Gildan Activewear Announces Third Quarter Results in Line with Guidance, Projects Strong Fourth Quarter and Reconfirms Full Year E

Thu Aug 2, 2012 7:00am EDT

* Reuters is not responsible for the content in this press release.

  MONTREAL, QUEBEC, Aug 02 (MARKET WIRE) --
Gildan Activewear Inc. (TSX:GIL)(NYSE:GIL) today announced its financial
results for the third quarter of its 2012 fiscal year, and reconfirmed
its earnings guidance for the full fiscal year.

    Third Quarter Results

    Gildan today reported net earnings of U.S. $78.6 million or U.S. $0.64
per share on a diluted basis for its third fiscal quarter ended July 1,
2012, compared with net earnings of U.S. $88.1 million or U.S. $0.72 per
share in the third quarter of fiscal 2011. Results for the third quarter
of fiscal 2012 include restructuring and acquisition-related charges
amounting to U.S. $1.6 million after-tax, primarily related to the
acquisition of Anvil Holdings, Inc. (Anvil) which was completed on May 9,
2012. Before restructuring and acquisition-related costs, adjusted net
earnings for the third quarter of fiscal 2012 were U.S. $80.2 million or
U.S. $0.66 per share, compared to U.S. $93.7 million or U.S. $0.76 per
share in the third quarter of last year. The Company had previously
projected adjusted net earnings of approximately U.S. $0.65 per share for
the third quarter, when it reported its second quarter results on May 3,
2012.

    The decline in the Company's net earnings compared to last year was
primarily due to lower printwear net selling prices and transitional
manufacturing inefficiencies related to the ramp-down of the Rio Nance I
facility, which is currently being modernized and refurbished, and the
ramp-up of Rio Nance V. Manufacturing costs in the third quarter also
include a non-cash charge of U.S. $0.03 per share to write off obsolete
manufacturing equipment at Rio Nance I, as previously announced on May 3,
2012.  These negative variances from last year were partially offset by
higher printwear unit sales volumes, the benefit of selling price
increases in Branded Apparel which were implemented in the fourth quarter
of fiscal 2011, more favourable product-mix in both operating segments,
improved sock manufacturing efficiencies and the accretive impact of the
acquisition of Anvil. Cotton costs in the third quarter were essentially
unchanged from the third quarter of last year.

    Net sales in the third quarter amounted to U.S. $600.2 million, up 13.3%
from U.S. $529.7 million in the third quarter of fiscal 2011, and in line
with the Company's previous guidance. Sales for the Printwear segment
amounted to U.S. $449.3 million, up 11.3% from fiscal 2011, and sales for
the Branded Apparel segment were U.S. $150.9 million, up 19.7% from the
third quarter of last year.

    The increase in sales in the Printwear segment compared to the third
quarter of fiscal 2011 was primarily due to higher unit sales volumes, as
a result of further organic market share penetration in the U.S.
distributor channel, the impact of the Anvil acquisition, a 4.3% increase
in overall industry demand from U.S. screenprinters and strong growth in
the Company's target international markets. The Company's market share in
the U.S. distributor market in the third quarter, including both the
Gildan and Anvil brands, was 71.3%, according to the CREST report.
Effective from the month of July, the Company's data will no longer be
provided for the CREST report, for confidentiality reasons. The impact on
Printwear net sales revenues of higher unit sales volumes was partially
offset by lower net selling prices, compared to the third quarter of
fiscal 2011.

    The growth in sales for the Branded Apparel segment was due to higher net
selling prices and the impact of the acquisition of Anvil, together with
more favourable product-mix. Excluding Anvil, sales revenues for Branded
Apparel in the third quarter were up by 6.5% compared to the third
quarter of fiscal 2011.

    Consolidated gross margins in the third quarter were 23.9% compared to
27.9% last year. The decline in gross margins was due to the lower net
selling prices in the Printwear segment, the textile manufacturing
inefficiencies due to the transition from Rio Nance I to Rio Nance V and
the Rio Nance I asset write-off, partially offset by higher selling
prices in the Branded Apparel segment, favourable product-mix and
improved sock manufacturing efficiencies.

    SG&A expenses in the third quarter were U.S. $57.2 million, or 9.5% of
net sales, compared with U.S. $56.6 million, or 10.7% of net sales, in
the third quarter of last year. Excluding the impact of the acquisition
of Anvil, SG&A expenses were approximately U.S. $3 million lower than the
third quarter of last year.  The reduction in SG&A expenses was due to
lower legal and professional fees, the non-recurrence of a write-down of
obsolete assets in the third quarter last year and lower variable
compensation expenses.

    In the third quarter, the Printwear division reported operating income of
U.S. $89.5 million, compared with U.S. $109.9 million in the third
quarter of fiscal 2011. The decline in the results for the Printwear
segment was due to the impact of lower net selling prices and textile
manufacturing inefficiencies, partially offset by higher unit sales
volumes, more favourable product-mix and the accretive impact of the
Anvil acquisition. The Branded Apparel division reported operating income
of U.S. $14.2 million, compared with U.S. $2.1 million in the third
quarter of fiscal 2011, due to higher net selling prices, improved sock
manufacturing efficiencies and the accretive impact of the Anvil
acquisition.

    In the third quarter, the Company reached an agreement to license the New
Balance(R) brand for activewear products in the printwear distributor
channel in the U.S. and Canada. Gildan currently has the exclusive U.S.
sock license for New Balance. The Company also reached an agreement to
further extend the term of its exclusive U.S. sock license for the Under
Armour(R) brand.

    Year-to-Date Sales and Earnings

    Net sales for the first nine months of fiscal 2012 amounted to U.S.
$1,386.6 million, up 11.5% from U.S. $1,244.1 million in fiscal 2011 due
to the acquisitions of Gold Toe Moretz and Anvil, as well as higher
selling prices for Branded Apparel, partially offset by lower selling
prices for Printwear in the third quarter.

    The Company reported net earnings of U.S. $59.4 million or U.S. $0.49 per
share in the first nine months of fiscal 2012, compared to net earnings
of U.S. $185.7 million or U.S. $1.52 per share in the first nine months
of fiscal 2011. Adjusted net earnings before restructuring and
acquisition-related costs amounted to U.S. $62.2 million or U.S. $0.51
per share in the first nine months of fiscal 2012, compared to adjusted
net earnings of U.S. $194.9 million or U.S. $1.59 per share in the first
nine months of fiscal 2011. The decline in adjusted EPS in the first nine
months of fiscal 2012 compared to last year was due primarily to the
significant increase in cotton costs in the first half of the fiscal year
and lower Printwear selling prices in the third quarter.

    Sales and Earnings Outlook

    The Company is reconfirming its prior guidance for adjusted EPS for
fiscal 2012 of approximately U.S. $1.30, on sales revenues of
approximately U.S. $1.95 billion. Adjusted EPS in the fourth quarter is
projected to be close to U.S. $0.80 per share, on sales revenues of
approximately U.S. $560 million.

    Assumptions for industry growth, market share and pricing in the
printwear industry in the fourth quarter are in line with the third
fiscal quarter. The Company is assuming overall U.S. printwear industry
demand growth in the fourth quarter of 4%. Market share in the U.S.
distributor channel in the fourth quarter is now projected to be
approximately 71.5%, essentially the same as in the third quarter, which
exceeds the Company's previous assumption of 70% for the second half of
fiscal 2012. Sales of Gildan brand from U.S. distributors to U.S.
printers have continued to be strong in the month of July.

    Sales for Branded Apparel in the fourth quarter are projected to be in
excess of 30% higher than the fourth quarter of fiscal 2011, due to new
programs and back-to-school placements and the impact of Anvil, combined
with more favourable product-mix and higher selling prices. Excluding
Anvil, Branded Apparel sales are projected to be up approximately 15%
from the fourth quarter of last year. 

    Cotton costs in cost of sales in the fourth quarter will be lower than
the third quarter of fiscal 2012 and significantly lower than the fourth
quarter of last year, as declining cotton costs are increasingly
reflected in inventories consumed in cost of goods sold. The benefit of
lower cotton costs compared to the fourth quarter of last year is assumed
to be partially offset by inflation in labour, electricity,
transportation and other cost inputs.

    The Company is assuming the continuation of current pricing in the U.S.
distributor channel throughout the fourth quarter and is assuming that
selling prices to retailers remain unchanged from current levels. The
assumptions for net selling prices are essentially unchanged from the
Company's prior guidance.  Net selling prices for Printwear are assumed
to be significantly lower than the fourth quarter of fiscal 2011, as
selling prices were reduced in the first quarter of fiscal 2012. Branded
Apparel selling prices are higher than last year. Selling price increases
to retailers implemented in the fourth quarter of fiscal 2011 did not
reflect the pass-through of high-cost cotton to retailers.

    Cash Flow

    The Company generated free cash flow of U.S. $142.4 million in the third
quarter, which was utilized to finance the acquisition of Anvil, pay the
quarterly dividend and reduce utilization of the Company's revolving
credit facility. The Company is projecting free cash flow of
approximately U.S. $120 million in the fourth quarter, and to end the
fiscal year with very low debt leverage and significant unutilized
borrowing capacity. The Company is projecting full year capital
expenditures in fiscal 2012 of approximately U.S. $90 million, compared
to its prior forecast of approximately U.S. $100 million. Capital
spending on Rio Nance V is expected to be essentially completed by the
end of the fourth quarter.

    Declaration of Quarterly Dividend

    The Board of Directors has declared a cash dividend of U.S. $0.075 per
share, payable on September 10, 2012 to shareholders of record on August
16, 2012. This dividend is an "eligible dividend" for the purposes of the
Income Tax Act (Canada) and any other applicable provincial legislation
pertaining to eligible dividends.

    Disclosure of Outstanding Share Data

    As of July 31, 2012, there were 121,576,377 common shares issued and
outstanding along with 1,071,065 stock options and 881,656 dilutive
restricted share units ("Treasury RSUs") 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 Treasury RSU
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 at least 50% of each Treasury RSU
grant is contingent on the achievement of performance conditions that are
primarily based on the Company's average return on assets performance for
the period as compared to the S&P/TSX Capped Consumer Discretionary
Index, excluding income trusts, or as determined by the Board of
Directors.

    Consolidated Financial Data - unaudited            


                                                                            
(in US$ millions, except per                                                
 share amounts or otherwise                                                 
 indicated)                     Q3 2012     Q3 2011    YTD 2012    YTD 2011 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Net sales                         600.2       529.7     1,386.6     1,244.1 
Gross profit                      143.5       147.8       235.9       338.2 
Selling, general and                                                        
 administrative expenses                                                    
 (SG&A)                            57.2        56.6       162.0       145.4 
Operating income                   82.6        83.0        68.4       180.2 
EBITDA(1)                         116.2       112.4       142.6       247.1 
Net earnings                       78.6        88.1        59.4       185.7 
Adjusted net earnings(1)           80.2        93.7        62.2       194.9 
                                                                            
----------------------------------------------------------------------------
Diluted EPS                        0.64        0.72        0.49        1.52 
Adjusted diluted EPS(1)            0.66        0.76        0.51        1.59 
                                                                            
----------------------------------------------------------------------------
Gross margin                       23.9%       27.9%       17.0%       27.2%
SG&A as a percentage of                                                     
 sales                              9.5%       10.7%       11.7%       11.7%
Operating margin                   13.8%       15.7%        4.9%       14.5%
                                                                            
----------------------------------------------------------------------------
                                                                            
Cash flows from operations        158.3        41.0        48.9        51.8 
Free cash flow(1)                 142.4         8.5       (13.9)      (44.7)
                                                                            
----------------------------------------------------------------------------
                                                                            
                                                        July 1,  October 2, 
As at                                                      2012        2011 
----------------------------------------------------------------------------
Inventories                                               550.3       568.3 
Trade accounts receivable                                 302.4       191.6 
Net indebtedness(1)                                       257.5       127.0 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Please refer to "Non-GAAP Financial Measures" in this press release.    
Certain minor rounding variances exist between the financial statements and 
this summary.                                                               


    Segmented Financial Data - unaudited            


                                                                            
(in US$ millions)              Q3 2012     Q3 2011    YTD 2012     YTD 2011 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Segmented net sales:                                                        
 Printwear                       449.3       403.6       957.4        977.2 
 Branded Apparel                 150.9       126.1       429.2        266.9 
----------------------------------------------------------------------------
Total net sales                  600.2       529.7     1,386.6      1,244.1 
----------------------------------------------------------------------------
                                                                            
Segment operating income                                                    
 (loss):                                                                    
 Printwear                        89.5       109.9       108.7        261.8 
 Branded Apparel                  14.2         2.1        17.7        (10.5)
----------------------------------------------------------------------------
Total segment operating                                                     
 income                          103.7       112.0       126.4        251.3 
Corporate and other(1)           (21.1)      (29.0)      (58.0)       (71.1)
----------------------------------------------------------------------------
Total operating income            82.6        83.0        68.4        180.2 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Includes corporate head office expenses, restructuring and acquisition- 
related costs, and amortization of intangible assets                        
Certain minor rounding variances exist between the financial statements and 
this summary.                                                               


    Information for Shareholders

    Gildan Activewear Inc. will hold a conference call to discuss these
results today at 8:30 AM ET. The conference call can be accessed by
dialing (866) 321-6651 (Canada & U.S.) or (416) 642-5212 (international)
and entering passcode 4125369, or by live sound webcast on Gildan's
website ("Investor Relations" section) at the following address:
http://gildan.com/corporate/IR/webcastPresentations.cfm. If you are
unable to participate in the conference call, a replay will be available
starting that same day at 10:30 AM ET by dialing (888) 203-1112 (Canada &
U.S.) or (647) 436-0148 (international) and entering passcode 4125369,
until Thursday, August 9, 2012 at midnight, or by sound web cast on
Gildan's website for 30 days following the live webcast. 

    This release should be read in conjunction with Gildan's 2012 Third
Quarter Management's Discussion and Analysis ("MD&A") dated August 1,
2012 and its unaudited condensed interim consolidated financial
statements for the three and nine months ended July 1, 2012 (available at
http://gildan.com/corporate/IR/quarterlyReports.cfm) which is
incorporated by reference in this release, and which will be filed by
Gildan with the Canadian securities regulatory authorities and with the
U.S. Securities and Exchange Commission.

    About Gildan

    Gildan is a marketer and globally low-cost vertically-integrated
manufacturer of quality branded basic family apparel. Gildan(R) is the
leading activewear brand in the printwear market in the U.S. and Canada,
and is increasing its penetration in international markets, such as
Europe, Mexico and the Asia-Pacific region. We are also one of the
largest suppliers of athletic, casual and dress socks sold to a broad
spectrum of retailers in the U.S. The Company markets its products under
a diversified portfolio of company-owned brands, including Gildan(R),
Anvil(R), Gold Toe(R), PowerSox(R), SilverToe(R), Auro(R), All Pro(R) and
GT(R). We are also the exclusive U.S. sock licensee for the Under
Armour(R) and New Balance(R) brands. The Company is now pursuing a
strategy to become a major supplier of basic branded activewear and
underwear for U.S. retailers. In addition to supplying retailers, Gildan
also manufactures select activewear programs for leading consumer brands.
With over 30,000 employees worldwide, Gildan owns and operates highly
efficient, large-scale, environmentally and socially responsible
manufacturing facilities in Central America and the Caribbean Basin and
has taken initial steps towards the potential development of a
manufacturing hub in Asia to support its planned growth in Asia and
Europe. More information on the Company can be found on Gildan's website
at www.gildan.com and more information on its corporate citizenship
practices can be found at www.genuinegildan.com.

    Forward-Looking Statements

    Certain statements included in this press release constitute
"forward-looking statements" within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995 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, including, without limitation, our expectation with regards
to industry demand and unit volume growth, sales revenue, gross margins,
selling, general and administrative expenses, earnings per share, capital
expenditures, market share, selling prices, cotton costs, income tax
rate, and free cash flow. Forward-looking statements generally can be
identified by the use of conditional or forward-looking terminology such
as "may", "will", "expect", "intend", "estimate", "project", "assume",
"anticipate", "plan", "foresee", "believe" or "continue" 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 "Risks and Uncertainties" section and the risks described under the
"Critical Accounting Estimates" and "Financial Risk Management" sections
in our most recent Management's Discussion and Analysis 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.

    Forward-looking information is inherently uncertain and 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:


--  our ability to implement our growth strategies and plans, including
    achieving market share gains, implementing cost reduction initiatives
    and completing and successfully integrating acquisitions; 
--  the intensity of competitive activity and our ability to compete
    effectively; 
--  adverse changes in general economic and financial conditions globally or
    in one or more of the markets we serve; 
--  our reliance on a small number of significant customers; 
--  the fact that our customers do not commit contractually to minimum
    quantity purchases; 
--  our ability to anticipate changes in consumer preferences and trends; 
--  our ability to manage production and inventory levels effectively in
    relation to changes in customer demand; 
--  fluctuations and volatility in the price of raw materials used to
    manufacture our products, such as cotton and polyester fibres; 
--  our dependence on key suppliers and our ability to maintain an
    uninterrupted supply of raw materials and finished goods; 
--  the impact of climate, political, social and economic risks in the
    countries in which we operate or from which we source production; 
--  disruption to manufacturing and distribution activities due to labour
    disruptions, political or social instability, bad weather, natural
    disasters, pandemics and other unforeseen adverse events; 
--  changes to international trade legislation that the Company is currently
    relying on in conducting its manufacturing operations or the application
    of safeguards thereunder; 
--  factors or circumstances that could increase our effective income tax
    rate, including the outcome of any tax audits or changes to applicable
    tax laws or treaties; 
--  compliance with applicable environmental, tax, trade, employment, health
    and safety, and other laws and regulations in the jurisdictions in which
    we operate; 
--  our significant reliance on computerized information systems for our
    business operations, including our JD Edwards Enterprise Resource
    Planning (ERP) system which is currently being upgraded to the latest
    system release, Enterprise One; 
--   changes in our relationship with our employees or changes to domestic
    and foreign employment laws and regulations; 
--  negative publicity as a result of violation of local labour laws or
    international labour standards, or unethical labour or other business
    practices by the Company or one of its third-party contractors; 
--  our dependence on key management and our ability to attract and/or
    retain key personnel; 
--  changes to and failure to comply with consumer product safety laws and
    regulations; 
--  adverse changes in third party licensing arrangements and licensed
    brands; 
--  our ability to protect our intellectual property rights; 
--  changes in accounting policies and estimates; and 
--  exposure to risks arising from financial instruments, including credit
    risk, liquidity risk, foreign currency risk and interest rate risk, as
    well as risks arising from commodity prices. 


    These factors 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, may have on
the Company's business. For example, they do not include the effect of
business dispositions, acquisitions, other business transactions, asset
write-downs, asset impairment losses 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. 

    There can be no assurance that the expectations represented by our
forward-looking statements will prove to be correct. The purpose of the
forward-looking statements is to provide the reader with a description of
management's expectations regarding the Company's future financial
performance and may not be appropriate for other purposes. Furthermore,
unless otherwise stated, the forward-looking statements contained in this
press release are made as of the date of this press release, 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 press release are expressly qualified by this cautionary statement.

    Non-GAAP Financial Measures

    This press release includes references to certain non-GAAP financial
measures such as EBITDA, adjusted net earnings, adjusted diluted EPS,
free cash flow, total indebtedness, and net indebtedness. These non-GAAP
measures do not have any standardized meanings prescribed by IFRS and are
therefore unlikely to be comparable to similar measures presented by
other companies. Accordingly, they should not be considered in isolation.
The terms and definitions of the non-GAAP measures used in this press
release and a reconciliation of each non-GAAP measure to the most
directly comparable IFRS measure are provided below.

    EBITDA

    EBITDA is calculated as earnings before financial expenses, income taxes
and depreciation and amortization and excludes the impact of
restructuring and acquisition-related costs, as well as the equity
earnings in investment in joint venture. The Company uses EBITDA, among
other measures, to assess the operating performance of its business. The
Company also believes 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. The Company
excludes 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.


(in U.S.$ millions)             Q3 2012    Q3 2011    YTD 2012     YTD 2011 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net earnings                       78.6       88.1        59.4        185.7 
Restructuring and                                                           
 acquisition-related costs          3.6        8.2         5.5         12.6 
Depreciation and                                                            
 amortization                      27.5       21.1        72.0         56.3 
Variation of depreciation                                                   
 included in inventories            2.5        0.1        (3.3)        (2.0)
Financial expenses, net             3.5        0.8         8.5          4.1 
Income tax expense                                                          
 (recovery)                         0.3       (5.0)        0.3         (9.3)
Equity (earnings) loss in                                                   
 investment in joint                                                        
 venture                            0.2       (0.9)        0.2         (0.3)
----------------------------------------------------------------------------
EBITDA                            116.2      112.4       142.6        247.1 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Certain minor rounding variances exist between the financial statements and 
this summary.                                                               


    Adjusted net earnings and adjusted diluted EPS

    Adjusted net earnings and adjusted diluted earnings per share are
calculated as net earnings and earnings per share excluding restructuring
and acquisition-related costs, net of related income tax recoveries. The
Company uses and presents these non-GAAP measures to assess its operating
performance from one period to the next without the variation caused by
restructuring and acquisition-related costs, net of related income tax
recoveries, that could potentially distort the analysis of trends in its
business performance. Excluding these items does not imply they are
necessarily non-recurring.


(in U.S.$ millions, except                                                  
 per share amounts)            Q3 2012     Q3 2011    YTD 2012     YTD 2011 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net earnings                      78.6        88.1        59.4        185.7 
Adjustments for:                                                            
  Restructuring and                                                         
   acquisition-related                                                      
   costs                           3.6         8.2         5.5         12.6 
  Income tax recovery on                                                    
   restructuring and                                                        
   acquisition-related                                                      
   costs                          (2.0)       (2.6)       (2.7)        (3.4)
----------------------------------------------------------------------------
Adjusted net earnings             80.2        93.7        62.2        194.9 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Basic EPS                         0.65        0.72        0.49         1.53 
Diluted EPS                       0.64        0.72        0.49         1.52 
Adjusted diluted EPS              0.66        0.76        0.51         1.59 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Certain minor rounding variances exist between the financial statements and 
this summary.                                                               


    Free cash flow 

    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. The Company
considers free cash flow to be an important indicator of the financial
strength and performance of its business, because it shows how much cash
is available after capital expenditures to repay debt and to reinvest in
its business, and/or to redistribute to its shareholders. The Company
believes this measure is commonly used by investors and analysts when
valuing a business and its underlying assets. 


(in U.S.$ millions)            Q3 2012     Q3 2011    YTD 2012     YTD 2011 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash flows from operating                                                   
 activities                      158.3        41.0        48.9         51.8 
Cash flows used in                                                          
 investing activities           (103.3)     (377.7)     (150.2)      (441.7)
Adjustments for:                                                            
  Business acquisitions           87.4       345.2        87.4        345.2 
----------------------------------------------------------------------------
Free cash flow                   142.4         8.5       (13.9)       (44.7)
----------------------------------------------------------------------------
----------------------------------------------------------------------------



Certain minor rounding variances exist between the financial statements and 
this summary.                                                               


    Total indebtedness and Net indebtedness

    Total indebtedness is comprised of bank indebtedness and long-term debt
(including any current portion), and net indebtedness is calculated as
total indebtedness net of cash and cash equivalents. The Company
considers total indebtedness and net indebtedness to be important
indicators of the financial leverage of the Company.


                                                       July 1,   October 2, 
(in U.S.$ millions)                                       2012         2011 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Long-term debt and total indebtedness                    306.0        209.0 
Cash and cash equivalents                                (48.5)       (82.0)
----------------------------------------------------------------------------
Net indebtedness                                         257.5        127.0 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Certain minor rounding variances exist between the financial statements and 
this summary.                                                               


Contacts:
Investor Relations
Laurence G.  Sellyn
Executive Vice-President,
Chief Financial and Administrative Officer
(514) 343-8805
lsellyn@gildan.com

Sophie Argiriou
Director,
Investor Communications
(514) 343-8815
sargiriou@gildan.com

Media Relations
Genevieve Gosselin
Director, Corporate Communications
(514) 343-8814
ggosselin@gildan.com

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