussion and
    Analysis of Financial Condition and Results of Operations</i></font></td>
    </b></font>
  </tr>
</table>
<font SIZE="2"><i>
<p>Our operations are subject to environmental regulation</p>
</i>
<p ALIGN="JUSTIFY">We are subject to various environmental and occupational
health and safety laws and regulations in our operations in Canada, the United
States and offshore. Future events, such as:</p>
<ul>
  <li>
  <p ALIGN="justify">a change in existing laws and regulations; </li>
  <li>
  <p ALIGN="justify">the enactment of new laws and regulations; </li>
  <li>
  <p ALIGN="justify">a release of hazardous substances on or from our properties
  or any associated offsite disposal location; or </li>
  <li>
  <p ALIGN="justify">the discovery of contamination from current or prior
  activities at any of our properties</li>
</ul>
<p>may give rise to compliance or environmental remediation costs that could
have a material adverse effect on our business. </p>
<i>
<p>We rely on a relatively small number of significant customers</p>
</i>
<p ALIGN="JUSTIFY">We sell our products to approximately 180 customers. In
fiscal 2006, our largest customer accounted for 28.2% (2005 &#150;28.2%) of sales,
and our top ten customers accounted for 66.0% (2005 &#150; 63.8%) of total sales. We
expect that these customers will continue to represent a significant portion of
our sales in the future, together with a relatively small number of large
mass-market retailers. If any of our significant customers substantially reduce
their purchases or cease to buy from us and we cannot replace that business with
sales to other customers on similar terms, our business would be materially
adversely affected. </p>
<i>
<p>Our customers do not commit to purchase minimum quantities</p>
</i>
<p ALIGN="JUSTIFY">Our contracts with our customers do not require them to
purchase a minimum quantity of our products. If any of our customers experiences
a significant business downturn or fails to remain committed to our products,
they may reduce or discontinue purchases from us. Although we have maintained
long-term relationships with many of our wholesale distributor customers, we
cannot assure you that historic levels of business from any of our customers
will continue or increase in the future.</p>
<i>
<p>We are exposed to concentrations of credit risk</p>
</i>
<p ALIGN="JUSTIFY">The Company's financial instruments that are exposed to
concentrations of credit risk consist primarily of cash equivalents and trade
receivables. The Company invests available cash in short-term deposits with
major North American and European financial institutions.</p>
<p ALIGN="JUSTIFY">The Company's extension of credit involves considerable
judgement and is based on an evaluation of each customer's financial condition
and payment history. Adverse changes in our customers' financial position could
cause us to limit or discontinue business with that customer, require us to
assume more credit risk relating to that customer's future purchases or limit
our ability to collect accounts receivable relating to previous purchases by
that customer, all of which could have a material adverse effect on our
business, results of operations and financial condition. The Company regularly
monitors its credit risk exposure to its customers and takes steps to mitigate
the risk of loss. As at October 1, 2006, the Company's top ten customers
accounted</font><font FACE="Akzidenz Grotesk BE" SIZE="2"> for approximately
57.0% (2005 &#150; 60.1%) of the trade receivable balance of which one customer
represented 18.1% (2005 &#150;20.5%). The remaining trade receivable balance is
comprised of a large number of debtors across many geographic areas including
the United States, Canada, Europe, Mexico and Australasia. An allowance for
doubtful accounts is maintained for credit losses consistent with the credit
risk, historical trends, general economic conditions and other available
information.</p>
<i>
<p>We are subject to international trade regulation that is becoming
increasingly liberalized</p>
</i>
<p ALIGN="JUSTIFY">The textile and apparel industries of developed countries
(including Canada, the United States and Europe) have historically received a
relatively higher degree of trade protection than other industries. </p>
<p ALIGN="JUSTIFY">Since January 2005, quotas on imports of textiles and apparel
from member countries of the World Trade Organization (WTO) have been
eliminated, except that China will continue to be subject to quotas on its
textile and apparel exports until the end of 2008. Additionally, the developed
countries have implemented regional trade agreements and programs, such as the
North American Free Trade Agreement (NAFTA), the Caribbean Basin Trade
Partnership Act (CBTPA) and the Central America Free Trade Agreement (CAFTA),
which allow qualifying textiles and apparel from participating countries
duty-free access to developed countries' markets. One of the newest programs, CAFTA, was adopted to strengthen and develop economic relations among its
parties. We have situated our manufacturing facilities in strategic locations to
take advantage of these trade liberalization measures, which enable us to be
competitive in our markets. </p>
<p ALIGN="JUSTIFY">CAFTA allows the United States to impose safeguards in the
form of full or partial restoration of normal duties if increased imports cause
or threaten serious damage to domestic industry. There can be no assurance that
CAFTA safeguards or other developments in trade regulation would not adversely
impact our business. </p>
<p ALIGN="JUSTIFY">The Company is subject to customs audits in the various
countries in which it operates. The Company believes that its customs compliance
programs are effective, although we cannot predict the likelihood or outcome of
any governmental audit.</p>
<i>
<p>We currently pay income tax at a comparatively low effective rate, which
could change in the future</p>
</i>
<p ALIGN="JUSTIFY">The Company's sales structure results in the income generated
from its international sales being subject to relatively low income tax rates.
The structure is supported by current domestic laws in the countries in which
the Company operates, as well as through the application of income tax treaties
between various countries in which the Company operates. The Company conducts
annual transfer pricing studies to substantiate the transactions between the
various related parties within the Company. </p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'>
<font FACE="Akzidenz Grotesk BE" SIZE="2"><b>
    <p align="right">Gildan 2006 Annual Report &#149; 39</b></font><table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="2"><b>
    <td bgcolor="#111111" width="493" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2" color="#FFFFFF"><b>MD&amp;A</b></font></td>
    <td width="493" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    </b></font>
  </tr>
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="2"><b>
    <td width="986" colspan="2"><font SIZE="2"><i>Management's Discussion and
    Analysis of Financial Condition and Results of Operations</i></font></td>
    </b></font>
  </tr>
</table>
<font SIZE="2">
<p ALIGN="JUSTIFY">The Company is subject to government audits in the various
countries in which it operates. The final result of any audits undertaken by
taxation authorities may vary compared to the estimates and assumptions used by
management in determining the Company's consolidated tax provision. Depending on
the ultimate outcome of any such audit, there may be a material impact on the
Company's consolidated tax provision. </p>
<p ALIGN="JUSTIFY">The Company operates under free trade and export processing
zones in various countries in Central America and the Caribbean Basin. Under the
free trade zone rules, the Company is not subject to income tax in these
countries. Any changes to the free trade zone rules or the free trade zone
status of any one of the countries in which we operate may impact the effective
tax rate of the Company.</p>
<p ALIGN="JUSTIFY">Any unanticipated changes to either current domestic laws in
the countries in which the Company operates, or any changes to the income tax
treaties the Company currently relies on, could also impact the effective tax
rate of the Company. </p>
<i>
<p>The price of the raw materials we buy is prone to significant fluctuations
and volatility</p>
</i>
<p ALIGN="JUSTIFY">Cotton is the primary raw material used in the manufacture of
our products. We also purchase chemicals, dyestuffs and trims through a variety
of suppliers. The Company purchases cotton through its yarn-spinning joint
venture, and also purchases processed cotton yarn from outside vendors, at
prices that vary depending on the actual price of cotton. The price of cotton
fluctuates and is affected by weather, consumer demand, speculation on the
commodities market, the relative valuations and fluctuations of the currencies
of producer versus consumer countries and other factors that are generally
unpredictable and beyond our control. In addition, fluctuations in crude oil or
petroleum prices may also influence the prices of related items used in our
business, such as chemicals, dyestuffs and trims. The Company enters into
futures contracts and makes other arrangements to establish firm prices for
cotton and cotton yarn for which it will ultimately take delivery in order to
mitigate the effect of price fluctuations. For future deliveries with a fixed
price, the Company will not be able to benefit from price decreases but will be
protected against price increases. Conversely, in the event that we have not
entered into sufficient cotton futures contracts or made other arrangements to
lock in the price of cotton yarn in advance of delivery, we will not be
protected against price increases, but will be in a position to benefit from any
price decreases. </p>
<p ALIGN="JUSTIFY">Without taking into account the impact of futures contracts,
a change of $0.01 per pound in cotton prices would affect the Company's annual
raw material costs by approximately $3.2 million, at estimated production levels
for fiscal 2007. The ultimate effect of this change on the Company's earnings
cannot be quantified, as the relationship between movements in cotton prices and
movements in industry selling prices cannot be predicted with any certainty.</p>
<i>
<p>Our operations are subject to political, social and economic risks</p>
</i>
<p ALIGN="JUSTIFY">The majority of our products are now manufactured and sewn in
Central America, the Caribbean Basin and Mexico. The Company is currently adding
significant new capacity and making further capital investments in Central
America and the Caribbean Basin. Some of these countries have experienced
political, social and economic instability, and we cannot be certain of their
future stability. </p>
<p ALIGN="JUSTIFY">Additional events that could disrupt our supply chain,
interrupt production in our offshore facilities or increase our cost of sales
include:</p>
<ul>
  <li>
  <p ALIGN="justify">political instability, labour unrest, war or terrorism;
  </li>
  <li>
  <p ALIGN="justify">disruptions in shipping and freight forwarding services;
  </li>
  <li>
  <p ALIGN="justify">increases in oil prices and energy costs, which would
  increase transportation costs; </li>
  <li>
  <p ALIGN="justify">interruptions in the availability of basic services and
  infrastructure, including power and water shortages; and </li>
  <li>
  <p ALIGN="justify">fire or natural disasters, such as hurricanes, floods and
  earthquakes.</li>
</ul>
<p>Such conditions or events could have material adverse effects on our
business, results of operations and financial condition. </p>
<i>
<p>Our industry is subject to fluctuations in sales demand</p>
</i>
<p ALIGN="JUSTIFY">Demand for our products may vary from year to year. We must
appropriately balance our inventory with our ability to meet market demand.
Based on discussions with our customers and internally generated projections
reflecting our analysis of factors impacting industry demand at the beginning of
each fiscal year, we produce and store finished goods inventory to meet the
expected demand for delivery. If, after producing and storing inventory in
anticipation of deliveries, demand is significantly less than expected, we may
have to hold inventory for extended periods of time, or sell excess inventory at
reduced prices. In either case, our profits would be reduced. Excess inventory
could also result in slower production, lower plant and equipment utilization
and lower fixed operating cost absorption, all of which would have a negative
impact on our business, results of operations or financial condition.</p>
<i>
<p>Our business operations significantly rely on our information systems </p>
</i>
<p ALIGN="JUSTIFY">We depend on information systems to manage our inventory,
process transactions, respond to customer inquiries, purchase, sell and ship
goods on a timely basis and maintain cost-effective operations. There can be no
assurance that we will not experience operational problems with our information
systems as a result of system failures, viruses, or other causes. Any material
disruption or slowdown of our systems could cause operational delays that could
have a material adverse effect on our business, results of operation and
financial condition. </p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'>
<font FACE="Akzidenz Grotesk BE" SIZE="2">
<p>
    <font FACE="Times New Roman" SIZE="2"><b>&nbsp;40</b> &#149; Gildan 2006 Annual
    Report </font></p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="2"><b>
    <td bgcolor="#111111" width="493" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2" color="#FFFFFF"><b>MD&amp;A</b></font></td>
    <td width="493" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    </b></font>
  </tr>
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="2"><b>
    <td width="986" colspan="2"><font SIZE="2"><i>Management's Discussion and
    Analysis of Financial Condition and Results of Operations</i></font></td>
    </b></font>
  </tr>
</table>
<font FACE="Akzidenz Grotesk BE" SIZE="2"><i>
<p>Foreign currency risk</p>
</i>
<p ALIGN="JUSTIFY">Effective fiscal 2004, the functional and reporting currency
of the Company was changed from the Canadian dollar to the U.S. dollar. This
change was made as the majority of the Company's sales revenues are denominated
in U.S. dollars, while its manufacturing operations are increasingly diversified
outside Canada. However, as the Company operates as an international business,
its financial results continue to be exposed to the effects of changes in
foreign currency (non-U.S. dollar) exchange rates. The Company's exposure
relates primarily to changes in the U.S. dollar/Canadian dollar, U.S.
dollar/Honduras lempira, U.S. dollar/British pound and U.S. dollar/Euro exchange
rates. Significant fluctuations in these exchange rates could materially impact
our future results of operations. </p>
<i>
<p>Our operations could be affected by changes in our relationship with our
employees or changes to domestic and foreign employment regulations</p>
</i>
<p ALIGN="JUSTIFY">We employ over 15,000 employees worldwide. As a result,
changes in domestic and foreign laws governing our relationships with our
employees, including wage and hour laws and regulations, fair labour standards,
overtime pay, unemployment tax rates, workers' compensation rates and payroll
taxes, would likely have a direct impact on our operating costs. The majority of
our employees are employed outside of Canada and the United States. A
significant increase in wage rates in the countries we operate could have a
material impact on our operating costs. </p>
<p ALIGN="JUSTIFY">The Company has been able to operate in a productive manner
in all of its manufacturing facilities without experiencing labour disruptions,
such as strikes or work stoppages. If labour relations were to change or
deteriorate, this could adversely affect the productivity and cost structure of
the Company's manufacturing operations.</p>
</font><font SIZE="2"><i>
<p>We may suffer negative publicity if we, or our third-party contractors
violate labour laws or engage in practices that are viewed as unethical </p>
</i>
<p ALIGN="JUSTIFY">We are committed to ensuring that all of our manufacturing
facilities comply with our strict internal code of conduct, local and
international laws, and the codes to which we subscribe, including those of
Worldwide Responsible Apparel Production (WRAP) and the Fair Labour Association
(FLA). While the majority of our manufacturing operations are conducted through
company-owned facilities, we also utilize third-party contractors to complement
our vertically-integrated production. We have engaged Verit&#233;, a globally
respected training and auditing organization, to carry out a comprehensive
program of training and auditing at all of our Company-owned and contractor
facilities. In addition, we have recruited an internationally respected Director
of Corporate Social Responsibility to develop the Company's compliance programs.
However, if one of our own manufacturing operations or one of our third-party
contractors violates or is accused of violating local or international labour
laws or other applicable regulations, or engages in labour or other practices
that would be viewed, in any market in which our products are sold, as
unethical, we could suffer negative publicity which could tarnish our reputation
or result in a loss of sales that could have a material adverse effect on our
business, results of operations and financial condition. </p>
<i>
<p>We depend on key management</p>
</i>
<p ALIGN="JUSTIFY">Our success depends upon the continued contributions of our
key management, some of whom have unique talents and experience and would be
difficult to replace. The loss or interruption of the services of a key
executive could have a material adverse effect on our business during the
transitional period that would be required for a successor to assume the
responsibilities of the key management position. Our future success will also
depend on our ability to attract and retain key managers, sales people and
others. We may not be able to attract or retain these employees, which could
adversely affect our business. </p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'>
<font FACE="Akzidenz Grotesk BE" SIZE="2"><b>
    <p align="right">Gildan 2006 Annual Report &#149; 41</b></font><table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="2"><b>
    <td bgcolor="#111111" width="493" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2" color="#FFFFFF"><b>MD&amp;A</b></font></td>
    <td width="493" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    </b></font>
  </tr>
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="2"><b>
    <td width="986" colspan="2"><font SIZE="2"><i>Management's Discussion and
    Analysis of Financial Condition and Results of Operations</i></font></td>
    </b></font>
  </tr>
</table>
<font SIZE="2"><b>
<p>Reconciliation and Definition of Non-GAAP Measures</p>
</b>
<p ALIGN="JUSTIFY">We use non-GAAP measures to assess our operating performance
and financial condition. The terms and definitions of the non-GAAP measures used
in this report and a reconciliation of each non-GAAP measure to the most
directly comparable GAAP measure are provided below. The non-GAAP measures are
presented on a consistent basis for all periods presented in this MD&amp;A. These
non-GAAP measures do not have any standardized meanings prescribed by Canadian
GAAP and are therefore unlikely to be comparable to similar measures presented
by other companies. Accordingly, they should not be considered in isolation. </p>
<b>
<p>Adjusted Net Earnings and Adjusted Diluted EPS</p>
</b>
<p ALIGN="JUSTIFY">To measure our performance from one period to the next,
without the variations caused by the impacts of restructuring and other charges
as discussed on page 26, and the change in functional currency, as discussed on
page 28, management uses adjusted net earnings and adjusted diluted earnings per
share, which is calculated as net earnings and earnings per share excluding
these items. We exclude these items because they affect the comparability of our
financial results and could potentially distort the analysis of trends in our
business performance. Excluding these items does not imply they are necessarily
non-recurring.</p>
<i>
<p>(in $ millions, except per share amounts)</p>
</i></font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2"><b>2006</b></font></td>
    <td WIDTH="20%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2"><b>Audited</b></font></td>
    <td WIDTH="41%" COLSPAN="2" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2"><b>Adjusted</b></font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-top-style: solid; border-top-width: 1" valign="bottom">&nbsp;</td>
    <td WIDTH="20%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">&nbsp;</td>
    <td WIDTH="20%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">&nbsp;</td>
    <td WIDTH="20%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">Sales</font></td>
    <td WIDTH="20%" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2"><b>773.2</b></font></td>
    <td WIDTH="20%" align="right" valign="bottom" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="20%" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2"><b>773.2</b></font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">Cost of sales</font></td>
    <td WIDTH="20%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2"><b>521.1</b></font></td>
    <td WIDTH="20%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">&nbsp;</td>
    <td WIDTH="20%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2"><b>521.1</b></font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2">Gross profit</font></td>
    <td WIDTH="20%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2"><b>252.1</b></font></td>
    <td WIDTH="20%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="20%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2"><b>252.1</b></font></td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom">&nbsp;</td>
    <td WIDTH="20%" align="right" valign="bottom">&nbsp;</td>
    <td WIDTH="20%" align="right" valign="bottom">&nbsp;</td>
    <td WIDTH="20%" align="right" valign="bottom">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Selling, general and
    administrative expenses</font></td>
    <td WIDTH="20%" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2"><b>84.4</b></font></td>
    <td WIDTH="20%" align="right" valign="bottom" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="20%" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2"><b>84.4</b></font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Restructuring and other charges</font></td>
    <td WIDTH="20%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2"><b>20.4</b></font></td>
    <td WIDTH="20%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2"><b>(20.4)<sup>(1)</sup></b></font></td>
    <td WIDTH="20%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2"><b>&#150;</b></font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
    <td WIDTH="20%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2"><b>147.3</b></font></td>
    <td WIDTH="20%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2"><b>
    <p style="margin-right: 15">20.4</b></font></td>
    <td WIDTH="20%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2"><b>167.7</b></font></td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom"><font SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Depreciation and amortization</font></td>
    <td WIDTH="20%" align="right" valign="bottom"><font SIZE="2"><b>32.4</b></font></td>
    <td WIDTH="20%" align="right" valign="bottom">
    <p style="margin-right: 15">&nbsp;</td>
    <td WIDTH="20%" align="right" valign="bottom"><font SIZE="2"><b>32.4</b></font></td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Interest, net</font></td>
    <td WIDTH="20%" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2"><b>3.1</b></font></td>
    <td WIDTH="20%" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 15">&nbsp;</td>
    <td WIDTH="20%" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2"><b>3.1</b></font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Non-controlling interest in
    income of consolidated joint venture</font></td>
    <td WIDTH="20%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2"><b>0.2</b></font></td>
    <td WIDTH="20%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <p style="margin-right: 15">&nbsp;</td>
    <td WIDTH="20%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2"><b>0.2</b></font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2">Earnings before income taxes</font></td>
    <td WIDTH="20%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2"><b>111.6</b></font></td>
    <td WIDTH="20%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2"><b>
    <p style="margin-right: 15">20.4</b></font></td>
    <td WIDTH="20%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2"><b>132.0</b></font></td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">Income taxes</font></td>
    <td WIDTH="20%" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>4.8</b></font></td>
    <td WIDTH="20%" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>0.4 <sup>(1)</sup></b></font></td>
    <td WIDTH="20%" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>5.2</b></font></td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">Net earnings</font></td>
    <td WIDTH="20%" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2"><b>106.8</b></font></td>
    <td WIDTH="20%" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2"><b>
    <p style="margin-right: 15">20.0</b></font></td>
    <td WIDTH="20%" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2"><b>126.8</b></font></td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="20%" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="20%" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 15">&nbsp;</td>
    <td WIDTH="20%" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">Basic EPS</font></td>
    <td WIDTH="20%" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2"><b>1.78</b></font></td>
    <td WIDTH="20%" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2"><b>
    <p style="margin-right: 15">0.33</b></font></td>
    <td WIDTH="20%" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2"><b>2.11</b></font></td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">Diluted EPS</font></td>
    <td WIDTH="20%" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>1.76</b></font></td>
    <td WIDTH="20%" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>
    <p style="margin-right: 15">0.33</b></font></td>
    <td WIDTH="20%" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>2.09</b></font></td>
  </tr>
</table>
<font FACE="Akzidenz Grotesk BE" SIZE="2"><i>
<p>Certain minor rounding variances exist between the financial statements and
this summary.</p>
<p>(in $ millions, except per share amounts)</p>
</i></font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="393" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">2005</font></td>
    <td WIDTH="197" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">Audited</font></td>
    <td WIDTH="198" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">&nbsp;</td>
    <td WIDTH="198" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">Adjusted</font></td>
  </tr>
  <tr>
    <td WIDTH="393" style="border-top-style: solid; border-top-width: 1" valign="bottom">&nbsp;</td>
    <td WIDTH="197" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">&nbsp;</td>
    <td WIDTH="198" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">&nbsp;</td>
    <td WIDTH="198" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="393" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">Sales</font></td>
    <td WIDTH="197" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">653.9</font></td>
    <td WIDTH="198" align="right" valign="bottom" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="198" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">653.9</font></td>
  </tr>
  <tr>
    <td WIDTH="393" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">Cost of sales</font></td>
    <td WIDTH="197" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">450.6</font></td>
    <td WIDTH="198" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">&nbsp;</td>
    <td WIDTH="198" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">450.6</font></td>
  </tr>
  <tr>
    <td WIDTH="393" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2">Gross profit</font></td>
    <td WIDTH="197" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2">203.3</font></td>
    <td WIDTH="198" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="198" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2">203.3</font></td>
  </tr>
  <tr>
    <td WIDTH="393" valign="bottom"><font SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Selling, general and
    administrative expenses</font></td>
    <td WIDTH="197" align="right" valign="bottom"><font SIZE="2">73.8</font></td>
    <td WIDTH="198" align="right" valign="bottom">&nbsp;</td>
    <td WIDTH="198" align="right" valign="bottom"><font SIZE="2">73.8</font></td>
  </tr>
  <tr>
    <td WIDTH="393" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Restructuring and other charges</font></td>
    <td WIDTH="197" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2">11.8</font></td>
    <td WIDTH="198" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2">(11.8)<sup>(1)</sup></font></td>
    <td WIDTH="198" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="393" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
    <td WIDTH="197" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <font SIZE="2">117.7</font></td>
    <td WIDTH="198" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-right: 15">11.8</font></td>
    <td WIDTH="198" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <font SIZE="2">129.5</font></td>
  </tr>
  <tr>
    <td WIDTH="393" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Depreciation and amortization</font></td>
    <td WIDTH="197" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">25.6</font></td>
    <td WIDTH="198" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 15">&nbsp;</td>
    <td WIDTH="198" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">25.6</font></td>
  </tr>
  <tr>
    <td WIDTH="393" valign="bottom"><font SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Interest, net</font></td>
    <td WIDTH="197" align="right" valign="bottom"><font SIZE="2">4.6</font></td>
    <td WIDTH="198" align="right" valign="bottom">
    <p style="margin-right: 15">&nbsp;</td>
    <td WIDTH="198" align="right" valign="bottom"><font SIZE="2">4.6</font></td>
  </tr>
  <tr>
    <td WIDTH="393" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <p style="text-indent: -26; margin-left: 26"><font SIZE="2">Non-controlling
    interest in income of consolidated joint venture</font></td>
    <td WIDTH="197" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2">0.1</font></td>
    <td WIDTH="198" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 15">&nbsp;</td>
    <td WIDTH="198" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2">0.1</font></td>
  </tr>
  <tr>
    <td WIDTH="393" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <font SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Earnings before income taxes</font></td>
    <td WIDTH="197" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <font SIZE="2">87.4</font></td>
    <td WIDTH="198" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-right: 15">11.8</font></td>
    <td WIDTH="198" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <font SIZE="2">99.2</font></td>
  </tr>
  <tr>
    <td WIDTH="393" style="border-bottom: 1px solid #000000" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Income taxes</font></td>
    <td WIDTH="197" align="right" style="border-bottom: 1px solid #000000" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2">1.4</font></td>
    <td WIDTH="198" align="right" style="border-bottom: 1px solid #000000" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2">
    <p style="margin-right: 5">3.9<sup>(1)</sup></font></td>
    <td WIDTH="198" align="right" style="border-bottom: 1px solid #000000" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2">5.3</font></td>
  </tr>
  <tr>
    <td WIDTH="393" style="border-bottom: 1px solid #000000" valign="bottom">
    <font SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Net earnings</font></td>
    <td WIDTH="197" align="right" style="border-bottom: 1px solid #000000" valign="bottom">
    <font SIZE="2">86.0</font></td>
    <td WIDTH="198" align="right" style="border-bottom: 1px solid #000000" valign="bottom">
    <font SIZE="2">
    <p style="margin-right: 15">7.9</font></td>
    <td WIDTH="198" align="right" style="border-bottom: 1px solid #000000" valign="bottom">
    <font SIZE="2">93.9</font></td>
  </tr>
  <tr>
    <td WIDTH="393" valign="bottom" bgcolor="#E6E6E6">
    <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
    <td WIDTH="197" align="right" valign="bottom" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="198" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 15">&nbsp;</td>
    <td WIDTH="198" align="right" valign="bottom" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="393" valign="bottom"><font SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Basic EPS</font></td>
    <td WIDTH="197" align="right" valign="bottom"><font SIZE="2">1.44</font></td>
    <td WIDTH="198" align="right" valign="bottom"><font SIZE="2">
    <p style="margin-right: 15">0.13</font></td>
    <td WIDTH="198" align="right" valign="bottom"><font SIZE="2">1.57</font></td>
  </tr>
  <tr>
    <td WIDTH="393" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Diluted EPS</font></td>
    <td WIDTH="197" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2">1.43</font></td>
    <td WIDTH="198" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2">
    <p style="margin-right: 15">0.13</font></td>
    <td WIDTH="198" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E6E6E6">
    <font SIZE="2">1.56</font></td>
  </tr>
  <tr>
    <td WIDTH="393" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
    <td WIDTH="197" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">&nbsp;</td>
    <td WIDTH="198" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">&nbsp;</td>
    <td WIDTH="198" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">&nbsp;</td>
  </tr>
  <tr>
    <td COLSPAN="4" width="986" valign="bottom"><font SIZE="2"><i>Certain minor
    rounding variances exist between the financial statements and this summary.</i></font></td>
  </tr>
  <tr>
    <td WIDTH="393" valign="bottom">&nbsp;</td>
    <td WIDTH="197" align="right" valign="bottom">&nbsp;</td>
    <td WIDTH="198" align="right" valign="bottom">&nbsp;</td>
    <td WIDTH="198" align="right" valign="bottom">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="393" valign="bottom">&nbsp;</td>
    <td WIDTH="197" align="right" valign="bottom">&nbsp;</td>
    <td WIDTH="198" align="right" valign="bottom">&nbsp;</td>
    <td WIDTH="198" align="right" valign="bottom">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="590" COLSPAN="2" valign="bottom"><font SIZE="2"><i>(in $
    millions, except per share amounts)</i></font></td>
    <td WIDTH="198" align="right" valign="bottom">&nbsp;</td>
    <td WIDTH="198" align="right" valign="bottom">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="393" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">2004</font></td>
    <td WIDTH="197" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">Audited</font></td>
    <td WIDTH="198" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="198" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">Adjusted</font></td>
  </tr>
  <tr>
    <td WIDTH="393" valign="bottom" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="197" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="198" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="198" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="393" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">Sales</font></td>
    <td WIDTH="197" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">533.4</font></td>
    <td WIDTH="198" align="right" valign="bottom" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="198" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">533.4</font></td>
  </tr>
  <tr>
    <td WIDTH="393" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Cost of sales</font></td>
    <td WIDTH="197" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">378.7</font></td>
    <td WIDTH="198" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">(3.3)<sup>(2)</sup></font></td>
    <td WIDTH="198" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">375.4</font></td>
  </tr>
  <tr>
    <td WIDTH="393" valign="bottom" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Gross profit</font></td>
    <td WIDTH="197" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">154.7</font></td>
    <td WIDTH="198" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">
    <p style="margin-right: 15">3.3</font></td>
    <td WIDTH="198" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">158.0</font></td>
  </tr>
  <tr>
    <td WIDTH="393" valign="bottom"><font SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Selling, general and
    administrative expenses</font></td>
    <td WIDTH="197" align="right" valign="bottom"><font SIZE="2">58.3</font></td>
    <td WIDTH="198" align="right" valign="bottom">&nbsp;</td>
    <td WIDTH="198" align="right" valign="bottom"><font SIZE="2">58.3</font></td>
  </tr>
  <tr>
    <td WIDTH="393" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Restructuring and other charges</font></td>
    <td WIDTH="197" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">4.6</font></td>
    <td WIDTH="198" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">(4.6)<sup>(1)</sup></font></td>
    <td WIDTH="198" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="393" valign="bottom" style="border-top-style: solid; border-top-width: 1">
    <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
    <td WIDTH="197" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1">
    <font SIZE="2">91.8</font></td>
    <td WIDTH="198" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1">
    <font SIZE="2">
    <p style="margin-right: 15">7.9</font></td>
    <td WIDTH="198" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1">
    <font SIZE="2">99.7</font></td>
  </tr>
  <tr>
    <td WIDTH="393" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Depreciation and amortization</font></td>
    <td WIDTH="197" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">22.3</font></td>
    <td WIDTH="198" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 15">&nbsp;</td>
    <td WIDTH="198" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">22.3</font></td>
  </tr>
  <tr>
    <td WIDTH="393" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Interest, net</font></td>
    <td WIDTH="197" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">6.2</font></td>
    <td WIDTH="198" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 15">&nbsp;</td>
    <td WIDTH="198" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">6.2</font></td>
  </tr>
  <tr>
    <td WIDTH="393" valign="bottom" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Earnings before income taxes</font></td>
    <td WIDTH="197" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">63.3</font></td>
    <td WIDTH="198" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">
    <p style="margin-right: 15">7.9</font></td>
    <td WIDTH="198" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">71.2</font></td>
  </tr>
  <tr>
    <td WIDTH="393" valign="bottom" style="border-bottom: 1px solid #000000">
    <font SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Income taxes</font></td>
    <td WIDTH="197" align="right" valign="bottom" style="border-bottom: 1px solid #000000">
    <font SIZE="2">3.1</font></td>
    <td WIDTH="198" align="right" valign="bottom" style="border-bottom: 1px solid #000000">
    <font SIZE="2">
    <p style="margin-right: 5">1.4<sup>(1)</sup></font></td>
    <td WIDTH="198" align="right" valign="bottom" style="border-bottom: 1px solid #000000">
    <font SIZE="2">4.5</font></td>
  </tr>
  <tr>
    <td WIDTH="393" valign="bottom" style="border-bottom: 1px solid #000000" bgcolor="#E6E6E6">
    <font SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Net earnings</font></td>
    <td WIDTH="197" align="right" valign="bottom" style="border-bottom: 1px solid #000000" bgcolor="#E6E6E6">
    <font SIZE="2">60.2</font></td>
    <td WIDTH="198" align="right" valign="bottom" style="border-bottom: 1px solid #000000" bgcolor="#E6E6E6">
    <font SIZE="2">
    <p style="margin-right: 15">6.5</font></td>
    <td WIDTH="198" align="right" valign="bottom" style="border-bottom: 1px solid #000000" bgcolor="#E6E6E6">
    <font SIZE="2">66.7</font></td>
  </tr>
  <tr>
    <td WIDTH="393" valign="bottom">
    <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
    <td WIDTH="197" align="right" valign="bottom">&nbsp;</td>
    <td WIDTH="198" align="right" valign="bottom">
    <p style="margin-right: 15">&nbsp;</td>
    <td WIDTH="198" align="right" valign="bottom">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="393" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Basic EPS</font></td>
    <td WIDTH="197" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">1.02</font></td>
    <td WIDTH="198" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">
    <p style="margin-right: 15">0.11</font></td>
    <td WIDTH="198" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">1.13</font></td>
  </tr>
  <tr>
    <td WIDTH="393" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Diluted EPS</font></td>
    <td WIDTH="197" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">1.01</font></td>
    <td WIDTH="198" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 15">0.11</font></td>
    <td WIDTH="198" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">1.12</font></td>
  </tr>
</table>
<font FACE="Akzidenz Grotesk BE" SIZE="2"><i>
<p>Certain minor rounding variances exist between the financial statements and
this summary.</p>
<p>(1) Adjustment to remove restructuring and other charges, and the income tax
effect thereon. See page 26. <br>
(2) Adjustment to remove the impact of the change in functional currency. See
page 28.</p>
</i></font><hr color="#000000" size="5"><p Style='page-break-before:always'>
<font FACE="Akzidenz Grotesk BE" SIZE="2">
<p>
    <font FACE="Times New Roman" SIZE="2"><b>&nbsp;42</b> &#149; Gildan 2006 Annual
    Report </font></p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="2"><b>
    <td bgcolor="#111111" width="493" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2" color="#FFFFFF"><b>MD&amp;A</b></font></td>
    <td width="493" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    </b></font>
  </tr>
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="2"><b>
    <td width="986" colspan="2"><font SIZE="2"><i>Management's Discussion and
    Analysis of Financial Condition and Results of Operations</i></font></td>
    </b></font>
  </tr>
</table>
<font SIZE="2"><b>
<p>EBITDA</p>
</b>
<p ALIGN="JUSTIFY">EBITDA is calculated as earnings before interest, taxes and
depreciation and amortization and excludes the impacts of restructuring and
other charges, as discussed on page 26 and the change in functional currency, as
discussed on page 28. We use EBITDA, among other measures, to assess the
operating performance of our business. We also believe this measure is commonly
used by investors and analysts to measure a company's ability to service debt
and to meet other payment obligations, or as a common valuation measurement. We
exclude depreciation and amortization expenses, which are non-cash in nature and
can vary significantly depending upon accounting methods or non-operating
factors such as historical cost. Excluding these items does not imply they are
necessarily non-recurring. </p>
<i>
<p>(in $ millions)</p>
</i></font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="39%" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="20%" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>2006</b></font></td>
    <td WIDTH="20%" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">2005</font></td>
    <td WIDTH="21%" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">2004</font></td>
  </tr>
  <tr>
    <td WIDTH="39%" valign="bottom" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="20%" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="20%" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="21%" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="39%" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">Net earnings</font></td>
    <td WIDTH="20%" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2"><b>106.8</b></font></td>
    <td WIDTH="20%" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">86.0</font></td>
    <td WIDTH="21%" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">60.2</font></td>
  </tr>
  <tr>
    <td WIDTH="39%" valign="bottom"><font SIZE="2">Restructuring and other
    charges</font></td>
    <td WIDTH="20%" align="right" valign="bottom"><font SIZE="2"><b>20.4</b></font></td>
    <td WIDTH="20%" align="right" valign="bottom"><font SIZE="2">11.8</font></td>
    <td WIDTH="21%" align="right" valign="bottom"><font SIZE="2">4.6</font></td>
  </tr>
  <tr>
    <td WIDTH="39%" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">Change in functional currency</font></td>
    <td WIDTH="20%" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2"><b>&#150;</b></font></td>
    <td WIDTH="20%" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">&#150;</font></td>
    <td WIDTH="21%" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">3.3</font></td>
  </tr>
  <tr>
    <td WIDTH="39%" valign="bottom"><font SIZE="2">Depreciation and amortization</font></td>
    <td WIDTH="20%" align="right" valign="bottom"><font SIZE="2"><b>32.4</b></font></td>
    <td WIDTH="20%" align="right" valign="bottom"><font SIZE="2">25.6</font></td>
    <td WIDTH="21%" align="right" valign="bottom"><font SIZE="2">22.3</font></td>
  </tr>
  <tr>
    <td WIDTH="39%" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">Interest, net</font></td>
    <td WIDTH="20%" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2"><b>3.1</b></font></td>
    <td WIDTH="20%" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">4.6</font></td>
    <td WIDTH="21%" align="right" valign="bottom" bgcolor="#E6E6E6"><font SIZE="2">6.2</font></td>
  </tr>
  <tr>
    <td WIDTH="39%" valign="bottom"><font SIZE="2">Income taxes</font></td>
    <td WIDTH="20%" align="right" valign="bottom"><font SIZE="2"><b>4.8</b></font></td>
    <td WIDTH="20%" align="right" valign="bottom"><font SIZE="2">1.4</font></td>
    <td WIDTH="21%" align="right" valign="bottom"><font SIZE="2">3.1</font></td>
  </tr>
  <tr>
    <td WIDTH="39%" valign="bottom" style="border-bottom: 1px solid #000000" bgcolor="#E6E6E6">
    <font SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Non-controlling interest in
    income of consolidated joint venture</font></td>
    <td WIDTH="20%" align="right" valign="bottom" style="border-bottom: 1px solid #000000" bgcolor="#E6E6E6">
    <font SIZE="2"><b>0.2</b></font></td>
    <td WIDTH="20%" align="right" valign="bottom" style="border-bottom: 1px solid #000000" bgcolor="#E6E6E6">
    <font SIZE="2">0.1</font></td>
    <td WIDTH="21%" align="right" valign="bottom" style="border-bottom: 1px solid #000000" bgcolor="#E6E6E6">
    <font SIZE="2">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="39%" valign="bottom" style="border-bottom: 1px solid #000000">
    <font SIZE="2"><b>EBITDA</b></font></td>
    <td WIDTH="20%" align="right" valign="bottom" style="border-bottom: 1px solid #000000">
    <font SIZE="2"><b>167.7</b></font></td>
    <td WIDTH="20%" align="right" valign="bottom" style="border-bottom: 1px solid #000000">
    <font SIZE="2">129.5</font></td>
    <td WIDTH="21%" align="right" valign="bottom" style="border-bottom: 1px solid #000000">
    <font SIZE="2">99.7</font></td>
  </tr>
</table>
<font FACE="Akzidenz Grotesk BE" SIZE="2"><i>
<p>Certain minor rounding variances exist between the financial statements and
this summary.</p>
</i><b>
<p>Free Cash Flow</p>
</b>
<p ALIGN="JUSTIFY">Free cash flow is defined as cash from operating activities
including net changes in non-cash working capital balances, less cash flow used
in investing activities excluding business acquisitions. We consider free cash
flow to be an important indicator of the financial strength and performance of
our business, because it shows how much cash is available after capital
expenditures to repay debt and to reinvest in our business. We believe this
measure is commonly used by investors and analysts when valuing a business and
its underlying assets.</p>
<i>
<p>(in $ millions)</p>
</i></font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="39%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="20%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>2006</b></font></td>
    <td WIDTH="20%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">2005</font></td>
    <td WIDTH="21%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">2004</font></td>
  </tr>
  <tr>
    <td WIDTH="39%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="20%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="20%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="21%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="39%" bgcolor="#E6E6E6"><font SIZE="2">Cash flows from operating activities</font></td>
    <td WIDTH="20%" align="right" bgcolor="#E6E6E6"><font SIZE="2"><b>
    <p style="margin-right: 4">94.7</b></font></td>
    <td WIDTH="20%" align="right" bgcolor="#E6E6E6"><font SIZE="2">
    <p style="margin-right: 4">93.2</font></td>
    <td WIDTH="21%" align="right" bgcolor="#E6E6E6"><font SIZE="2">
    <p style="margin-right: 4">58.9</font></td>
  </tr>
  <tr>
    <td WIDTH="39%"><font SIZE="2">Cash flows from investing activities</font></td>
    <td WIDTH="20%" align="right"><font SIZE="2"><b>(96.1)</b></font></td>
    <td WIDTH="20%" align="right"><font SIZE="2">(83.8)</font></td>
    <td WIDTH="21%" align="right"><font SIZE="2">(53.8)</font></td>
  </tr>
  <tr>
    <td WIDTH="39%" bgcolor="#E6E6E6"><font SIZE="2">Add back:</font></td>
    <td WIDTH="20%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="20%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="21%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="39%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">&nbsp;&nbsp;&nbsp; Acquisition of Kentucky Derby</font></td>
    <td WIDTH="20%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>
    <p style="margin-right: 4">19.9</b></font></td>
    <td WIDTH="20%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">&#150;</font></td>
    <td WIDTH="21%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="39%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2"><b>Free cash flow</b></font></td>
    <td WIDTH="20%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2"><b>
    <p style="margin-right: 4">18.5</b></font></td>
    <td WIDTH="20%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">
    <p style="margin-right: 4">9.4</font></td>
    <td WIDTH="21%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">
    <p style="margin-right: 4">5.1</font></td>
  </tr>
</table>
<font SIZE="2"><i>
<p>Certain minor rounding variances exist between the financial statements and
this summary.</p>
</i><b>
<p>Total Indebtedness and Cash in Excess of Debt (Net Indebtedness) </p>
</b>
<p>We consider total indebtedness and net debt to be important indicators of the
financial leverage of the Company.</p>
<i>
<p>(in $ millions)</p>
</i></font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="39%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="20%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>2006</b></font></td>
    <td WIDTH="20%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">2005</font></td>
    <td WIDTH="21%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">2004</font></td>
  </tr>
  <tr>
    <td WIDTH="39%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="20%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="20%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="21%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="39%" bgcolor="#E6E6E6"><font SIZE="2">Bank indebtedness</font></td>
    <td WIDTH="20%" align="right" bgcolor="#E6E6E6"><font SIZE="2"><b>(3.5)</b></font></td>
    <td WIDTH="20%" align="right" bgcolor="#E6E6E6"><font SIZE="2">(4.0)</font></td>
    <td WIDTH="21%" align="right" bgcolor="#E6E6E6"><font SIZE="2">
    <p style="margin-right: 4">-</font></td>
  </tr>
  <tr>
    <td WIDTH="39%"><font SIZE="2">Current portion of long-term debt</font></td>
    <td WIDTH="20%" align="right"><font SIZE="2"><b>(21.8)</b></font></td>
    <td WIDTH="20%" align="right"><font SIZE="2">(19.8)</font></td>
    <td WIDTH="21%" align="right"><font SIZE="2">(18.6)</font></td>
  </tr>
  <tr>
    <td WIDTH="39%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">Long-term debt</font></td>
    <td WIDTH="20%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2"><b>(12.0)</b></font></td>
    <td WIDTH="20%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">(27.3)</font></td>
    <td WIDTH="21%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">(38.0)</font></td>
  </tr>
  <tr>
    <td WIDTH="39%" style="border-top-style: solid; border-top-width: 1">
    <font SIZE="2"><b>Total indebtedness</b></font></td>
    <td WIDTH="20%" align="right" style="border-top-style: solid; border-top-width: 1">
    <font SIZE="2"><b>(37.3)</b></font></td>
    <td WIDTH="20%" align="right" style="border-top-style: solid; border-top-width: 1">
    <font SIZE="2">(51.1)</font></td>
    <td WIDTH="21%" align="right" style="border-top-style: solid; border-top-width: 1">
    <font SIZE="2">(56.6)</font></td>
  </tr>
  <tr>
    <td WIDTH="39%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">Cash and cash equivalents</font></td>
    <td WIDTH="20%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2"><b>
    <p style="margin-right: 4">29.0</b></font></td>
    <td WIDTH="20%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">
    <p style="margin-right: 4">69.8</font></td>
    <td WIDTH="21%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font SIZE="2">
    <p style="margin-right: 4">60.7</font></td>
  </tr>
  <tr>
    <td WIDTH="39%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>(Net indebtedness) cash in excess of debt</b></font></td>
    <td WIDTH="20%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>(8.3)</b></font></td>
    <td WIDTH="20%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">18.7</font></td>
    <td WIDTH="21%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">4.1</font></td>
  </tr>
</table>
<font FACE="Akzidenz Grotesk BE" SIZE="2"><i>
<p>Certain minor rounding variances exist between the financial statements and
this summary.</p>
</i></font><hr color="#000000" size="5"><p Style='page-break-before:always'>
<font FACE="Akzidenz Grotesk BE" SIZE="2"><b>
    <p align="right">Gildan 2006 Annual Report &#149; 43</b></font><table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="2"><b>
    <td bgcolor="#111111" width="493" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2" color="#FFFFFF"><b>MD&amp;A</b></font></td>
    <td width="493" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    </b></font>
  </tr>
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="2"><b>
    <td width="986" colspan="2"><font SIZE="2"><i>Management's Discussion and
    Analysis of Financial Condition and Results of Operations</i></font></td>
    </b></font>
  </tr>
</table>
<font SIZE="2"><b>
<p>Forward-Looking Statements</p>
</b>
<p ALIGN="JUSTIFY">Certain statements included in this MD&amp;A may constitute
&quot;forward-looking statements&quot; within the meaning of the U.S. <i>Private
Securities Litigation Reform Act of 1995 </i>and Canadian securities legislation
and regulations, and are subject to important risks, uncertainties and
assumptions. This forward-looking information includes amongst others,
information with respect to our objectives and the strategies to achieve these
objectives, as well as information with respect to our beliefs, plans,
expectations, anticipations, estimates and intentions. Forward-looking
statements generally can be identified by the use of forward-looking terminology
such as &quot;may&quot;, &quot;will&quot;, &quot;expect&quot;, &quot;intend&quot;, &quot;estimate&quot;, &quot;anticipate&quot;, &quot;plan&quot;,
&quot;foresee&quot;, &quot;believe&quot; or &quot;continue&quot; or the negatives of these terms or variations
of them or similar terminology. We refer you to the Company's filings with the
Canadian securities regulatory authorities and the U.S. Securities and Exchange
Commission, as well as the &quot;Risks and Uncertainties&quot; section of this MD&amp;A,
beginning on page 37, for a discussion of the various factors that may affect
the Company's future results. Material factors and assumptions that were applied
in drawing a conclusion or making a forecast or projection are also set out
throughout this document.</p>
<p ALIGN="JUSTIFY">The results or events predicted in such forward-looking
information may differ materially from actual results or events. Material
factors, which could cause actual results or events to differ materially from a
conclusion, forecast or projection in such forward-looking information, include,
but are not limited to:</p>
<ul>
  <li>
  <p ALIGN="justify">general economic conditions such as currency exchange
  rates, commodity prices and other factors over which we have no control; </li>
  <li>
  <p ALIGN="justify">the impact of economic and business conditions, industry
  trends and other external and political factors in the countries in which we
  operate; </li>
  <li>
  <p ALIGN="justify">the intensity of competitive activity; </li>
  <li>
  <p ALIGN="justify">changes in environmental, tax, trade and other laws and
  regulations; </li>
  <li>
  <p ALIGN="justify">our ability to implement our strategies and plans; </li>
  <li>
  <p ALIGN="justify">our ability to complete and successfully integrate
  acquisitions; </li>
  <li>
  <p ALIGN="justify">changes in customer demand for our products and our ability
  to maintain customer relationships and grow our business; </li>
  <li>
  <p ALIGN="justify">the seasonality of our business; </li>
  <li>
  <p ALIGN="justify">our ability to attract and retain key personnel; </li>
  <li>
  <p ALIGN="justify">changes in accounting policies; and </li>
  <li>
  <p ALIGN="justify">disruption to manufacturing and distribution activities due
  to the impact of weather, natural disasters and other unforeseen adverse
  events.</li>
</ul>
<p ALIGN="JUSTIFY">This may cause the Company's actual performance and financial
results in future periods to differ materially from any estimates or projections
of future performance or results expressed or implied by such forward-looking
statements. Forward-looking statements do not take into account the effect that
transactions or non-recurring or other special items announced or occurring
after the statements are made have on the Company's business. For example, they
do not include the effect of business dispositions, acquisitions, other business
transactions, asset writedowns or other charges announced or occurring after
forward-looking statements are made. The financial impact of such transactions
and non-recurring and other special items can be complex and necessarily depends
on the facts particular to each of them. </p>
<p ALIGN="JUSTIFY">We believe that the expectations represented by our
forward-looking statements are reasonable, yet there can be no assurance that
such expectations will prove to be correct. Furthermore, the forward-looking
statements contained in this report are made as of the date of this report, and
we do not undertake any obligation to update publicly or to revise any of the
included forward-looking statements, whether as a result of new information,
future events or otherwise unless required by applicable legislation or
regulation. The forward-looking statements contained in this report are
expressly qualified by this cautionary statement.</p>
<p>December 13, 2006</p>
<hr color="#000000" size="5">
</font>

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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>3
<FILENAME>exh992.htm
<DESCRIPTION>EX-99.2
<TEXT>
<html>

<head>
<title>Gildan Activewear Inc.: Exhibit 99.2 - Prepared by TNT Filings Inc.</title>
</head>

<body>

<hr color="#000000" size="5"><font FACE="Caslon Two Twenty Four" SIZE="7">
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: none; border-bottom-width: medium" bgcolor="#00A5E3">
    <font FACE="Times New Roman" SIZE="2"><b><font color="#FFFFFF">&nbsp;44</font></b></font></font><font color="#FFFFFF" size="2" face="Times New Roman">
    </font><font FACE="Caslon Two Twenty Four" SIZE="7">
    <font FACE="Times New Roman" SIZE="2"><font color="#FFFFFF">&#149; Gildan 2006
    Annual Report </font></font></td>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#00A5E3" bordercolor="#FFFFFF">
    <p align="right"><font FACE="Times New Roman" SIZE="7" color="#FFFFFF">
    Consolidated</font></td>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: solid; border-top-width: 1" bgcolor="#00A5E3">
    <p align="right"><font FACE="Times New Roman" SIZE="7" color="#FFFFFF">
    Financial Statements</font></p>
    <p align="right">&nbsp;</p>
    <p align="right">&nbsp;</p>
    <p align="right">&nbsp;</p>
    <p align="right">&nbsp;</p>
    <p align="right">&nbsp;</p>
    <p align="right">&nbsp;</td>
  </tr>
</table>
</font><hr color="#000000" size="5"><p style="page-break-before: always">
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    </font>
  </tr>
    <font FACE="Caslon Two Twenty Four" SIZE="7">
    </font>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF" colspan="2">
    <font FACE="Akzidenz Grotesk BE" SIZE="2">
    <p align="right">Gildan 2006 Annual Report &#149; <b>45</b></font></td>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF" colspan="2">
    &nbsp;</td>
  </tr>
  <tr>
    <font FACE="Caslon Two Twenty Four" SIZE="7">
    <td width="70%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#000000">
    <font FACE="Times New Roman" SIZE="2" color="#FFFFFF"><b>MANAGEMENT'S
    RESPONSIBILITY FOR FINANCIAL REPORTING</b></font></td>
    </font>
    <td width="30%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF">
    <hr color="#000000" size="1"></td>
  </tr>
</table>
<font FACE="Akzidenz Grotesk BE" SIZE="2">
<p ALIGN="JUSTIFY">&nbsp;</p>
</font><font SIZE="2" face="Times New Roman">
<p ALIGN="JUSTIFY">The accompanying consolidated financial statements have been
prepared by management and approved by the Board of Directors of the Company.
The consolidated financial statements were prepared in accordance with
accounting principles generally accepted in Canada and, where appropriate,
reflect management's best estimates and judgements. Where alternative accounting
methods exist, management has chosen those methods deemed most appropriate in
the circumstances. Management is responsible for the accuracy, integrity and
objectivity of the consolidated financial statements within reasonable limits of
materiality, and for the consistency of financial data included in the text of
the Annual Report with that contained in the consolidated financial statements.</p>
<p align="justify">To assist management in the discharge of these
responsibilities, the Company maintains a system of internal controls over
financial reporting as described in &quot;Management's Annual Report of Internal
Control Over Financial Reporting&quot; on page 36 of this Annual Report.</p>
<p ALIGN="JUSTIFY">The Company's Audit and Finance Committee is appointed by the
Board of Directors annually and is comprised exclusively of outside, independent
directors. The Audit and Finance Committee meets with management as well as with
the independent auditors and internal auditors to satisfy itself that management
is properly discharging its financial reporting responsibilities and to review
the consolidated financial statements and the independent auditors' report. The
Audit and Finance Committee reports its findings to the Board of Directors for
consideration in approving the consolidated financial statements for
presentation to the shareholders. The Audit and Finance Committee considers, for
review by the Board of Directors and approval by the shareholders, the
engagement or reappointment of the independent auditors. KPMG LLP have direct
access to the Audit and Finance Committee of the Board of Directors.</p>
<p ALIGN="JUSTIFY">The consolidated financial statements have been independently
audited by KPMG LLP, Chartered Accountants, on behalf of the shareholders, in
accordance with Canadian generally accepted auditing standards and, with respect
to the consolidated financial statements for the year ended October 1, 2006, in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Their report outlines the nature of their audit and expresses
their opinion on the consolidated financial statements of the Company. In
addition, our auditors have issued an attestation report on management's
assessment of the Company's internal controls over financial reporting as of
October 1, 2006.</p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="620"><font FACE="Times New Roman" size="2">(Signed: Glenn J.
    Chamandy)</font></td>
    <td WIDTH="621"><font FACE="Times New Roman" size="2">(Signed: Laurence G.
    Sellyn)</font></td>
  </tr>
  <tr>
    <td WIDTH="620">&nbsp;</td>
    <td WIDTH="621">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="620"><font FACE="Times New Roman" size="2"><b>Glenn J. Chamandy</b></font></td>
    <td WIDTH="621"><font FACE="Times New Roman" size="2"><b>Laurence G. Sellyn</b></font></td>
  </tr>
  <tr>
    <td WIDTH="620"><font FACE="Times New Roman" SIZE="2">President and Chief
    Executive Officer</font></td>
    <td WIDTH="621"><font FACE="Times New Roman" SIZE="2">Executive
    Vice-President,</font></td>
  </tr>
  <tr>
    <td WIDTH="620">&nbsp;</td>
    <td WIDTH="621"><font FACE="Times New Roman" SIZE="2">Chief Financial and
    Administrative Officer</font></td>
  </tr>
  <tr>
    <td WIDTH="620"><font FACE="Times New Roman" SIZE="2">December 6, 2006</font></td>
    <td WIDTH="621">&nbsp;</td>
  </tr>
</table>
<hr color="#000000" size="5"><p style="page-break-before: always"><font FACE="Akzidenz Grotesk BE" SIZE="2">
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF" colspan="2">
    <font FACE="Times New Roman" SIZE="2"><b>&nbsp;46</b> &#149; Gildan 2006 Annual
    Report </font></td>
  </tr>
  <tr>
    <td width="70%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    &nbsp;</td>
    <td width="30%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    &nbsp;</td>
  </tr>
  <tr>
    <font FACE="Caslon Two Twenty Four" SIZE="7">
    <td width="70%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#000000">
    <font FACE="Times New Roman" SIZE="2" color="#FFFFFF"><b>REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</b></font></td>
    </font>
    <td width="30%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF">
    <hr color="#000000" size="1"></td>
  </tr>
</table>
<p>&nbsp;</p>
</font><font FACE="Times New Roman" SIZE="2">
<p align="justify">To the Shareholders and Board of Directors of Gildan
Activewear Inc.</p>
<p ALIGN="JUSTIFY">We have audited the accompanying consolidated balance sheets
of Gildan Activewear Inc. and subsidiaries as of October 1, 2006 and October 2,
2005 and the related consolidated statements of earnings, retained earnings and
cash flows for the years ended October 1, 2006, October 2, 2005 and October 3,
2004. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.</p>
<p ALIGN="JUSTIFY">We conducted our audits in accordance with Canadian generally
accepted auditing standards. With respect to the consolidated financial
statements for the year ended October 1, 2006, we also conducted our audit in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion. </p>
<p ALIGN="JUSTIFY">In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the financial
position of Gildan Activewear Inc. and subsidiaries as of October 1, 2006 and
October 2, 2005, and the results of their operations and their cash flows for
the years ended October 1, 2006, October 2, 2005 and October 3, 2004, in
conformity with Canadian generally accepted accounting principles. </p>
<p ALIGN="JUSTIFY">We have also audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the effectiveness of
Gildan Activewear Inc. and subsidiaries' internal control over financial
reporting as of October 1, 2006, based on criteria established in <i>Internal
Control &#150; Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission </i>(COSO), and our report dated
December 6, 2006 expressed an unqualified opinion on management's assessment of,
and the effective operation of, internal control over financial reporting.</p>
</font><font FACE="Akzidenz Grotesk BE" SIZE="2">
<p>&nbsp;</p>
<font FACE="Times New Roman" SIZE="2">
<p>(Signed: KPMG LLP)<br>
<b>Chartered Accountants</p>
</b>
<p>Montreal, Canada <br>
December 6, 2006</p>
</font>
</font><hr color="#000000" size="5"><p style="page-break-before: always">
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    </font>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF" colspan="2">
    <p align="right"><font FACE="Akzidenz Grotesk BE" SIZE="2">Gildan 2006
    Annual Report &#149; <b>47</b></font></td>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF" colspan="2">
    &nbsp;</td>
  </tr>
  <tr>
    <font FACE="Caslon Two Twenty Four" SIZE="7">
    <td width="70%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#000000">
    <font FACE="Times New Roman" SIZE="2" color="#FFFFFF"><b>REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</b></font></td>
    </font>
    <td width="30%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF">
    <hr color="#000000" size="1"></td>
  </tr>
</table>
<p>&nbsp;</p>
<font FACE="Times New Roman" SIZE="2">
<p>To the Shareholders and Board of Directors of Gildan Activewear Inc.</p>
<p ALIGN="JUSTIFY">We have audited management's assessment, included in the
accompanying Management's Annual Report on Internal Control over Financial
Reporting appearing in Gildan Activewear Inc.'s (the &quot;Company&quot;) Annual Report
for the year ended October 1, 2006, that the Company maintained effective
internal control over financial reporting as of October 1, 2006, based on
criteria established in <i>Internal Control &#150; Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission </i>(COSO). As
described in Management's Annual Report on Internal Control over Financial
Reporting, management excluded the acquisition of Kentucky Derby Hosiery Co.,
Inc. and subsidiaries (&quot;Kentucky Derby&quot;), which occurred in July 2006, from the
scope of their assessment of internal controls over financial reporting.
Kentucky Derby is a wholly-owned subsidiary of the Company whose total assets
and total sales represented less than 11% of consolidated total assets and less
than 4% of consolidated sales, respectively, of the Company as of and for the
year ended October 1, 2006. Accordingly, our audit of internal control over
financial reporting also excluded an evaluation of the internal control over
financial reporting of Kentucky Derby. The Company's management is responsible
for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting.
Our responsibility is to express an opinion on management's assessment and on
the effectiveness of the Company's internal control over financial reporting
based on our audit.</p>
<p ALIGN="JUSTIFY">We conducted our audit in accordance with the standards of
the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in
all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, evaluating management's assessment, testing
and evaluating the design and operating effectiveness of internal control, and
performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our
opinion.</p>
<p ALIGN="JUSTIFY">A company's internal control over financial reporting is a
process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with Canadian and U.S. generally accepted accounting
principles. A company's internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company's assets that could have a
material effect on the financial statements.</p>
<p ALIGN="JUSTIFY">Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.</p>
<p ALIGN="JUSTIFY">In our opinion, management's assessment that Gildan
Activewear Inc. and subsidiaries maintained effective internal control over
financial reporting as of October 1, 2006 is fairly stated, in all material
respects, based on criteria established in <i>Internal Control &#150; Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission </i>(COSO). Also, in our opinion, Gildan Activewear Inc. and
subsidiaries maintained, in all material respects, effective internal control
over financial reporting as of October 1, 2006, based on criteria established in
Internal <i>Control &#150;
Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission </i>(COSO).</p>
<p ALIGN="JUSTIFY">We also have audited, in accordance with Canadian generally
accepted auditing standards, the consolidated balance sheets of Gildan
Activewear Inc. and subsidiaries as of October 1, 2006 and October 2, 2005, and
the related consolidated statements of earnings, retained earnings and cash
flows for the years ended October 1, 2006, October 2, 2005 and October 3, 2004.
With respect to the consolidated financial statements for the year ended October
1, 2006, we have also conducted our audit in accordance with the standards of
the Public Company Accounting Oversight Board (United States). Our report dated
December 6, 2006 expressed an unqualified opinion on those consolidated
financial statements.</p>
</font>
<font FACE="Akzidenz Grotesk BE" SIZE="2">
<p>&nbsp;</p>
</font>
<font FACE="Times New Roman" SIZE="2">
<p>(Signed: KPMG LLP)<br>
<b>Chartered Accountants</p>
</b>
<p>Montreal, Canada <br>
December 6, 2006</p>
</font>
<font FACE="Times New Roman" SIZE="2">
</font>
<hr color="#000000" size="5"><p style="page-break-before: always">
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    </font>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    <font FACE="Akzidenz Grotesk BE" SIZE="2">
    <p align="left"><font FACE="Times New Roman" SIZE="2"><b>&nbsp;48</b> &#149;
    Gildan 2006 Annual Report</font></font></td>
  </tr>
</table>

<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF" colspan="2">
    &nbsp;</td>
  </tr>
  <tr>
    <font FACE="Caslon Two Twenty Four" SIZE="7">
    <td width="70%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#000000">
    <div style="padding-left: 20">
    <font FACE="Times New Roman" SIZE="2" color="#FFFFFF"><b>&nbsp;CONSOLIDATED
    BALANCE SHEETS</b></font></div>
    </td>
    </font>
    <td width="30%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF">
    <hr color="#000000" size="1"></td>
  </tr>
</table>
<font FACE="Akzidenz Grotesk BE" SIZE="2">
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%"><font FACE="Times New Roman" size="2"><i>October 1, 2006
    and October 2, 2005</i></font></td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%"><font FACE="Times New Roman" size="2"><i>(In thousands
    of US dollars)</i></font></td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%">&nbsp;</td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%">&nbsp;</td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="6%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2"><b>
    2006</b></font></td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2">2005</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="6%" align="right" style="border-top-style: solid; border-top-width: 1; padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-top-style: solid; border-top-width: 1; padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="border-top-style: solid; border-top-width: 1; padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="border-top-style: solid; border-top-width: 1; padding-left: 30; padding-right: 30">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%"><font FACE="Times New Roman" SIZE="2"><b>Assets</b></font></td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%"><font FACE="Times New Roman" SIZE="2">Current assets:</font></td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%">
    <p style="margin-left: 26"><font FACE="Times New Roman" SIZE="2">Cash and cash
    equivalents</font></td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2"><b>
    $</b></font></td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2"><b>
    29,007</b></font></td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2">
    69,802</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%">
    <p style="margin-left: 26"><font FACE="Times New Roman" SIZE="2">Accounts
    receivable</font></td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2"><b>
    165,870</b></font></td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2">
    108,646</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%">
    <p style="margin-left: 26"><font FACE="Times New Roman" SIZE="2">Inventories</font></td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2"><b>
    200,653</b></font></td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2">
    134,861</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%">
    <p style="margin-left: 26"><font FACE="Times New Roman" SIZE="2">Prepaid expenses
    and deposits</font></td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2"><b>
    5,757</b></font></td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2">
    4,394</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-left: 26"><font FACE="Times New Roman" SIZE="2">Future income
    taxes (note 14)</font></td>
    <td WIDTH="6%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2"><b>
    5,298</b></font></td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2">
    10,135</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%">&nbsp;</td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2"><b>
    406,585</b></font></td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2">
    327,838</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%">&nbsp;</td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%"><font FACE="Times New Roman" SIZE="2">Fixed assets (note
    4)</font></td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2"><b>
    302,677</b></font></td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2">
    260,615</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%"><font FACE="Times New Roman" SIZE="2">Intangible assets
    (note 5)</font></td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2"><b>
    9,513</b></font></td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%"><font FACE="Times New Roman" SIZE="2">Other assets (note
    6)</font></td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2"><b>
    4,501</b></font></td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2">
    4,036</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Assets held for
    sale (note 16 (b))</font></td>
    <td WIDTH="6%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2"><b>&#150;</b></font></td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2">
    5,027</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="6%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2"><b>
    $</b></font></td>
    <td WIDTH="12%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2"><b>
    723,276</b></font></td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2">
    597,516</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%">&nbsp;</td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%"><font FACE="Times New Roman" SIZE="2"><b>Liabilities and
    Shareholders' Equity</b></font></td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%"><font FACE="Times New Roman" SIZE="2">Current
    liabilities:</font></td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%">
    <p style="margin-left: 26"><font FACE="Times New Roman" SIZE="2">Bank indebtedness
    (note 7)</font></td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2"><b>
    $</b></font></td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2"><b>
    3,500</b></font></td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2">
    3,980</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%">
    <p style="margin-left: 26"><font FACE="Times New Roman" SIZE="2">Accounts payable
    and accrued liabilities</font></td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2"><b>
    117,984</b></font></td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2">
    86,843</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%">
    <p style="margin-left: 26"><font FACE="Times New Roman" SIZE="2">Income taxes
    payable</font></td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2"><b>
    2,269</b></font></td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2">
    2,206</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%">
    <p style="margin-left: 26"><font FACE="Times New Roman" SIZE="2">Current portion of
    long-term debt (note 8)</font></td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2"><b>
    21,820</b></font></td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2">
    19,859</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="6%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2"><b>
    145,573</b></font></td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2">
    112,888</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%">&nbsp;</td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%"><font FACE="Times New Roman" SIZE="2">Long-term debt
    (note 8)</font></td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2"><b>
    12,041</b></font></td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2">
    27,288</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%"><font FACE="Times New Roman" SIZE="2">Future income
    taxes (note 14)</font></td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2"><b>
    29,443</b></font></td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2">
    31,386</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%"><font FACE="Times New Roman" SIZE="2">Non-controlling
    interest in consolidated joint venture</font></td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2"><b>
    5,654</b></font></td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2">
    5,394</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%">&nbsp;</td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%"><font FACE="Times New Roman" SIZE="2">Shareholders'
    equity (note 9):</font></td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%">
    <p style="margin-left: 26"><font FACE="Times New Roman" SIZE="2">Share capital</font></td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2"><b>
    86,584</b></font></td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2">
    84,177</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%">
    <p style="margin-left: 26"><font FACE="Times New Roman" SIZE="2">Contributed
    surplus</font></td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2"><b>
    2,365</b></font></td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2">
    1,596</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%">
    <p style="margin-left: 26"><font FACE="Times New Roman" SIZE="2">Cumulative
    translation adjustment</font></td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2"><b>
    26,248</b></font></td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2">
    26,248</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%">
    <p style="margin-left: 26"><font FACE="Times New Roman" SIZE="2">Retained earnings</font></td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2"><b>
    415,368</b></font></td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2">
    308,539</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="6%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2"><b>
    530,565</b></font></td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2">
    420,560</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%">&nbsp;</td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="padding-left: 30; padding-right: 30">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Commitments and
    contingent liabilities (note 12)</font></td>
    <td WIDTH="6%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="6%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2"><b>
    $</b></font></td>
    <td WIDTH="12%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2"><b>
    723,276</b></font></td>
    <td WIDTH="6%" align="right" bgcolor="#E8E3D8" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="13%" align="right" bgcolor="#E8E3D8" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30">
    <font FACE="Times New Roman" SIZE="2">
    597,516</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%">&nbsp;</td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="6%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%"><font FACE="Times New Roman" size="2"><i>See accompanying
    notes to consolidated financial statements.</i></font></td>
    <td WIDTH="6%" align="center" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="6%" align="center" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%">&nbsp;</td>
    <td WIDTH="6%" align="center" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="6%" align="center" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="51%"><font FACE="Akzidenz Grotesk BE" SIZE="1"><i>
    <font FACE="Times New Roman" SIZE="2">On behalf of the Board:</font></i></font></td>
    <td WIDTH="6%" align="center" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="12%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="6%" align="center" style="padding-left: 30; padding-right: 30">&nbsp;</td>
    <td WIDTH="13%" align="right" style="padding-left: 30; padding-right: 30">&nbsp;</td>
  </tr>
</table>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="49%">&nbsp;</td>
    <td WIDTH="49%" align="center" style="padding-left: 30; padding-right: 30">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="49%" style="padding-left: 0; padding-right: 0">&nbsp;</td>
    <td WIDTH="49%" align="center">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="49%" style="padding-left: 0; padding-right: 0">&nbsp;</td>
    <td WIDTH="49%" align="center">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="49%" style="padding-left: 0; padding-right: 0">
    <font FACE="Times New Roman" size="2">(Signed: Glenn J. Chamandy)</font></td>
    <td WIDTH="49%" align="center">
    <p align="left"><font FACE="Times New Roman" size="2">(Signed: Pierre
    Robitaille)</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="49%" style="padding-left: 0; padding-right: 0">
    <font FACE="Times New Roman" size="2"><b>Glenn J. Chamandy</b></font></td>
    <td WIDTH="49%" align="left"><font FACE="Times New Roman" size="2"><b>Pierre
    Robitaille</b></font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="49%" style="padding-left: 0; padding-right: 0">
    <font FACE="Times New Roman" size="2"><i>Director</i></font></td>
    <td WIDTH="49%" align="left"><font FACE="Times New Roman" size="2"><i>
    Director</i></font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="49%" style="padding-left: 0; padding-right: 0">&nbsp;</td>
    <td WIDTH="49%" align="center">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="49%" style="padding-left: 0; padding-right: 0">&nbsp;</td>
    <td WIDTH="49%" align="center">&nbsp;</td>
  </tr>
</table>
</font>

<font FACE="Times New Roman" SIZE="2">
</font>
<hr color="#000000" size="5"><p style="page-break-before: always">
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    </font>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    <p align="right"><font FACE="Akzidenz Grotesk BE" SIZE="2">Gildan 2006
    Annual Report &#149; <b>49</b></font></td>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    &nbsp;</td>
  </tr>
</table>

<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    <font FACE="Caslon Two Twenty Four" SIZE="7">
    <td width="70%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#000000">
    <div style="padding-left: 20">
    <font FACE="Times New Roman" SIZE="2" color="#FFFFFF"><b>&nbsp;CONSOLIDATED </b></font>
    </font>
    <font FACE="Times New Roman" SIZE="2" color="#FFFFFF">
      <b>STATEMENTS OF EARNINGS</b></div>
    </td>
    </font>
    <td width="30%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF">
    <hr color="#000000" size="1"></td>
  </tr>
</table>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0" height="558">
  <tr>
    <td WIDTH="50%" style="padding-left: 20" height="19">
    <font FACE="Times New Roman" size="2"><i>Years ended October 1, 2006,
    October 2, 2005 and October 3, 2004</i></font></td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="50%" style="padding-left: 20" height="19">
    <font FACE="Times New Roman" size="2"><i>(In thousands of US dollars, except
    per share amounts)</i></font></td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">
    <font FACE="Times New Roman" SIZE="2"><b>2006</b></font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">
    <font FACE="Times New Roman" SIZE="2">2005</font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">
    <font FACE="Times New Roman" SIZE="2">2004</font></td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1; padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1; padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="50%" height="15" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Sales</font></td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="15" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>$</b></font></td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="15" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>773,190</b></font></td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="15" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="15" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">653,851</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="15" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="15" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">533,368</font></td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Cost of sales</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">
    <font FACE="Times New Roman" SIZE="2"><b>521,095</b></font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">
    <font FACE="Times New Roman" SIZE="2">450,570</font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">
    <font FACE="Times New Roman" SIZE="2">378,696</font></td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Gross
    profit</font></td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>252,095</b></font></td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">203,281</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">154,672</font></td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Selling,
    general and administrative expenses</font></td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>84,388</b></font></td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">73,846</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">58,284</font></td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Restructuring and other charges (note
    16)</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">
    <font FACE="Times New Roman" SIZE="2"><b>20,386</b></font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">
    <font FACE="Times New Roman" SIZE="2">11,776</font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">
    <font FACE="Times New Roman" SIZE="2">4,614</font></td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Earnings
    before the undernoted items</font></td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>147,321</b></font></td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">117,659</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">91,774</font></td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    Depreciation and amortization</font></td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>32,383</b></font></td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">25,615</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">22,275</font></td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19"><font FACE="Times New Roman" SIZE="2">Interest,
    net</font></td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">
    <font FACE="Times New Roman" SIZE="2"><b>3,067</b></font></td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">
    <font FACE="Times New Roman" SIZE="2">4,615</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">
    <font FACE="Times New Roman" SIZE="2">6,170</font></td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">Non-controlling interest in income of
    consolidated joint venture</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>260</b></font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">34</font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">
    <font FACE="Times New Roman" SIZE="2"><b>35,710</b></font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">
    <font FACE="Times New Roman" SIZE="2">30,264</font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">
    <font FACE="Times New Roman" SIZE="2">28,445</font></td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19"><font FACE="Times New Roman" SIZE="2">Earnings
    before income taxes</font></td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">
    <font FACE="Times New Roman" SIZE="2"><b>111,611</b></font></td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">
    <font FACE="Times New Roman" SIZE="2">87,395</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">
    <font FACE="Times New Roman" SIZE="2">63,329</font></td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">Income taxes (note 14)</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>4,782</b></font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">1,352</font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">3,078</font></td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1; padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1; padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="50%" height="15" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>Net earnings</b></font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="15" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>$</b></font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="15" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>106,829</b></font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="15" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="15" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">86,043</font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="15" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="15" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">60,251</font></td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Earnings
    per share (note 15):</font></td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="50%" height="15"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Basic</font></td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="15">
    <font FACE="Times New Roman" SIZE="2"><b>$</b></font></td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="15">
    <font FACE="Times New Roman" SIZE="2"><b>1.78</b></font></td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="15">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="15">
    <font FACE="Times New Roman" SIZE="2">1.44</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="15">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="15">
    <font FACE="Times New Roman" SIZE="2">1.02</font></td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Diluted</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>1.76</b></font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">1.43</font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">1.01</font></td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19"><font FACE="Times New Roman" size="2"><i>See
    accompanying notes to consolidated financial statements.</i></font></td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    <font FACE="Caslon Two Twenty Four" SIZE="7">
    <td width="70%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#000000">
    <div style="padding-left: 20">
    <font FACE="Times New Roman" SIZE="2" color="#FFFFFF"><b>&nbsp;CONSOLIDATED </b></font>
    </font>
    <font FACE="Times New Roman" SIZE="2" color="#FFFFFF">
      <b>STATEMENTS OF RETAINED EARNINGS</b></div>
    </td>
    </font>
    <td width="30%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF">
    <hr color="#000000" size="1"></td>
  </tr>
</table>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="50%" style="padding-left: 20" height="19">
    <font FACE="Times New Roman" size="2"><i>Years ended October 1, 2006,
    October 2, 2005 and October 3, 2004</i></font></td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="50%" style="padding-left: 20" height="19">
    <font FACE="Times New Roman" size="2"><i>(In thousands of US dollars, except
    per share amounts)</i></font></td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">
    <font FACE="Times New Roman" SIZE="2"><b>2006</b></font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">
    <font FACE="Times New Roman" SIZE="2">2005</font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">
    <font FACE="Times New Roman" SIZE="2">2004</font></td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1; padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1; padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Retained
    earnings, beginning of year</font></td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>308,539</b></font></td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">222,496</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">162,245</font></td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Net earnings</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">
    <font FACE="Times New Roman" SIZE="2"><b>106,829</b></font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">
    <font FACE="Times New Roman" SIZE="2">86,043</font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19">
    <font FACE="Times New Roman" SIZE="2">60,251</font></td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">Retained earnings, end of year</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>415,368</b></font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">308,539</font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 30; padding-right: 30" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">222,496</font></td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="50%" height="19"><font FACE="Times New Roman" size="2"><i>See
    accompanying notes to consolidated financial statements.</i></font></td>
    <td WIDTH="8%" align="center" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="center" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="8%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="center" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 30; padding-right: 30" height="19">&nbsp;</td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
</font>
<hr color="#000000" size="5"><p style="page-break-before: always">
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    </font>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    <font FACE="Akzidenz Grotesk BE" SIZE="2">
    <p align="left"><font FACE="Times New Roman" SIZE="2"><b>&nbsp;50</b> &#149;
    Gildan 2006 Annual Report</font></font></td>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    &nbsp;</td>
  </tr>
</table>

<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    <font FACE="Caslon Two Twenty Four" SIZE="7">
    <td width="70%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#000000">
    <div style="padding-left: 20">
    <font FACE="Times New Roman" SIZE="2" color="#FFFFFF"><b>&nbsp;CONSOLIDATED </b></font>
    </font>
    <font FACE="Times New Roman" SIZE="2" color="#FFFFFF">
      <b>STATEMENTS OF CASH FLOWS</b></div>
    </td>
    </font>
    <td width="30%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF">
    <hr color="#000000" size="1"></td>
  </tr>
</table>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" size="2"><i>Years ended October
    1, 2006, October 2, 2005 and October 3, 2004</i></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" size="2"><i>(In thousands of US
    dollars)</i></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">2006</b></font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2005</font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2004</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2"><b>Cash flows from
    (used in) operating activities:</b></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" SIZE="2">Net earnings</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">$</b></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">106,829</b></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">86,043</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">60,251</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Adjustments for:</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Depreciation and amortization</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">32,383</b></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">25,615</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">22,275</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Impairment loss (note 16 (a))</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">15,149</b></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">&#150;</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Loss on disposal and writedown of fixed assets</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">1,197</b></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">7,373</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">1,949</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Stock-based compensation costs</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">908</b></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">1,050</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">477</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Future income taxes</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">1,764</b></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">176</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2,947</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Non-controlling interest</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">260</b></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">34</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Unrealized foreign exchange loss</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">843</b></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2,552</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">586</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Changes in non-cash
    working capital balances:</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Accounts receivable</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>(41,058)</b></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">(22,694)</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">(20,236)</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Inventories</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>(35,435)</b></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">(17,790)</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">(13,112)</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Prepaid expenses and deposits</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">95</b></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">(1,082)</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">440</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Accounts payable and accrued liabilities</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">11,046</b></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">11,979</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">5,416</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Income taxes payable</font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">740</b></font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">(6)</font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">(2,073)</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">94,721</b></font></td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">93,250</font></td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">58,920</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2"><b>Cash flows from
    (used in) financing activities:</b></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" SIZE="2">Repayment of long-term
    debt</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>(23,866)</b></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">(24,739)</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">(19,981)</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Increase in long-term
    debt</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">691</b></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">12,086</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">4,125</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" SIZE="2">(Decrease) increase in
    bank indebtedness</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>(17,830)</b></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">3,980</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Repayment of capital
    leases</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>(186)</b></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">(157)</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">(1,158)</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" SIZE="2">Proceeds from the
    issuance of shares</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">1,808</b></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">5,872</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2,664</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">Contribution by non-controlling
    interest</font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">&#150;</b></font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2,500</font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>(39,383)</b></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">(458)</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">(14,350)</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" SIZE="2"><b>Cash flows from
    (used in) investing activities:</b></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Purchase of fixed
    assets</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>(80,183)</b></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">(86,124)</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">(53,684)</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" SIZE="2">Acquisition of
    Kentucky Derby Hosiery Co., Inc. (note 3)</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>(19,911)</b></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">&#150;</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Proceeds from the sale
    of assets held for sale</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">5,027</b></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">4,087</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Increase in other assets</font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>(986)</b></font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">(1,811)</font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">(136)</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>(96,053)</b></font></td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">(83,848)</font></td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">(53,820)</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2"><b>Effect of exchange
    rate changes on cash and</b></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 20">cash equivalents denominated in foreign
    currencies</b></font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>(80)</b></font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">187</font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">581</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" SIZE="2"><b>Net (decrease)
    increase in cash and cash equivalents during the year</b></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>(40,795)</b></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">9,131</font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">(8,669)</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>Cash and cash equivalents,
    beginning of year</b></font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">69,802</b></font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">60,671</font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">69,340</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>Cash and cash equivalents, end of
    year</b></font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">$</b></font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">29,007</b></font></td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">69,802</font></td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1; padding-left: 20; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">60,671</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="64%" colspan="3"><font FACE="Times New Roman" size="2"><i>
    Supplemental disclosure of cash flow information (note 17 (c))</i></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="64%" colspan="3"><font FACE="Times New Roman" size="2"><i>See
    accompanying notes to consolidated financial statements.</i></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
</font>
<hr color="#000000" size="5"><p style="page-break-before: always">
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    </font>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    <p align="right"><font FACE="Akzidenz Grotesk BE" SIZE="2">Gildan 2006
    Annual Report &#149; <b>51</b></font></td>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    &nbsp;</td>
  </tr>
</table>

<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="70%" style="padding-left: 20" colspan="5" bgcolor="#000000">
    <font FACE="Times New Roman" SIZE="2" color="#FFFFFF"><b>&nbsp;NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS</b></font></td>
    <td WIDTH="30%" align="right" colspan="4"><hr color="#000000" size="1"></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" size="2"><i>Years ended October
    1, 2006, October 2, 2005 and October 3, 2004</i></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" colspan="2">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" size="2"><i>(In thousands of US
    dollars)</i></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" colspan="2">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
<p ALIGN="JUSTIFY">Gildan Activewear Inc. (the &quot;Company&quot;) is incorporated under
the Canada Business Corporations Act. Its principal business activity is the
manufacture and sale of activewear, socks and underwear. The Company's fiscal
year ends on the first Sunday following September 28. All references to 2006,
2005 and 2004 represent the fiscal years ended October 1, 2006, October 2, 2005
and October 3, 2004, respectively. </p>
<b>
<p>1</b> </font><b><font FACE="Times New Roman" size="2">2005 Accounting Changes</p>
</font></b><font FACE="Times New Roman" SIZE="2">
<p ALIGN="JUSTIFY">Effective the beginning of the Company's 2005 fiscal year,
the Company adopted, on a prospective basis, the recommendations of the Canadian
Institute of Chartered Accountants (&quot;CICA&quot;) Accounting Guideline 15 &#150; <i>
Consolidation of Variable Interest Entities </i>(&quot;AcG-15&quot;) (&quot;VIEs&quot;). A VIE is
any type of legal structure not controlled by voting equity, but rather by/or
through contractual or other financial arrangements. This guideline requires the
Company to identify VIEs in which it has an interest, determine whether it is
the primary beneficiary of such entities and, if so, to consolidate the VIE. A
primary beneficiary is an enterprise that will absorb a majority of the VIE's
expected losses, receive a majority of its expected residual return, or both.
The Company determined that its joint venture (CanAm Yarns, LLC) (&quot;CanAm&quot;) with
Frontier Spinning Mills, Inc. met the criteria for being a VIE and that the
Company is the primary beneficiary of the entity.</p>
<p ALIGN="JUSTIFY">The application of the guideline in fiscal 2005 resulted in
an increase to total assets of $7,929, total liabilities of $5,069 and
non-controlling interest of $2,860. The Company's net earnings were not affected
by this change as the investment in the joint venture was previously accounted
for using the proportionate consolidation method.</p>
<b>
<p>2</b> <b>Significant Accounting Policies</p>
</b>
<p align="justify">The consolidated financial statements are expressed in US
dollars and have been prepared in accordance with accounting principles
generally accepted in Canada. The principal accounting policies of the Company
are summarized as follows:</p>
<b>
<p style="text-indent: -30; margin-left: 30" align="justify">(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Basis of presentation<br>
<br>
</b>The accompanying consolidated financial statements include the accounts of
the Company and its subsidiaries and a joint venture for which the Company is
considered the primary beneficiary. All significant intercompany balances and
transactions have been eliminated on consolidation.</p>
<b>
<p style="text-indent: -30; margin-left: 30" align="justify">(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cash and cash equivalents<br>
<br>
</b>The Company considers all liquid investments with maturities of three months
or less when acquired to be cash equivalents.</p>
<b>
<p style="text-indent: -30; margin-left: 30" align="justify">(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Inventories<br>
<br>
</b>Inventories are stated at the lower of cost and market value. Cost is
established based on the first-in, first-out method. Market value is defined as
replacement cost for raw materials and net realizable value for work in process
and finished goods.</p>
<b>
<p style="text-indent: -30; margin-left: 30" align="justify">(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Fixed assets<br>
<br>
</b>Fixed assets are recorded at cost. Depreciation is calculated on a
straight-line basis at the following annual rates:<br>
&nbsp;</p>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="1%" style="border-style: none; border-width: medium">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="72%" style="border-left-style: none; border-left-width: medium; border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">Asset</font></td>
    <td WIDTH="28%" align="center" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">Rate</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="border-style: none; border-width: medium">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="72%" style="border-left-style: none; border-left-width: medium" bgcolor="#E6E6E6">
    <font SIZE="2">Buildings and improvements</font></td>
    <td WIDTH="28%" align="center" bgcolor="#E6E6E6"><font SIZE="2">2 1/2% to 20%</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="border-style: none; border-width: medium">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="72%" style="border-left-style: none; border-left-width: medium; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">Equipment</font></td>
    <td WIDTH="28%" align="center" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">6 2/3% to 25%</font></td>
  </tr>
</table>
<p style="margin-left: 30" align="justify">Construction in progress includes
expenditures incurred to-date, including deposits for equipment and plant
expansions which are still in progress or are not yet in service as at the
balance sheet date. Accordingly, depreciation on these assets will commence when
the assets are put into service.</p>
<b>
<p style="text-indent: -30; margin-left: 30" align="justify">(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Intangible assets<br>
<br>
</b>Intangible assets, which represent customer contracts and customer
relationships included in the acquisition of Kentucky Derby Hosiery Co., Inc.
are being amortized on a straight-line basis over a period of fifteen years.</p>
</font>
<font FACE="Times New Roman" SIZE="2">
</font>
<hr color="#000000" size="5"><p style="page-break-before: always">
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    </font>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    <font FACE="Akzidenz Grotesk BE" SIZE="2">
    <p align="left"><font FACE="Times New Roman" SIZE="2"><b>&nbsp;52</b> &#149;
    Gildan 2006 Annual Report&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font></font></td>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    &nbsp;</td>
  </tr>
</table>

<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="70%" style="padding-left: 20" colspan="5" bgcolor="#000000">
    <font FACE="Times New Roman" SIZE="2" color="#FFFFFF"><b>&nbsp;NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS</b></font></td>
    <td WIDTH="30%" align="right" colspan="4"><hr color="#000000" size="1"></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" size="2"><i>Years ended October
    1, 2006, October 2, 2005 and October 3, 2004</i></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" colspan="2">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" size="2"><i>(In thousands of US
    dollars)</i></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" colspan="2">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
  </tr>
</table>
<font FACE="Times New Roman" size="2"><b>
<p>2</b> </font><b><font size="2" face="Times New Roman">Significant Accounting
Policies (Continued)</p>
<p style="text-indent: -30; margin-left: 30" align="justify">(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Impairment of long-lived assets<br>
<br>
</font></b><font SIZE="2" face="Times New Roman">Long-lived assets, consisting
of fixed assets and intangible assets with finite lives, are reviewed for
potential impairment whenever events and 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.</p>
</font><b><font SIZE="2" face="Times New Roman">
<p style="text-indent: -30; margin-left: 30" align="justify">(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Deferred charges<br>
<br>
</font></b><font FACE="Akzidenz Grotesk BE" SIZE="2">
<font SIZE="2" face="Times New Roman">The costs of obtaining long-term financing
are deferred and amortized using the interest method over the term of the
related debt. Plant start-up costs are deferred and amortized on a straight-line
basis over two years. The amortization of these charges is included in
&quot;Depreciation and amortization&quot;.</p>
</font><b><font SIZE="2" face="Times New Roman">
<p style="text-indent: -30; margin-left: 30" align="justify">(h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Use of estimates<br>
<br>
</font></b><font SIZE="2" face="Times New Roman">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 from those estimates.<br>
<br>
Significant areas requiring the use of management estimates and assumptions
include the key assumptions used in determining the allowance for doubtful
accounts, future income tax assets and liabilities, stock-based compensation
costs, estimating the fair value of identifiable tangible and intangible assets
in a business combination and the useful life and recoverability of fixed assets
and intangible assets.</p>
</font><b><font SIZE="2" face="Times New Roman">
<p style="text-indent: -30; margin-left: 30" align="justify">(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Foreign currency translation<br>
<br>
</font></b><font SIZE="2" face="Times New Roman">Monetary assets and liabilities
of the Canadian and foreign operations denominated in currencies other than US
dollars are translated at the rates of exchange at the balance sheet date. Other
balance sheet items, denominated in currencies other than US dollars, are
translated at the rates prevailing at the respective transaction dates. Income
and expenses, denominated in currencies other than US dollars, are translated at
average rates prevailing during the year. Gains or losses on foreign exchange
are recorded in the consolidated statements of earnings.<br>
<br>
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.</p>
</font><b><font SIZE="2" face="Times New Roman">
<p style="text-indent: -30; margin-left: 30" align="justify">(j)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Revenue recognition<br>
<br>
</font></b><font SIZE="2" face="Times New Roman">Sales are recognized upon
shipment of products to customers, since title passes upon shipment. At the time
of sale, estimates are made for customer price discounts and rebates based upon
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 and other known factors, and exclude
sales taxes.</p>
</font><b><font SIZE="2" face="Times New Roman">
<p style="text-indent: -30; margin-left: 30" align="justify">(k)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cotton and yarn procurements<br>
<br>
</font></b><font FACE="Times New Roman" SIZE="2">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. The Company
commits to fixed prices on a percentage of its cotton and yarn requirements up
to eighteen months in the future. If market prices for cotton and yarn fall
significantly below the committed future purchase prices, the Company estimates
the costs of cotton and yarn that are not recoverable in future sales of
finished goods, and records a charge to earnings.</p>
</font></font><hr color="#000000" size="5"><p style="page-break-before: always">
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    </font>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    <p align="right"><font FACE="Akzidenz Grotesk BE" SIZE="2">Gildan 2006
    Annual Report &#149; <b>53</b></font><font FACE="Times New Roman" SIZE="2">
    </font></td>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    &nbsp;</td>
  </tr>
</table>


<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="70%" style="padding-left: 20" colspan="5" bgcolor="#000000">
    <font FACE="Times New Roman" SIZE="2" color="#FFFFFF"><b>&nbsp;NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS</b></font></td>
    <td WIDTH="30%" align="right" colspan="4"><hr color="#000000" size="1"></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" size="2"><i>Years ended October
    1, 2006, October 2, 2005 and October 3, 2004</i></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" colspan="2">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" size="2"><i>(In thousands of US
    dollars)</i></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" colspan="2">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
  </tr>
</table>
<b><font FACE="Akzidenz Grotesk BE" SIZE="2">
<p>&nbsp;</p>
<p><font FACE="Times New Roman" size="2">2 Significant Accounting Policies
(Continued)</font></p>
</font><font SIZE="2" face="Times New Roman">
<p style="text-indent: -30; margin-left: 30" align="justify">(l)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Financial instruments and hedging relationships<br>
<br>
</font></b><font SIZE="2" face="Times New Roman">The Company may periodically
use derivative financial instruments, such as forward foreign exchange
contracts, to manage risks related to fluctuations in exchange rates. Derivative
financial instruments are not used for trading purposes. Forward foreign
exchange contracts are entered into with maturities not exceeding twenty-four
months. <br>
<br>
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. When hedging instruments become ineffective before
their maturity or the hedging relationship is terminated, deferred gains or
losses on such instruments continue to be deferred and charged to earnings in
the same period as for the corresponding gains or losses for the hedged items;
gains and losses realized subsequently as a result of marking-to-market are
charged directly to earnings. If the hedged item ceases to exist due to its
maturity, expiry, cancellation or exercise before the hedging instrument
expires, deferred gains or losses are charged in 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 earnings.<br>
<br>
As at October 1, 2006, all outstanding forward foreign exchange contracts were
reported on a mark-to-market basis, and the gains or losses were included in
earnings. The Company elected not to follow hedge accounting for these
derivatives.</p>
<b>
<p style="text-indent: -30; margin-left: 30" align="justify">(m)&nbsp;&nbsp;&nbsp;&nbsp;
Income taxes<br>
<br>
</b>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 if realization is not considered to be more likely than not, a
valuation allowance is provided.</p>
<b>
<p style="text-indent: -30; margin-left: 30" align="justify">(n)&nbsp;&nbsp;&nbsp;&nbsp;
Stock-based compensation and other stock-based payments<br>
<br>
</b>Effective the commencement of its 2004 fiscal year, the Company follows the
fair value-based method to account for all transactions whereby services are
received in exchange for stock-based compensation and other stock-based
payments. Under the fair value-based method, compensation cost is measured at
the fair value at the date of grant and is expensed over the award's vesting
period.<br>
<br>
In fiscal 2006, the Company changed its accounting policy to estimate
forfeitures of stock options and restricted share units when determining
stock-based compensation. In prior years, the Company accounted for forfeitures
as they occurred. This change in accounting policy had no significant impact on
the financial position of the Company or on the results of its operations.<br>
<br>
For employee share purchase plans, the Company's contribution, on the employee's
behalf, is recognized as a 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.</p>
<b>
<p style="text-indent: -30; margin-left: 30" align="justify">(o)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Employee future benefits<br>
<br>
</b>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. </p>
<b>
<p style="text-indent: -30; margin-left: 30" align="justify">(p)&nbsp;&nbsp;&nbsp;&nbsp;
Earnings per share<br>
<br>
</b>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 in the same manner, except the weighted average
number of common shares outstanding for the period is increased to include
additional shares from the assumed exercise of options, if dilutive, and the
issuance of restricted share units. The number of additional shares is
calculated by assuming that outstanding options are exercised, and that the
proceeds from such exercises, as well as the amount of unrecognized stock-based
compensation are used to repurchase common shares at the average share price for
the period.</p>
</font>
<font FACE="Times New Roman" SIZE="2">
</font>
<hr color="#000000" size="5"><p style="page-break-before: always">
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    </font>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    <font FACE="Akzidenz Grotesk BE" SIZE="2">
    <p align="left"><font FACE="Times New Roman" SIZE="2"><b>&nbsp;54</b> &#149;
    Gildan 2006 Annual Report</font></font></td>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    &nbsp;</td>
  </tr>
</table>

<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="70%" style="padding-left: 20" colspan="5" bgcolor="#000000">
    <font FACE="Times New Roman" SIZE="2" color="#FFFFFF"><b>&nbsp;NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS</b></font></td>
    <td WIDTH="30%" align="right" colspan="4"><hr color="#000000" size="1"></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" size="2"><i>Years ended October
    1, 2006, October 2, 2005 and October 3, 2004</i></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" colspan="2">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" size="2"><i>(In thousands of US
    dollars)</i></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" colspan="2">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
  </tr>
</table>
<font FACE="Akzidenz Grotesk BE" SIZE="2"><b>
<p>&nbsp;</p>
<p><font FACE="Times New Roman" size="2">2 Significant Accounting Policies
(Continued)</font></b></p>
</font><font SIZE="2" face="Times New Roman"><b>
<p align="justify" style="text-indent: -30; margin-left: 30">(q)&nbsp;&nbsp;&nbsp;&nbsp;
Environmental expenditures<br>
<br>
</b>Environmental expenditures that relate to current operations are expensed or
capitalized as appropriate. 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.</p>
<b>
<p align="justify" style="text-indent: -30; margin-left: 30">(r)&nbsp;&nbsp;&nbsp;&nbsp;
Guarantees<br>
<br>
</b>In the normal course of business, the Company enters into various agreements
that may contain guarantees. A liability is recorded when the Company considers
probable that a payment relating to the guarantee has to be made to the other
party. </p>
<b>
<p align="justify" style="text-indent: -30; margin-left: 30">(s)&nbsp;&nbsp;&nbsp;&nbsp;
Business acquisitions<br>
<br>
</b>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 noncurrent assets, with the balance
recorded as an extraordinary gain. </p>
</font><font FACE="Akzidenz Grotesk BE">
<p><font FACE="Times New Roman" size="2"><b>3</b></font></font><font SIZE="2" face="Times New Roman">
</font><font FACE="Akzidenz Grotesk BE" SIZE="2">
<font FACE="Times New Roman" size="2"><b>Business Acquisition</b></font></p>
</font><font SIZE="2" face="Times New Roman">
<p align="justify">Effective July 6, 2006, the Company acquired 100% of the
common shares of Kentucky Derby Hosiery Co., Inc. (&quot;Kentucky Derby&quot;), a U.S.
hosiery manufacturer with corporate headquarters in Hopkinsville, Kentucky. The
total purchase price of $20,371, including transaction costs, was paid in cash,
except for $460 which was settled through the issuance of common shares of the
Company. The acquisition is intended to enhance and accelerate the Company's
strategy to enter the North American mass-market retail channel as a supplier of
athletic socks, underwear and activewear.</p>
<p align="justify">The Company accounted for this acquisition using the purchase
method and the results of Kentucky Derby have been consolidated with those of
the Company from the date of acquisition. </p>
<p align="justify">The following table summarizes the estimated fair value of
the assets acquired and liabilities assumed at the date of acquisition:</p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" height="450" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="58%" height="19"><font FACE="Times New Roman" SIZE="2"><b>Assets
    acquired</b></font></td>
    <td WIDTH="3%" height="19" align="right">&nbsp;</td>
    <td WIDTH="21%" height="19" align="right" style="padding-right: 20">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" height="15" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Accounts receivable</font></td>
    <td WIDTH="3%" height="15" align="right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="21%" height="15" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">15,081</font></td>
  </tr>
  <tr>
    <td WIDTH="58%" height="19"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Income taxes receivable</font></td>
    <td WIDTH="3%" height="19" align="right">&nbsp;</td>
    <td WIDTH="21%" height="19" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">775</font></td>
  </tr>
  <tr>
    <td WIDTH="58%" height="19" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Inventory</font></td>
    <td WIDTH="3%" height="19" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="21%" height="19" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">30,357</font></td>
  </tr>
  <tr>
    <td WIDTH="58%" height="19"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Prepaid expenses</font></td>
    <td WIDTH="3%" height="19" align="right">&nbsp;</td>
    <td WIDTH="21%" height="19" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">1,458</font></td>
  </tr>
  <tr>
    <td WIDTH="58%" height="19" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Fixed assets</font></td>
    <td WIDTH="3%" height="19" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="21%" height="19" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">6,993</font></td>
  </tr>
  <tr>
    <td WIDTH="58%" height="19" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Customer contracts and customer relationships</font></td>
    <td WIDTH="3%" height="19" style="border-bottom-style: solid; border-bottom-width: 1" align="right">&nbsp;</td>
    <td WIDTH="21%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">9,866</font></td>
  </tr>
  <tr>
    <td WIDTH="58%" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="3%" height="19" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="21%" height="19" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">64,530</font></td>
  </tr>
  <tr>
    <td WIDTH="58%" height="19"><font FACE="Times New Roman" SIZE="2"><b>
    Liabilities assumed</b></font></td>
    <td WIDTH="3%" height="19" align="right">&nbsp;</td>
    <td WIDTH="21%" height="19" align="right" style="padding-right: 20">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" height="19" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Bank indebtedness</font></td>
    <td WIDTH="3%" height="19" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="21%" height="19" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">17,350</font></td>
  </tr>
  <tr>
    <td WIDTH="58%" height="19"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Accounts payable and accrued liabilities</font></td>
    <td WIDTH="3%" height="19" align="right">&nbsp;</td>
    <td WIDTH="21%" height="19" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">16,734</font></td>
  </tr>
  <tr>
    <td WIDTH="58%" height="19" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Long-term debt</font></td>
    <td WIDTH="3%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="21%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">10,075</font></td>
  </tr>
  <tr>
    <td WIDTH="58%" height="19" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="3%" height="19" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" align="right">&nbsp;</td>
    <td WIDTH="21%" height="19" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">44,159</font></td>
  </tr>
  <tr>
    <td WIDTH="58%" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="3%" height="19" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="21%" height="19" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" height="15" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>Net assets acquired</b></font></td>
    <td WIDTH="3%" height="15" style="border-bottom-style: solid; border-bottom-width: 1" align="right">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="21%" height="15" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">20,371</font></td>
  </tr>
  <tr>
    <td WIDTH="58%" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="3%" height="19" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="21%" height="19" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" height="19"><font FACE="Times New Roman" SIZE="2"><b>
    Consideration</b></font></td>
    <td WIDTH="3%" height="19" align="right">&nbsp;</td>
    <td WIDTH="21%" height="19" align="right" style="padding-right: 20">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="58%" height="15" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Cash</font></td>
    <td WIDTH="3%" height="15" align="right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="21%" height="15" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">19,000</font></td>
  </tr>
  <tr>
    <td WIDTH="58%" height="19"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">10,000 common shares</font></td>
    <td WIDTH="3%" height="19" align="right">&nbsp;</td>
    <td WIDTH="21%" height="19" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">460</font></td>
  </tr>
  <tr>
    <td WIDTH="58%" height="19" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Transaction costs</font></td>
    <td WIDTH="3%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="21%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">911</font></td>
  </tr>
  <tr>
    <td WIDTH="58%" height="19" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="3%" height="19" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" align="right">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="21%" height="19" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">20,371</font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
</font>
<hr color="#000000" size="5"><p style="page-break-before: always">
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    </font>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    <p align="right"><font FACE="Times New Roman" SIZE="2">&nbsp;</font><font FACE="Akzidenz Grotesk BE" SIZE="2">Gildan
    2006 Annual Report &#149; <b>55</b></font></td>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    &nbsp;</td>
  </tr>
</table>
<b><font FACE="Akzidenz Grotesk BE" SIZE="3">
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="70%" style="padding-left: 20" colspan="5" bgcolor="#000000">
    <font FACE="Times New Roman" SIZE="2" color="#FFFFFF"><b>&nbsp;NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS</b></font></td>
    <td WIDTH="30%" align="right" colspan="4"><hr color="#000000" size="1"></td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" size="2"><i>Years ended October
    1, 2006, October 2, 2005 and October 3, 2004</i></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" colspan="2">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" size="2"><i>(In thousands of US
    dollars)</i></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" colspan="2">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
  </tr>
</table>
<dir>
  <p>&nbsp;</p>
</dir>
</font><font FACE="Times New Roman" size="2">
<p>3</font></b><font size="2" face="Times New Roman"> <b>Business Acquisition
(Continued)</p>
</b>
<p align="justify">Immediately following the acquisition, the Company repaid the
entire amount of bank indebtedness and $3,987 of long-term debt.</p>
<p ALIGN="JUSTIFY">The value of the shares issued as consideration for the
business acquisition was $46.00 per share, which was determined using the
Company's average closing share price on the New York Stock Exchange over a
reasonable period before and after the date the terms of the business
consideration were agreed to and announced.</p>
<p ALIGN="JUSTIFY">Included in the purchase price allocation is an accrual of
$1,500 for estimated costs, which includes severance and other employee related
costs, for the restructuring and integration of the operations of Kentucky
Derby. The restructuring and integration process is expected to be completed
during the next fiscal year. As at October 1, 2006, the entire amount is
included in &quot;Accounts payable and accrued liabilities&quot;.</p>
<p ALIGN="JUSTIFY"><b>4</b> <b>Fixed Assets</p>
</b></font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>2006</b></font></td>
  </tr>
  <tr>
    <td WIDTH="40%">&nbsp;</td>
    <td WIDTH="10%" align="right" colspan="2">&nbsp;</td>
    <td WIDTH="10%" COLSPAN="2" align="right">
    <font FACE="Times New Roman" SIZE="2"><b>Accumulated</b></font></td>
    <td WIDTH="10%" align="right" colspan="2" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>Net book</b></font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" colspan="2" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>Cost</b></font></td>
    <td WIDTH="10%" COLSPAN="2" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>depreciation</b></font></td>
    <td WIDTH="10%" align="right" colspan="2" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>value</b></font></td>
  </tr>
  <tr>
    <td WIDTH="40%">&nbsp;</td>
    <td WIDTH="10%" align="right" colspan="2">&nbsp;</td>
    <td WIDTH="10%" align="right" colspan="2">&nbsp;</td>
    <td WIDTH="10%" align="right" colspan="2" style="padding-right: 20">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Land</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2"><b>$</b></font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2"><b>
    21,669</b></font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2"><b>$</b></font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2"><b>&#150;</b></font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2"><b>$</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>21,669</b></font></td>
  </tr>
  <tr>
    <td WIDTH="40%"><font FACE="Times New Roman" SIZE="2">Buildings and
    improvements</font></td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right"><font FACE="Times New Roman" SIZE="2"><b>
    109,949</b></font></td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right"><font FACE="Times New Roman" SIZE="2"><b>
    19,442</b></font></td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>90,507</b></font></td>
  </tr>
  <tr>
    <td WIDTH="40%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Equipment</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2"><b>
    268,420</b></font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2"><b>
    107,530</b></font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>160,890</b></font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Construction in progress</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>29,611</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>&#150;</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>29,611</b></font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>$</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>429,649</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>$</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>126,972</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>$</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>302,677</b></font></td>
  </tr>
  <tr>
    <td WIDTH="40%">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">2005</font></td>
  </tr>
  <tr>
    <td WIDTH="40%">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" COLSPAN="2" align="right">
    <font FACE="Times New Roman" SIZE="2">Accumulated</font></td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">Net book</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Cost</font></td>
    <td WIDTH="10%" COLSPAN="2" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">depreciation</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">value</font></td>
  </tr>
  <tr>
    <td WIDTH="40%">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1; padding-right: 20">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Land</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">19,032</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">&#150;</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">19,032</font></td>
  </tr>
  <tr>
    <td WIDTH="40%"><font FACE="Times New Roman" SIZE="2">Buildings and
    improvements</font></td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right"><font FACE="Times New Roman" SIZE="2">95,207</font></td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right"><font FACE="Times New Roman" SIZE="2">10,691</font></td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">84,516</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Equipment</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">227,046</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">73,619</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">153,427</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Construction in progress</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">3,640</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">&#150;</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">3,640</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">344,925</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">84,310</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">260,615</font></td>
  </tr>
</table>
<p><font FACE="Times New Roman" SIZE="2">For fiscal 2006, accumulated
depreciation includes an asset impairment loss of $15,149, described in note 16
(a).</font></p>
<p><font FACE="Times New Roman" size="2"><b>5 Intangible Assets</b></font></p>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="60%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">2006</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2005</font></td>
  </tr>
  <tr>
    <td WIDTH="60%">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="60%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Customer contracts and
    customer relationships (note 3)</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">$</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">9,866</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="60%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Less accumulated amortization</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>(353)</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="60%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">$</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">9,513</b></font></td>
    <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="60%">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="60%">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="60%"><font FACE="Times New Roman" size="2"><b>6 Other Assets</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="60%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">2006</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2005</font></td>
  </tr>
  <tr>
    <td WIDTH="60%">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="60%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Deferred charges, net
    of accumulated amortization of $6,544 (2005 &#150; $5,716)</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">$</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">2,333</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">1,482</font></td>
  </tr>
  <tr>
    <td WIDTH="60%"><font FACE="Times New Roman" SIZE="2">Long-term receivable</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">758</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">1,133</font></td>
  </tr>
  <tr>
    <td WIDTH="60%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Deposits</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">581</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">662</font></td>
  </tr>
  <tr>
    <td WIDTH="60%"><font FACE="Times New Roman" SIZE="2">Prepaid equipment
    rental</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">441</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">446</font></td>
  </tr>
  <tr>
    <td WIDTH="60%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">Other</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">388</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">313</font></td>
  </tr>
  <tr>
    <td WIDTH="60%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">$</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">4,501</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">4,036</font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
</font>
<hr color="#000000" size="5"><p style="page-break-before: always">
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    </font>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    <font FACE="Akzidenz Grotesk BE" SIZE="2">
    <p align="left"><font FACE="Times New Roman" SIZE="2"><b>&nbsp;56</b> &#149;
    Gildan 2006 Annual Report</font></font></td>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    &nbsp;</td>
  </tr>
</table>

<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="3"><b>
    <td WIDTH="70%" style="padding-left: 20" colspan="5" bgcolor="#000000">
    <font FACE="Times New Roman" SIZE="2" color="#FFFFFF"><b>&nbsp;NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS</b></font></td>
    <td WIDTH="30%" align="right" colspan="4"><hr color="#000000" size="1"></td>
    </b></font>
  </tr>
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="3"><b>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" size="2"><i>Years ended October
    1, 2006, October 2, 2005 and October 3, 2004</i></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" colspan="2">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    </b></font>
  </tr>
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="3"><b>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" size="2"><i>(In thousands of US
    dollars)</i></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" colspan="2">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    </b></font>
  </tr>
</table>
<p>&nbsp;</p>
<font FACE="Times New Roman" size="2"><b>
<p>7</b> <b>Bank Indebtedness</p>
</b>
<p ALIGN="JUSTIFY">The Company's joint venture, CanAm, has a revolving line of
credit in the amount of $4,000. As at October 1, 2006, the joint venture had
utilized $3,500 (2005 &#150; $3,980) of its line of credit. The borrowings are due on
demand and bear interest at 30-day LIBOR plus 2.25% (7.58% at October 1, 2006;
6.13% at October 2, 2005). The line of credit is secured by a first ranking
security interest on the assets of the joint venture.</p>
<b>
<p>8</b> <b>Long-Term Debt</p>
</b></font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="60%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>2006</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">2005</font></td>
  </tr>
  <tr>
    <td WIDTH="60%">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1; padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1; padding-right: 20">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="60%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2"><b>Secured</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="60%"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Senior notes (a)</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>$</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>17,500</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">35,000</font></td>
  </tr>
  <tr>
    <td WIDTH="60%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Term loan, repayable in monthly instalments,
    bearing interest at 30-day LIBOR plus</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="60%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 40">2.75% (8.07% at October 1, 2006; 6.63% at October
    2, 2005),</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="60%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 40">maturing in September 2012; secured by assets (b)</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>9,657</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">10,658</font></td>
  </tr>
  <tr>
    <td WIDTH="60%"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Term loan, repayable in monthly instalments,
    bearing interest at a fixed rate of 6%,</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="60%"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 40">maturing in December 2008; secured by equipment
    (b)</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>734</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">1,041</font></td>
  </tr>
  <tr>
    <td WIDTH="60%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Municipal bonds, repayable in annual instalments,
    bearing interest at variable rates</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="60%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 40">(3.85% at October 1, 2006), maturing in January
    2010; secured</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="60%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 40">by building and equipment (c)</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>2,860</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="60%"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Notes payable to bank due in monthly instalments,
    bearing interest at fixed rates</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="60%"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 40">ranging from 4.39% to 5.38%, maturing from
    December 2006 to June 2009;</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="60%"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 40">secured by equipment (c)</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>2,128</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="60%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Note payable to bank due in monthly instalments,
    bearing interest at a fixed</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="60%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 40">rate of 4.84%, maturing in October 2009; secured
    by equipment (c)</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>647</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="60%"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Note payable to bank due in monthly instalments,
    bearing interest</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="60%"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 40">at NY Prime plus 0.25% (8.50% at October 1,
    2006),</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="60%"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 40">maturing in July 2011; secured by a building (c)</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>195</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="60%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Obligations under capital leases, bearing
    interest at 3.83%</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>&#150;</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">186</font></td>
  </tr>
  <tr>
    <td WIDTH="60%">
    <p style="margin-left: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>33,721</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">46,885</font></td>
  </tr>
  <tr>
    <td WIDTH="60%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">Current portion of secured debt</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>21,712</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">19,737</font></td>
  </tr>
  <tr>
    <td WIDTH="60%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>$</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>12,009</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">27,148</font></td>
  </tr>
  <tr>
    <td WIDTH="60%" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="60%"><font FACE="Times New Roman" SIZE="2"><b>Unsecured</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="60%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Term loans, bearing interest at rates up to 5%
    per annum,</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="60%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 40">maturing at various dates through 2008</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>$</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>140</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">&nbsp;262</font></td>
  </tr>
  <tr>
    <td WIDTH="60%">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="60%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">Current portion of unsecured debt</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>108</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">122</font></td>
  </tr>
  <tr>
    <td WIDTH="60%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>$</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>32</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">&nbsp;140</font></td>
  </tr>
  <tr>
    <td WIDTH="60%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">Total secured and unsecured long-term
    debt</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>$</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>12,041</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">27,288</font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
<p ALIGN="JUSTIFY" style="text-indent: -30; margin-left: 30">(a)&nbsp;&nbsp;&nbsp;
The notes bear interest at 9.51% on $13,750 and 9.88% on $3,750, and are secured
by tangible and intangible property of the Company. The combined effective
interest rate on the senior notes for fiscal 2006 and 2005 was 9.59%. The notes
mature in June 2007.</p>
<p style="text-indent: -30; margin-left: 30">(b)&nbsp;&nbsp;&nbsp; These term
loans have been entered into by CanAm, the Company's joint venture with Frontier
Spinning Mills, Inc.<br>
<br>
The fixed assets of CanAm serve as collateral for the long-term borrowings of
CanAm. In addition, the Company has provided a guarantee of $3,500 on the term
debt and revolving credit facility with the bank. Other creditors of CanAm do
not have any recourse to the general credit of the Company.</p>
<p style="text-indent: -30; margin-left: 30">(c)&nbsp;&nbsp;&nbsp;&nbsp; As a
result of the acquisition of Kentucky Derby, described in note 3, the Company
assumed the obligations entered into by Kentucky Derby. </p>
</font>
<font FACE="Times New Roman" SIZE="2">
</font>
<hr color="#000000" size="5"><p style="page-break-before: always">
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    </font>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    <p align="right"><font FACE="Times New Roman" SIZE="2">&nbsp;</font><font FACE="Akzidenz Grotesk BE" SIZE="2">Gildan
    2006 Annual Report &#149; <b>57</b></font></td>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    &nbsp;</td>
  </tr>
</table>

<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="3"><b>
    <td WIDTH="70%" style="padding-left: 20" colspan="5" bgcolor="#000000">
    <font FACE="Times New Roman" SIZE="2" color="#FFFFFF"><b>&nbsp;NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS</b></font></td>
    <td WIDTH="30%" align="right" colspan="4"><hr color="#000000" size="1"></td>
    </b></font>
  </tr>
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="3"><b>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" size="2"><i>Years ended October
    1, 2006, October 2, 2005 and October 3, 2004</i></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" colspan="2">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    </b></font>
  </tr>
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="3"><b>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" size="2"><i>(In thousands of US
    dollars)</i></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" colspan="2">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    </b></font>
  </tr>
</table>
<p>&nbsp;</p>
<font FACE="Times New Roman" size="2"><b>
<p>8</b> <b>Long-Term Debt (Continued)</p>
</b>
<p ALIGN="JUSTIFY">The Company has a revolving term credit facility for a
maximum of $200,000 which matures in July 2009. The facility is secured by a
first ranking moveable hypothec and security interest on the majority of the
Company's accounts receivable, inventories, intangible assets, equipment and
tangible moveable assets. There were no amounts drawn under this facility at
October 1, 2006 or October 2, 2005.</p>
<p>Under various financing arrangements with its bankers and other long-term
lenders, the Company is required to meet certain covenants. The Company was in
compliance with all of these covenants as at October 1, 2006 and October 2,
2005.</p>
<p>Principal payments due on long-term debt are as follows:</p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="75%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Fiscal year</font></td>
    <td WIDTH="12%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="75%">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="75%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">2007</font></td>
    <td WIDTH="12%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="12%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">21,820</font></td>
  </tr>
  <tr>
    <td WIDTH="75%"><font FACE="Times New Roman" SIZE="2">2008</font></td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right"><font FACE="Times New Roman" SIZE="2">3,581</font></td>
  </tr>
  <tr>
    <td WIDTH="75%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">2009</font></td>
    <td WIDTH="12%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">2,901</font></td>
  </tr>
  <tr>
    <td WIDTH="75%"><font FACE="Times New Roman" SIZE="2">2010</font></td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right"><font FACE="Times New Roman" SIZE="2">2,408</font></td>
  </tr>
  <tr>
    <td WIDTH="75%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">2011</font></td>
    <td WIDTH="12%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">1,664</font></td>
  </tr>
  <tr>
    <td WIDTH="75%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Thereafter</font></td>
    <td WIDTH="12%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">1,487</font></td>
  </tr>
  <tr>
    <td WIDTH="75%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="12%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">33,861</font></td>
  </tr>
</table>
<p><font FACE="Times New Roman" size="2"><b>9 Shareholders' Equity</b></font></p>
<p><font FACE="Times New Roman" SIZE="2">Changes in share capital were as
follows:</font></p>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="40%">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">2006</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2005</font></td>
  </tr>
  <tr>
    <td WIDTH="40%">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">Book</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">Book</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">Shares</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">value</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">Shares</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">value</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Authorized without
    limit as to number and without par value:</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">First preferred shares, issuable in series,
    non-voting</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Second preferred shares, issuable in series,
    non-voting</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Common shares</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Issued and
    outstanding:</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Common shares:</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 40">Total outstanding, beginning of year</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">59,954,530</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">$</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">84,177</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">&#150;</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="40%"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 40">Conversion of Class A shares</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 60">into common shares (a)</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">&#150;</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">&#150;</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">59,397,412</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">78,170</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 40">Shares issued pursuant to business acquisition
    (note 3)</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">10,000</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">460</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">&#150;</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="40%"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 40">Shares issued under employee share purchase plan</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">8,321</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">360</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">9,916</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">200</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 40">Shares issued pursuant to exercise of stock
    options</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">140,983</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">1,587</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">547,202</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">5,807</font></td>
  </tr>
  <tr>
    <td WIDTH="40%"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 40">Total outstanding, end of year</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">60,113,834</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">86,584</b></font></td>
    <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">59,954,530</font></td>
    <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">84,177</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Class A subordinate voting shares:</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 40">Total outstanding, beginning of year</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">&#150;</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">&#150;</b></font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">59,397,412</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">78,170</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 40">Conversion of Class A shares into</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 60">common shares (a)</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">&#150;</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">&#150;</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">(59,397,412)</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">(78,170)</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 40">Total outstanding, end of year</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">&#150;</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">&#150;</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">&#150;</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">60,113,834</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">$</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">86,584</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">59,954,530</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">84,177</font></td>
  </tr>
</table>
<p><font FACE="Times New Roman" SIZE="2">The amounts credited to share capital
from the exercise of stock options include a cash consideration of $1,448 (2005
&#150; $5,672) as well as an ascribed value from contributed surplus of $139 (2005 &#150;
$135).</font></p>
<font FACE="Times New Roman" SIZE="2">
</font>
<hr color="#000000" size="5"><p style="page-break-before: always">
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    </font>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    <font FACE="Akzidenz Grotesk BE" SIZE="2">
    <p align="left"><font FACE="Times New Roman" SIZE="2"><b>&nbsp;58</b> &#149;
    Gildan 2006 Annual Report</font></font></td>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    &nbsp;</td>
  </tr>
</table>

<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="3"><b>
    <td WIDTH="70%" style="padding-left: 20" colspan="5" bgcolor="#000000">
    <font FACE="Times New Roman" SIZE="2" color="#FFFFFF"><b>&nbsp;NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS</b></font></td>
    <td WIDTH="30%" align="right" colspan="4"><hr color="#000000" size="1"></td>
    </b></font>
  </tr>
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="3"><b>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" size="2"><i>Years ended October
    1, 2006, October 2, 2005 and October 3, 2004</i></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" colspan="2">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    </b></font>
  </tr>
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="3"><b>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" size="2"><i>(In thousands of US
    dollars)</i></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" colspan="2">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    </b></font>
  </tr>
</table>
<p>&nbsp;</p>
<font FACE="Times New Roman" size="2"><b>
<p>9</b> <b>Shareholders' Equity (Continued)</p>
</b>
<p ALIGN="JUSTIFY" style="text-indent: -30; margin-left: 30">(a)&nbsp;&nbsp;&nbsp;&nbsp;
The Articles of the Company were amended by Certificate of Amendment dated
February 2, 2005 to create an unlimited number of a new class of common shares,
convert each of the issued and outstanding Class A subordinate voting shares
into one of the common shares created and cancel the Class A subordinate voting
shares as well as the rights, privileges, restrictions and conditions attached
thereto.</p>
<p ALIGN="JUSTIFY" style="text-indent: -30; margin-left: 30">(b)&nbsp;&nbsp;&nbsp;&nbsp;
On December 1, 2005, the Board of Directors approved the renewal of the stock
repurchase program authorizing the Company to purchase up to a maximum of
1,000,000 of the Company's common shares in the open market commencing December
22, 2005 and ending December 21, 2006. As at October 1, 2006, no shares had been
repurchased under this plan.</p>
<p ALIGN="JUSTIFY" style="text-indent: -30; margin-left: 30">(c)&nbsp;&nbsp;&nbsp;&nbsp;
On December 1, 2004, the Board of Directors adopted a shareholder rights plan,
which became effective that same day. At the annual and special meeting of the
shareholders on February 2, 2005, the shareholders approved a resolution
confirming the ratification of the shareholder rights plan. The objectives of
the shareholder rights plan are to provide 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.</p>
<p style="text-indent: -30; margin-left: 30">(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Changes in contributed surplus were as follows:</p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="1%">&nbsp;</td>
    <td WIDTH="79%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1; padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1; padding-right: 20">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%">
    <p style="margin-left: 20">&nbsp;</td>
    <td WIDTH="79%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Balance, October 3,
    2004</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">681</font></td>
  </tr>
  <tr>
    <td WIDTH="1%">
    <p style="margin-left: 20">&nbsp;</td>
    <td WIDTH="79%"><font FACE="Times New Roman" SIZE="2">Stock-based
    compensation related to stock options and restricted share units</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">1,050</font></td>
  </tr>
  <tr>
    <td WIDTH="1%">
    <p style="margin-left: 20">&nbsp;</td>
    <td WIDTH="79%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">Ascribed value credited to share
    capital from exercise of stock options</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">(135)</font></td>
  </tr>
  <tr>
    <td WIDTH="1%">
    <p style="margin-left: 20">&nbsp;</td>
    <td WIDTH="79%" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">Balance, October 2, 2005</font></td>
    <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1; padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">1,596</font></td>
  </tr>
  <tr>
    <td WIDTH="1%">
    <p style="margin-left: 20">&nbsp;</td>
    <td WIDTH="79%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Stock-based
    compensation related to stock options and restricted share units</font></td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">908</font></td>
  </tr>
  <tr>
    <td WIDTH="1%">
    <p style="margin-left: 20">&nbsp;</td>
    <td WIDTH="79%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Ascribed value credited to share
    capital from exercise of stock options</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20">
    <font FACE="Times New Roman" SIZE="2">(139)</font></td>
  </tr>
  <tr>
    <td WIDTH="1%">
    <p style="margin-left: 20">&nbsp;</td>
    <td WIDTH="79%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">Balance, October 1, 2006</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1; padding-right: 20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2,365</font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
<p style="text-indent: -30; margin-left: 30" align="justify">(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cumulative translation adjustment:<br>
<br>
At the commencement of fiscal 2004, the Company adopted the US dollar as its
functional and reporting currency. The change in the functional currency for the
prior periods resulted in a currency translation adjustment of $26,248 which is
reflected in the cumulative translation adjustment.</p>
<b>
<p>10</b> <b>Stock-Based Compensation</p>
</b>
<p style="text-indent: -30; margin-left: 30" align="justify">(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Employee share purchase plans:<br>
<br>
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. Employees purchasing shares under the plans
must hold the shares for a minimum of one year. The Company has reserved
1,400,000 common shares for issuance under the plans. As at October 1, 2006, a
total of 61,077 (2005 &#150; 52,756) shares were issued under these plans.</p>
<p style="text-indent: -30; margin-left: 30" align="justify">(b)&nbsp;&nbsp;&nbsp;&nbsp;
Stock options and restricted share units:<br>
<br>
The Company's Long Term Incentive Plan (the &quot;LTIP&quot;) includes stock options and
restricted share units. The LTIP allows the Board of Directors to grant stock
options and dilutive restricted share units (&quot;Treasury RSUs&quot;) 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
3,000,158 the number of common shares that are issuable pursuant to the exercise
of stock options and the vesting of Treasury RSUs. As at October 1, 2006,
2,062,187 common shares remained authorized for future issuance under this plan.<br>
<br>
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 vest
equally over a two to four-year period from the date of grant, and expire no
more than ten years after the date of the grant.</p>
</font>
<font FACE="Times New Roman" SIZE="2">
</font>
<hr color="#000000" size="5"><p style="page-break-before: always">
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    </font>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    <p align="right"><font FACE="Akzidenz Grotesk BE" SIZE="2">Gildan 2006
    Annual Report &#149; <b>59</b></font></td>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    &nbsp;</td>
  </tr>
</table>

<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="3"><b>
    <td WIDTH="70%" style="padding-left: 20" colspan="5" bgcolor="#000000">
    <font FACE="Times New Roman" SIZE="2" color="#FFFFFF"><b>&nbsp;NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS</b></font></td>
    <td WIDTH="30%" align="right" colspan="4"><hr color="#000000" size="1"></td>
    </b></font>
  </tr>
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="3"><b>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" size="2"><i>Years ended October
    1, 2006, October 2, 2005 and October 3, 2004</i></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" colspan="2">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    </b></font>
  </tr>
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="3"><b>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" size="2"><i>(In thousands of US
    dollars)</i></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" colspan="2">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    </b></font>
  </tr>
</table>
<p>&nbsp;</p>
<p><font FACE="Times New Roman" size="2"><b>10 Stock-Based Compensation
(Continued)</b></font></p>
<p><font FACE="Times New Roman" size="2">Changes in outstanding stock options
were as follows:</font></p>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="30%">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" COLSPAN="3" align="right">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">Weighted average</font></td>
  </tr>
  <tr>
    <td WIDTH="30%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">Number</font></td>
    <td WIDTH="10%" COLSPAN="2" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">exercise price</font></td>
  </tr>
  <tr>
    <td WIDTH="30%">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" COLSPAN="2" align="right">
    <font FACE="Times New Roman" size="2"><i>
    <p style="margin-right: 4">(in Canadian dollars)</i></font></td>
  </tr>
  <tr>
    <td WIDTH="30%">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="30%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Options outstanding,
    October 3, 2004</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">1,142,646</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">12.88</font></td>
  </tr>
  <tr>
    <td WIDTH="30%"><font FACE="Times New Roman" SIZE="2">Exercised</font></td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right"><font FACE="Times New Roman" SIZE="2">
    (547,202)</font></td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">12.78</font></td>
  </tr>
  <tr>
    <td WIDTH="30%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">Forfeited</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">(26,666)</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">20.45</font></td>
  </tr>
  <tr>
    <td WIDTH="30%"><font FACE="Times New Roman" SIZE="2">Options outstanding,
    October 2, 2005</font></td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">568,778</font></td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">12.62</font></td>
  </tr>
  <tr>
    <td WIDTH="30%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">Exercised</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">(140,983)</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">12.38</font></td>
  </tr>
  <tr>
    <td WIDTH="30%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Options outstanding, October 1, 2006</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">427,795</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">12.70</font></td>
  </tr>
</table>
<p><font FACE="Times New Roman" SIZE="2">The following table summarizes
information about stock options outstanding and exercisable at October 1, 2006:</font></p>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0" height="267">
  <tr>
    <td WIDTH="30%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" height="21">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" height="21">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" height="21">&nbsp;</td>
    <td WIDTH="10%" COLSPAN="2" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" height="21">
    <font FACE="Times New Roman" SIZE="2">Options outstanding</font></td>
    <td WIDTH="10%" COLSPAN="3" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" height="21">
    <font FACE="Times New Roman" SIZE="2">Options exercisable</font></td>
  </tr>
  <tr>
    <td WIDTH="30%" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">
    <font FACE="Times New Roman" SIZE="2">Weighted</font></td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="30%" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" COLSPAN="2" align="right" height="19">
    <font FACE="Times New Roman" SIZE="2">Weighted</font></td>
    <td WIDTH="10%" align="right" height="19">
    <font FACE="Times New Roman" SIZE="2">average</font></td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" COLSPAN="2" align="right" height="19">
    <font FACE="Times New Roman" SIZE="2">Weighted</font></td>
  </tr>
  <tr>
    <td WIDTH="30%" height="19"><font FACE="Times New Roman" SIZE="2">Range of</font></td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">
    <font FACE="Times New Roman" SIZE="2">average</font></td>
    <td WIDTH="10%" align="right" height="19">
    <font FACE="Times New Roman" SIZE="2">remaining</font></td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">
    <font FACE="Times New Roman" SIZE="2">average</font></td>
  </tr>
  <tr>
    <td WIDTH="30%" height="19"><font FACE="Times New Roman" SIZE="2">exercise</font></td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">
    <font FACE="Times New Roman" SIZE="2">exercise</font></td>
    <td WIDTH="10%" align="right" height="19">
    <font FACE="Times New Roman" SIZE="2">contractual</font></td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">
    <font FACE="Times New Roman" SIZE="2">exercise</font></td>
  </tr>
  <tr>
    <td WIDTH="30%" style="border-bottom-style: solid; border-bottom-width: 1" height="19">
    <font FACE="Times New Roman" SIZE="2">prices</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="19">
    <font FACE="Times New Roman" SIZE="2">Number</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="19">
    <font FACE="Times New Roman" SIZE="2">price</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="19">
    <font FACE="Times New Roman" SIZE="2">life (yrs)</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="19">
    <font FACE="Times New Roman" SIZE="2">Number</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="19">
    <font FACE="Times New Roman" SIZE="2">price</font></td>
  </tr>
  <tr>
    <td WIDTH="30%" style="border-bottom-style: solid; border-bottom-width: 1" height="20">
    <font FACE="Times New Roman" size="2"><i>(in Canadian dollars)</i></font></td>
    <td WIDTH="10%" COLSPAN="3" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">
    <font FACE="Times New Roman" size="2"><i>(in Canadian dollars)</i></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">&nbsp;</td>
    <td WIDTH="10%" COLSPAN="2" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">
    <font FACE="Times New Roman" size="2"><i>(in Canadian dollars)</i></font></td>
  </tr>
  <tr>
    <td WIDTH="30%" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="30%" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="30%" height="15" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">$ 2.57 &#150;
    4.88</font></td>
    <td WIDTH="10%" align="right" height="15" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">49,056</font></td>
    <td WIDTH="10%" align="right" height="15" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="10%" align="right" height="15" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">3.78</font></td>
    <td WIDTH="10%" align="right" height="15" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">2.17</font></td>
    <td WIDTH="10%" align="right" height="15" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">49,056</font></td>
    <td WIDTH="10%" align="right" height="15" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="10%" align="right" height="15" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">3.78</font></td>
  </tr>
  <tr>
    <td WIDTH="30%" height="19"><font FACE="Times New Roman" SIZE="2">$ 9.85 &#150;
    10.79</font></td>
    <td WIDTH="10%" align="right" height="19">
    <font FACE="Times New Roman" SIZE="2">50,830</font></td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">
    <font FACE="Times New Roman" SIZE="2">10.46</font></td>
    <td WIDTH="10%" align="right" height="19">
    <font FACE="Times New Roman" SIZE="2">5.12</font></td>
    <td WIDTH="10%" align="right" height="19">
    <font FACE="Times New Roman" SIZE="2">50,830</font></td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">
    <font FACE="Times New Roman" SIZE="2">10.46</font></td>
  </tr>
  <tr>
    <td WIDTH="30%" height="19" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">$ 12.13 &#150;
    13.75</font></td>
    <td WIDTH="10%" align="right" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">208,856</font></td>
    <td WIDTH="10%" align="right" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">12.68</font></td>
    <td WIDTH="10%" align="right" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">4.07</font></td>
    <td WIDTH="10%" align="right" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">208,856</font></td>
    <td WIDTH="10%" align="right" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">12.68</font></td>
  </tr>
  <tr>
    <td WIDTH="30%" style="border-bottom-style: solid; border-bottom-width: 1" height="20">
    <font FACE="Times New Roman" SIZE="2">$ 17.00 &#150; 20.45</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">
    <font FACE="Times New Roman" SIZE="2">119,053</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">
    <font FACE="Times New Roman" SIZE="2">17.35</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">
    <font FACE="Times New Roman" SIZE="2">4.54</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">
    <font FACE="Times New Roman" SIZE="2">109,500</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">
    <font FACE="Times New Roman" SIZE="2">17.29</font></td>
  </tr>
  <tr>
    <td WIDTH="30%" style="border-bottom-style: solid; border-bottom-width: 1" height="20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">427,795</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">12.70</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">418,242</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">12.58</font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
<p ALIGN="JUSTIFY">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 Treasury RSUs are
subject to vesting conditions, with 50% of each award vesting at the end of
their vesting period on the basis of time and the remaining 50% of each award
vesting based on the achievement of specified Company performance objectives.
Compensation expense relating to the Treasury RSUs is recognized in the
financial statements over the vesting period based on the fair value of the
Treasury RSUs on the date of the grant and estimates relating to forfeitures and
the probability of performance objectives being met. The fair value of the
Treasury RSUs granted is equal to the market price of the common shares of the
Company at the time of grant.</p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="70%"><font FACE="Times New Roman" SIZE="2">Changes in outstanding
    Treasury RSUs were as follows:</font></td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" COLSPAN="2" align="right">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">Weighted average</font></td>
  </tr>
  <tr>
    <td WIDTH="70%">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">fair value</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">Number</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">per unit</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" COLSPAN="2" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" size="2"><i>
    <p style="margin-right: 4">(in Canadian dollars)</i></font></td>
  </tr>
  <tr>
    <td WIDTH="70%">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="70%">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="70%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">RSUs outstanding,
    October 3, 2004</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">224,000</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">19.65</font></td>
  </tr>
  <tr>
    <td WIDTH="70%"><font FACE="Times New Roman" SIZE="2">Granted</font></td>
    <td WIDTH="10%" align="right"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">162,000</font></td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">27.83</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">Forfeited</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">(30,000)</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">18.33</font></td>
  </tr>
  <tr>
    <td WIDTH="70%"><font FACE="Times New Roman" SIZE="2">RSUs outstanding,
    October 2, 2005</font></td>
    <td WIDTH="10%" align="right"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">356,000</font></td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">23.48</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Granted</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">120,500</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">45.72</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Forfeited</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">(60,000)</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">25.55</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">RSUs outstanding, October 1, 2006</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">416,500</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">29.62</font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
</font>
<hr color="#000000" size="5"><p style="page-break-before: always">
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    </font>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    <font FACE="Akzidenz Grotesk BE" SIZE="2">
    <p align="left"><font FACE="Times New Roman" SIZE="2"><b>&nbsp;60</b> &#149;
    Gildan 2006 Annual Report </font></font></td>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    &nbsp;</td>
  </tr>
</table>

<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="3"><b>
    <td WIDTH="70%" style="padding-left: 20" colspan="5" bgcolor="#000000">
    <font FACE="Times New Roman" SIZE="2" color="#FFFFFF"><b>&nbsp;NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS</b></font></td>
    <td WIDTH="30%" align="right" colspan="4"><hr color="#000000" size="1"></td>
    </b></font>
  </tr>
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="3"><b>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" size="2"><i>Years ended October
    1, 2006, October 2, 2005 and October 3, 2004</i></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" colspan="2">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    </b></font>
  </tr>
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="3"><b>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" size="2"><i>(In thousands of US
    dollars)</i></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" colspan="2">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    </b></font>
  </tr>
</table>
<p>&nbsp;</p>
<font FACE="Times New Roman" size="2"><b>
<p>10</b> <b>Stock-Based Compensation (Continued)</p>
</b>
<p ALIGN="JUSTIFY">As of October 1, 2006, none of the awarded and outstanding
Treasury RSUs were vested. The compensation expense recorded for fiscal 2006, in
respect of the LTIP, was $908 (2005 &#150; $919). The counterpart has been recorded
as contributed surplus. When the shares are issued to the employees, the amounts
previously credited to contributed surplus are credited to share capital.</p>
<b>
<p>11</b> <b>Deferred Share Unit Plan</p>
</b>
<p ALIGN="JUSTIFY">The Company has a deferred share unit plan for independent
members of the Company's Board of Directors who must receive 50% of their annual
retainers in the form of deferred share units (&quot;DSUs&quot;). The value of these DSUs
is the market price of the Company's common shares at the time of payment of the
retainers or fees. DSUs granted under the plan will be redeemable and the value
thereof payable in cash only after the director ceases to act as a director of
the Company. As at October 1, 2006, there were 1,991 (2005 &#150; 2,666) DSUs
outstanding at a value of $96 (2005 &#150; $102). This amount is included in
&quot;Accounts payable and accrued liabilities&quot;. The DSU obligation will continue to
be adjusted each quarter based on the market value of the Company's common
shares. The Company includes the cost of the DSU plan in &quot;Selling, general and
administrative expenses&quot;.</p>
<p>Changes in outstanding DSUs were as follows:</p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="805" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="230" align="right" style="border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="805" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">DSUs outstanding,
    October 3, 2004</font></td>
    <td WIDTH="230" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="805" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Granted</font></td>
    <td WIDTH="230" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2,666</font></td>
  </tr>
  <tr>
    <td WIDTH="805" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">DSUs outstanding, October 2, 2005</font></td>
    <td WIDTH="230" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2,666</font></td>
  </tr>
  <tr>
    <td WIDTH="805"><font FACE="Times New Roman" SIZE="2">Granted</font></td>
    <td WIDTH="230" align="right"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">1,497</font></td>
  </tr>
  <tr>
    <td WIDTH="805" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">Settled</font></td>
    <td WIDTH="230" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">(2,172)</font></td>
  </tr>
  <tr>
    <td WIDTH="805" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">DSUs outstanding, October 1, 2006</font></td>
    <td WIDTH="230" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">1,991</font></td>
  </tr>
</table>
<p><font FACE="Times New Roman" size="2"><b>12 Commitments and Contingent
Liabilities</b></font></p>
<p><font FACE="Times New Roman" SIZE="2">(a)&nbsp;&nbsp;&nbsp;&nbsp; The minimum
annual lease payments under operating leases for premises, equipment and
aircraft are approximately as follows:</font></p>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="75%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Fiscal year</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="75%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="75%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">2007</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">9,980</font></td>
  </tr>
  <tr>
    <td WIDTH="75%"><font FACE="Times New Roman" SIZE="2">2008</font></td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="15%" align="right"><font FACE="Times New Roman" SIZE="2">5,175</font></td>
  </tr>
  <tr>
    <td WIDTH="75%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">2009</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">4,180</font></td>
  </tr>
  <tr>
    <td WIDTH="75%"><font FACE="Times New Roman" SIZE="2">2010</font></td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="15%" align="right"><font FACE="Times New Roman" SIZE="2">3,439</font></td>
  </tr>
  <tr>
    <td WIDTH="75%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">2011</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">2,959</font></td>
  </tr>
  <tr>
    <td WIDTH="75%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Thereafter</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">8,996</font></td>
  </tr>
  <tr>
    <td WIDTH="75%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">34,729</font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
<p style="text-indent: -30; margin-left: 30" align="justify">(b)&nbsp;&nbsp;&nbsp;&nbsp;
As at October 1, 2006, there were contractual obligations outstanding of
approximately $46,882 for the acquisition of fixed assets (2005 &#150; $16,971).</p>
<p style="text-indent: -30; margin-left: 30" align="justify">(c)&nbsp;&nbsp;&nbsp;&nbsp;
The Company is a party to 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.</p>
<p ALIGN="JUSTIFY" style="text-indent: -30; margin-left: 30">(d)&nbsp;&nbsp;&nbsp;&nbsp;
In November 2002, one of the Company's Mexican subsidiaries (&quot;Gildan Mexico&quot;)
received a tax assessment from a regional taxation office relating to duties for
the 2000 fiscal year for approximately $6,000. The substance of the assessment
was that the Mexican tax authorities adopted the position that Canadian-made
textiles shipped to Gildan Mexico for sewing processing had not subsequently
been exported from Mexico. Gildan Mexico appealed the assessment and was
successful in obtaining a judgement in its favour. Notwithstanding the judgement,
the regional Mexican taxation office issued a new assessment in March 2005, and
increased the assessed amount to approximately $7,100, primarily comprising
interest and late payment penalties. Shortly after receiving the second
assessment, Gildan Mexico again filed an appeal. In July 2006, Gildan Mexico
received notification that its appeal of the second assessment for fiscal 2000
was unsuccessful. The Company has received legal opinions that the tax
assessment is without merit under Mexican law governing re-export from
maquiladora operations.</p>
</font>
<font FACE="Times New Roman" SIZE="2">
</font>
<hr color="#000000" size="5"><p style="page-break-before: always">
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    </font>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    <p align="right"><font FACE="Akzidenz Grotesk BE" SIZE="2">Gildan 2006
    Annual Report &#149; <b>61</b></font></td>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    &nbsp;</td>
  </tr>
</table>

<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="3"><b>
    <td WIDTH="70%" style="padding-left: 20" colspan="5" bgcolor="#000000">
    <font FACE="Times New Roman" SIZE="2" color="#FFFFFF"><b>&nbsp;NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS</b></font></td>
    <td WIDTH="30%" align="right" colspan="4"><hr color="#000000" size="1"></td>
    </b></font>
  </tr>
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="3"><b>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" size="2"><i>Years ended October
    1, 2006, October 2, 2005 and October 3, 2004</i></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" colspan="2">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    </b></font>
  </tr>
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="3"><b>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" size="2"><i>(In thousands of US
    dollars)</i></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" colspan="2">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    </b></font>
  </tr>
</table>
<p>&nbsp;</p>
<font FACE="Times New Roman" size="2"><b>
<p>12</b> <b>Commitments and Contingent Liabilities (Continued)</p>
</b>
<p ALIGN="JUSTIFY">Additionally, Gildan Mexico, a maquiladora operation, has
provided documentation to establish that the textiles imported into Mexico for
sewing were subsequently exported to the United States and Canada. The Company
is pursuing all available avenues to resolve this matter in its favour. At the
present time, the Mexican authorities are not attempting to enforce payment of
this tax assessment. The Company expects to be successful in its efforts to
clarify and resolve this matter and, accordingly, no provision has been made in
the accounts for this potential liability.</p>
<p ALIGN="JUSTIFY"><b>13</b> <b>Guarantees</p>
</b>
<p align="justify">As at October 1, 2006, significant guarantees that have been
provided to third parties are the following:</p>
<p ALIGN="JUSTIFY">The Company, and some of its subsidiaries, have granted
irrevocable standby letters of credit and surety bonds, issued by highly rated
financial institutions, to third parties to indemnify them in the event the
Company does not perform its contractual obligations. As at October 1, 2006, the
maximum potential liability under these guarantees was $43,100, of which $5,700
was for surety bonds and $37,400 was for corporate guarantees and standby
letters of credit. The standby letters of credit mature at various dates during
fiscal 2007, the surety bonds are automatically renewed on an annual basis and
the corporate guarantees mature at various dates up to fiscal 2010.</p>
<p ALIGN="JUSTIFY">As at October 1, 2006, the Company has recorded no liability
with respect to these guarantees, as the Company does not expect to make any
payments for the aforementioned items. Management believes that the fair value
of the non-contingent obligations requiring performance under the guarantees in
the event that specified triggering events or conditions occur approximates the
cost of obtaining the standby letters of credit and surety bonds.</p>
<p ALIGN="JUSTIFY"><b>14</b> <b>Income Taxes</p>
</b>
<p align="justify">The income tax provision differs from the amount computed by
applying the combined Canadian federal and provincial tax rates to earnings
before income taxes. The reasons for the difference and the related tax effects
are as follows:</p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0" height="56">
  <tr>
    <td WIDTH="40%" height="19" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">2006</b></font></td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2005</font></td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2004</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" height="19">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" height="15" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Combined
    basic Canadian federal and provincial income taxes</font></td>
    <td WIDTH="10%" height="15" align="right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">$</b></font></td>
    <td WIDTH="10%" height="15" align="right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">35,459</b></font></td>
    <td WIDTH="10%" height="15" align="right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="10%" height="15" align="right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">27,075</font></td>
    <td WIDTH="10%" height="15" align="right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="10%" height="15" align="right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">20,012</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" height="19"><font FACE="Times New Roman" SIZE="2">Increase
    (decrease) in income taxes resulting from:</font></td>
    <td WIDTH="10%" height="19" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" height="19" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Effect of different tax rates on earnings of
    foreign subsidiaries</font></td>
    <td WIDTH="10%" height="19" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>(33,664)</b></font></td>
    <td WIDTH="10%" height="19" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">(29,016)</font></td>
    <td WIDTH="10%" height="19" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">(19,935)</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" height="19" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 20">Effect of non-deductible expenses and other</font></td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">2,987</b></font></td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">3,293</font></td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">3,001</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" height="19" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">$</b></font></td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">4,782</b></font></td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">1,352</font></td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">3,078</font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
<p ALIGN="JUSTIFY">For fiscal 2005, the effect of different tax rates on
earnings of foreign subsidiaries was greater than the amount computed by
applying the combined Canadian tax rates to consolidated earnings before income
taxes. This occurred due to a combination of losses incurred in the Canadian
parent company that generated a recovery of income taxes at statutory Canadian
rates, and earnings in the Company's subsidiaries that generated income tax
expense at relatively low tax rates.</p>
<p ALIGN="JUSTIFY">The components of income tax expense are as follows:</p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0" height="56">
  <tr>
    <td WIDTH="40%" height="19" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">2006</b></font></td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2005</font></td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2004</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" height="19">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" height="15" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Current
    income taxes</font></td>
    <td WIDTH="10%" height="15" align="right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">$</b></font></td>
    <td WIDTH="10%" height="15" align="right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">3,018</b></font></td>
    <td WIDTH="10%" height="15" align="right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="10%" height="15" align="right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">1,176</font></td>
    <td WIDTH="10%" height="15" align="right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="10%" height="15" align="right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">131</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" height="19" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Future income taxes</font></td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">1,764</b></font></td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">176</font></td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2,947</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" height="1" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    </td>
    <td WIDTH="10%" height="1" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">$</b></font></td>
    <td WIDTH="10%" height="1" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">4,782</b></font></td>
    <td WIDTH="10%" height="1" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="10%" height="1" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">1,352</font></td>
    <td WIDTH="10%" height="1" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="10%" height="1" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">3,078</font></td>
  </tr>
</table>
<font SIZE="2" face="Times New Roman">
<p ALIGN="JUSTIFY">The Company has not recognized a future income tax liability
for the undistributed earnings of its subsidiaries in the current or prior years
because the Company currently does not expect to sell those investments, and for
those undistributed earnings that would become taxable, there is no intention to
repatriate the earnings.</p>
</font>
<font FACE="Times New Roman" SIZE="2">
</font>
<hr color="#000000" size="5"><p style="page-break-before: always">
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    </font>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    <font FACE="Akzidenz Grotesk BE" SIZE="2">
    <p align="left"><font FACE="Times New Roman" SIZE="2"><b>&nbsp;62</b> &#149;
    Gildan 2006 Annual Report </font></font></td>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    &nbsp;</td>
  </tr>
</table>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="3"><b>
    <td WIDTH="70%" style="padding-left: 20" colspan="5" bgcolor="#000000">
    <font FACE="Times New Roman" SIZE="2" color="#FFFFFF"><b>&nbsp;NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS</b></font></td>
    <td WIDTH="30%" align="right" colspan="4"><hr color="#000000" size="1"></td>
    </b></font>
  </tr>
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="3"><b>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" size="2"><i>Years ended October
    1, 2006, October 2, 2005 and October 3, 2004</i></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" colspan="2">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    </b></font>
  </tr>
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="3"><b>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" size="2"><i>(In thousands of US
    dollars)</i></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" colspan="2">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    </b></font>
  </tr>
</table>
<p>&nbsp;</p>
<font FACE="Times New Roman" size="2"><b>
<p>14</b> <b>Income Taxes (Continued)</p>
</b>
<p ALIGN="JUSTIFY">Future income taxes reflect the net effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. In assessing
the realizability of future tax assets, management considers whether it is more
likely than not that some portion or all of the future income tax assets will be
realized.</p>
<p>Significant components of the Company's future tax position are as follows:</p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="60%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">2006</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2005</font></td>
  </tr>
  <tr>
    <td WIDTH="60%">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="60%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Future income tax
    assets (liabilities):</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="60%"><font FACE="Times New Roman" SIZE="2">Non-capital losses and
    research and development expenses</font></td>
    <td WIDTH="10%" align="right"><font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">$</b></font></td>
    <td WIDTH="10%" align="right"><font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">5,495</b></font></td>
    <td WIDTH="10%" align="right"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="10%" align="right"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">6,735</font></td>
  </tr>
  <tr>
    <td WIDTH="60%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Reserves and accruals</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">5,561</b></font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2,200</font></td>
  </tr>
  <tr>
    <td WIDTH="60%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Other</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">949</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">1,200</font></td>
  </tr>
  <tr>
    <td WIDTH="60%" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">12,005</b></font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">10,135</font></td>
  </tr>
  <tr>
    <td WIDTH="60%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Less valuation allowance</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>(4,624)</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="60%" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">7,381</b></font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">10,135</font></td>
  </tr>
  <tr>
    <td WIDTH="60%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Fixed assets and other</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>(31,526)</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">(31,386)</font></td>
  </tr>
  <tr>
    <td WIDTH="60%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">Net future income tax liability</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">$</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>(24,145)</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">(21,251)</font></td>
  </tr>
  <tr>
    <td WIDTH="60%"><font FACE="Times New Roman" SIZE="2">Presented as:</font></td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="60%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Current assets</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">$</b></font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">5,298</b></font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">10,135</font></td>
  </tr>
  <tr>
    <td WIDTH="60%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Long-term liabilities</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>(29,443)</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">(31,386)</font></td>
  </tr>
  <tr>
    <td WIDTH="60%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">$</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>(24,145)</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">(21,251)</font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
<p ALIGN="JUSTIFY">The Company has unused tax losses expiring in 2026 and
deductible temporary differences in the amount of $16,661 arising from the
acquisition of Kentucky Derby. The Company recorded a valuation allowance due to
the uncertainty of realizing the benefits of these items.</p>
<b>
<p>15</b> <b>Earnings Per Share</p>
</b>
<p align="justify">A reconciliation between basic and diluted earnings per share
is as follows:</p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="57%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="3%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">2006</b></font></td>
    <td WIDTH="5%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2005</font></td>
    <td WIDTH="5%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2004</font></td>
  </tr>
  <tr>
    <td WIDTH="57%">&nbsp;</td>
    <td WIDTH="3%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="5%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="5%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="57%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Basic earnings per
    share:</font></td>
    <td WIDTH="3%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="5%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="5%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="57%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Basic weighted average number of
    common shares outstanding</font></td>
    <td WIDTH="3%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">60,051,683</b></font></td>
    <td WIDTH="5%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">59,690,966</font></td>
    <td WIDTH="5%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">59,181,610</font></td>
  </tr>
  <tr>
    <td WIDTH="57%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">Basic earnings per share</font></td>
    <td WIDTH="3%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">$</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">1.78</b></font></td>
    <td WIDTH="5%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">1.44</font></td>
    <td WIDTH="5%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">1.02</font></td>
  </tr>
  <tr>
    <td WIDTH="57%"><font FACE="Times New Roman" SIZE="2">Diluted earnings per
    share:</font></td>
    <td WIDTH="3%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="5%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="5%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="57%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Basic weighted average
    number of common shares outstanding</font></td>
    <td WIDTH="3%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">60,051,683</b></font></td>
    <td WIDTH="5%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">59,690,966</font></td>
    <td WIDTH="5%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">59,181,610</font></td>
  </tr>
  <tr>
    <td WIDTH="57%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Plus impact of stock options and
    Treasury RSUs</font></td>
    <td WIDTH="3%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">574,201</b></font></td>
    <td WIDTH="5%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">443,910</font></td>
    <td WIDTH="5%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">489,568</font></td>
  </tr>
  <tr>
    <td WIDTH="57%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">Diluted weighted average number of
    common shares outstanding</font></td>
    <td WIDTH="3%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">60,625,884</b></font></td>
    <td WIDTH="5%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">60,134,876</font></td>
    <td WIDTH="5%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">59,671,178</font></td>
  </tr>
  <tr>
    <td WIDTH="57%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Diluted earnings per share</font></td>
    <td WIDTH="3%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">$</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-right: 4">1.76</b></font></td>
    <td WIDTH="5%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">1.43</font></td>
    <td WIDTH="5%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">1.01</font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
<p align="justify">All stock options and Treasury RSUs outstanding for fiscal
2006 and fiscal 2005 were dilutive.</p>
<p align="justify">Excluded from the above calculation for fiscal 2004 are
64,000 stock options ranging in price from CA$18.25 to CA$20.44 which were
deemed to be anti-dilutive because the exercise prices were greater than the
average market price of the common shares. </p>
</font>
<font FACE="Times New Roman" SIZE="2">
</font>
<hr color="#000000" size="5"><p style="page-break-before: always">
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    </font>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    <p align="right"><font FACE="Times New Roman" SIZE="2"><b>&nbsp;</b></font><font FACE="Akzidenz Grotesk BE" SIZE="2">Gildan
    2006 Annual Report &#149; <b>63</b></font></td>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    &nbsp;</td>
  </tr>
</table>

<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="3"><b>
    <td WIDTH="70%" style="padding-left: 20" colspan="5" bgcolor="#000000">
    <font FACE="Times New Roman" SIZE="2" color="#FFFFFF"><b>&nbsp;NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS</b></font></td>
    <td WIDTH="30%" align="right" colspan="4"><hr color="#000000" size="1"></td>
    </b></font>
  </tr>
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="3"><b>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" size="2"><i>Years ended October
    1, 2006, October 2, 2005 and October 3, 2004</i></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" colspan="2">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    </b></font>
  </tr>
  <tr>
    <font FACE="Akzidenz Grotesk BE" SIZE="3"><b>
    <td WIDTH="1%" style="padding-left: 20">&nbsp;</td>
    <td WIDTH="46%"><font FACE="Times New Roman" size="2"><i>(In thousands of US
    dollars)</i></font></td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20" colspan="2">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    <td WIDTH="9%" align="right" style="padding-left: 20; padding-right: 20">&nbsp;</td>
    </b></font>
  </tr>
</table>
<p align="justify">&nbsp;</p>
<p align="justify"><font FACE="Times New Roman" size="2"><b>16 Restructuring and
Other Charges</b></font></p>
<p align="justify"><font FACE="Times New Roman" SIZE="2">The following table
summarizes the components of restructuring and other charges:</font></p>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="55%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="5%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>2006</b></font></td>
    <td WIDTH="5%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">2005</font></td>
    <td WIDTH="5%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">2004</font></td>
  </tr>
  <tr>
    <td WIDTH="55%">&nbsp;</td>
    <td WIDTH="5%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="5%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="5%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="55%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Canadian textile
    manufacturing restructuring (a)</font></td>
    <td WIDTH="5%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2"><b>$</b></font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2"><b>
    18,930</b></font></td>
    <td WIDTH="5%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">&#150;</font></td>
    <td WIDTH="5%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="55%"><font FACE="Times New Roman" SIZE="2">Restructuring of
    yarn-spinning facilities (b)</font></td>
    <td WIDTH="5%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right"><font FACE="Times New Roman" SIZE="2"><b>&#150;</b></font></td>
    <td WIDTH="5%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right"><font FACE="Times New Roman" SIZE="2">10,726</font></td>
    <td WIDTH="5%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right"><font FACE="Times New Roman" SIZE="2">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="55%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">Charge to comply with employment
    contract (c)</font></td>
    <td WIDTH="5%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>1,456</b></font></td>
    <td WIDTH="5%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">1,050</font></td>
    <td WIDTH="5%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">4,614</font></td>
  </tr>
  <tr>
    <td WIDTH="55%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="5%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>$</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>20,386</b></font></td>
    <td WIDTH="5%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">11,776</font></td>
    <td WIDTH="5%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">4,614</font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
<p ALIGN="JUSTIFY" style="text-indent: -26; margin-left: 26">(a)&nbsp;&nbsp; In
September 2006, the Company announced a restructuring of its Canadian
manufacturing operations to take effect in December 2006, involving the closure
of its textile manufacturing facility in Valleyfield, Quebec and the downsizing
of its Montreal, Quebec knitting facility. The Company has recorded a charge of
$18,930 relating to this restructuring and the concurrent re-assessment of the
recoverability of the carrying values of its remaining Canadian textile
manufacturing and related assets. Under the Company's business model, there are
essentially no tax recoveries with respect to this charge. The components of
this charge include employee severance of $2,141 with respect to the Valleyfield
and Montreal textiles facilities, an asset impairment loss of $15,149 relating
to all of the Canadian textile and related manufacturing fixed assets, and other
costs of $1,640. The Company was required to recognize asset impairment charges
to reduce the carrying value of the fixed assets to fair value because the
carrying value of the assets exceeded the future cash flows which they were
projected to generate during the balance of their estimated economic lives. As
at October 1, 2006, all amounts accrued for severance and other costs remained
unpaid and are included in &quot;Accounts payable and accrued liabilities&quot;.</p>
<p ALIGN="JUSTIFY" style="text-indent: -26; margin-left: 26">(b)&nbsp;&nbsp;
During fiscal 2005, the Company closed its two Canadian yarn-spinning
facilities, and relocated a major portion of its yarn-spinning equipment to a
North Carolina spinning facility operated by CanAm. The Company recorded a
charge of $10,726 before tax ($7,008 after tax) during fiscal 2005 for the costs
associated with this closure. The components of the charge included a writedown
to fair value of the fixed assets not transferred to CanAm of $6,783, employee
severance of $3,688, and other costs of $255. The fixed assets not transferred
to CanAm were classified as held for sale at their estimated fair values.<br>
<br>
Proceeds from assets held for sale of $4,087 and $5,027 were received,
respectively in fiscal 2005 and in fiscal 2006. Severance costs were paid in
full in fiscal 2005.</p>
<p ALIGN="JUSTIFY" style="text-indent: -26; margin-left: 26">(c)&nbsp;&nbsp;&nbsp;
During fiscal 2004, the Company expensed $4,614 ($3,184 after tax) representing
management's best estimate of the cost of financial obligations pursuant to an
employment contract with the former Chairman and Co-Chief Executive Officer of
the Company. The employment contract includes variable components related to the
Company's financial and operating performance to fiscal 2009. Most of the
payments under this contract are payable in Canadian dollars. Movements in the
accrual were as follows:</p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" height="199" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
  <tr>
    <td WIDTH="1%" height="15" style="border-style: none; border-width: medium">
    <p style="margin-left: 52"></td>
    <td WIDTH="66%" height="15" style="border-left-style: none; border-left-width: medium; border-bottom-style: solid; border-bottom-width: 1">
    </td>
    <td WIDTH="10%" height="15" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    </td>
    <td WIDTH="10%" height="15" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    </td>
  </tr>
  <tr>
    <td WIDTH="1%" height="15" style="border-style: none; border-width: medium">
    <p style="margin-left: 52"></td>
    <td WIDTH="66%" height="15" style="border-left-style: none; border-left-width: medium" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">Balance, October 3, 2004</font></td>
    <td WIDTH="10%" height="15" align="right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="10%" height="15" align="right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2,225</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" height="19" style="border-style: none; border-width: medium">
    <p style="margin-left: 52">&nbsp;</td>
    <td WIDTH="66%" height="19" style="border-left-style: none; border-left-width: medium">
    <font FACE="Times New Roman" SIZE="2">Adjustments related to variable
    components of contractual obligations</font></td>
    <td WIDTH="10%" height="19" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">1,050</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" height="19" style="border-style: none; border-width: medium">
    <p style="margin-left: 52">&nbsp;</td>
    <td WIDTH="66%" height="19" style="border-left-style: none; border-left-width: medium" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">Foreign exchange adjustment</font></td>
    <td WIDTH="10%" height="19" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">153</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" height="19" style="border-style: none; border-width: medium">
    <p style="margin-left: 52">&nbsp;</td>
    <td WIDTH="66%" height="19" style="border-left-style: none; border-left-width: medium">
    <font FACE="Times New Roman" SIZE="2">Payments</font></td>
    <td WIDTH="10%" height="19" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right">
    <font FACE="Times New Roman" SIZE="2">(646)</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" height="19" style="border-style: none; border-width: medium">
    <p style="margin-left: 52">&nbsp;</td>
    <td WIDTH="66%" height="19" style="border-left-style: none; border-left-width: medium; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">Balance, October 2, 2005</font></td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2,782</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" height="19" style="border-style: none; border-width: medium">
    <p style="margin-left: 52">&nbsp;</td>
    <td WIDTH="66%" height="19" style="border-left-style: none; border-left-width: medium">
    <font FACE="Times New Roman" SIZE="2">Adjustments related to variable
    components of contractual obligations</font></td>
    <td WIDTH="10%" height="19" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">1,456</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" height="19" style="border-style: none; border-width: medium">
    <p style="margin-left: 52">&nbsp;</td>
    <td WIDTH="66%" height="19" style="border-left-style: none; border-left-width: medium" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">Foreign exchange adjustment</font></td>
    <td WIDTH="10%" height="19" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">114</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" height="19" style="border-style: none; border-width: medium">
    <p style="margin-left: 52">&nbsp;</td>
    <td WIDTH="66%" height="19" style="border-left-style: none; border-left-width: medium; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Payments</font></td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" height="19" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">(1,064)</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" height="15" style="border-style: none; border-width: medium">
    <p style="margin-left: 52"></td>
    <td WIDTH="66%" height="15" style="border-left-style: none; border-left-width: medium; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">Balance, October 1, 2006</font></td>
    <td WIDTH="10%" height="15" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="10%" height="15" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">3,288</font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
</font>
<hr color="#000000" size="5"><p style="page-break-before: always">
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    </font>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    <font FACE="Akzidenz Grotesk BE" SIZE="2">
    <p align="left"><font FACE="Times New Roman" SIZE="2"><b>64</b> &#149; Gildan
    2006 Annual Report </font></font></td>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    &nbsp;</td>
  </tr>
</table>

<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <font face="Akzidenz Grotesk BE" size="3"><b>
    <td style="PADDING-LEFT: 20px" width="70%" bgColor="#000000" colSpan="5">
    <font face="Times New Roman" color="#ffffff" size="2"><b>&nbsp;NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS</b></font></td>
    <td align="right" width="30%" colSpan="4"><hr color="#000000" SIZE="1"></td>
    </b></font>
  </tr>
  <tr>
    <b><font face="Times New Roman" size="2">
    <td style="PADDING-LEFT: 20px" width="1%">&nbsp;</td>
    </font><font face="Akzidenz Grotesk BE" size="3">
    <td width="46%"><font face="Times New Roman" size="2"><i>Years ended October
    1, 2006, October 2, 2005 and October 3, 2004</i></font></td>
    </font><font face="Times New Roman" size="2">
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%">
    &nbsp;</td>
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%">
    &nbsp;</td>
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%" colSpan="2">
    &nbsp;</td>
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%">
    &nbsp;</td>
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%">
    &nbsp;</td>
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%">
    &nbsp;</td>
    </font></b>
  </tr>
  <tr>
    <b><font face="Times New Roman" size="2">
    <td style="PADDING-LEFT: 20px" width="1%">&nbsp;</td>
    </font><font face="Akzidenz Grotesk BE" size="3">
    <td width="46%"><font face="Times New Roman" size="2"><i>(In thousands of US
    dollars)</i></font></td>
    </font><font face="Times New Roman" size="2">
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%">
    &nbsp;</td>
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%">
    &nbsp;</td>
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%" colSpan="2">
    &nbsp;</td>
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%">
    &nbsp;</td>
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%">
    &nbsp;</td>
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%">
    &nbsp;</td>
    </font></b>
  </tr>
</table>
<font face="Times New Roman" size="2"><b>
<p>17</b> <b>Other information</p>
</b>
<p>(a)&nbsp;&nbsp; The following items were included in the determination of the Company's
net earnings:</p>
</font>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td style="BORDER-BOTTOM: 1px solid" width="44%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%">
    <font size="2" face="Times New Roman"><b>2006</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%">
    <font size="2" face="Times New Roman">2005</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="10%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="10%">
    <font size="2" face="Times New Roman">2004</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid" width="44%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="10%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="10%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
  </tr>
  <tr>
    <td width="44%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">Depreciation expense
    of fixed assets</font></td>
    <td align="right" width="9%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman"><b>$</b></font></td>
    <td align="right" width="9%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman"><b>31,006</b></font></td>
    <td align="right" width="9%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">$</font></td>
    <td align="right" width="9%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">24,677</font></td>
    <td align="right" width="10%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">$</font></td>
    <td align="right" width="10%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">21,511</font></td>
  </tr>
  <tr>
    <td width="44%"><font size="2" face="Times New Roman">Interest expense on
    long-term debt</font></td>
    <td align="right" width="9%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="9%"><font size="2" face="Times New Roman"><b>4,253</b></font></td>
    <td align="right" width="9%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="9%"><font size="2" face="Times New Roman">4,805</font></td>
    <td align="right" width="10%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="10%"><font size="2" face="Times New Roman">6,226</font></td>
  </tr>
  <tr>
    <td width="44%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">Interest expense on
    short-term indebtedness</font></td>
    <td align="right" width="9%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="9%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman"><b>280</b></font></td>
    <td align="right" width="9%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="9%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">56</font></td>
    <td align="right" width="10%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="10%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&#150;</font></td>
  </tr>
  <tr>
    <td width="44%"><font size="2" face="Times New Roman">Foreign exchange gain
    (loss)</font></td>
    <td align="right" width="9%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="9%"><font size="2" face="Times New Roman"><b>1,578</b></font></td>
    <td align="right" width="9%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="9%"><font size="2" face="Times New Roman">(1,113)</font></td>
    <td align="right" width="10%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="10%"><font size="2" face="Times New Roman">47</font></td>
  </tr>
  <tr>
    <td width="44%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">Defined contribution
    plan expense</font></td>
    <td align="right" width="9%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="9%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman"><b>1,035</b></font></td>
    <td align="right" width="9%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="9%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">688</font></td>
    <td align="right" width="10%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="10%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">442</font></td>
  </tr>
  <tr>
    <td width="44%"><font size="2" face="Times New Roman">Amortization expense
    of deferred start-up costs</font></td>
    <td align="right" width="9%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="9%"><font size="2" face="Times New Roman"><b>770</b></font></td>
    <td align="right" width="9%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="9%"><font size="2" face="Times New Roman">502</font></td>
    <td align="right" width="10%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="10%"><font size="2" face="Times New Roman">377</font></td>
  </tr>
  <tr>
    <td width="44%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">Amortization of
    intangible assets</font></td>
    <td align="right" width="9%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="9%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman"><b>353</b></font></td>
    <td align="right" width="9%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="9%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&#150;</font></td>
    <td align="right" width="10%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="10%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&#150;</font></td>
  </tr>
  <tr>
    <td width="44%"><font size="2" face="Times New Roman">Amortization of
    deferred financing costs</font></td>
    <td align="right" width="9%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="9%"><font size="2" face="Times New Roman"><b>254</b></font></td>
    <td align="right" width="9%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="9%"><font size="2" face="Times New Roman">436</font></td>
    <td align="right" width="10%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="10%"><font size="2" face="Times New Roman">387</font></td>
  </tr>
  <tr>
    <td width="44%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">Investment income</font></td>
    <td align="right" width="9%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="9%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman"><b>1,466</b></font></td>
    <td align="right" width="9%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="9%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">450</font></td>
    <td align="right" width="10%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="10%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">248</font></td>
  </tr>
  <tr>
    <td style="BORDER-BOTTOM: 1px solid" width="44%">
    <font size="2" face="Times New Roman">Research and development tax credits</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%">
    <font size="2" face="Times New Roman"><b>1,290</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%">
    <font size="2" face="Times New Roman">761</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="10%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="10%">
    <font size="2" face="Times New Roman">360</font></td>
  </tr>
</table>
<font face="Times New Roman" size="2">
<p style="MARGIN-LEFT: 26px; TEXT-INDENT: -26px" align="justify">(b)&nbsp;&nbsp; An amount
of approximately $1,035 (2005 &#150; $1,173; 2004 &#150; $500) is included as compensation
costs in &quot;Selling, general and administrative expenses&quot; for fiscal 2006 in
respect of the employee share purchase plans, RSUs, DSUs and certain stock
options.</p>
<p style="MARGIN-LEFT: 26px; TEXT-INDENT: -26px">(c)&nbsp;&nbsp; Supplemental cash flow
disclosure:</p>
</font>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td style="BORDER-BOTTOM: 1px solid" vAlign="bottom" width="44%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-BOTTOM: 1px solid" vAlign="bottom" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-BOTTOM: 1px solid" vAlign="bottom" align="right" width="9%">
    <font size="2" face="Times New Roman"><b>2006</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" vAlign="bottom" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-BOTTOM: 1px solid" vAlign="bottom" align="right" width="9%">
    <font size="2" face="Times New Roman">2005</font></td>
    <td style="BORDER-BOTTOM: 1px solid" vAlign="bottom" align="right" width="10%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-BOTTOM: 1px solid" vAlign="bottom" align="right" width="10%">
    <font size="2" face="Times New Roman">2004</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid" vAlign="bottom" width="44%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" vAlign="bottom" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" vAlign="bottom" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" vAlign="bottom" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" vAlign="bottom" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" vAlign="bottom" align="right" width="10%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" vAlign="bottom" align="right" width="10%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
  </tr>
  <tr>
    <td vAlign="bottom" width="44%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">Cash
    paid during the year for:</font></td>
    <td vAlign="bottom" align="right" width="9%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td vAlign="bottom" align="right" width="9%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td vAlign="bottom" align="right" width="9%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td vAlign="bottom" align="right" width="9%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td vAlign="bottom" align="right" width="10%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td vAlign="bottom" align="right" width="10%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
  </tr>
  <tr>
    <td vAlign="bottom" width="44%"><font size="2" face="Times New Roman">
    <p style="MARGIN-LEFT: 26px">Interest</font></td>
    <td vAlign="bottom" align="right" width="9%">
    <font size="2" face="Times New Roman"><b>$</b></font></td>
    <td vAlign="bottom" align="right" width="9%">
    <font size="2" face="Times New Roman"><b>4,771</b></font></td>
    <td vAlign="bottom" align="right" width="9%">
    <font size="2" face="Times New Roman">$</font></td>
    <td vAlign="bottom" align="right" width="9%">
    <font size="2" face="Times New Roman">4,516</font></td>
    <td vAlign="bottom" align="right" width="10%">
    <font size="2" face="Times New Roman">$</font></td>
    <td vAlign="bottom" align="right" width="10%">
    <font size="2" face="Times New Roman">6,404</font></td>
  </tr>
  <tr>
    <td vAlign="bottom" width="44%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">
    <p style="MARGIN-LEFT: 26px">Income taxes</font></td>
    <td vAlign="bottom" align="right" width="9%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td vAlign="bottom" align="right" width="9%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman"><b>2,031</b></font></td>
    <td vAlign="bottom" align="right" width="9%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td vAlign="bottom" align="right" width="9%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">1,557</font></td>
    <td vAlign="bottom" align="right" width="10%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td vAlign="bottom" align="right" width="10%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">1,812</font></td>
  </tr>
  <tr>
    <td vAlign="bottom" width="44%"><font size="2" face="Times New Roman">
    Non-cash transactions:</font></td>
    <td vAlign="bottom" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td vAlign="bottom" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td vAlign="bottom" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td vAlign="bottom" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td vAlign="bottom" align="right" width="10%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td vAlign="bottom" align="right" width="10%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
  </tr>
  <tr>
    <td vAlign="bottom" width="44%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">
    <p style="MARGIN-LEFT: 52px; TEXT-INDENT: -26px">Additions to fixed assets
    included in accounts payable and accrued liabilities</font></td>
    <td vAlign="bottom" align="right" width="9%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td vAlign="bottom" align="right" width="9%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman"><b>2,979</b></font></td>
    <td vAlign="bottom" align="right" width="9%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td vAlign="bottom" align="right" width="9%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">740</font></td>
    <td vAlign="bottom" align="right" width="10%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td vAlign="bottom" align="right" width="10%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">3,473</font></td>
  </tr>
  <tr>
    <td style="BORDER-BOTTOM: 1px solid" vAlign="bottom" width="44%">
    <font size="2" face="Times New Roman">
    <p style="MARGIN-LEFT: 52px; TEXT-INDENT: -26px">Issuance of shares on
    acquisition of Kentucky Derby</font></td>
    <td style="BORDER-BOTTOM: 1px solid" vAlign="bottom" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-BOTTOM: 1px solid" vAlign="bottom" align="right" width="9%">
    <font size="2" face="Times New Roman"><b>460</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" vAlign="bottom" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-BOTTOM: 1px solid" vAlign="bottom" align="right" width="9%">
    <font size="2" face="Times New Roman">&#150;</font></td>
    <td style="BORDER-BOTTOM: 1px solid" vAlign="bottom" align="right" width="10%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-BOTTOM: 1px solid" vAlign="bottom" align="right" width="10%">
    <font size="2" face="Times New Roman">&#150;</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid" vAlign="bottom" width="44%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" vAlign="bottom" align="right" width="9%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" vAlign="bottom" align="right" width="9%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" vAlign="bottom" align="right" width="9%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" vAlign="bottom" align="right" width="9%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" vAlign="bottom" align="right" width="10%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" vAlign="bottom" align="right" width="10%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
  </tr>
  <tr>
    <td vAlign="bottom" width="44%"><font size="2" face="Times New Roman">Cash
    and cash equivalents consist of:</font></td>
    <td vAlign="bottom" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td vAlign="bottom" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td vAlign="bottom" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td vAlign="bottom" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td vAlign="bottom" align="right" width="10%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td vAlign="bottom" align="right" width="10%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
  </tr>
  <tr>
    <td vAlign="bottom" width="44%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">
    <p style="MARGIN-LEFT: 52px; TEXT-INDENT: -26px">Cash balances with banks</font></td>
    <td vAlign="bottom" align="right" width="9%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman"><b>$</b></font></td>
    <td vAlign="bottom" align="right" width="9%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman"><b>27,810</b></font></td>
    <td vAlign="bottom" align="right" width="9%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">$</font></td>
    <td vAlign="bottom" align="right" width="9%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">38,802</font></td>
    <td vAlign="bottom" align="right" width="10%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">$</font></td>
    <td vAlign="bottom" align="right" width="10%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">33,571</font></td>
  </tr>
  <tr>
    <td style="BORDER-BOTTOM: 1px solid" vAlign="bottom" width="44%">
    <font size="2" face="Times New Roman">
    <p style="MARGIN-LEFT: 52px; TEXT-INDENT: -26px">Short-term investments,
    bearing interest at 4.90% (2005 &#150; 3.67%; 2004 &#150; 1.72%)</font></td>
    <td style="BORDER-BOTTOM: 1px solid" vAlign="bottom" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-BOTTOM: 1px solid" vAlign="bottom" align="right" width="9%">
    <font size="2" face="Times New Roman"><b>1,197</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" vAlign="bottom" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-BOTTOM: 1px solid" vAlign="bottom" align="right" width="9%">
    <font size="2" face="Times New Roman">31,000</font></td>
    <td style="BORDER-BOTTOM: 1px solid" vAlign="bottom" align="right" width="10%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-BOTTOM: 1px solid" vAlign="bottom" align="right" width="10%">
    <font size="2" face="Times New Roman">27,100</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" vAlign="bottom" width="44%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" vAlign="bottom" align="right" width="9%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman"><b>$</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" vAlign="bottom" align="right" width="9%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman"><b>29,007</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" vAlign="bottom" align="right" width="9%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">$</font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" vAlign="bottom" align="right" width="9%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">69,802</font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" vAlign="bottom" align="right" width="10%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">$</font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" vAlign="bottom" align="right" width="10%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">60,671</font></td>
  </tr>
</table>
<font face="Times New Roman" size="2"><b>
<p>18</b> <b>Related Party Transactions</p>
</b>
<p align="justify">The Company has transactions with Frontier Spinning Mills,
Inc., which manages the operations of CanAm. These transactions are in the
normal course of operations and are measured at the exchange amount, which is
the amount of consideration established and agreed to by the related parties.
The following is a summary of the related party transactions and balances owed:</p>
</font>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td style="BORDER-BOTTOM: 1px solid" width="44%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%">
    <font size="2" face="Times New Roman"><b>2006</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%">
    <font size="2" face="Times New Roman">2005</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="10%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="10%">
    <font size="2" face="Times New Roman">2004</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid" width="44%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="9%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="10%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="10%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
  </tr>
  <tr>
    <td width="44%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">Transactions:</font></td>
    <td align="right" width="9%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="9%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="9%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="9%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="10%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="10%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
  </tr>
  <tr>
    <td width="44%"><font size="2" face="Times New Roman">
    <p style="MARGIN-LEFT: 26px">Yarn purchases</font></td>
    <td align="right" width="9%"><font size="2" face="Times New Roman"><b>$</b></font></td>
    <td align="right" width="9%"><font size="2" face="Times New Roman"><b>
    100,432</b></font></td>
    <td align="right" width="21%" colSpan="2">
    <font size="2" face="Times New Roman">$106,820</font></td>
    <td align="right" width="10%"><font size="2" face="Times New Roman">$</font></td>
    <td align="right" width="10%"><font size="2" face="Times New Roman">94,910</font></td>
  </tr>
  <tr>
    <td width="44%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">
    <p style="MARGIN-LEFT: 26px">Management fee expense</font></td>
    <td align="right" width="9%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="9%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman"><b>750</b></font></td>
    <td align="right" width="9%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="9%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">562</font></td>
    <td align="right" width="10%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="10%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&#150;</font></td>
  </tr>
  <tr>
    <td width="44%"><font size="2" face="Times New Roman">Balances outstanding:</font></td>
    <td align="right" width="9%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="9%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="9%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="9%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="10%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="10%"><font size="2" face="Times New Roman">&nbsp;</font></td>
  </tr>
  <tr>
    <td style="BORDER-BOTTOM: 1px solid" width="44%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">
    <p style="MARGIN-LEFT: 26px">Accounts payable</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman"><b>$</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman"><b>18,877</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">$</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">15,631</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="10%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="10%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
  </tr>
</table>
<font face="Times New Roman" size="2">
<p>During fiscal 2005, Frontier Spinning Mills, Inc. contributed $2,500 in cash
to CanAm.</p>
</font>
<font FACE="Times New Roman" SIZE="2">
</font>
<hr color="#000000" size="5"><p style="page-break-before: always">
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    </font>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    <p align="right"><font FACE="Akzidenz Grotesk BE" SIZE="2">Gildan 2006
    Annual Report &#149; <b>65</b></font></td>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    &nbsp;</td>
  </tr>
</table>

<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <font face="Akzidenz Grotesk BE" size="3"><b>
    <td style="PADDING-LEFT: 20px" width="70%" bgColor="#000000" colSpan="5">
    <font face="Times New Roman" color="#ffffff" size="2"><b>&nbsp;NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS</b></font></td>
    <td align="right" width="30%" colSpan="4"><hr color="#000000" SIZE="1"></td>
    </b></font>
  </tr>
  <tr>
    <b><font face="Times New Roman" size="2">
    <td style="PADDING-LEFT: 20px" width="1%">&nbsp;</td>
    </font><font face="Akzidenz Grotesk BE" size="3">
    <td width="46%"><font face="Times New Roman" size="2"><i>Years ended October
    1, 2006, October 2, 2005 and October 3, 2004</i></font></td>
    </font><font face="Times New Roman" size="2">
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%">
    &nbsp;</td>
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%">
    &nbsp;</td>
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%" colSpan="2">
    &nbsp;</td>
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%">
    &nbsp;</td>
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%">
    &nbsp;</td>
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%">
    &nbsp;</td>
    </font></b>
  </tr>
  <tr>
    <b><font face="Times New Roman" size="2">
    <td style="PADDING-LEFT: 20px" width="1%">&nbsp;</td>
    </font><font face="Akzidenz Grotesk BE" size="3">
    <td width="46%"><font face="Times New Roman" size="2"><i>(In thousands of US
    dollars)</i></font></td>
    </font><font face="Times New Roman" size="2">
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%">
    &nbsp;</td>
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%">
    &nbsp;</td>
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%" colSpan="2">
    &nbsp;</td>
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%">
    &nbsp;</td>
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%">
    &nbsp;</td>
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%">
    &nbsp;</td>
    </font></b>
  </tr>
</table>
<font face="Times New Roman" size="2"><b>
<p>19</b> <b>Financial Instruments</p>
</b>
<p>(a)&nbsp;&nbsp;&nbsp;&nbsp; Foreign currency risk management:</p>
<p style="MARGIN-LEFT: 26px" align="justify">A portion of the Company's sales
and operating expenses are denominated in currencies other than US dollars. The
Company uses the revenue stream in these non-US dollar currencies as a partial,
natural hedge against purchases of fixed assets and expenses denominated in
these non-US dollar currencies. From time to time, the Company also uses forward
foreign exchange contracts to hedge its foreign exchange exposure on cash flows
related to sales and operating expenses.</p>
<p style="MARGIN-LEFT: 26px">The following table summarizes the Company's
commitments to buy and sell foreign currencies as at October 1, 2006 and October
2, 2005:</p>
</font>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td width="25%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="18%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="19%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="19%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="19%"><font size="2" face="Times New Roman">Notional</font></td>
  </tr>
  <tr>
    <td width="25%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="18%"><font size="2" face="Times New Roman">Notional</font></td>
    <td align="right" width="19%"><font size="2" face="Times New Roman">Exchange</font></td>
    <td align="right" width="19%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="19%"><font size="2" face="Times New Roman">US
    dollar</font></td>
  </tr>
  <tr>
    <td style="BORDER-BOTTOM: 1px solid" width="25%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="18%">
    <font size="2" face="Times New Roman">amount</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="19%">
    <font size="2" face="Times New Roman">rate</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="19%">
    <font size="2" face="Times New Roman">Maturity</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="19%">
    <font size="2" face="Times New Roman">equivalent</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid" width="25%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="18%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="19%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="19%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="19%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
  </tr>
  <tr>
    <td width="25%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman"><b>2006:</b></font></td>
    <td align="right" width="18%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="19%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="19%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="19%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
  </tr>
  <tr>
    <td width="25%"><font size="2" face="Times New Roman">Buy contracts:</font></td>
    <td align="right" width="18%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="19%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="19%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="19%"><font size="2" face="Times New Roman">&nbsp;</font></td>
  </tr>
  <tr>
    <td width="25%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">
    <p style="MARGIN-LEFT: 26px">Foreign exchange contracts</font></td>
    <td align="right" width="18%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&#128;<b>&nbsp;
    9,756</b></font></td>
    <td align="right" width="19%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman"><b>
    1.2056 to 1.2696</b></font></td>
    <td align="right" width="19%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman"><b>Oct.
    2006 &#150; June 2007</b></font></td>
    <td align="right" width="19%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman"><b>$
    11,934</b></font></td>
  </tr>
  <tr>
    <td style="BORDER-BOTTOM: 1px solid" width="25%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="18%">
    <font size="2" face="Times New Roman"><b>CA$&nbsp; 6,250</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="19%">
    <font size="2" face="Times New Roman"><b>0.8961</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="19%">
    <font size="2" face="Times New Roman"><b>Oct. 2006</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="19%">
    <font size="2" face="Times New Roman"><b>5,600</b></font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid" width="25%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="18%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="19%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="19%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="19%" bgcolor="#E6E6E6">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
  </tr>
  <tr>
    <td width="25%"><font size="2" face="Times New Roman">2005:</font></td>
    <td align="right" width="18%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="19%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="19%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="19%"><font size="2" face="Times New Roman">&nbsp;</font></td>
  </tr>
  <tr>
    <td width="25%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">Buy contracts:</font></td>
    <td align="right" width="18%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="19%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="19%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="19%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
  </tr>
  <tr>
    <td width="25%"><font size="2" face="Times New Roman">Foreign exchange
    contracts</font></td>
    <td align="right" width="18%"><font size="2" face="Times New Roman">CA$&nbsp;
    21,400</font></td>
    <td align="right" width="19%"><font size="2" face="Times New Roman">0.7997
    to 0.8216</font></td>
    <td align="right" width="19%"><font size="2" face="Times New Roman">Oct.
    2005 &#150; Aug. 2006</font></td>
    <td align="right" width="19%"><font size="2" face="Times New Roman">$ 17,348</font></td>
  </tr>
  <tr>
    <td width="25%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="18%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&#128;&nbsp; 2,150</font></td>
    <td align="right" width="19%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">1.2039</font></td>
    <td align="right" width="19%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">Oct.
    2005</font></td>
    <td align="right" width="19%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">2,588</font></td>
  </tr>
  <tr>
    <td width="25%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="18%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="19%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="19%"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="19%"><font size="2" face="Times New Roman">&nbsp;</font></td>
  </tr>
  <tr>
    <td width="25%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">Sell contracts:</font></td>
    <td align="right" width="18%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="19%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="19%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="19%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
  </tr>
  <tr>
    <td width="25%"><font size="2" face="Times New Roman">Foreign exchange
    contracts</font></td>
    <td align="right" width="18%"><font size="2" face="Times New Roman">&#128;&nbsp; 9,276</font></td>
    <td align="right" width="19%"><font size="2" face="Times New Roman">1.3450
    to 1.3721</font></td>
    <td align="right" width="19%"><font size="2" face="Times New Roman">Oct.
    2005 &#150; Sept. 2006</font></td>
    <td align="right" width="19%"><font size="2" face="Times New Roman">$ 12,620</font></td>
  </tr>
  <tr>
    <td width="25%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&nbsp;</font></td>
    <td align="right" width="18%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">&#163;&nbsp; 4,490</font></td>
    <td align="right" width="19%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">1.8707
    to 1.8909</font></td>
    <td align="right" width="19%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">Oct.
    2005 &#150; Sept. 2006</font></td>
    <td align="right" width="19%" bgcolor="#E6E6E6"><font size="2" face="Times New Roman">8,439</font></td>
  </tr>
  <tr>
    <td style="BORDER-BOTTOM: 1px solid" width="25%">
    <font size="2" face="Times New Roman">&nbsp;</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="18%">
    <font size="2" face="Times New Roman">CA$&nbsp; 2,800</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="19%">
    <font size="2" face="Times New Roman">0.8610</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="19%">
    <font size="2" face="Times New Roman">Oct. 2005</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="19%">
    <font size="2" face="Times New Roman">2,410</font></td>
  </tr>
</table>
<font size="2">
<p style="MARGIN-LEFT: 26px" align="justify"><font face="Times New Roman">A
forward foreign exchange contract represents an obligation to buy or sell a
foreign currency with a counterparty. Credit risk exists in the event of failure
by a counterparty to meet its obligations. The Company reduces this risk by
dealing only with highly rated counterparties, normally major European and North
American financial institutions.</font></p>
<p><font face="Times New Roman">(b)&nbsp;&nbsp;&nbsp; Credit risk:</font></p>
<p style="MARGIN-LEFT: 26px"><font face="Times New Roman">The Company's
financial instruments that are exposed to concentrations of credit risk consist
primarily of cash equivalents and trade receivables.</font></p>
<p style="MARGIN-LEFT: 26px"><font face="Times New Roman">The Company invests
available cash in short-term deposits with major North American and European
financial institutions.</font></p>
<p style="MARGIN-LEFT: 26px" align="justify"><font face="Times New Roman">The
Company's extension of credit involves judgement and is based on an evaluation
of each customer's financial condition and payment history. The Company
regularly monitors its credit risk exposure to its customers and takes steps to
mitigate the risk of loss. As at October 1, 2006, the Company's top 10 customers
accounted for 57.0% (2005 &#150; 60.1%) of the trade receivable balance, of which one
customer represented 18.1% (2005 &#150; 20.5%). The remaining trade receivable
balances are dispersed among a large number of debtors across many geographic
areas including the United States, Canada, Europe and Australasia.</font></p>
<p style="MARGIN-LEFT: 26px"><font face="Times New Roman">An allowance for
doubtful accounts is maintained for credit losses consistent with the credit
risk, historical trends, general economic conditions and other information.</font></p>
<p style="MARGIN-LEFT: 26px; TEXT-INDENT: -26px"><font face="Times New Roman">
(c)&nbsp;&nbsp;&nbsp; Fair value disclosure:</font></p>
<p style="MARGIN-LEFT: 26px"><font face="Times New Roman">Fair value estimates
are made as of a specific point in time, using available information about the
financial instrument. These estimates are subjective in nature and often cannot
be determined with precision.</font></p>
</font>
<font FACE="Times New Roman" SIZE="2">
</font>
<hr color="#000000" size="5"><p style="page-break-before: always">
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%">
  <tr>
    </font>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    <font FACE="Akzidenz Grotesk BE" SIZE="2">
    <p align="left"><font FACE="Times New Roman" SIZE="2"><b>&nbsp;66</b> &#149;
    Gildan 2006 Annual Report </font></font></td>
  </tr>
  <tr>
    <td width="100%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
    &nbsp;</td>
  </tr>
</table>

<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <font face="Akzidenz Grotesk BE" size="3"><b>
    <td style="PADDING-LEFT: 20px" width="70%" bgColor="#000000" colSpan="5">
    <font face="Times New Roman" color="#ffffff" size="2"><b>&nbsp;NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS</b></font></td>
    <td align="right" width="30%" colSpan="4"><hr color="#000000" SIZE="1"></td>
    </b></font>
  </tr>
  <tr>
    <b><font face="Times New Roman" size="2">
    <td style="PADDING-LEFT: 20px" width="1%">&nbsp;</td>
    </font><font face="Akzidenz Grotesk BE" size="3">
    <td width="46%"><font face="Times New Roman" size="2"><i>Years ended October
    1, 2006, October 2, 2005 and October 3, 2004</i></font></td>
    </font><font face="Times New Roman" size="2">
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%">
    &nbsp;</td>
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%">
    &nbsp;</td>
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%" colSpan="2">
    &nbsp;</td>
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%">
    &nbsp;</td>
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%">
    &nbsp;</td>
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%">
    &nbsp;</td>
    </font></b>
  </tr>
  <tr>
    <b><font face="Times New Roman" size="2">
    <td style="PADDING-LEFT: 20px" width="1%">&nbsp;</td>
    </font><font face="Akzidenz Grotesk BE" size="3">
    <td width="46%"><font face="Times New Roman" size="2"><i>(In thousands of US
    dollars)</i></font></td>
    </font><font face="Times New Roman" size="2">
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%">
    &nbsp;</td>
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%">
    &nbsp;</td>
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%" colSpan="2">
    &nbsp;</td>
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%">
    &nbsp;</td>
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%">
    &nbsp;</td>
    <td style="PADDING-RIGHT: 20px; PADDING-LEFT: 20px" align="right" width="9%">
    &nbsp;</td>
    </font></b>
  </tr>
</table>
<p>&nbsp;</p>
<font FACE="Times New Roman" size="2"><b>
<p>19</b> <b>Financial Instruments (Continued)</p>
</b>
<p>The Company has determined that the carrying values of its short-term
financial assets and liabilities approximate their respective fair values as at
the balance sheet dates because of the short-term maturity of those instruments.
</p>
<p ALIGN="JUSTIFY">The fair value of long-term debt is $34,479 (2005 &#150; $49,532)
compared to a carrying value of $33,861 (2005 &#150; $47,147) as at October 1, 2006.
The fair value of the forward foreign exchange contracts is $502 (2005 &#150; $2,953)
as at October 1, 2006. The method of calculating fair values for the financial
instruments is described below.</p>
<p ALIGN="JUSTIFY">The fair value of the Company's long-term debt bearing
interest at fixed rates was calculated using the present value of future
payments of principal and interest discounted at the current market rates of
interest available to the Company for the same or similar debt instruments with
the same remaining maturities. For long-term debt bearing interest at variable
rates, the fair value is considered to approximate the carrying value. The fair
value of the forward foreign exchange contracts was determined using quoted
market values.</p>
<p style="text-indent: -30; margin-left: 30">(d)&nbsp;&nbsp;&nbsp;&nbsp;
Interest rate risk:<br>
<br>
The Company's exposure to interest rate fluctuations is with respect to debt
which bears interest at floating rates. </p>
<b>
<p>20</b> <b>Segmented Information </p>
</b>
<p>The Company manufactures and sells activewear, socks and underwear. The
Company operates in one business segment, being high-volume, basic, frequently
replenished, non-fashion apparel.</p>
<p>(a)&nbsp;&nbsp;&nbsp;&nbsp; Sales by major product group:</p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0" height="406">
  <tr>
    <td WIDTH="1%" height="18">
    <p style="margin-left: 30"></td>
    <td WIDTH="50%" style="border-bottom-style: solid; border-bottom-width: 1" height="18">
    </td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="18">
    </td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="18">
    <font FACE="Times New Roman" SIZE="2"><b>2006</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="18">
    </td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="18">
    <font FACE="Times New Roman" SIZE="2">2005</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="18">
    <font FACE="Times New Roman" SIZE="2">2004</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" height="19">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="50%" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" height="19">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="50%" height="19" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Activewear
    and underwear</font></td>
    <td WIDTH="10%" align="right" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>$</b></font></td>
    <td WIDTH="10%" align="right" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>743,215</b></font></td>
    <td WIDTH="10%" align="right" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="10%" align="right" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">653,851</font></td>
    <td WIDTH="10%" align="right" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$ 533,368</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" height="20">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="50%" style="border-bottom-style: solid; border-bottom-width: 1" height="20">
    <font FACE="Times New Roman" SIZE="2">Socks</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">
    <font FACE="Times New Roman" SIZE="2"><b>29,975</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">
    <font FACE="Times New Roman" SIZE="2">&#150;</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">
    <font FACE="Times New Roman" SIZE="2">&#150;</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" height="20">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="50%" style="border-bottom-style: solid; border-bottom-width: 1" height="20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>$</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>773,190</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">653,851</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$ 533,368</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" height="19">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="50%" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="101%" height="19" colspan="7">
    <font FACE="Times New Roman" SIZE="2">
    <p style="text-indent: -30; margin-left: 30">(b)&nbsp;&nbsp;&nbsp;&nbsp;
    Major customers and revenues by geographic areas:<br>
    <br>
    (i) The Company has one customer accounting for greater than 10% of total
    sales. This customer accounted for 28.2% of total sales (2005 &#150; 28.2%; 2004
    &#150; 25.0%).<br>
    <br>
    (ii) Sales were derived from customers located in the following geographic
    areas:&nbsp;</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" height="20">&nbsp;</td>
    <td WIDTH="50%" style="border-bottom-style: solid; border-bottom-width: 1" height="20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" height="20">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="50%" style="border-bottom-style: solid; border-bottom-width: 1" height="20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">
    <font FACE="Times New Roman" SIZE="2"><b>2006</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">
    <font FACE="Times New Roman" SIZE="2">2005</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">
    <font FACE="Times New Roman" SIZE="2">2004</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" height="19">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="50%" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" height="19">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="50%" height="19" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">United
    States</font></td>
    <td WIDTH="10%" align="right" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>$</b></font></td>
    <td WIDTH="10%" align="right" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>680,048</b></font></td>
    <td WIDTH="10%" align="right" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="10%" align="right" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">567,084</font></td>
    <td WIDTH="10%" align="right" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$ 452,060</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" height="19">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="50%" height="19"><font FACE="Times New Roman" SIZE="2">Canada</font></td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">
    <font FACE="Times New Roman" SIZE="2"><b>50,440</b></font></td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">
    <font FACE="Times New Roman" SIZE="2">46,009</font></td>
    <td WIDTH="10%" align="right" height="19">
    <font FACE="Times New Roman" SIZE="2">44,827</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" height="20">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="50%" style="border-bottom-style: solid; border-bottom-width: 1" height="20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">Europe and other</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>42,702</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">40,758</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">36,481</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" height="20">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="50%" style="border-bottom-style: solid; border-bottom-width: 1" height="20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">
    <font FACE="Times New Roman" SIZE="2"><b>$</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">
    <font FACE="Times New Roman" SIZE="2"><b>773,190</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">
    <font FACE="Times New Roman" SIZE="2">653,851</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">
    <font FACE="Times New Roman" SIZE="2">$ 533,368</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" height="19">&nbsp;</td>
    <td WIDTH="50%" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="101%" height="19" colspan="7">
    <font FACE="Times New Roman" SIZE="2">(c)&nbsp;&nbsp;&nbsp;&nbsp; Fixed
    assets by geographic areas are as follows:</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" height="20">&nbsp;</td>
    <td WIDTH="50%" style="border-bottom-style: solid; border-bottom-width: 1" height="20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" height="20">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="50%" style="border-bottom-style: solid; border-bottom-width: 1" height="20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">
    <font FACE="Times New Roman" SIZE="2"><b>2006</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">
    <font FACE="Times New Roman" SIZE="2">2005</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" height="19">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="50%" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%" height="19">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="50%" height="19" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Caribbean
    Basin and Central America</font></td>
    <td WIDTH="10%" align="right" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>$</b></font></td>
    <td WIDTH="10%" align="right" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>200,170</b></font></td>
    <td WIDTH="10%" align="right" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$ 141,029</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" height="19">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="50%" height="19"><font FACE="Times New Roman" SIZE="2">United
    States</font></td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19">
    <font FACE="Times New Roman" SIZE="2"><b>68,591</b></font></td>
    <td WIDTH="10%" align="right" height="19">
    <font FACE="Times New Roman" SIZE="2">67,260</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" height="19">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="50%" height="19" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Canada</font></td>
    <td WIDTH="10%" align="right" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>31,407</b></font></td>
    <td WIDTH="10%" align="right" height="19" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">47,711</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" height="20">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="50%" style="border-bottom-style: solid; border-bottom-width: 1" height="20">
    <font FACE="Times New Roman" SIZE="2">Mexico</font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">
    <font FACE="Times New Roman" SIZE="2"><b>2,509</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20">
    <font FACE="Times New Roman" SIZE="2">4,615</font></td>
  </tr>
  <tr>
    <td WIDTH="1%" height="20">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="50%" style="border-bottom-style: solid; border-bottom-width: 1" height="20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>$</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2"><b>302,677</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" height="20" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">$ 260,615</font></td>
  </tr>
</table>
<font FACE="Times New Roman" size="2"><b>
<p>21</b> <b>Comparative figures</p>
</b>
<p>Certain comparative figures have been reclassified in order to conform with
the current year's presentation.</p>
</font><font FACE="Akzidenz Grotesk BE" size="2"><hr color="#000000" size="5">
</font>

</body>

</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.3
<SEQUENCE>4
<FILENAME>exh993.htm
<DESCRIPTION>EX-99.3
<TEXT>
<html>

<head>

<title>Gildan Activewear Inc.: Exhibit 99.3 - Prepared by TNT Filings Inc.
</title>
</head>

<body>

<hr color="#000000" size="5">
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="25%" rowspan="5" valign="top">
    <img border="0" src="exh9934.gif" width="131" height="55"></td>
    <td WIDTH="52%"><font FACE="Times New Roman" SIZE="2"><b>KPMG LLP</b></font></td>
    <td WIDTH="8%"><font FACE="Times New Roman" SIZE="2">Telephone</font></td>
    <td WIDTH="21%"><font FACE="Times New Roman" SIZE="2">(514) 840-2100</font></td>
  </tr>
  <tr>
    <td WIDTH="52%"><font FACE="Times New Roman" SIZE="2"><b>Chartered
    Accountants</b></font></td>
    <td WIDTH="8%"><font FACE="Times New Roman" SIZE="2">Fax</font></td>
    <td WIDTH="21%"><font FACE="Times New Roman" SIZE="2">(514) 840-2187</font></td>
  </tr>
  <tr>
    <td WIDTH="52%"><font FACE="Times New Roman" SIZE="2">600 de Maisonneuve
    Blvd. West</font></td>
    <td WIDTH="8%"><font FACE="Times New Roman" SIZE="2">Internet</font></td>
    <td WIDTH="21%"><font FACE="Times New Roman" SIZE="2">www.kpmg.ca</font></td>
  </tr>
  <tr>
    <td WIDTH="52%"><font FACE="Times New Roman" SIZE="2">Suite 1500</font></td>
    <td WIDTH="8%">&nbsp;</td>
    <td WIDTH="21%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="52%"><font FACE="Times New Roman" SIZE="2">Montr&#233;al Qu&#233;bec H3A
    03A</font></td>
    <td WIDTH="8%">&nbsp;</td>
    <td WIDTH="21%">&nbsp;</td>
  </tr>
</table>
<font FACE="Times New Roman" size="5"><b>
<p align="justify">CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM </p>
</b></font><font FACE="Times New Roman" SIZE="2">
<p>To the Board of Directors of <br>
Gildan Activewear Inc. </p>
<p>We consent to the inclusion in this annual report on Form 40-F of: </p>
</font><font FACE="Symbol MT" LANG="JA" SIZE="3">
<ul>
  <li>
  <p ALIGN="justify"></font><font SIZE="2" face="Times New Roman">our auditors'
  report dated December 6, 2006 on the consolidated balance sheets of Gildan
  Activewear Inc. as at October 1, 2006 and October 2, 2005 and the consolidated
  statements of earnings, retained earnings and cash flows for the years ended
  October 1, 2006, October 2, 2005 and October 3, 2004</font></li>
  <li>
  <p ALIGN="justify"><font SIZE="2" face="Times New Roman">our auditors' report
  dated December 6, 2006 on reconciliation to United States generally accepted
  accounting principles</font></li>
  <li>
  <p ALIGN="justify"><font SIZE="2" face="Times New Roman">our Report on
  Internal Control over Financial Reporting under Standards of the Public
  Company Accounting Oversight Board (United States) dated December 6, 2006 on
  management's assessment of the effectiveness of internal control over
  financial reporting as of October 1, 2006 and the effectiveness of internal
  control over financial reporting as of October 1, 2006</font></li>
</ul>
<p ALIGN="justify"><font SIZE="2" face="Times New Roman">each of which is
included in this annual report on Form 40-F of Gildan Activewear Inc. for the
fiscal year ended October 1, 2006.</p>
<p>/s/KPMG LLP </p>
<p>Chartered Accountants </p>
<p>Montr&#233;al, Canada <br>
December 20, 2006 </p>
</font><font FACE="Univers" SIZE="2"><b>
<p align="center">KPMG LLP</b>, a Canadian limited liability partnership is the
Canadian<br>
&nbsp;member firm of KPMG International, a Swiss cooperative. </p>
<hr color="#000000" size="5"></font>

</body>

</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.5
<SEQUENCE>5
<FILENAME>exh995.htm
<DESCRIPTION>EX-99.5
<TEXT>
<html>

<head>

<title>Gildan Activewear Inc.: Exhibit 99.5 - Prepared by TNT Filings Inc.
</title>
</head>

<body>

<hr color="#000000" size="5">
<p><img border="0" src="exh9951.gif" width="110" height="56"></p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<font FACE="Times New Roman" SIZE="2">
<blockquote>
  <p>Supplementary Information of </p>
  </font><font FACE="Times New Roman" SIZE="5"><b>
  <p>GILDAN ACTIVEWEAR INC. </p>
  </b></font><font FACE="Times New Roman" SIZE="2">
  <p>Three years ended October 1, 2006 </p>
  </font>
  <p>&nbsp;</p>
</blockquote>
<p>&nbsp;</p>
<p>&nbsp;</p>
<hr color="#000000" size="5"><p style="page-break-before: always">
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="20%" rowspan="6">
    <img border="0" src="exh9952.gif" width="103" height="46"></td>
    <td WIDTH="46%">&nbsp;</td>
    <td WIDTH="17%">&nbsp;</td>
    <td WIDTH="17%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="46%"><font FACE="Times New Roman" SIZE="2"><b>KPMG LLP</b></font></td>
    <td WIDTH="17%"><font FACE="Times New Roman" SIZE="2">Telephone</font></td>
    <td WIDTH="17%"><font FACE="Times New Roman" SIZE="2">(514) 840-2100</font></td>
  </tr>
  <tr>
    <td WIDTH="46%"><font FACE="Times New Roman" SIZE="2"><b>Chartered
    Accountants</b></font></td>
    <td WIDTH="17%"><font FACE="Times New Roman" SIZE="2">Fax</font></td>
    <td WIDTH="17%"><font FACE="Times New Roman" SIZE="2">(514) 840-2187</font></td>
  </tr>
  <tr>
    <td WIDTH="46%"><font FACE="Times New Roman" SIZE="2">600 de Maisonneuve
    Blvd. West</font></td>
    <td WIDTH="17%"><font FACE="Times New Roman" SIZE="2">Internet</font></td>
    <td WIDTH="17%"><font FACE="Times New Roman" SIZE="2">www.kpmg.ca</font></td>
  </tr>
  <tr>
    <td WIDTH="46%"><font FACE="Times New Roman" SIZE="2">Suite 1500</font></td>
    <td WIDTH="17%">&nbsp;</td>
    <td WIDTH="17%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="46%"><font FACE="Times New Roman" SIZE="2">Montr&#233;al Qu&#233;bec H3A
    03A</font></td>
    <td WIDTH="17%">&nbsp;</td>
    <td WIDTH="17%">&nbsp;</td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="5"><b>
<p align="justify">AUDITORS' REPORT ON RECONCILIATION TO UNITED STATES GAAP </p>
</b></font><font FACE="Times New Roman" SIZE="2">
<p align="justify">To the Board of Directors of Gildan Activewear Inc. </p>
<p align="justify">On December 6, 2006, we reported on the consolidated balance
sheets of Gildan Activewear Inc. (the &quot;Company&quot;) as at October 1, 2006 and
October 2, 2005 and the consolidated statements of earnings, retained earnings
and cash flows for the years ended October 1, 2006, October 2, 2005 and October
3, 2004 which are included in the annual report on Form 40-F. In connection with
our audits conducted in accordance with Canadian generally accepted auditing
standards and, with respect to the year ended October 1, 2006, in accordance
with the standards of the Public Company Accounting Oversight Board (United
States) of the aforementioned consolidated financial statements, we also have
audited the related supplemental note entitled &quot;Reconciliation to United States
GAAP&quot; included in the Form 40-F. This supplemental note is the responsibility of
the Company's management. Our responsibility is to express an opinion on this
supplemental note based on our audits. </p>
<p align="justify">In our opinion, such supplemental note, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.
</p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td><font FACE="Times New Roman" SIZE="2">/s/KPMG LLP</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font FACE="Times New Roman" SIZE="2">Chartered Accountants</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font FACE="Times New Roman" SIZE="2">Montr&#233;al, Canada</font></td>
  </tr>
  <tr>
    <td><font FACE="Times New Roman" SIZE="2">December 6, 2006</font></td>
  </tr>
</table>
<font FACE="Univers" SIZE="2"><b>
<p align="center">&nbsp;</p>
<p align="center">KPMG LLP</b>, a Canadian limited liability partnership is the
Canadian <br>
member firm of KPMG International, a Swiss cooperative. </p>
<hr color="#000000" size="5"><p style="page-break-before: always"></font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td><font FACE="Times New Roman" SIZE="5"><b>GILDAN ACTIVEWEAR INC.</b></font></td>
  </tr>
  <tr>
    <td><font FACE="Times New Roman" SIZE="2">Reconciliation to United States
    GAAP</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font FACE="Times New Roman" SIZE="2">Years ended October 1, 2006,
    October 2, 2005 and October 3, 2004</font></td>
  </tr>
  <tr>
    <td style="border-bottom-style: solid; border-bottom-width: 2">
    <font FACE="Times New Roman" SIZE="2">(In thousands of US dollars, except
    share and per share amounts)</font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
<p align="justify">The consolidated financial statements of the Company are
expressed in US dollars and are prepared in accordance with Canadian generally
accepted accounting principles (&quot;GAAP&quot;), which conform, in all material
respects, with those generally accepted in the United States except as described
below:</p>
<p align="justify">(a)&nbsp;&nbsp;&nbsp;&nbsp; Consolidated statements of
earnings: </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="471" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="80" align="right" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2006</font></td>
    <td WIDTH="80" align="right" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2005</font></td>
    <td WIDTH="80" align="right" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2004</font></td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="471">&nbsp;</td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="471" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Net earnings in accordance with
    Canadian GAAP</font></td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">106,829</font></td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">86,043</font></td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">60,251</font></td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="471"><font FACE="Times New Roman" SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Swap expense (i)</font></td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right"><font FACE="Times New Roman" SIZE="2">(94)</font></td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right"><font FACE="Times New Roman" SIZE="2">(175)</font></td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right"><font FACE="Times New Roman" SIZE="2">(586)</font></td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="471" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Start-up costs (ii)</font></td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">(537)</font></td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">(293)</font></td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">(347)</font></td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="471"><font FACE="Times New Roman" SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Stock-based compensation (iii)</font></td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">&#150;</font></td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">&#150;</font></td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">106</font></td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="471" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Tax effect of above adjustments</font></td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">29</font></td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">54</font></td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">32</font></td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="471" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
    <td WIDTH="80" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="471" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Net earnings in accordance with
    United States GAAP</font></td>
    <td WIDTH="80" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">106,227</font></td>
    <td WIDTH="80" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">85,629</font></td>
    <td WIDTH="80" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">59,456</font></td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="471">
    <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="471" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Other comprehensive income:</font></td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="471"><font FACE="Times New Roman" SIZE="2">
    <p style="text-indent: -26; margin-left: 52">Mark-to-market adjustments on
    foreign exchange contracts, net of tax (2005 - $261; 2004 - $655) (d)</font></td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">&#150;</font></td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">580</font></td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">1,457</font></td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="471" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
    <td WIDTH="80" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="471" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Comprehensive income</font></td>
    <td WIDTH="80" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="80" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">106,227</font></td>
    <td WIDTH="80" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="80" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">86,209</font></td>
    <td WIDTH="80" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="80" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">60,913</font></td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="471" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="471">&nbsp;</td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="471" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="80" align="right" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2006</font></td>
    <td WIDTH="80" align="right" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2005</font></td>
    <td WIDTH="80" align="right" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2004</font></td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="471">&nbsp;</td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="471" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Earnings per share
    under United States GAAP:</font></td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="471"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 26">Basic</font></td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="80" align="right"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">&nbsp;1.77</font></td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="80" align="right"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">&nbsp;1.44</font></td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="80" align="right"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">&nbsp;1.00</font></td>
  </tr>
  <tr>
    <td WIDTH="34" style="border-bottom-style: none; border-bottom-width: medium">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="471" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 26">Diluted</font></td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">1.75</font></td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">1.43</font></td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">1.00</font></td>
  </tr>
  <tr>
    <td WIDTH="34" style="border-style: none; border-width: medium">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="471" style="border-left-style: none; border-left-width: medium; border-bottom-style: solid; border-bottom-width: 3">&nbsp;</td>
    <td WIDTH="80" align="right" style="border-bottom-style: solid; border-bottom-width: 3">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" style="border-bottom-style: solid; border-bottom-width: 3">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" style="border-bottom-style: solid; border-bottom-width: 3">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" style="border-bottom-style: solid; border-bottom-width: 3">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" style="border-bottom-style: solid; border-bottom-width: 3">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" style="border-bottom-style: solid; border-bottom-width: 3">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="34" style="border-style: none; border-width: medium">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="471" style="border-left-style: none; border-left-width: medium" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="34" style="border-style: none; border-width: medium">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="471" style="border-left-style: none; border-left-width: medium">
    <font FACE="Times New Roman" SIZE="2">Weighted average number of common
    shares outstanding:</font></td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="80" align="right">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="34" style="border-style: none; border-width: medium">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="471" style="border-left-style: none; border-left-width: medium" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 26">Basic</font></td>
    <td WIDTH="160" COLSPAN="2" align="right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">60,051,683</font></td>
    <td WIDTH="160" COLSPAN="2" align="right" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">59,690,966</font></td>
    <td WIDTH="160" align="right" colspan="2" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">59,181,610</font></td>
  </tr>
  <tr>
    <td WIDTH="34" style="border-style: none; border-width: medium">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="471" style="border-left-style: none; border-left-width: medium; border-bottom-style: solid">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 26">Diluted</font></td>
    <td WIDTH="160" COLSPAN="2" align="right" style="border-bottom-style: solid">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">60,625,884</font></td>
    <td WIDTH="160" COLSPAN="2" align="right" style="border-bottom-style: solid">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">60,134,876</font></td>
    <td WIDTH="160" align="right" colspan="2" style="border-bottom-style: solid">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">59,671,178</font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
<p align="center">- 1 - </p>
<hr color="#000000" size="5"><p style="page-break-before: always"></font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td><font FACE="Times New Roman" SIZE="5"><b>GILDAN ACTIVEWEAR INC.</b></font></td>
  </tr>
  <tr>
    <td><font FACE="Times New Roman" SIZE="2">Reconciliation to United States
    GAAP</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font FACE="Times New Roman" SIZE="2">Years ended October 1, 2006,
    October 2, 2005 and October 3, 2004</font></td>
  </tr>
  <tr>
    <td style="border-bottom-style: solid; border-bottom-width: 2">
    <font FACE="Times New Roman" SIZE="2">(In thousands of US dollars, except
    share and per share amounts)</font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
<p align="justify">(a)&nbsp;&nbsp;&nbsp;&nbsp; Consolidated statements of
earnings (continued): </p>
<p align="justify" style="margin-left: 30">(i)&nbsp;&nbsp;&nbsp;&nbsp; Swap
revenue: </p>
<p ALIGN="justify" style="margin-left: 60">Under United States GAAP, SFAS 133,
&quot;Accounting for Derivative Instruments and Hedging Activities&quot; requires that all
derivative instruments be recognized as assets or liabilities and be measured at
fair value. Under Canadian GAAP, there is no requirement to record derivative
instruments used for hedging purposes at fair values. Consequently, on an
ongoing basis, differences arise between amounts recognized for Canadian GAAP
and United States GAAP. Upon cancellation of the derivative instruments, the
gain or loss recognized under Canadian GAAP is different than the amount under
United States GAAP. </p>
<p ALIGN="justify" style="margin-left: 60">Under Canadian GAAP, the Company was
using hedge accounting for certain derivative instruments. The gain realized on
cancellation of a cross-currency interest rate swap arrangement was deferred,
and is being amortized over the term of the related debt. Under United States
GAAP, the Company had not designated the derivative instrument in a hedging
relationship and, consequently, upon cancellation of the instrument, the Company
recognized the gain immediately into earnings. </p>
<p ALIGN="justify" style="margin-left: 30">(ii)&nbsp;&nbsp;&nbsp;&nbsp; Start-up
costs: </p>
<p ALIGN="justify" style="margin-left: 60">Costs incurred during the start-up
period for new manufacturing and distribution facilities are deferred and
amortized on a straight-line basis over two years. United States GAAP requires
such costs to be expensed as incurred. The adjustment to net earnings in
accordance with United States GAAP includes the write-off of current year's
start-up costs, and the reversal of the current year amortization of start-up
costs deferred under Canadian GAAP. </p>
<p ALIGN="justify" style="margin-left: 30">(iii)&nbsp;&nbsp;&nbsp;&nbsp;
Stock-based compensation: </p>
<p ALIGN="justify" style="margin-left: 60">On October 3, 2005, the Company
adopted Statement of Financial Accounting Standards (SFAS) No. 123 (R),
&quot;Share-Based Payment&quot;, which requires the expensing of all options issued,
modified or settled based on the grant date fair value over the period during
which an employee is required to provide service (vesting period). The standard
also requires that cash settled awards be measured at fair value at each
reporting date until ultimate settlement. </p>
<p align="center">- 2 - </p>
<hr color="#000000" size="5"><p style="page-break-before: always"></font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td><font FACE="Times New Roman" SIZE="5"><b>GILDAN ACTIVEWEAR INC.</b></font></td>
  </tr>
  <tr>
    <td><font FACE="Times New Roman" SIZE="2">Reconciliation to United States
    GAAP</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font FACE="Times New Roman" SIZE="2">Years ended October 1, 2006,
    October 2, 2005 and October 3, 2004</font></td>
  </tr>
  <tr>
    <td style="border-bottom-style: solid; border-bottom-width: 2">
    <font FACE="Times New Roman" SIZE="2">(In thousands of US dollars, except
    share and per share amounts)</font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
<p align="justify">(a)&nbsp;&nbsp;&nbsp;&nbsp; Consolidated statements of
earnings (continued): </p>
<p align="justify" style="margin-left: 30">(iii)&nbsp;&nbsp;&nbsp; Stock-based
compensation (continued): </p>
<p align="justify" style="margin-left: 60">The Company adopted SFAS No. 123 (R)
using the modified prospective approach, which requires application of the
standard to all awards granted, modified, repurchased or cancelled on or after
October 3, 2005, and to all awards for which the requisite service has not been
rendered as at such date. Since October 6, 2003, the Company has been following
the fair value based approach prescribed by SFAS No. 123, &quot;Accounting for
Stock-Based Compensation&quot;, as amended by SFAS No. 148, &quot;Accounting for
Stock-Based Compensation - Transition and Disclosure&quot;, for stock option awards
granted, modified or settled on or after such date, while cash settled awards
were measured at their intrinsic value at each reporting period until October 2,
2005. As such, the application of SFAS No. 123 (R) on October 3, 2005 to all
awards granted prior to its adoption did not have a significant impact on the
financial statements. In accordance with the modified prospective approach,
prior period financial statements have not been restated to reflect the impact
of SFAS No. 123 (R). </p>
<p align="justify" style="margin-left: 60">For fiscal 2006, the application of
SFAS No. 123 (R) had no significant impact on the financial position of the
Company or on the results of its operations. </p>
<p align="justify" style="margin-left: 60">Prior to October 3, 2005, the Company
followed the fair value-based approach for stock option awards and had
prospectively applied this method of accounting to all awards granted, modified
or settled on or after October 6, 2003, and measured cash settled awards at
their intrinsic value at period-end. </p>
<p align="justify" style="margin-left: 60">Under Canadian GAAP, for options
granted in prior years, the Company used the settlement date method of
accounting for options, and compensation expense was not recognized. </p>
<p align="center">- 3 - </p>
<hr color="#000000" size="5"><p style="page-break-before: always"></font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td><font FACE="Times New Roman" SIZE="5"><b>GILDAN ACTIVEWEAR INC.</b></font></td>
  </tr>
  <tr>
    <td><font FACE="Times New Roman" SIZE="2">Reconciliation to United States
    GAAP</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font FACE="Times New Roman" SIZE="2">Years ended October 1, 2006,
    October 2, 2005 and October 3, 2004</font></td>
  </tr>
  <tr>
    <td style="border-bottom-style: solid; border-bottom-width: 2">
    <font FACE="Times New Roman" SIZE="2">(In thousands of US dollars, except
    share and per share amounts)</font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
<p>(b)&nbsp;&nbsp;&nbsp;&nbsp; Consolidated statements of cash flows: </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="437" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">
    <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
    <td WIDTH="85" align="right" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="85" align="right" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2006</font></td>
    <td WIDTH="86" align="right" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2005</font></td>
    <td WIDTH="86" align="right" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2004</font></td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="437">
    <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
    <td WIDTH="85" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="85" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="437" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Changes due to United States
    GAAP:</font></td>
    <td WIDTH="85" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="85" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="437"><font FACE="Times New Roman" SIZE="2">
    <p style="text-indent: -26; margin-left: 52">Operating activities on a
    Canadian basis</font></td>
    <td WIDTH="85" align="right" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="85" align="right" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">94,721</font></td>
    <td WIDTH="86" align="right" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="86" align="right" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">93,250</font></td>
    <td WIDTH="86" align="right" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="86" align="right" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">58,920</font></td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="437" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="text-indent: -26; margin-left: 52">Start-up costs</font></td>
    <td WIDTH="85" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="85" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">(537)</font></td>
    <td WIDTH="86" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">(293)</font></td>
    <td WIDTH="86" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">(347)</font></td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="437" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="text-indent: -26; margin-left: 52">Operating activities cash flow,
    United States GAAP</font></td>
    <td WIDTH="85" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="85" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">94,184</font></td>
    <td WIDTH="86" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">92,957</font></td>
    <td WIDTH="86" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">58,573</font></td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="437" bgcolor="#E6E6E6">
    <p style="text-indent: -26; margin-left: 52">&nbsp;</td>
    <td WIDTH="85" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="85" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="437"><font FACE="Times New Roman" SIZE="2">
    <p style="text-indent: -26; margin-left: 52">Investing activities on a
    Canadian basis</font></td>
    <td WIDTH="85" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="85" align="right" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">(96,053)</font></td>
    <td WIDTH="86" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">(83,848)</font></td>
    <td WIDTH="86" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">(53,820)</font></td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="437" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="text-indent: -26; margin-left: 52">Start-up costs</font></td>
    <td WIDTH="85" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="85" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">537</font></td>
    <td WIDTH="86" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">293</font></td>
    <td WIDTH="86" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">347</font></td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="437" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="text-indent: -26; margin-left: 52">Investing activities cash flow,
    United States GAAP</font></td>
    <td WIDTH="85" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="85" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">(95,516)</font></td>
    <td WIDTH="86" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">(83,555)</font></td>
    <td WIDTH="86" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">(53,473)</font></td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="437" bgcolor="#E6E6E6">
    <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
    <td WIDTH="85" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="85" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="437"><font FACE="Times New Roman" SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Financing activities on a
    Canadian basis and under United States GAAP</font></td>
    <td WIDTH="85" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="85" align="right" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">(39,383)</font></td>
    <td WIDTH="86" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">(458)</font></td>
    <td WIDTH="86" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">(14,350)</font></td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="437" bgcolor="#E6E6E6">
    <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
    <td WIDTH="85" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="85" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="437"><font FACE="Times New Roman" SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Effect of exchange rate changes
    on cash and cash equivalents</font></td>
    <td WIDTH="85" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="85" align="right" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">(80)</font></td>
    <td WIDTH="86" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">187</font></td>
    <td WIDTH="86" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">581</font></td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="437" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
    <td WIDTH="85" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="85" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="437" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Net (decrease) increase in cash
    and cash equivalents, during the year</font></td>
    <td WIDTH="85" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="85" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">(40,795)</font></td>
    <td WIDTH="86" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">9,131</font></td>
    <td WIDTH="86" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">(8,669)</font></td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="437" bgcolor="#E6E6E6">
    <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
    <td WIDTH="85" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="85" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="437"><font FACE="Times New Roman" SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Cash and cash equivalents,
    United States GAAP, beginning of year</font></td>
    <td WIDTH="85" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="85" align="right" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">69,802</font></td>
    <td WIDTH="86" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">60,671</font></td>
    <td WIDTH="86" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">69,340</font></td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="437" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
    <td WIDTH="85" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="85" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="86" align="right" valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="437" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2">
    <p style="text-indent: -26; margin-left: 26">Cash and cash equivalents,
    United States GAAP, end of year</font></td>
    <td WIDTH="85" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="85" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">29,007</font></td>
    <td WIDTH="86" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="86" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">69,802</font></td>
    <td WIDTH="86" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="86" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">60,671</font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
<p>(c)&nbsp;&nbsp;&nbsp;&nbsp; Consolidated balance sheets: </p>
<p style="margin-left: 30">A reconciliation of shareholders' equity under
Canadian GAAP to United States GAAP is as follows: </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="1%">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="63%" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2006</font></td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2005</font></td>
  </tr>
  <tr>
    <td WIDTH="1%">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="63%">&nbsp;</td>
    <td WIDTH="8%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="63%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Shareholders' equity
    under Canadian GAAP</font></td>
    <td WIDTH="8%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="9%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">530,565</font></td>
    <td WIDTH="9%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="9%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">420,560</font></td>
  </tr>
  <tr>
    <td WIDTH="1%">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="63%">&nbsp;</td>
    <td WIDTH="8%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="63%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">United States GAAP
    adjustments:</font></td>
    <td WIDTH="8%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="63%"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 26">Start-up costs</font></td>
    <td WIDTH="8%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right"><font FACE="Times New Roman" SIZE="2">(1,590)</font></td>
    <td WIDTH="9%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right"><font FACE="Times New Roman" SIZE="2">(1,053)</font></td>
  </tr>
  <tr>
    <td WIDTH="1%">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="63%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 26">Foreign exchange contracts</font></td>
    <td WIDTH="8%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">&#150;</font></td>
    <td WIDTH="9%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2,953</font></td>
  </tr>
  <tr>
    <td WIDTH="1%">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="63%"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 26">Cross-currency swap</font></td>
    <td WIDTH="8%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">29</font></td>
    <td WIDTH="9%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">123</font></td>
  </tr>
  <tr>
    <td WIDTH="1%">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="63%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 26">Tax effect on above adjustments</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">(9)</font></td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">(954)</font></td>
  </tr>
  <tr>
    <td WIDTH="1%">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="63%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">(1,570)</font></td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">1,069</font></td>
  </tr>
  <tr>
    <td WIDTH="1%">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="63%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="63%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2">Shareholders' equity under United
    States GAAP</font></td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">528,995</font></td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">421,629</font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
<p align="center">- 4 - </p>
<hr color="#000000" size="5"><p style="page-break-before: always"></font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td><font FACE="Times New Roman" SIZE="5"><b>GILDAN ACTIVEWEAR INC.</b></font></td>
  </tr>
  <tr>
    <td><font FACE="Times New Roman" SIZE="2">Reconciliation to United States
    GAAP</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td><font FACE="Times New Roman" SIZE="2">Years ended October 1, 2006,
    October 2, 2005 and October 3, 2004</font></td>
  </tr>
  <tr>
    <td style="border-bottom-style: solid; border-bottom-width: 2">
    <font FACE="Times New Roman" SIZE="2">(In thousands of US dollars, except
    share and per share amounts)</font></td>
  </tr>
</table>
<font SIZE="2" face="Times New Roman">
<p>(d)&nbsp;&nbsp;&nbsp;&nbsp; Comprehensive income: </p>
<p align="justify" style="margin-left: 30">Under United States GAAP, SFAS No.
130, &quot;Reporting Comprehensive Income&quot; establishes standards for reporting and
presentation of comprehensive income and its components in a full set of
financial statements. Comprehensive income consists of net earnings and all
other changes in shareholders' equity that do not result from transactions with
shareholders. Such changes include cumulative foreign currency translation
adjustments and the changes in the market value of the forward foreign exchange
contracts considered as hedges against cash flow items. The Statement does not
affect the Company's financial position or results of operations. </p>
<p align="justify" style="margin-left: 30">Accumulated other comprehensive
income, which resulted from (a) the change in functional currency in fiscal 2004
and (b) the market value of the forward foreign exchange contracts considered as
hedges against cash flow items in fiscal 2004 and fiscal 2005, the effect of
which reversed in fiscal 2006, is as follows: </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="1%">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="43%" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2006</font></td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2005</font></td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2004</font></td>
  </tr>
  <tr>
    <td WIDTH="1%">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="43%">&nbsp;</td>
    <td WIDTH="9%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="43%" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Opening balance</font></td>
    <td WIDTH="9%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="9%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">28,285</font></td>
    <td WIDTH="9%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="9%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">27,705</font></td>
    <td WIDTH="9%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">26,248</font></td>
  </tr>
  <tr>
    <td WIDTH="1%">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="43%"><font FACE="Times New Roman" SIZE="2">Change during the year</font></td>
    <td WIDTH="9%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right"><font FACE="Times New Roman" SIZE="2">(2,037)</font></td>
    <td WIDTH="9%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">580</font></td>
    <td WIDTH="9%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">1,457</font></td>
  </tr>
  <tr>
    <td WIDTH="1%">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="43%" bgcolor="#E6E6E6">&nbsp;</td>
    <td WIDTH="9%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="9%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="1%">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="43%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">&nbsp;</td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">26,248</font></td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">28,285</font></td>
    <td WIDTH="9%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">27,705</font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
<p ALIGN="justify" style="margin-left: 30">Under Canadian GAAP, the cumulative
translation adjustment account is disclosed as a separate component of
shareholders' equity. </p>
<p ALIGN="justify">(e)&nbsp;&nbsp;&nbsp;&nbsp; Supplementary information: </p>
<p ALIGN="justify" style="margin-left: 30">Under United States GAAP and
Securities and Exchange Commission rules, separate disclosure is required for
the following statement of earnings and balance sheet items. There is no similar
requirement under Canadian GAAP. </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="415" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="89" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="89" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2006</font></td>
    <td WIDTH="89" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="89" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2005</font></td>
    <td WIDTH="90" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="90" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 3; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2004</font></td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="415">&nbsp;</td>
    <td WIDTH="89" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="89" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="89" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="89" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="90" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="90" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="415" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Statements of
    earnings:</font></td>
    <td WIDTH="89" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="89" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="89" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="89" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="90" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="90" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="415"><font FACE="Times New Roman" SIZE="2">
    <p style="text-indent: -30; margin-left: 60">Rental expenses</font></td>
    <td WIDTH="89" align="right" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="89" align="right" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">5,535</font></td>
    <td WIDTH="89" align="right" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="89" align="right" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">3,517</font></td>
    <td WIDTH="90" align="right" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="90" align="right" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">2,826</font></td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="415" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="text-indent: -30; margin-left: 60">Advertising expenses</font></td>
    <td WIDTH="89" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="89" align="right" valign="bottom" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">6,627</font></td>
    <td WIDTH="89" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="89" align="right" valign="bottom" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">5,760</font></td>
    <td WIDTH="90" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="90" align="right" valign="bottom" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">5,148</font></td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="415">&nbsp;</td>
    <td WIDTH="89" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="89" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="89" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="89" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="90" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="90" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="415" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">Balance sheets:</font></td>
    <td WIDTH="89" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="89" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="89" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="89" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="90" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="90" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="415"><font FACE="Times New Roman" SIZE="2">
    <p style="text-indent: -30; margin-left: 60">Accounts payable</font></td>
    <td WIDTH="89" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="89" align="right" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">58,089</font></td>
    <td WIDTH="89" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="89" align="right" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">43,234</font></td>
    <td WIDTH="90" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="90" align="right" valign="bottom">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">40,040</font></td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="415" bgcolor="#E6E6E6"><font FACE="Times New Roman" SIZE="2">
    <p style="text-indent: -30; margin-left: 60">Accrued liabilities</font></td>
    <td WIDTH="89" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="89" align="right" valign="bottom" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">59,866</font></td>
    <td WIDTH="89" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="89" align="right" valign="bottom" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">43,486</font></td>
    <td WIDTH="90" align="right" valign="bottom" bgcolor="#E6E6E6">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="90" align="right" valign="bottom" bgcolor="#E6E6E6">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">34,458</font></td>
  </tr>
  <tr>
    <td WIDTH="34">
    <p style="margin-left: 30">&nbsp;</td>
    <td WIDTH="415" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2">
    <p style="text-indent: -30; margin-left: 60">Allowance for doubtful
    accounts, price discounts and rebates</font></td>
    <td WIDTH="89" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="89" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">57,487</font></td>
    <td WIDTH="89" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="89" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">42,258</font></td>
    <td WIDTH="90" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="90" align="right" valign="bottom" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 3">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-right: 4">23,460</font></td>
  </tr>
</table>
<p>&nbsp;</p>
<font FACE="Times New Roman" SIZE="2">
<p align="center">- 5 - </p>
<hr color="#000000" size="5"></font>

</body>

</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.6
<SEQUENCE>6
<FILENAME>exh996.htm
<DESCRIPTION>EX-99.6
<TEXT>
<html>

<head>

<title>Gildan Activewear Inc.: Exhibit 99.6 - Prepared by TNT Filings Inc.
</title>
</head>

<body>

<hr color="#000000" size="5"><font FACE="Times New Roman PS" SIZE="2"><b>
<p align="right">EXHIBIT 99.6 </p>
</b></font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="44">&nbsp;</td>
    <td WIDTH="44">&nbsp;</td>
    <td WIDTH="897">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="985" colspan="3" align="center">
    <font FACE="Times New Roman PS" SIZE="2"><b>CERTIFICATION</b></font></td>
  </tr>
  <tr>
    <td WIDTH="985" colspan="3" align="center">
    <font FACE="Times New Roman PS" SIZE="2"><b>REQUIRED BY RULE 13a-14(a)</b></font></td>
  </tr>
  <tr>
    <td WIDTH="985" colspan="3" align="center">
    <font FACE="Times New Roman PS" SIZE="2"><b>OR RULE 15d-14(a)</b></font></td>
  </tr>
  <tr>
    <td WIDTH="44">&nbsp;</td>
    <td WIDTH="44">&nbsp;</td>
    <td WIDTH="897">&nbsp;</td>
  </tr>
  <tr>
    <td COLSPAN="3" width="985"><font FACE="Times New Roman PSMT" SIZE="2">I,
    Glenn J. Chamandy, certify that:</font></td>
  </tr>
  <tr>
    <td WIDTH="44">&nbsp;</td>
    <td WIDTH="44">&nbsp;</td>
    <td WIDTH="897">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="44" valign="top" align="justify">
    <font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">1.</font></td>
    <td WIDTH="941" COLSPAN="2" align="justify">
    <font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">I have reviewed this annual
    report on Form 40-F of Gildan Activewear Inc.;</font></td>
  </tr>
  <tr>
    <td WIDTH="44" valign="top" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="897" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="44" valign="top" align="justify">
    <font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">2.</font></td>
    <td WIDTH="941" COLSPAN="2" align="justify">
    <font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Based on my knowledge, this
    report does not contain any untrue statement of a material fact or omit to
    state a material fact necessary to make the statements made, in light of the
    circumstances under which such statements were made, not misleading with
    respect to the period covered by this report;</font></td>
  </tr>
  <tr>
    <td WIDTH="44" valign="top" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="897" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="44" valign="top" align="justify">
    <font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">3.</font></td>
    <td WIDTH="941" COLSPAN="2" align="justify">
    <font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Based on my knowledge, the
    financial statements, and other financial information included in this
    report, fairly present in all material respects the financial condition,
    results of operations and cash flows of the issuer as of, and for, the
    periods presented in this report;</font></td>
  </tr>
  <tr>
    <td WIDTH="44" valign="top" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="897" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="44" valign="top" align="justify">
    <font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">4.</font></td>
    <td WIDTH="941" COLSPAN="2" align="justify">
    <font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">The issuer's other certifying
    officer and I are responsible for establishing and maintaining disclosure
    controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
    15d-15(e)) and internal control over financial reporting (as defined in
    Exchange Act Rules 13(a) &#150; 15(f) and 15(d) &#150; 15(f)) for the issuer and have:</font></td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="897" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" valign="top" align="justify">
    <font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">(a)</font></td>
    <td WIDTH="897" align="justify"><font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Designed such disclosure controls
    and procedures, or caused such disclosure controls and procedures to be
    designed under our supervision, to ensure that material information relating
    to the issuer, including its consolidated subsidiaries, is made known to us
    by others within those entities, particularly during the period in which
    this report is being prepared;</font></td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" valign="top" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="897" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" valign="top" align="justify">
    <font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">(b)</font></td>
    <td WIDTH="897" align="justify"><font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Designed such internal control
    over financial reporting, or caused such internal control over financial
    reporting to be designed under our supervision, to provide reasonable
    assurance regarding the reliability of financial reporting and the
    preparation of financial statements for external purposes in accordance with
    generally accepted accounting principles;</font></td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" valign="top" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="897" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" valign="top" align="justify">
    <font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">(c)</font></td>
    <td WIDTH="897" align="justify"><font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Evaluated the effectiveness of
    the issuer's disclosure controls and procedures and presented in this report
    our conclusions about the effectiveness of the disclosure controls and
    procedures, as of the end of the period covered by this report based on such
    evaluation; and</font></td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" valign="top" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="897" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" valign="top" align="justify">
    <font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">(d)</font></td>
    <td WIDTH="897" align="justify"><font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Disclosed in this report any
    change in the issuer's internal control over financial reporting that
    occurred during the period covered by the annual report that has materially
    affected, or is reasonably likely to materially affect, the issuer's
    internal control over financial reporting; and</font></td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" valign="top" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="897" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify"><font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">5.</font></td>
    <td WIDTH="941" COLSPAN="2" align="justify">
    <font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">The issuer's other certifying
    officer and I have disclosed, based on our most recent evaluation of
    internal control over financial reporting, to the issuer's auditors and the
    audit committee of the issuer's board of directors (or persons performing
    the equivalent functions):</font></td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="897" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" valign="top" align="justify">
    <font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">(a)</font></td>
    <td WIDTH="897" align="justify"><font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">All significant deficiencies and
    material weaknesses in the design or operation of internal control over
    financial reporting which are reasonably likely to adversely affect the
    issuer's ability to record, process, summarize and report financial
    information; and</font></td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" valign="top" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="897" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" valign="top" align="justify">
    <font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">(b)</font></td>
    <td WIDTH="897" align="justify"><font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Any fraud, whether or not
    material, that involves management or other employees who have a significant
    role in the issuer's internal control over financial reporting.</font></td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="897" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" align="justify"><font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Date:</font></td>
    <td WIDTH="897" align="justify"><font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">December 20, 2006</font></td>
  </tr>
</table>
<div align="right">
  <table CELLSPACING="0" BORDER="0" WIDTH="50%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
    <tr>
      <td WIDTH="13%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman PSMT" SIZE="2">/s/</font></td>
      <td WIDTH="87%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman PSMT" SIZE="2">Glenn J. Chamandy</font></td>
    </tr>
    <tr>
      <td WIDTH="13%" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman PSMT" SIZE="2">Name:</font></td>
      <td WIDTH="87%" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman PSMT" SIZE="2">Glenn J. Chamandy</font></td>
    </tr>
    <tr>
      <td WIDTH="13%"><font FACE="Times New Roman PSMT" SIZE="2">Title:</font></td>
      <td WIDTH="87%"><font FACE="Times New Roman PSMT" SIZE="2">President and
      Chief Executive Officer</font></td>
    </tr>
  </table>
</div>
<font FACE="Times New Roman PS" SIZE="2"><b><hr color="#000000" size="5"><p style="page-break-before: always"></b>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="44">&nbsp;</td>
    <td WIDTH="44">&nbsp;</td>
    <td WIDTH="897">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="985" colspan="3" align="center">
    <font FACE="Times New Roman PS" SIZE="2"><b>CERTIFICATION</b></font></td>
  </tr>
  <tr>
    <td WIDTH="985" colspan="3" align="center">
    <font FACE="Times New Roman PS" SIZE="2"><b>REQUIRED BY RULE 13a-14(a)</b></font></td>
  </tr>
  <tr>
    <td WIDTH="985" colspan="3" align="center">
    <font FACE="Times New Roman PS" SIZE="2"><b>OR RULE 15d-14(a)</b></font></td>
  </tr>
  <tr>
    <td WIDTH="44">&nbsp;</td>
    <td WIDTH="44">&nbsp;</td>
    <td WIDTH="897">&nbsp;</td>
  </tr>
  <tr>
    <td COLSPAN="3" width="985"><font FACE="Times New Roman PSMT" SIZE="2">I,
    Laurence G. Sellyn, certify that:</font></td>
  </tr>
  <tr>
    <td WIDTH="44">&nbsp;</td>
    <td WIDTH="44">&nbsp;</td>
    <td WIDTH="897">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="44" valign="top" align="justify">
    <font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">1.</font></td>
    <td WIDTH="941" COLSPAN="2" align="justify">
    <font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">I have reviewed this annual
    report on Form 40-F of Gildan Activewear Inc.;</font></td>
  </tr>
  <tr>
    <td WIDTH="44" valign="top" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="897" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="44" valign="top" align="justify">
    <font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">2.</font></td>
    <td WIDTH="941" COLSPAN="2" align="justify">
    <font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Based on my knowledge, this
    report does not contain any untrue statement of a material fact or omit to
    state a material fact necessary to make the statements made, in light of the
    circumstances under which such statements were made, not misleading with
    respect to the period covered by this report;</font></td>
  </tr>
  <tr>
    <td WIDTH="44" valign="top" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="897" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="44" valign="top" align="justify">
    <font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">3.</font></td>
    <td WIDTH="941" COLSPAN="2" align="justify">
    <font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Based on my knowledge, the
    financial statements, and other financial information included in this
    report, fairly present in all material respects the financial condition,
    results of operations and cash flows of the issuer as of, and for, the
    periods presented in this report;</font></td>
  </tr>
  <tr>
    <td WIDTH="44" valign="top" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="897" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="44" valign="top" align="justify">
    <font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">4.</font></td>
    <td WIDTH="941" COLSPAN="2" align="justify">
    <font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">The issuer's other certifying
    officer and I are responsible for establishing and maintaining disclosure
    controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
    15d-15(e)) and internal control over financial reporting (as defined in
    Exchange Act Rules 13(a) &#150; 15(f) and 15(d) &#150; 15(f)) for the issuer and have:</font></td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="897" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" valign="top" align="justify">
    <font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">(a)</font></td>
    <td WIDTH="897" align="justify"><font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Designed such disclosure controls
    and procedures, or caused such disclosure controls and procedures to be
    designed under our supervision, to ensure that material information relating
    to the issuer, including its consolidated subsidiaries, is made known to us
    by others within those entities, particularly during the period in which
    this report is being prepared;</font></td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" valign="top" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="897" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" valign="top" align="justify">
    <font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">(b)</font></td>
    <td WIDTH="897" align="justify"><font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Designed such internal control
    over financial reporting, or caused such internal control over financial
    reporting to be designed under our supervision, to provide reasonable
    assurance regarding the reliability of financial reporting and the
    preparation of financial statements for external purposes in accordance with
    generally accepted accounting principles;</font></td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" valign="top" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="897" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" valign="top" align="justify">
    <font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">(c)</font></td>
    <td WIDTH="897" align="justify"><font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Evaluated the effectiveness of
    the issuer's disclosure controls and procedures and presented in this report
    our conclusions about the effectiveness of the disclosure controls and
    procedures, as of the end of the period covered by this report based on such
    evaluation; and</font></td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" valign="top" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="897" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" valign="top" align="justify">
    <font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">(d)</font></td>
    <td WIDTH="897" align="justify"><font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Disclosed in this report any
    change in the issuer's internal control over financial reporting that
    occurred during the period covered by the annual report that has materially
    affected, or is reasonably likely to materially affect, the issuer's
    internal control over financial reporting; and</font></td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" valign="top" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="897" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify"><font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">5.</font></td>
    <td WIDTH="941" COLSPAN="2" align="justify">
    <font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">The issuer's other certifying
    officer and I have disclosed, based on our most recent evaluation of
    internal control over financial reporting, to the issuer's auditors and the
    audit committee of the issuer's board of directors (or persons performing
    the equivalent functions):</font></td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="897" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" valign="top" align="justify">
    <font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">(a)</font></td>
    <td WIDTH="897" align="justify"><font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">All significant deficiencies and
    material weaknesses in the design or operation of internal control over
    financial reporting which are reasonably likely to adversely affect the
    issuer's ability to record, process, summarize and report financial
    information; and</font></td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" valign="top" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="897" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" valign="top" align="justify">
    <font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">(b)</font></td>
    <td WIDTH="897" align="justify"><font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Any fraud, whether or not
    material, that involves management or other employees who have a significant
    role in the issuer's internal control over financial reporting.</font></td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="897" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="44" align="justify">
    <p style="margin-left: 5; margin-right: 5">&nbsp;</td>
    <td WIDTH="44" align="justify"><font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">Date:</font></td>
    <td WIDTH="897" align="justify"><font FACE="Times New Roman PSMT" SIZE="2">
    <p style="margin-left: 5; margin-right: 5">December 20, 2006</font></td>
  </tr>
</table>
<div align="right">
  <table CELLSPACING="0" BORDER="0" WIDTH="50%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
    <tr>
      <td WIDTH="13%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman PSMT" SIZE="2">/s/</font></td>
      <td WIDTH="87%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman PSMT" SIZE="2">Laurence G. Sellyn</font></td>
    </tr>
    <tr>
      <td WIDTH="13%" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman PSMT" SIZE="2">Name:</font></td>
      <td WIDTH="87%" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman PSMT" SIZE="2">Laurence G. Sellyn</font></td>
    </tr>
    <tr>
      <td WIDTH="13%" valign="top"><font FACE="Times New Roman PSMT" SIZE="2">
      Title:</font></td>
      <td WIDTH="87%"><font FACE="Times New Roman PSMT" SIZE="2">Executive
      Vice-President, Chief Financial and Administrative Officer</font></td>
    </tr>
  </table>
</div>
<hr color="#000000" size="5">

</body>

</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.7
<SEQUENCE>7
<FILENAME>exh997.htm
<DESCRIPTION>EX-99.7
<TEXT>
<html>

<head>

<title>Gildan Activewear Inc.: Exhibit 99.7 - Prepared by TNT Filings Inc.
</title>
</head>

<body>

<hr color="#000000" size="5"><font FACE="Times New Roman PS" SIZE="2"><b>
<p align="right">EXHIBIT 99.7 </p>
<p align="center">CERTIFICATION <br>
REQUIRED BY RULE 13a-14(b) OR RULE 15d-14(b) AND <br>
SECTION 1350 OF CHAPTER 63 OF TITLE 18 <br>
OF THE UNITED STATES CODE </p>
</b></font><font FACE="Times New Roman PSMT" SIZE="2">
<p align="justify">Gildan Activewear Inc. (the &quot;Corporation&quot;) is filing its
annual report on Form 40-F for the fiscal year ended October 1, 2006 (the
&quot;Report&quot;) with the United States Securities and Exchange Commission. </p>
<p align="justify">I, Glenn J. Chamandy, President and Chief Executive Officer
of the Corporation, certify, pursuant to 18 U.S.C. section 1350, as enacted
pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of
my knowledge: </p>
<p align="justify">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The Report
fully complies with the requirements of Section 13(a) or 15(d) of the U.S.
Securities Exchange Act of 1934; and </p>
<p align="justify">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
information contained in the Report fairly presents, in all material respects,
the financial condition and results of operations of the Corporation. </p>
<p align="justify">Dated: December 20, 2006 </p>
</font>
<div align="right">
  <table CELLSPACING="0" BORDER="0" WIDTH="50%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
    <tr>
      <td WIDTH="13%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman PSMT" SIZE="2">/s/</font></td>
      <td WIDTH="87%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman PSMT" SIZE="2">Glenn J. Chamandy</font></td>
    </tr>
    <tr>
      <td WIDTH="13%" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman PSMT" SIZE="2">Name:</font></td>
      <td WIDTH="87%" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman PSMT" SIZE="2">Glenn J. Chamandy</font></td>
    </tr>
    <tr>
      <td WIDTH="13%"><font FACE="Times New Roman PSMT" SIZE="2">Title:</font></td>
      <td WIDTH="87%"><font FACE="Times New Roman PSMT" SIZE="2">President and
      Chief Executive Officer</font></td>
    </tr>
  </table>
</div>
<p>&nbsp;</p>
<hr color="#000000" size="5"><p style="page-break-before: always"><font FACE="Times New Roman PS" SIZE="2"><b>
<p align="center">CERTIFICATION <br>
REQUIRED BY RULE 13a-14(b) OR RULE 15d-14(b) AND <br>
SECTION 1350 OF CHAPTER 63 OF TITLE 18 <br>
OF THE UNITED STATES CODE </p>
</b></font><font FACE="Times New Roman PSMT" SIZE="2">
<p align="justify">Gildan Activewear Inc. (the &quot;Corporation&quot;) is filing its
annual report on Form 40-F for the fiscal year ended October 1, 2006 (the
&quot;Report&quot;) with the United States Securities and Exchange Commission. </p>
<p align="justify">I, Laurence G. Sellyn, Executive Vice-President, Finance and
Chief Financial Officer of the Corporation, certify, pursuant to 18 U.S.C.
section 1350, as enacted pursuant to section 906 of the Sarbanes-Oxley Act of
2002, that, to the best of my knowledge: </p>
<p align="justify">1.</font> <font FACE="Times New Roman PSMT" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Report fully complies with the requirements of Section 13(a) or 15(d) of the
U.S. Securities Exchange Act of 1934; and </p>
<p align="justify">2.</font> <font FACE="Times New Roman PSMT" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Corporation.
</p>
<p align="justify">Dated: December 20, 2006 </p>
</font>
<div align="right">
  <table CELLSPACING="0" BORDER="0" WIDTH="50%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
    <tr>
      <td WIDTH="13%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman PSMT" SIZE="2">/s/</font></td>
      <td WIDTH="87%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman PSMT" SIZE="2">Laurence G. Sellyn</font></td>
    </tr>
    <tr>
      <td WIDTH="13%" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman PSMT" SIZE="2">Name:</font></td>
      <td WIDTH="87%" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman PSMT" SIZE="2">Laurence G. Sellyn</font></td>
    </tr>
    <tr>
      <td WIDTH="13%" valign="top"><font FACE="Times New Roman PSMT" SIZE="2">
      Title:</font></td>
      <td WIDTH="87%"><font FACE="Times New Roman PSMT" SIZE="2">Executive
      Vice-President, Chief Financial and Administrative Officer</font></td>
    </tr>
  </table>
</div>
<p>&nbsp;</p>
<hr color="#000000" size="5">

</body>

</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>GRAPHIC
<SEQUENCE>8
<FILENAME>exh9951.gif
<DESCRIPTION>GRAPHIC
<TEXT>
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