EX-99.2 3 exhibit99_2.htm SECOND CALENDAR QUARTER 2015 INTERIM FINANCIAL STATEMENTS

| CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

GILDAN ACTIVEWEAR INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in thousands of U.S. dollars) - unaudited
|  |  |  | July 5, |  | October 5,
|  |  |  | 2015 |  | 2014
Current assets: |  |  |  |  |  |  |
| Cash and cash equivalents |  |  | $ | 44,586 |  | $ | 65,163
| Trade accounts receivable |  |  |  | 451,197 |  |  | 354,265
| Income taxes receivable |  |  |  | 6,523 |  |  | 1,439
| Inventories (note 5) |  |  |  | 818,648 |  |  | 779,407
| Prepaid expenses and deposits |  |  |  | 17,775 |  |  | 17,507
| Assets held for sale |  |  |  | 4,989 |  |  | 5,839
| Other current assets |  |  |  | 26,385 |  |  | 23,784
Total current assets |  |  |  | 1,370,103 |  |  | 1,247,404
Non-current assets: |  |  |  |  |  |  |
| Property, plant and equipment |  |  |  | 1,027,869 |  |  | 873,726
| Intangible assets |  |  |  | 339,099 |  |  | 287,353
| Goodwill (note 8(a)) |  |  |  | 188,211 |  |  | 176,445
| Other non-current assets |  |  |  | 8,211 |  |  | 8,116
Total non-current assets |  |  |  | 1,563,390 |  |  | 1,345,640
Total assets |  |  | $ | 2,933,493 |  | $ | 2,593,044
Current liabilities: |  |  |  |  |  |  |
| Accounts payable and accrued liabilities |  |  | $ | 279,237 |  | $ | 374,671
Total current liabilities |  |  |  | 279,237 |  |  | 374,671
Non-current liabilities: |  |  |  |  |  |  |
| Long-term debt (note 6) |  |  |  | 593,000 |  |  | 157,000
| Deferred income taxes |  |  |  | 1,024 |  |  | 349
| Employee benefit obligations |  |  |  | 16,010 |  |  | 19,565
| Provisions |  |  |  | 18,652 |  |  | 17,926
Total non-current liabilities |  |  |  | 628,686 |  |  | 194,840
Total liabilities |  |  |  | 907,923 |  |  | 569,511
Equity: |  |  |  |  |  |  |
| Share capital |  |  |  | 123,431 |  |  | 124,595
| Contributed surplus |  |  |  | 28,263 |  |  | 20,778
| Retained earnings |  |  |  | 1,873,952 |  |  | 1,885,892
| Accumulated other comprehensive income |  |  |  | (76) |  |  | (7,732)
Total equity attributable to shareholders of the Company |  |  |  | 2,025,570 |  |  | 2,023,533
Total liabilities and equity |  |  | $ | 2,933,493 |  | $ | 2,593,044
See accompanying notes to condensed interim consolidated financial statements.

| QUARTERLY REPORT – QUARTER ENDED JULY 5, 2015 P.29

| CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

GILDAN ACTIVEWEAR INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF EARNINGS
AND COMPREHENSIVE INCOME
(in thousands of U.S. dollars, except per share data) - unaudited
| Three months ended |  | Nine months ended
| July 5, |  |  | July 6, |  |  | July 5, |  |  | July 6,
|  | 2015 |  |  | 2014 |  |  | 2015 |  |  | 2014
Net sales | $ | 714,153 |  | $ | 693,783 |  | $ | 1,740,964 |  | $ | 1,693,993
Cost of sales |  | 523,548 |  |  | 499,593 |  |  | 1,367,582 |  |  | 1,227,377
Gross profit |  | 190,605 |  |  | 194,190 |  |  | 373,382 |  |  | 466,616
Selling, general and administrative expenses |  | 80,131 |  |  | 71,752 |  |  | 236,754 |  |  | 213,843
Restructuring and acquisition-related costs (note 7) |  | 4,243 |  |  | 632 |  |  | 9,323 |  |  | 2,714
Operating income |  | 106,231 |  |  | 121,806 |  |  | 127,305 |  |  | 250,059
Financial expenses, net (note 8(c)) |  | 4,764 |  |  | 732 |  |  | 10,504 |  |  | 1,260
Earnings before income taxes |  | 101,467 |  |  | 121,074 |  |  | 116,801 |  |  | 248,799
Income tax expense |  | 2,037 |  |  | 5,075 |  |  | 2,571 |  |  | 11,924
Net earnings |  | 99,430 |  |  | 115,999 |  |  | 114,230 |  |  | 236,875
Other comprehensive income (loss), net of related |  |  |  |  |  |  |  |  |  |  |
income taxes (note 10): |  |  |  |  |  |  |  |  |  |  |
Cash flow hedges |  | 3,621 |  |  | (1,162) |  |  | 7,656 |  |  | (2,274)
Comprehensive income | $ | 103,051 |  | $ | 114,837 |  | $ | 121,886 |  | $ | 234,601
Earnings per share (note 11): |  |  |  |  |  |  |  |  |  |  |
Basic(1) | $ | 0.41 |  | $ | 0.48 |  | $ | 0.47 |  | $ | 0.97
Diluted(1) | $ | 0.41 |  | $ | 0.47 |  | $ | 0.47 |  | $ | 0.96
(1) All earnings per share and share data reflect the effect of the two-for-one stock split which took effect on March 27, 2015.
See accompanying notes to condensed interim consolidated financial statements. |  |  |  |  |  |

| QUARTERLY REPORT – QUARTER ENDED JULY 5, 2015 P.30

| CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

GILDAN ACTIVEWEAR INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Nine months ended July 5, 2015 and July 6, 2014
(in thousands or thousands of U.S. dollars) - unaudited

|  |  |  |  |  |  |  |  | Accumulated |  |  |  |  |  |
|  |  |  |  |  |  |  |  | other |  |  |  |  |  |
| Share capital |  | Contributed |  | comprehensive |  | Retained |  | Total
| Number(1) |  | Amount |  | surplus |  | income (loss) |  | earnings |  | equity
Balance, October 5, 2014 | 244,648 |  | $ | 124,595 |  | $ | 20,778 |  | $ | (7,732) |  | $ | 1,885,892 |  | $ | 2,023,533
Share-based compensation | - |  |  | - |  |  | 7,590 |  |  | - |  |  | - |  |  | 7,590
Shares issued under employee share |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
purchase plan | 35 |  |  | 1,016 |  |  | - |  |  | - |  |  | - |  |  | 1,016
Shares issued pursuant to exercise of |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
stock options | 733 |  |  | 10,311 |  |  | (3,352) |  |  | - |  |  | - |  |  | 6,959
Shares issued or distributed pursuant to |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
vesting of restricted share units | 432 |  |  | 4,303 |  |  | (4,303) |  |  | - |  |  | - |  |  | -
Shares repurchased and cancelled | (3,050) |  |  | (1,555) |  |  | - |  |  | - |  |  | (78,188) |  |  | (79,743)
Share repurchases for future settlement |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
of non-Treasury RSUs | (560) |  |  | (15,239) |  |  | 7,488 |  |  | - |  |  | - |  |  | (7,751)
Dividends declared | - |  |  | - |  |  | 62 |  |  | - |  |  | (47,982) |  |  | (47,920)
Transactions with shareholders of the |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Company recognized directly in equity | (2,410) |  |  | (1,164) |  |  | 7,485 |  |  | - |  |  | (126,170) |  |  | (119,849)
Cash flow hedges (note 10) | - |  |  | - |  |  | - |  |  | 7,656 |  |  | - |  |  | 7,656
Net earnings | - |  |  | - |  |  | - |  |  | - |  |  | 114,230 |  |  | 114,230
Comprehensive income | - |  |  | - |  |  | - |  |  | 7,656 |  |  | 114,230 |  |  | 121,886
Balance, July 5, 2015 | 242,238 |  | $ | 123,431 |  | $ | 28,263 |  | $ | (76) |  | $ | 1,873,952 |  | $ | 2,025,570
Balance, September 29, 2013 | 243,252 |  | $ | 107,867 |  | $ | 28,869 |  | $ | (656) |  | $ | 1,583,346 |  | $ | 1,719,426
Share-based compensation | - |  |  | - |  |  | 7,219 |  |  | - |  |  | - |  |  | 7,219
Shares issued under employee share |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
purchase plan | 30 |  |  | 778 |  |  | - |  |  | - |  |  | - |  |  | 778
Shares issued pursuant to exercise of |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
stock options | 174 |  |  | 3,339 |  |  | (964) |  |  | - |  |  | - |  |  | 2,375
Shares issued or distributed pursuant to |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
vesting of restricted share units | 812 |  |  | 9,600 |  |  | (9,600) |  |  | - |  |  | - |  |  | -
Share repurchases for future settlement |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
of non-Treasury RSUs | (600) |  |  | (14,481) |  |  | 8,383 |  |  | - |  |  | - |  |  | (6,098)
Dividends declared | - |  |  | - |  |  | 175 |  |  | - |  |  | (40,010) |  |  | (39,835)
Transactions with shareholders of the |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Company recognized directly in equity | 416 |  |  | (764) |  |  | 5,213 |  |  | - |  |  | (40,010) |  |  | (35,561)
Cash flow hedges (note 10) | - |  |  | - |  |  | - |  |  | (2,274) |  |  | - |  |  | (2,274)
Net earnings | - |  |  | - |  |  | - |  |  | - |  |  | 236,875 |  |  | 236,875
Comprehensive income (loss) | - |  |  | - |  |  | - |  |  | (2,274) |  |  | 236,875 |  |  | 234,601
Balance, July 6, 2014 | 243,668 |  | $ | 107,103 |  | $ | 34,082 |  | $ | (2,930) |  | $ | 1,780,211 |  | $ | 1,918,466
(1) All earnings per share and share data reflect the effect of the two-for-one stock split which took effect on March 27, 2015.
See accompanying notes to condensed interim consolidated financial statements. |  |  |

| QUARTERLY REPORT – QUARTER ENDED JULY 5, 2015 P.31

| CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

GILDAN ACTIVEWEAR INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars) - unaudited

|  | Three months ended |  | Nine months ended
|  | July 5, |  | July 6, |  | July 5, |  | July 6,
|  |  | 2015 |  |  | 2014 |  |  | 2015 |  |  | 2014
Cash flows from (used in) operating activities: |  |  |  |  |  |  |  |  |  |
| Net earnings | $ | 99,430 |  | $ | 115,999 |  | $ | 114,230 |  | $ | 236,875
| Adjustments to reconcile net earnings to cash flows |  |  |  |  |  |  |  |  |  |  |
| from operating activities (note 12(a)) |  | 42,822 |  |  | 32,900 |  |  | 97,965 |  |  | 78,699
|  |  | 142,252 |  |  | 148,899 |  |  | 212,195 |  |  | 315,574
| Changes in non-cash working capital balances: |  |  |  |  |  |  |  |  |  |  |
| Trade accounts receivable |  | (102,584) |  |  | (69,901) |  |  | (94,383) |  |  | (110,911)
| Income taxes |  | (1,601) |  |  | 319 |  |  | (5,059) |  |  | (2,284)
| Inventories |  | 51,968 |  |  | (2,104) |  |  | (10,536) |  |  | (125,000)
| Prepaid expenses and deposits |  | (2,592) |  |  | (6,034) |  |  | (199) |  |  | (3,077)
| Other current assets |  | (1,346) |  |  | (6,403) |  |  | (4,298) |  |  | (7,849)
| Accounts payable and accrued liabilities |  | (888) |  |  | 19,551 |  |  | (68,383) |  |  | 12,162
Cash flows from operating activities |  | 85,209 |  |  | 84,327 |  |  | 29,337 |  |  | 78,615
Cash flows from (used in) investing activities: |  |  |  |  |  |  |  |  |  |  |
| Purchase of property, plant and equipment |  | (66,265) |  |  | (73,917) |  |  | (243,469) |  |  | (215,867)
| Purchase of intangible assets |  | (1,016) |  |  | (1,550) |  |  | (4,697) |  |  | (3,563)
| Business acquisitions |  | (500) |  |  | - |  |  | (103,870) |  |  | -
| Proceeds on disposal of assets held for sale and |  |  |  |  |  |  |  |  |  |  |
| property, plant and equipment |  | 546 |  |  | 3,326 |  |  | 2,478 |  |  | 4,595
Cash flows used in investing activities |  | (67,235) |  |  | (72,141) |  |  | (349,558) |  |  | (214,835)
Cash flows from (used in) financing activities: |  |  |  |  |  |  |  |  |  |  |
| (Decrease) increase in amounts drawn under |  |  |  |  |  |  |  |  |  |  |
| revolving long-term bank credit facility |  | (25,000) |  |  | (13,000) |  |  | 436,000 |  |  | 135,000
| Dividends paid |  | (15,795) |  |  | (13,329) |  |  | (47,920) |  |  | (39,835)
| Proceeds from the issuance of shares |  | 6,718 |  |  | 421 |  |  | 7,878 |  |  | 3,078
| Repurchase and cancellation of shares |  | - |  |  | - |  |  | (79,743) |  |  | -
| Share repurchases for future settlement of |  |  |  |  |  |  |  |  |  |  |
| non-Treasury RSUs |  | - |  |  | - |  |  | (15,239) |  |  | (14,481)
Cash flows (used in) from financing activities |  | (34,077) |  |  | (25,908) |  |  | 300,976 |  |  | 83,762
Effect of exchange rate changes on cash and cash |  |  |  |  |  |  |  |  |  |  |
equivalents denominated in foreign currencies |  | 408 |  |  | 223 |  |  | (1,332) |  |  | 182
Net decrease in cash and cash equivalents during the period |  | (15,695) |  |  | (13,499) |  |  | (20,577) |  |  | (52,276)
Cash and cash equivalents, beginning of period |  | 60,281 |  |  | 58,591 |  |  | 65,163 |  |  | 97,368
Cash and cash equivalents, end of period | $ | 44,586 |  | $ | 45,092 |  | $ | 44,586 |  | $ | 45,092
Cash paid during the period (included in cash flows from operating activities):
| Interest | $ | 2,347 |  | $ | 617 |  | $ | 4,804 |  | $ | 1,135
| Income taxes |  | 3,037 |  |  | 2,437 |  |  | 6,715 |  |  | 8,519
Supplemental disclosure of cash flow information (note 12) |  |  |  |  |  |  |  |  |  |  |
See accompanying notes to condensed interim consolidated financial statements.

| QUARTERLY REPORT – QUARTER ENDED JULY 5, 2015 P.32

| NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the period ended July 5, 2015
(Tabular amounts in thousands or thousands of U.S. dollars except per share data, unless otherwise indicated)
1. REPORTING ENTITY:
Gildan Activewear Inc. (the "Company") is domiciled in Canada and is incorporated under the Canada Business Corporations Act. Its principal business activity is the manufacture and sale of activewear, socks and underwear. Beginning in fiscal 2015, the Company’s fiscal year will end on the Sunday closest to December 31 of each year. As a result, fiscal 2015 will be a transition year, and will include 15 months of operations, beginning on October 6, 2014 and ending on January 3, 2016.
The address of the Company’s registered office is 600 de Maisonneuve Boulevard West, Suite 3300, Montreal, Quebec. These condensed interim consolidated financial statements are as at and for the three and nine months ended July 5, 2015 and include the accounts of the Company and its subsidiaries. The Company is a publicly listed entity and its shares are traded on the Toronto Stock Exchange and New York Stock Exchange under the symbol GIL.
All earnings per share and share data in these condensed interim consolidated financial statements and notes are on a post-split basis, reflecting the effect of the two-for-one stock split of the Company’s outstanding common shares by way of a share dividend that took effect on March 27, 2015.
2. BASIS OF PREPARATION:

(a) | Statement of compliance:

These condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard (“IAS”) 34, Interim Financial Reporting as issued by the International Accounting Standards Board (“IASB”). The Company applied the same accounting policies in the preparation of these condensed interim consolidated financial statements as those disclosed in note 3 of its most recent annual consolidated financial statements, except as noted below. These condensed interim consolidated financial statements should be read in conjunction with the Company’s 2014 audited annual consolidated financial statements. Certain prior year comparatives have been reclassified to conform to the current period’s presentation.
These condensed interim consolidated financial statements were authorized for issuance by the Board of Directors of the Company on July 30, 2015.

(b) | Seasonality of the business:

The Company’s net sales are subject to seasonal variations within our operating segments. For our Printwear segment, net sales have historically been higher during the second quarter of the calendar year. For our Branded Apparel segment, net sales have historically been higher during the third and fourth quarters of the calendar year.

(c) | Initial application of new or amended accounting standards in the reporting period:

On October 6, 2014, the Company adopted IFRIC 21, Levies. IFRIC 21 provides guidance on accounting for levies in accordance with IAS 37, Provisions, Contingent Liabilities and Contingent Assets. The interpretation defines a levy as an outflow of resources from an entity imposed by a government in accordance with legislation, other than income taxes within the scope of IAS 12, Income Taxes, and confirms that an entity recognizes a liability for a levy only when the triggering event specified in the legislation occurs. The adoption of IFRIC 21 did not have an impact on the Company’s consolidated financial statements.

| QUARTERLY REPORT – QUARTER ENDED JULY 5, 2015 P.33

| NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

3. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS NOT YET APPLIED:
Revenues from contracts with customers
In May 2014, the IASB released IFRS 15, Revenue from Contracts with Customers, which establishes principles for reporting and disclosing the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The core principle of IFRS 15 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods and services.
IFRS 15 provides a single model in order to depict the transfer of promised goods or services to customers, and supersedes IAS 11, Construction Contracts, IAS 18, Revenue, and a number of revenue-related interpretations (IFRIC 13, Customer Loyalty Programmes, IFRIC 15, Agreements for the Construction of Real Estate, IFRIC 18, Transfers of Assets from Customers, and SIC-31, Revenue - Barter Transactions Involving Advertising Service). IFRS 15 is currently effective for the Company’s fiscal year beginning on January 2, 2017, with earlier application permitted. The Company is currently assessing the impact of the adoption of this standard on its consolidated financial statements.
Financial Instruments
In July 2014, the IASB issued the complete IFRS 9 (2014), Financial Instruments. IFRS 9 (2014) differs in some regards from IFRS 9 (2013) which the Company early adopted effective March 31, 2014. IFRS 9 (2014) includes updated guidance on the classification and measurement of financial assets. The final standard also amends the impairment model by introducing a new expected credit loss model for calculating impairment, and new general hedge accounting requirements. The mandatory effective date of IFRS 9 (2014) is for annual periods beginning on or after January 1, 2018 and must be applied retrospectively with some exemptions. Early adoption is permitted. The Company is currently assessing the impact of the adoption of this standard on its consolidated financial statements.
4. BUSINESS ACQUISITION:
On March 2, 2015, the Company acquired substantially all of the operating assets of a company operating under the Comfort Colors trade name for cash consideration of $103.4 million. The transaction also resulted in the effective settlement of $8.4 million of trade accounts receivable from Comfort Colors prior to the acquisition. The acquisition was financed by the utilization of the Company’s revolving long-term bank credit facility. Comfort Colors is the leading supplier of garment-dyed undecorated basic T-shirts and sweatshirts for the North American printwear market. The Comfort Colors® brand is highly recognized among consumers purchasing from college bookstores, specialty retail stores, and destination and resort shops. The acquisition of Comfort Colors reinforces Gildan’s strategy to increase its penetration of the growing fashion basics segment of the North American printwear market.
The Company accounted for the acquisition using the acquisition method in accordance with IFRS 3, Business Combinations. The Company has determined the fair value of the assets acquired and liabilities assumed based on management's preliminary best estimate of their fair values and taking into account all relevant information available at that time. The Company has not yet finalized the assessment of the estimated fair value of inventories acquired, which the Company expects to finalize by the end of fiscal 2015. Goodwill is attributable primarily to Comfort Colors’ assembled workforce and expected synergies, which were not recorded separately since they did not meet the recognition criteria for identifiable intangible assets. Goodwill recorded in connection with this acquisition is partially deductible for tax purposes.

| QUARTERLY REPORT – QUARTER ENDED JULY 5, 2015 P.34

| NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

4. BUSINESS ACQUISITION (continued):
The following table summarizes the provisional amounts recognized for the assets acquired and liabilities assumed at the date of acquisition:

Assets acquired: |  |  |  |  |  |  |  |  |
| Trade accounts receivable |  |  |  |  |  |  |  | $ | 14,685
| Inventories |  |  |  |  |  |  |  |  | 22,778
| Prepaid expenses and deposits |  |  |  |  |  |  |  |  | 69
| Property, plant and equipment |  |  |  |  |  |  |  |  | 2,234
| Intangible assets (i) |  |  |  |  |  |  |  |  | 62,300
|  |  |  |  |  |  |  |  |  |  | 102,066
Liabilities assumed: |  |  |  |  |  |  |  |  |
| Accounts payable and accrued liabilities |  |  |  |  |  | (2,084)
|  |  |  |  |  |  |  |  |  |  | (2,084)
Goodwill |  |  |  |  |  |  |  |  | 11,766
Net assets acquired at fair value |  |  |  |  |  | 111,748
Cash consideration paid at closing |  |  |  |  |  |  |  |  | 103,370
Settlement of pre-existing relationship |  |  |  |  |  | 8,378
|  |  |  |  |  |  |  |  |  | $ | 111,748
(i) The intangible assets acquired are comprised of customer relationships in the amount of $25.0 million, which are being amortized on a straight line basis over their estimated useful lives, and trademarks in the amount of $37.3 million, which are not being amortized as they are considered to be indefinite life intangible assets.

The consolidated results of the Company for fiscal 2015 include net sales of $24.5 million and net earnings of $4.8 million relating to Comfort Colors’ results of operations since the date of acquisition, adjusted to reflect the elimination of intercompany sales. If the acquisition of Comfort Colors was accounted for on a pro forma basis as if it had occurred at the beginning of the Company’s fiscal year, the Company’s consolidated net sales and net earnings for the nine months ended July 5, 2015 would have been $1,768.3 million and $119.0 million, respectively. These pro forma figures have been estimated based on the results of Comfort Colors’ operations prior to being purchased by the Company, adjusted to reflect the elimination of intercompany sales, and fair value adjustments which arose on the date of acquisition, as if the acquisition occurred on October 6, 2014, and should not be viewed as indicative of the Company’s future results.
The operating results of Comfort Colors are included in the Printwear segment.

| QUARTERLY REPORT – QUARTER ENDED JULY 5, 2015 P.35

| NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

5. INVENTORIES:

|  |  |  |  | July 5, |  | October 5,
|  |  |  | 2015 |  | 2014
Raw materials and spare parts inventories |  |  |  |  | $ | 116,114 |  | $ | 98,767
Work in progress |  |  |  |  |  | 63,130 |  |  | 58,658
Finished goods |  |  |  |  |  | 639,404 |  |  | 621,982
|  |  |  |  | $ | 818,648 |  | $ | 779,407

6. LONG-TERM DEBT:
The Company has a committed unsecured revolving long-term bank credit facility of $1 billion. The facility provides for an annual extension which is subject to the approval of the lenders, and amounts drawn under the facility bear interest at a variable banker’s acceptance or U.S. LIBOR-based interest rate plus a spread ranging from 1% to 2%, such range being a function of the total debt to EBITDA ratio (as defined in the credit facility agreement). In December 2014, the Company amended its revolving long-term bank credit facility to increase the facility to $1 billion from $800 million, and to extend the maturity date from January 2019 to April 2020. As at July 5, 2015, $593.0 million (October 5, 2014 - $157.0 million) was drawn under the facility, and the effective interest rate for the nine months ended July 5, 2015 was 1.3%. In addition, an amount of $15.0 million (October 5, 2014 - $7.9 million) has been committed against this facility to cover various letters of credit. The revolving long-term bank credit facility requires the Company to comply with certain covenants including maintenance of financial ratios. The Company was in compliance with all covenants as at July 5, 2015.
7. RESTRUCTURING AND ACQUISITION-RELATED COSTS:

| Three months ended |  | Nine months ended
|  | July 5, |  | July 6, |  | July 5, |  | July 6,
|  | 2015 |  |  | 2014 |  | 2015 |  | 2014
Employee termination and benefit costs | $ | 2,502 |  | $ | - |  | $ | 3,709 |  | $ | 429
Loss on settlement on wind-up of defined benefit |  |  |  |  |  |  |  |  |  |  |
pension plan |  | - |  |  | - |  |  | - |  |  | 1,898
Exit, relocation and other costs |  | 1,495 |  |  | (127) |  |  | 4,163 |  |  | (34)
Gains on disposal of assets held for sale |  | - |  |  | - |  |  | (330) |  |  | (338)
Remeasurement of contingent consideration in |  |  |  |  |  |  |  |  |  |  |
connection with a business acquisition |  | 202 |  |  | - |  |  | 721 |  |  | -
Acquisition-related transaction costs |  | 44 |  |  | 759 |  |  | 1,060 |  |  | 759
| $ | 4,243 |  | $ | 632 |  | $ | 9,323 |  | $ | 2,714

Restructuring and acquisition-related costs for the nine months ended July 5, 2015 relate primarily to costs incurred in connection with the consolidation of sewing operations, the integration of screenprinting and distribution activities in connection with the integration of acquired businesses, the integration of the Doris Inc. acquisition, and the acquisition of the operating assets of Comfort Colors.
Restructuring and acquisition-related costs for the nine months ended July 6, 2014 relate primarily to a loss incurred on the final settlement on the wind-up of the former Gold Toe defined benefit pension plan, and transaction costs incurred in connection with the acquisition of the operating assets of Doris Inc.

| QUARTERLY REPORT – QUARTER ENDED JULY 5, 2015 P.36

| NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

8. OTHER INFORMATION:

(a) | Goodwill

|  |  |  |  |  |  |  |  | July 5,
|  |  |  |  |  |  |  | 2015
| Balance, October 5, 2014 |  |  |  |  |  |  |  | $ | 176,445
| Goodwill acquired (note 4) |  |  |  |  |  |  |  |  | 11,766
| Balance, July 5, 2015 |  |  |  |  |  |  |  | $ | 188,211

(b) | Depreciation and amortization:

|  | Three months ended |  | Nine months ended
|  | July 5, |  | July 6, |  | July 5, |  | July 6,
|  | 2015 |  | 2014 |  | 2015 |  | 2014
| Depreciation of property, plant and equipment | $ | 27,181 |  | $ | 21,637 |  | $ | 77,062 |  | $ | 61,490
| Adjustment for the variation of depreciation of property, |  |  |  |  |  |  |  |  |  |  |
| plant and equipment included in inventories at the |  |  |  |  |  |  |  |  |  |  |
| beginning and end of the period |  | 2,892 |  |  | 2,096 |  |  | (5,927) |  |  | (2,632)
| Depreciation of property, plant and equipment included |  |  |  |  |  |  |  |  |  |  |
| in net earnings |  | 30,073 |  |  | 23,733 |  |  | 71,135 |  |  | 58,858
| Amortization of intangible assets, excluding software |  | 4,727 |  |  | 3,688 |  |  | 13,168 |  |  | 11,064
| Amortization of software |  | 717 |  |  | 532 |  |  | 2,083 |  |  | 1,442
| Depreciation and amortization included in net earnings | $ | 35,517 |  | $ | 27,953 |  | $ | 86,386 |  | $ | 71,364

Property, plant and equipment includes $153.8 million (October 5, 2014 - $166.9 million) of assets not yet utilized in operations. Depreciation on these assets commences when the assets are available for use.

(c) | Financial expenses, net:

|  | Three months ended |  | Nine months ended
|  | July 5, |  | July 6, |  | July 5, |  | July 6,
|  | 2015 |  | 2014 |  | 2015 |  | 2014
| Interest expense on financial liabilities |  |  |  |  |  |  |  |  |  |  |
| recorded at amortized cost | $ | 2,130 |  | $ | 580 |  | $ | 4,446 |  | $ | 1,104
| Bank and other financial charges |  | 970 |  |  | 919 |  |  | 2,761 |  |  | 2,498
| Interest accretion on discounted provisions |  | 81 |  |  | 81 |  |  | 245 |  |  | 241
| Foreign exchange loss (gain) |  | 1,583 |  |  | (848) |  |  | 3,052 |  |  | (2,583)
|  | $ | 4,764 |  | $ | 732 |  | $ | 10,504 |  | $ | 1,260

| QUARTERLY REPORT – QUARTER ENDED JULY 5, 2015 P.37

| NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

9. FAIR VALUE MEASUREMENT:
Financial instruments – carrying amounts and fair values:
The carrying amounts and fair values of financial assets and liabilities included in the condensed interim consolidated statements of financial position are as follows:

|  | July 5, |  | October 5,
|  | 2015 |  |  | 2014
Financial assets |  |  |  |  |  |
Amortized cost: |  |  |  |  |  |
Cash and cash equivalents |  | $ | 44,586 |  | $ | 65,163
Trade accounts receivable |  |  | 451,197 |  |  | 354,265
Other current assets |  |  | 20,437 |  |  | 17,824
Long-term non-trade receivables included in other |  |  |  |  |  |
non-current assets |  |  | 3,622 |  |  | 4,008
Derivative financial instruments designated as effective |  |  |  |  |  |
hedging instruments included in other current assets |  |  | 2,740 |  |  | 920
Derivative financial instruments included in other |  |  |  |  |  |
current assets - total return swap |  |  | 1,445 |  |  | -
Financial liabilities |  |  |  |  |  |
Amortized cost: |  |  |  |  |  |
Accounts payable and accrued liabilities |  | $ | 270,698 |  | $ | 361,377
Long-term debt - bearing interest at variable rates |  |  | 593,000 |  |  | 157,000
Derivative financial instruments designated as effective |  |  |  |  |  |
hedging instruments included in accounts payable |  |  |  |  |  |
and accrued liabilities |  |  | 2,425 |  |  | 7,335
Contingent consideration included in accounts payable |  |  |  |  |  |
and accrued liabilities |  |  | 6,114 |  |  | 5,959

Short-term financial assets and liabilities
The Company has determined that the fair value of its short-term financial assets and liabilities approximates their respective carrying amounts as at the reporting dates due to the short-term maturities of these instruments, as they bear variable interest-rates or because the terms and conditions are comparable to current market terms and conditions for similar items.
Non-current assets and long-term debt
The fair values of the long-term non-trade receivables included in other non-current assets and the Company’s interest-bearing financial liabilities also approximate their respective carrying amounts because the interest rates applied to measure their carrying amounts approximate current market interest rates.

| QUARTERLY REPORT – QUARTER ENDED JULY 5, 2015 P.38

| NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

9. FAIR VALUE MEASUREMENT (continued):
Contingent consideration
The contingent consideration in connection with a business combination is payable based on the achievement of targets for growth in sales revenues for a three-year period from the date of the acquisition. The fair value measurement of the contingent consideration is determined using unobservable (Level 3) inputs. These inputs include (i) the estimated amount and timing of projected cash flows; (ii) the probability of the achievement of the factors on which the contingency is based; and (iii) the risk-adjusted discount rate used to present value the probability-weighted cash flows. Fair value has been estimated based on the best estimate of the probability of the revenue targets being achieved, as well as using a discount rate which is based on the risk associated with the revenue targets being met. The discount rate applied to the contingent consideration was 13.5%. Significant increases (decreases) in any of the inputs in isolation could result in a significantly lower (higher) fair value measurement. There has been no significant change in any of the inputs used to measure the fair value of the contingent consideration since the date of the acquisition. The contingent consideration is classified as a financial liability and is included in accounts payable and accrued liabilities.
Derivatives
The derivatives consist mainly of foreign exchange and commodity forward and option contracts. The fair value of the forward contracts is measured using a generally accepted valuation technique which is the discounted value of the difference between the contract’s value at maturity based on the rate set out in the contract and the contract’s value at maturity based on the rate that the counterparty would use if it were to renegotiate the same contract at the measurement date under the same conditions. The fair value of the option contracts is measured using option pricing models that utilize a variety of inputs that are a combination of quoted prices and market-corroborated inputs, including volatility estimates and option adjusted credit spreads.
The Company also has a total return swap (“TRS”) outstanding that is intended to reduce the variability of net earnings associated with deferred share units, which are settled in cash. The TRS is not designated as a hedging instrument and, therefore, the fair value adjustment at the end of each reporting period is recognized in selling, general and administrative expenses. The fair value of the TRS is measured by reference to the market price of the Company’s common shares, at each reporting date. The TRS has a one-year term, may be extended annually, and the contract allows for early termination at the option of the Company.
The fair values of financial assets, financial liabilities and derivative financial instruments were measured using Level 1 or 2 inputs in the fair value hierarchy, with the exception of the contingent consideration which was measured using Level 3 inputs. In determining the fair value of financial assets and financial liabilities, including derivative financial instruments, the Company takes into account its own credit risk and the credit risk of the counterparties.

| QUARTERLY REPORT – QUARTER ENDED JULY 5, 2015 P.39

| NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

10. OTHER COMPREHENSIVE INCOME (“OCI”):

| Three months ended |  | Nine months ended
| July 5, |  | July 6, |  | July 5, |  | July 6,
|  | 2015 |  |  | 2014 |  | 2015 |  | 2014
Net gain (loss) on derivatives designated as cash flow |  |  |  |  |  |  |  |  |  |  |
hedges: |  |  |  |  |  |  |  |  |  |  |
Foreign currency risk | $ | (223) |  | $ | (2,896) |  | $ | 631 |  | $ | (5,058)
Commodity price risk |  | 1,658 |  |  | - |  |  | 651 |  |  | -
Income taxes |  | 3 |  |  | 29 |  |  | (6) |  |  | 51
Amounts reclassified from OCI to property, plant and |  |  |  |  |  |  |  |  |  |  |
equipment, related to foreign currency risk |  | - |  |  | (84) |  |  | - |  |  | (991)
Amounts reclassified from OCI to inventory, |  |  |  |  |  |  |  |  |  |  |
related to commodity price risk |  | 1,872 |  |  | - |  |  | 7,402 |  |  | -
Amounts reclassified from OCI to net earnings, |  |  |  |  |  |  |  |  |  |  |
related to foreign currency risk, and included in: |  |  |  |  |  |  |  |  |  |  |
Net sales |  | (229) |  |  | 1,534 |  |  | (932) |  |  | 2,989
Selling, general and administrative expenses |  | - |  |  | - |  |  | - |  |  | 113
Financial expenses, net |  | 544 |  |  | 273 |  |  | (99) |  |  | 660
Income taxes |  | (4) |  |  | (18) |  |  | 9 |  |  | (38)
Other comprehensive income (loss) | $ | 3,621 |  | $ | (1,162) |  | $ | 7,656 |  | $ | (2,274)

The change in the time value element of option contracts designated as cash flow hedges to reduce the exposure in movements of commodity prices was not significant for the three and nine months ended July 5, 2015.
The change in the forward element of derivatives designated as cash flow and fair value hedges to reduce foreign currency risk was not significant for the three and nine months ended July 5, 2015.
For the three and nine months ended July 5, 2015, the derivatives designated as either cash flow hedges or fair value hedges were considered to be fully effective and no ineffectiveness has been recognized in net earnings.
As at July 5, 2015, approximately $0.1 million of net losses presented in accumulated other comprehensive income are expected to be reclassified to net earnings within the next twelve months.

| QUARTERLY REPORT – QUARTER ENDED JULY 5, 2015 P.40

| NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

11. EARNINGS PER SHARE:
Reconciliation between basic and diluted earnings per share is as follows:

| Three months ended |  | Nine months ended
| July 5, |  | July 6, |  | July 5, |  | July 6,
|  | 2015 |  |  | 2014 |  | 2015 |  | 2014
Net earnings - basic and diluted | $ | 99,430 |  | $ | 115,999 |  | $ | 114,230 |  | $ | 236,875
Basic earnings per share: |  |  |  |  |  |  |  |  |  |  |
Basic weighted average number of common |  |  |  |  |  |  |  |  |  |  |
shares outstanding | 241,856 |  | 243,584 |  | 242,356 |  | 243,388
Basic earnings per share | $ | 0.41 |  | $ | 0.48 |  | $ | 0.47 |  | $ | 0.97
Diluted earnings per share: |  |  |  |  |  |  |  |  |  |  |
Basic weighted average number of common |  |  |  |  |  |  |  |  |  |  |
shares outstanding | 241,856 |  | 243,584 |  | 242,356 |  | 243,388
Plus dilutive impact of stock options, Treasury RSUs |  |  |  |  |  |  |  |  |  |  |
and common shares held in trust |  | 1,953 |  |  | 2,844 |  |  | 1,955 |  |  | 2,898
Diluted weighted average number of common |  |  |  |  |  |  |  |  |  |  |
shares outstanding | 243,809 |  | 246,428 |  | 244,311 |  | 246,286
Diluted earnings per share | $ | 0.41 |  | $ | 0.47 |  | $ | 0.47 |  | $ | 0.96
All earnings per share and share data reflect the effect of the two-for-one stock split which took effect on March 27, 2015.

Excluded from the above calculation for the three months ended July 5, 2015 are nil stock options (2014 - 346,452) which were deemed to be anti-dilutive. Excluded from the above calculation for the nine months ended July 5, 2015 are 296,202 stock options (2014 - 346,452) which were deemed to be anti-dilutive.

| QUARTERLY REPORT – QUARTER ENDED JULY 5, 2015 P.41

| NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

12. SUPPLEMENTAL CASH FLOW DISCLOSURE:

(a) | Adjustments to reconcile net earnings to cash flows from operating activities:

|  | Three months ended |  | Nine months ended
|  | July 5, |  | July 6, |  | July 5, |  | July 6,
|  | 2015 |  | 2014 |  | 2015 |  | 2014
| Depreciation and amortization (note 8(b)) | $ | 35,517 |  | $ | 27,953 |  | $ | 86,386 |  | $ | 71,364
| Restructuring charges related to assets held |  |  |  |  |  |  |  |  |  |  |
| for sale (note 7) |  | - |  |  | - |  |  | (330) |  |  | (338)
| Remeasurement of contingent consideration in |  |  |  |  |  |  |  |  |  |  |
| connection with a business acquisition (note 7) |  | 202 |  |  | - |  |  | 721 |  |  | -
| Loss (gain) on disposal of property, plant and equipment |  | 161 |  |  | (105) |  |  | 607 |  |  | (909)
| Share-based compensation |  | 2,767 |  |  | 2,697 |  |  | 7,687 |  |  | 7,294
| Deferred income taxes |  | 902 |  |  | 2,524 |  |  | 1,142 |  |  | 5,927
| Unrealized net (gain) loss on foreign exchange and |  |  |  |  |  |  |  |  |  |  |
| financial derivatives |  | (516) |  |  | (139) |  |  | 788 |  |  | (782)
| Timing differences between settlement of financial |  |  |  |  |  |  |  |  |  |  |
| derivatives and transfer of deferred loss in |  |  |  |  |  |  |  |  |  |  |
| accumulated OCI to net earnings |  | 2,147 |  |  | - |  |  | 3,410 |  |  | -
| Other non-current assets |  | 1,071 |  |  | (460) |  |  | (95) |  |  | (546)
| Employee benefit obligations |  | 3 |  |  | 349 |  |  | (3,077) |  |  | (2,900)
| Provisions |  | 568 |  |  | 81 |  |  | 726 |  |  | (411)
|  | $ | 42,822 |  | $ | 32,900 |  | $ | 97,965 |  | $ | 78,699

(b) | Variations in non-cash transactions:

|  | Three months ended |  | Nine months ended
|  | July 5, |  | July 6, |  | July 5, |  | July 6,
|  | 2015 |  | 2014 |  | 2015 |  | 2014
| Additions to property, plant and equipment included in |  |  |  |  |  |  |  |  |  |  |
| accounts payable and accrued liabilities |  | (3,679) |  |  | 3,408 |  |  | (12,274) |  |  | 5,793
| Proceeds on disposal of property, plant and equipment |  |  |  |  |  |  |  |  |  |  |
| included in other current assets |  | (398) |  |  | 3,163 |  |  | (319) |  |  | (327)
| Settlement of pre-existing relationship |  | - |  |  | - |  |  | 8,378 |  |  | -
| Transfer from accounts payable and accrued liabilities to |  |  |  |  |  |  |  |  |  |  |
| contributed surplus in connection with share repurchases |  |  |  |  |  |  |  |  |  |  |
| for future settlement of non-Treasury RSUs |  | - |  |  | - |  |  | 7,488 |  |  | 8,383
| Non-cash ascribed value credited to contributed |  |  |  |  |  |  |  |  |  |  |
| surplus for dividends attributed to Treasury RSUs |  | 16 |  |  | 54 |  |  | 62 |  |  | 175
| Non-cash ascribed value credited to share capital from |  |  |  |  |  |  |  |  |  |  |
| shares issued or distributed pursuant to vesting of |  |  |  |  |  |  |  |  |  |  |
| restricted share units and exercise of stock options |  | 3,342 |  |  | 3,628 |  |  | 7,655 |  |  | 10,564

| QUARTERLY REPORT – QUARTER ENDED JULY 5, 2015 P.42

| NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

13. CONTINGENT LIABILITIES:
Claims and litigation
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 material adverse effect on the financial position or results of operations of the Company.
14. SEGMENT INFORMATION:
The Company manages and reports its business as two operating segments, Printwear and Branded Apparel, each of which is a reportable segment for financial reporting purposes. Each segment has its own management that is accountable and responsible for the segment’s operations, results and financial performance. These segments are principally organized by the major customer markets they serve. The following summary describes the operations of each of the Company’s operating segments:
Printwear: The Printwear segment, headquartered in Christ Church, Barbados, designs, manufactures, sources, markets and distributes undecorated activewear products in large quantities primarily to wholesale distributors in printwear markets in over 30 countries across North America, Europe, Asia-Pacific and Latin America.
Branded Apparel: The Branded Apparel segment, headquartered in Charleston, South Carolina, designs, manufactures, sources, markets and distributes branded family apparel, which includes athletic, casual and dress socks, sheer hosiery, legwear, shapewear, underwear and activewear products, primarily to U.S. and Canadian retailers.
The chief operating decision-maker assesses segment performance based on segment operating income which is defined as operating income before corporate head office expenses, restructuring and acquisition-related costs, and amortization of intangible assets, excluding software. The accounting policies of the segments are the same as those described in note 3 of the Company’s 2014 audited annual consolidated financial statements, and note 2 (c) of these condensed interim consolidated financial statements.

|  | Three months ended |  | Nine months ended
|  | July 5, |  | July 6, |  | July 5, |  | July 6,
|  | 2015 |  | 2014 |  | 2015 |  | 2014
Segmented net sales: |  |  |  |  |  |  |  |  |  |  |
| Printwear | $ | 477,836 |  | $ | 483,401 |  | $ | 1,069,436 |  | $ | 1,123,774
| Branded Apparel |  | 236,317 |  |  | 210,382 |  |  | 671,528 |  |  | 570,219
Total net sales | $ | 714,153 |  | $ | 693,783 |  | $ | 1,740,964 |  | $ | 1,693,993
Segment operating income: |  |  |  |  |  |  |  |  |  |  |
| Printwear | $ | 113,490 |  | $ | 129,687 |  | $ | 176,456 |  | $ | 270,102
| Branded Apparel |  | 19,443 |  |  | 15,550 |  |  | 29,867 |  |  | 50,776
Total segment operating income | $ | 132,933 |  | $ | 145,237 |  | $ | 206,323 |  | $ | 320,878
Reconciliation to consolidated earnings before income taxes: |  |  |  |  |  |  |  |  |
| Total segment operating income | $ | 132,933 |  | $ | 145,237 |  | $ | 206,323 |  | $ | 320,878
| Amortization of intangible assets, |  |  |  |  |  |  |  |  |  |  |
| excluding software |  | (4,727) |  |  | (3,688) |  |  | (13,168) |  |  | (11,064)
| Corporate expenses |  | (17,732) |  |  | (19,111) |  |  | (56,527) |  |  | (57,041)
| Restructuring and acquisition-related costs |  | (4,243) |  |  | (632) |  |  | (9,323) |  |  | (2,714)
| Financial expenses, net |  | (4,764) |  |  | (732) |  |  | (10,504) |  |  | (1,260)
Earnings before income taxes | $ | 101,467 |  | $ | 121,074 |  | $ | 116,801 |  | $ | 248,799

| QUARTERLY REPORT – QUARTER ENDED JULY 5, 2015 P.43