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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 27, 2003

OR

o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number 1-15583

DELTA APPAREL, INC.

(Exact name of registrant as specified in its charter)


GEORGIA
    
    58-2508794(State or other jurisdiction of
Incorporation or organization)
    
    (I.R.S. Employer
Identification No.)


2750 Premiere Parkway, Suite 100
Duluth, Georgia 30097

---

(Address of principal executive offices) (Zip Code)


(678) 775-6900

---

(Registrants telephone number, including area code)


(Not Applicable)

---

(Former name, former address and former fiscal year, if changed since last report.)


Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 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.  Yes  xNo
o

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).   Yeso   No  x

As of January 30, 2004, there were outstanding 4,066,149 shares of the
registrants common stock, par value of $0.01, which is the only class of the
outstanding common or voting stock of the registrant.





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TABLE OF CONTENTS



|                                                |                                                                                               |                                                                  |  |  |  |  |  | 
|----------------------------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION                  
|                                                | Item 1. Financial Statements (Unaudited)                                                     
|                                                |                                                                                               | Condensed Consolidated Balance Sheets                           
|                                                |                                                                                               | Condensed Consolidated Statements of Income                     
|Condensed Consolidated Statements of Cash Flows
|                                                |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|                                                | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                                | Item 3. Quantitative and Qualitative Disclosures about Market Risk                           
|                                                | Item 4: Controls and Procedures                                                              
|PART II. OTHER INFORMATION                     
|                                                | Item 1. Legal Proceedings                                                                    
|                                                | Item 4. Submission of Matters to a Vote of Security Holders                                  
|                                                | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                                     
|EX-31.1 SECTION 302 CERTIFICATION OF THE CEO   
|EX-31.2 SECTION 302 CERTIFICATION OF THE CFO   
|EX-32.1 SECTION 906 CERTIFICATION OF THE CEO   
|EX-32.2 SECTION 906 CERTIFICATION OF THE CFO   



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INDEX

PagePART 1.
    
    Financial InformationItem 1.
    
    Financial StatementsInterim Condensed Consolidated Financial Statements (Unaudited):Condensed Consolidated Balance Sheets December 27, 2003 and June 28, 2003
    
    3Condensed Consolidated Statements of Income Three months and six months ended December 27, 2003 and December 28, 2002
    
    4Condensed Consolidated Statements of Cash Flows Six months ended December 27, 2003 and December 28, 2002
    
    5Notes to Condensed Consolidated Financial Statements
    
    6-9Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    10-13Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    13-14Item 4.
    
    Controls and Procedures
    
    14PART II
    
    Other InformationItem 1.
    
    Legal Proceedings
    
    14Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    15Item 6.
    
    Exhibits and Reports on Form 8-K
    
    15-17Signatures
    
    
    
    18Exhibits
    
    
    
    19-22


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PART I. FINANCIAL INFORMATION




Item 1. Financial Statements (Unaudited)

DELTA APPAREL, INC. AND SUBSIDIARIES




Condensed Consolidated Balance Sheets
(in thousands, except shares and per share amounts)
(Unaudited)

(Unaudited)December 27,
    
    June 28,2003
    
    2003AssetsCurrent assets:Cash
    
    $
    365
    
    
    $
    203Accounts receivable, net
    
    
    23,693
    
    
    
    22,196Inventories
    
    
    111,250
    
    
    
    47,174Prepaid expenses and other current assets
    
    
    992
    
    
    
    1,689Deferred income taxes
    
    
    668
    
    
    
    620Income taxes receivable
    
    
    669
    
    
    
    434Total current assets
    
    
    137,637
    
    
    
    72,316Property, plant and equipment, net
    
    
    20,891
    
    
    
    22,077Other assets
    
    
    2,142
    
    
    
    54Total assets
    
    $
    160,670
    
    
    $
    94,447Liabilities and Stockholders EquityCurrent liabilities:Accounts payable and accrued expenses
    
    $
    22,501
    
    
    $
    16,033Current portion of long-term debt
    
    
    23,355
    
    
    
    2,000Total current liabilities
    
    
    45,856
    
    
    
    18,033Long-term debt
    
    
    35,460
    
    
    
    7,865Deferred income taxes
    
    
    517
    
    
    
    1,162Other liabilities
    
    
    12,823
    
    
    
    1,418Total liabilities
    
    
    94,656
    
    
    
    28,478Stockholders equity:Preferred stock2,000,000 shares authorized; none issued
and outstanding
    
    
    
    
    
    
    Common stockpar value $.01 a share, 7,500,000 shares authorized,
4,823,486 shares issued, and 4,062,649 and 4,037,080
shares outstanding as of December 27, 2003 and June 28, 2003,
respectively
    
    
    48
    
    
    
    48Additional paid-in capital
    
    
    53,889
    
    
    
    53,889Retained earnings
    
    
    20,819
    
    
    
    21,007Treasury stock760,837 and 786,406 shares as of December 27, 2003
and June 28, 2003, respectively
    
    
    (8,742
    )
    
    
    (8,975
    )Total stockholders equity
    
    
    66,014
    
    
    
    65,969Total liabilities and stockholders equity
    
    $
    160,670
    
    
    $
    94,447


See accompanying notes to condensed consolidated financial statements.

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DELTA APPAREL, INC. AND SUBSIDIARIES




Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)

Three Months Ended
    
    Six Months EndedDecember 27,
    
    December 28,
    
    December 27,
    
    December 28,2003
    
    2002
    
    2003
    
    2002Net sales
    
    $
    45,623
    
    
    $
    30,002
    
    
    $
    76,425
    
    
    $
    58,885Cost of goods sold
    
    
    36,714
    
    
    
    24,881
    
    
    
    63,434
    
    
    
    47,760Gross profit
    
    
    8,909
    
    
    
    5,121
    
    
    
    12,991
    
    
    
    11,125Selling, general and administrative expenses
    
    
    8,060
    
    
    
    2,863
    
    
    
    11,278
    
    
    
    5,835Provision
(recoveries) for bad debts
    
    
    88
    
    
    
    169
    
    
    
    (71
    )
    
    
    32Other expense (income)
    
    
    31
    
    
    
    34
    
    
    
    (50
    )
    
    
    142Operating income
    
    
    730
    
    
    
    2,055
    
    
    
    1,834
    
    
    
    5,115Interest expense, net
    
    
    892
    
    
    
    171
    
    
    
    1,046
    
    
    
    319(Loss) income before income taxes
    
    
    (162
    )
    
    
    1,884
    
    
    
    788
    
    
    
    4,797Income tax (benefit) expense
    
    
    (71
    )
    
    
    729
    
    
    
    290
    
    
    
    1,851Net (loss) income
    
    $
    (91
    )
    
    $
    1,155
    
    
    $
    498
    
    
    $
    2,946(Loss) earnings per shareBasic
    
    $
    (0.02
    )
    
    $
    0.28
    
    
    $
    0.12
    
    
    $
    0.73Diluted
    
    $
    (0.02
    )
    
    $
    0.27
    
    
    $
    0.12
    
    
    $
    0.70Weighted average number of shares outstanding
    
    
    4,064
    
    
    
    4,062
    
    
    
    4,054
    
    
    
    4,057Dilutive effect of stock options
    
    
    0
    
    
    
    158
    
    
    
    122
    
    
    
    156Weighted average number of shares assuming dilution
    
    
    4,064
    
    
    
    4,220
    
    
    
    4,176
    
    
    
    4,213


See accompanying notes to condensed consolidated financial statements.

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DELTA APPAREL, INC. AND SUBSIDIARIES




Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)

Six Months EndedDecember 27,
    
    December 28,2003
    
    2002Operating activities:Net income
    
    $
    498
    
    
    $
    2,946Adjustments
to reconcile net income to net cash provided by
(used in) operating activities:Depreciation
    
    
    2,263
    
    
    
    3,369Deferred income taxes
    
    
    (318
    )
    
    
    32Loss on sale of property and equipment
    
    
    4
    
    
    
    30Changes in operating assets and liabilities:Accounts receivable
    
    
    11,867
    
    
    
    5,074Inventories
    
    
    (12,121
    )
    
    
    (14,682
    )Prepaid expenses and other current assets
    
    
    882
    
    
    
    1,106Other noncurrent assets
    
    
    1,990
    
    
    
    (80
    )Accounts payable and accrued expenses
    
    
    (1,332
    )
    
    
    (4,227
    )Income taxes
    
    
    (235
    )
    
    
    (2,590
    )Other liabilities
    
    
    535
    
    
    
    198Net cash provided by (used in) operating activities
    
    
    4,033
    
    
    
    (8,824
    )Investing activities:Purchases of property, plant and equipment
    
    
    (1,084
    )
    
    
    (2,039
    )Proceeds from sale of property, plant and equipment
    
    
    4
    
    
    
    Cash paid for business, net of cash received
    
    
    (51,250
    )
    
    
    Net cash used in investing activities
    
    
    (52,330
    )
    
    
    (2,039
    )Financing activities:Proceeds from credit facilities, net
    
    
    40,950
    
    
    
    8,864Proceeds from long-term financing
    
    
    8,000
    
    
    
    (1,000
    )Repurchase of common stock
    
    
    (148
    )
    
    
    (687
    )Proceeds from exercise of stock options
    
    
    144
    
    
    
    121Dividends paid
    
    
    (487
    )
    
    
    (410
    )Net cash provided by financing activities
    
    
    48,459
    
    
    
    6,888Increase (decrease) in cash
    
    
    162
    
    
    
    (3,975
    )Cash at beginning of period
    
    
    203
    
    
    
    4,102Cash at end of period
    
    $
    365
    
    
    $
    127Supplemental cash flow information:Cash paid during the period for interest
    
    $
    621
    
    
    $
    217Cash paid during the period for income taxes
    
    $
    843
    
    
    $
    4,419Noncash financing activityissuance of common stock
    
    $
    37
    
    
    $
    710See accompanying notes to condensed consolidated financial statements


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DELTA APPAREL, INC. AND SUBSIDIARIES




NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note ABasis of Presentation

The interim condensed consolidated financial statements for the three and six
months ended December 27, 2003 and December 28, 2002, included herein, have
been prepared in accordance with the instructions for Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States for complete financial statements. In the opinion of management, all
adjustments (consisting of only normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
the three and six months ended December 27, 2003 are not necessarily indicative
of the results that may be expected for the year ending July 3, 2004. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Companys annual report on Form 10-K for the
year ended June 28, 2003, filed with the Securities and Exchange Commission.

Note BInventories

Inventories consist of the following:

December 27,
    
    June 28,2003
    
    2003Raw materials
    
    $
    5,864
    
    
    $
    2,895Work in process
    
    
    30,507
    
    
    
    16,580Finished goods
    
    
    74,879
    
    
    
    27,699$
    111,250
    
    
    $
    47,174


Note CAcquisition

On October 3, 2003, Delta Apparel completed the acquisition of all of the
outstanding capital stock of M. J. Soffe Co., a North Carolina corporation (the
Acquisition). The Acquisition was consummated by means of a stock purchase
transaction pursuant to which MJS Acquisition Company, a North Carolina
corporation and newly-formed, wholly-owned subsidiary of Delta Apparel (MJS),
acquired all of the outstanding capital stock of M. J. Soffe Co. from the
shareholders of M. J. Soffe Co., James F. Soffe, John D. Soffe, and Anthony M.
Cimaglia (collectively, the Individuals), pursuant to an Amended and Restated
Stock Purchase Agreement (the Stock Purchase Agreement) dated as of October
3, 2003 by and among Delta Apparel, MJS, M. J. Soffe Co., and the Individuals.
Immediately following the Acquisition, M. J. Soffe Co. was merged with and into
MJS (the Merger), with MJS as the surviving corporation in the Merger, and
MJSs name was changed to M. J. Soffe Co.

The aggregate consideration paid to the Individuals for all of the outstanding
capital stock of M. J. Soffe Co. consisted of (i) aggregate cash payments of
approximately $43.5 million; and (ii) the issuance of a promissory note to the
Individuals in the aggregate principal amount of $8 million (the Shareholder
Note). Also, additional amounts are payable to the Individuals in cash during
each of fiscal years 2005, 2006, and 2007 if specified financial performance
targets are met by M. J. Soffe Co. during annual periods beginning on September
28, 2003 and ending on September 30, 2006 (the Earnout Amounts). The Earnout
Amounts are capped at a maximum aggregate amount of $12 million.
To the extent
that the Earnout Amounts are paid, they are treated as additional costs of the
acquisition. In addition, pursuant to the Stock Purchase Agreement, MJS paid
approximately $8.5 million to satisfy all outstanding bank debt of M. J. Soffe
Co.

M. J. Soffe Co. manufactures, markets, and sells casual and athletic apparel.
It has a textile and sewing facility in Fayetteville, North Carolina, as well
as two additional sewing plants, one each in Bladenboro and Rowland, North
Carolina. In addition, M. J. Soffe Co. contracts approximately 30% of its
sewing requirement from two 50% owned facilities in Costa Rica. M. J. Soffe
Co. leases its primary distribution center in Fayetteville, North Carolina and
also leases space for satellite distribution facilities in other parts of the
United States.

In conjunction with the acquisition, on October 3, 2003 Delta Apparel entered
into an Amended and Restated Loan and Security Agreement with Congress
Financial Corporation (Southern), as lender and as agent for the financial
institutions named as lenders, pursuant to which Deltas existing line of
credit (the Delta Facility) was increased to $40 million, which represents a
$5 million increase in Delta Apparels predecessor credit facility.

Also on October 3, 2003, MJS entered into a Loan and Security Agreement with
Congress Financial Corporation (Southern), as lender and as agent for the
financial institutions named as lenders, which provides M. J. Soffe Co. with a
$38.5 million line of credit (the Soffe Facility). Together, the Delta
Facility and the Soffe Facility provide for lines of credit in an aggregate
amount of $78.5 million. The Delta Facility and

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the Soffe Facility are secured
by a first priority lien on all of the assets of Delta Apparel and M. J. Soffe
Co. Delta Apparel is a guarantor of the Soffe Facility, and M. J. Soffe Co. is
a guarantor of the Delta Facility. M. J. Soffe Co has the option to increase
the Soffe Facility from $38.5 million to $41.0 million, provided that no event
of default exists under the facility.

The acquisition of the M. J. Soffe Co. is an important part of Delta Apparels
expansion strategy. The addition of the Soffe business to Delta Apparel
represents an opportunity to participate in four additional distinct channels
of distribution for activewear products. The Company believes the
manufacturing, distribution, and marketing synergies between the companies will
allow both operations to expand at a faster pace than would be possible on a
stand-alone basis.

The results of M. J. Soffe Co.s operations have been included in the
consolidated financial statements since the acquisition date. The consolidated
balance sheet reflects the initial purchase price allocation of the assets
acquired and the liabilities assumed. The initial purchase price allocation
does not result in goodwill being recorded by the Company. The Company is
currently in the process of finalizing the valuations of the assets acquired
and liabilities assumed and thus the initial allocation of the purchase price
is subject to change. The purchase price allocation will be finalized upon
refinement of certain preliminary estimates.

Note DPro Forma Financial Information

The pro forma financial information presented below gives effect to the M. J.
Soffe Co. acquisition as if it had occurred as of the beginning of fiscal year
2004 and fiscal year 2003. Amounts are in thousands, except per share amounts.
The information presented below is for illustrative purposes only and is not
indicative of results that would have been achieved or results that may be
achieved in the future.

Three Months Ended
    
    Six Months EndedDecember 27
    
    December 28,
    
    December 27,
    
    December 28,2003
    
    2002
    
    2003
    
    2002Net sales
    
    $
    45,623
    
    
    $
    48,724
    
    
    $
    101,754
    
    
    $
    101,348Net (loss) income
    
    
    (91
    )
    
    
    2,614
    
    
    
    3,089
    
    
    
    6,639Net (loss) income, per shareBasic
    
    $
    (0.02
    )
    
    $
    0.64
    
    
    $
    0.76
    
    
    $
    1.64Diluted
    
    $
    (0.02
    )
    
    $
    0.62
    
    
    $
    0.74
    
    
    $
    1.58


Note EDebt

The Soffe Facility contains both a subjective acceleration clause and a lockbox
arrangement, whereby remittances from the customers reduce the current
outstanding borrowings. Pursuant to Emerging Issues Task Force (EITF) 95-22,
the Company is classifying borrowings under the Soffe Facility as current debt.

The Delta Facility contains a subjective acceleration clause and a springing
lockbox arrangement [as defined in EITF 95-22], whereby remittances from the customers are forwarded to
the Companys general bank account and do not reduce the
outstanding debt until
and unless a specified event or an event of default occurs. Pursuant to EITF
95-22, the Company is classifying borrowings under the Delta Facility as
noncurrent debt.

Note FIncome Taxes

The effective income tax rate on pretax income for the six months ended
December 27, 2003 was 36.8%, compared to 38.3% for the fiscal year ended June
28, 2003.

On October 3, 2003, the Company completed its acquisition of the M. J. Soffe
Co. A preliminary purchase price allocation indicates that no value will be
allocated to the property, plant and equipment of M. J. Soffe for book and tax
purposes. A tax loss was generated as a result of no value being allocated to
the property, plant and equipment. Accordingly, the Company realized the tax
loss and carried the loss back to the pre-acquisition income for the M. J.
Soffe Co., resulting in an $8.3 million federal tax refund during the second
fiscal quarter of fiscal year 2004, which has preliminarily been accounted for
as a reduction in the purchase price.

Note GStock Options and Incentive Stock Awards

The Company has elected to follow Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees (APB 25) and related
Interpretations in accounting for its employee stock options because, as
discussed below, the alternative fair value accounting provided for under FASB
Statement No. 123, Accounting for Stock-Based Compensation (SFAS 123),
requires use of option valuation models that were not developed for use in
valuing employee stock options.

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The following table illustrates the effect on net income and earnings per share
as if the fair value based method had been applied to all outstanding and
unvested options and awards in each period.

Three Months Ended
    
    Six Months EndedDecember 27,
    
    December 28,
    
    December 27,
    
    December 28,2003
    
    2002
    
    2003
    
    2002Net (loss) income, as reported
    
    $
    (91
    )
    
    $
    1,155
    
    
    $
    498
    
    
    $
    2,946Add: Stock-based employee
compensation expense included
in reported net income, net
of related tax effects
    
    
    131
    
    
    
    106
    
    
    
    236
    
    
    
    264Deduct: Total stock-based
employee compensation expense
determined under fair value
based method for all options
and awards, net of related
tax effects
    
    
    (78
    )
    
    
    (79
    )
    
    
    (18
    )
    
    
    (158
    )Pro forma net income
    
    $
    (38
    )
    
    $
    1,182
    
    
    $
    554
    
    
    $
    3,052(Loss) earnings per share:Basicas reported
    
    $
    (0.02
    )
    
    $
    0.28
    
    
    $
    0.12
    
    
    $
    0.73Basicpro forma
    
    $
    (0.01
    )
    
    $
    0.29
    
    
    $
    0.14
    
    
    $
    0.75Dilutedas reported
    
    $
    (0.02
    )
    
    $
    0.27
    
    
    $
    0.12
    
    
    $
    0.70Dilutedpro forma
    
    $
    (0.01
    )
    
    $
    0.28
    
    
    $
    0.13
    
    
    $
    0.72


Note HPurchase Contracts

The Company has entered into agreements, and has fixed prices, to purchase
cotton, yarn, finished apparel products and natural gas for use in its
manufacturing operations. At December 27, 2003, minimum payments under these
contracts to purchase cotton, yarn, finished apparel products and natural gas
with non-cancelable contract terms were $20.3 million, $1.1 million, $1.9
million and $0.3 million, respectively.

Note IComputation of Basic and Diluted Net Earnings per Share (EPS)

Basic net earnings per share is computed by dividing net income by the weighted
average number of common shares outstanding during the period. The computation
of diluted earnings per share includes the dilutive effect of stock options and
non-vested stock awards granted under the Companys Stock Option Plan and the
Companys Incentive Stock Award Plan.

The weighted average shares do not include securities that would be
anti-dilutive for each of the periods presented.

Note JStockholders Equity

Stock Repurchase Program
On November 1, 2000, the Board of Directors authorized the repurchase by the
Company in open market transactions of up to $3.0 million of Delta Apparel
common stock (Stock Repurchase Program). All purchases are made at the
discretion of management. On September 13, 2002, the Board of Directors
authorized the repurchase by the Company in open market transactions of up to
an additional $3.0 million of Delta Apparel common stock pursuant to its Stock
Repurchase Program, bringing the total amount authorized to $6.0 million.
During the three months ended December 27, 2003, the Company purchased 7,853
shares of Delta Apparel common stock for an aggregate of $0.1 million. Since
the inception of the Stock Repurchase Program, the Company has purchased
368,057 shares of Delta Apparel common stock pursuant to the program for an
aggregate of $4.2 million.

Quarterly Dividend Program
On October 20, 2003, the Board declared a cash dividend pursuant to the
Companys quarterly dividend program of six cents per share of common stock.
The dividend was paid on November 17, 2003 to shareholders of record as of the
close of business on November 5, 2003. On
January 28, 2004, the Board declared a cash dividend of six cents per share of
common stock payable February 23, 2004 to shareholders of record as of the
close of business on February 11, 2004. Although the Board may terminate or
amend the program at any time, the Company currently expects to continue the
quarterly dividend program.

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Note KSegment Reporting

The Company operates its business in two distinct segments: Delta and Soffe.
Although the two segments are similar in their production processes and
regulatory environment, they are distinct in their economic characteristics,
products and distribution methods.

The Delta segment manufactures, markets and distributes unembellished knit
apparel under the brands of Delta Pro-Weight, Delta Magnum Weight and
Quail Hollow. The products are primarily sold to screen printing companies
and distributors. In addition, products are manufactured under private labels
for retailers, corporate industry programs and sports licensed apparel
marketers.

The Soffe segment manufactures, markets and distributes embellished and
unembellished knit apparel under the Soffe label. The products are sold
through specialty sporting goods stores and department stores. In addition to
these retail channels, Soffe also supplies college bookstores and produces
activewear products for the U.S. Military.

The Companys management evaluates performance and allocates resources based on
profit or loss from operations before interest, income taxes and special
charges (Segment Operating Income). Segment Operating Income as presented by
Delta Apparel may not be comparable to similarly titled measures used by other
companies. The accounting policies of the reportable segments are the same as
those described in Note 1 to the consolidated financial statements in the
Annual Report on Form 10-K for the year ended June 28, 2003. Intercompany
transfers between operating segments were not material.

Information about the Companys operations as of and for the three months ended
December 27, 2003 and December 28, 2002, by operating segment, is as follows
(in thousands):

Corporate andDelta
    
    Soffe
    
    Unallocated
    
    ConsolidatedFiscal Year 2004:Net sales
    
    $
    28,574
    
    
    $
    17,065
    
    
    $
    (16
    )
    
    $
    45,623Segment operating income
    
    
    5
    
    
    
    694
    
    
    
    31
    
    
    
    730Segment assets
    
    
    94,202
    
    
    
    66,468
    
    
    
    
    
    
    
    160,670Fiscal Year 2003:Net sales
    
    $
    30,002
    
    
    
    
    
    
    
    
    
    
    $
    30,002Segment operating income
    
    
    2,055
    
    
    
    
    
    
    
    
    
    
    
    2,055Segment assets
    
    
    91,886
    
    
    
    
    
    
    
    
    
    
    
    91,886


Information about the Companys operations for the six months ended December
27, 2003 and December 28, 2002, by operating segment, is as follows (in
thousands):

Corporate andDelta
    
    Soffe
    
    Unallocated
    
    ConsolidatedFiscal Year 2004:Net sales
    
    $
    59,376
    
    
    $
    17,065
    
    
    $
    (16
    )
    
    $
    76,425Segment operating income
    
    
    1,115
    
    
    
    694
    
    
    
    25
    
    
    
    1,834Fiscal Year 2003:Net sales
    
    $
    58,885
    
    
    
    
    
    
    
    
    
    
    $
    58,885Segment operating income
    
    
    5,115
    
    
    
    
    
    
    
    
    
    
    
    5,115


The following reconciles the Segment operating income to the consolidated
income before income taxes for the three and six months ended December 27, 2003
and December 28, 2002.

Three Months Ended
    
    Six Months EndedDecember 27,
    
    December 28,
    
    December 27,
    
    December 28,2003
    
    2002
    
    2003
    
    2002Segment operating income
    
    $
    730
    
    
    $
    2,055
    
    
    $
    1,834
    
    
    $
    5,115Unallocated interest expense
    
    
    892
    
    
    
    171
    
    
    
    1,046
    
    
    
    319Consolidated (loss) income
before taxes
    
    $
    (162
    )
    
    $
    1,884
    
    
    $
    788
    
    
    $
    4,797


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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

The following discussion contains various forward-looking statements. All
statements, other than statements of historical fact, that address activities,
events or developments that the Company expects or anticipates will or may
occur in the future are forward-looking statements. Examples are statements
that concern future revenues, future costs, future capital expenditures,
business strategy, competitive strengths, competitive weaknesses, goals, plans,
references to future success or difficulties and other similar information.
The words estimate, project, forecast, anticipate, expect, intend,
believe and similar expressions, and discussions of strategy or intentions,
are intended to identify forward-looking statements.

The forward-looking statements in this Quarterly Report are based on the
Companys expectations and are necessarily dependent upon assumptions,
estimates and data that the Company believes are reasonable and accurate but
may be incorrect, incomplete or imprecise. Forward-looking statements are also
subject to a number of business risks and uncertainties, any of which could
cause actual results to differ materially from those set forth in or implied by
the forward-looking statements. The risks and uncertainties include, among
others, changes in the retail demand for apparel products, the cost of raw
materials, competitive conditions in the apparel and textile industries, the
relative strength of the United States dollar as against other currencies,
changes in United States trade regulations and the discovery of unknown
conditions (such as with respect to environmental matters and similar items)
and other risks described from time to time in the Companys reports filed with
the Securities and Exchange Commission. Accordingly, any forward-looking
statements do not purport to be predictions of future events or circumstances
and may not be realized.

The Company does not undertake publicly to update or revise the forward-looking
statements even if it becomes clear that any projected results will not be
realized.

BUSINESS OUTLOOK

Delta
Apparel (which refers to the consolidated operations of the Delta business and Soffe
business) achieved record sales for the quarter ended December 27, 2003, an
increase in sales of 52.1% from the prior year second fiscal quarter. Although
record sales were attained because of the Soffe acquisition, the Company was
not pleased with its sales and earnings for the quarter ended December 27,
2003. Delta Apparel does believe, however, that during the quarter it took
significant steps towards positioning itself to achieve significant sales and
earnings growth in the second half of its 2004 fiscal year.

In the Delta business, the second quarter began with pricing slightly higher
than in the first fiscal quarter. However, the pricing trend reversed itself
in November and pricing continued to be lower than expected through December.
As the marketplace lowered its prices, the Delta business chose to not
participate actively in the pricing competition as it anticipated higher prices
on tee shirts when its competition began passing along the higher raw material
costs to its customers. Despite lower than expected pricing, the prices on
most products were higher during the second fiscal quarter than during the
quarter ended September 27, 2003. Sales of private label products for the
quarter were below the level during the same quarter of last year due to the
slow retail environment. In addition, the distributor business continued to
decline and was approximately 10% of sales for the quarter. Despite these
declines, the direct business continued to grow and was approximately 76% of
sales, up from approximately 69% of sales in the second quarter of the prior
year. The direct sales continue to be driven by new customers and a higher
level of service. For the six months ended December 27, 2003, the Delta
business has shipped over two thousand accounts, up approximately 77% from the
prior year.

At this time the Company is encouraged with the apparel marketplace as the
spring selling season begins. All major suppliers have announced price
increases and these price increases appear to be holding in the marketplace.
The price increases vary by product, but are in the eight to eleven percent
range. While the Company is still cautious about pricing in the industry, it
appears that the pricing is improving as the spring selling season nears.
There can, however, be no assurance that pricing on tee shirts will remain at
current levels. Any significant declines in tee shirt pricing could have a
material effect on Delta Apparels results in the second half of fiscal year
2004.

During the second quarter, the manufacturing operations in the Delta business
have made significant improvements through cost reductions and process
improvement programs. The Company expects that over the long term these
manufacturing improvements can add approximately six margin points to the gross
profit. These improvements are expected, however, to be offset by reduced
production schedules
and higher raw material costs during the next two quarters. The improvements
made in the manufacturing operations are expected to improve the Companys
competitiveness and lower costs in the future.

In the Soffe business, sales started the quarter weak, as the purchase was
closed during the first week of the quarter. The second fiscal quarter is
typically the weakest sales and earnings quarter for the Soffe business. Sales
growth is expected over the next twelve months in each of the four Soffe
distribution channels. The Company is encouraged about the Soffe sales during
the upcoming quarter, as order backlog is up approximately ten percent over
last year.

During the quarter ended December 27, 2003, the Soffe business took significant
downtime in its manufacturing operation to start a process of inventory
reduction. The Soffe business also stopped production in one domestic leased
sewing plant. A cost reduction program was started in the Soffe textile
facility and the Company expects to see the impact of these programs over the
next year.

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The Company is also beginning a process of integrating the operations of the
two businesses. All basic cotton tee shirts for both the Delta line and the
Soffe line will be produced by the Delta manufacturing facilities. In
addition, the Delta line plans to utilize the Soffe shorts and fleece
production to expand its product offerings. In addition, the Company has also
found cost savings in the purchase of insurance, employee benefits and
manufacturing raw materials. The Company expects to have further significant
cost reductions as the Delta business and the Soffe business continue to work
together.

Delta Apparels operations reflect some seasonality, with sales during the
first and fourth fiscal quarters generally being the highest and sales during
the second and third fiscal quarters generally being the lowest. Therefore,
the results in the quarter ended December 27, 2003 may not be reflective of the
results for the other quarters within the fiscal year.

RESULTS OF OPERATIONS

Net sales for the second quarter of fiscal year 2004 were $45.6 million, an
increase of 52.1% from net sales of $30.0 million for the second quarter of the
prior year. The sales increase of $15.6 million was the result of the
acquisition of M. J. Soffe Co., which accounted for $17.1 million in sales in
the quarter. The lower net sales in the Delta business was primarily the
result of a 3.0% decline in the average selling prices of tee shirts. Lower
average selling prices were primarily the result of price promotions on the
basic adult and youth short sleeve white and colored tees driven by competition
in the marketplace. Net sales for the six months of fiscal year 2004 were
$76.4 million, an increase of $17.5 million, or 29.8%, from net sales of $58.9
million for the first six months of the prior year. The increase in net sales
was primarily the result of the acquisition of the M. J. Soffe Co. in the
second fiscal quarter, partially offset by a 7.5% decline in the average
selling prices of Delta tee shirts. Pricing on most Delta products was higher
in the second fiscal quarter as compared to its first quarter of fiscal year
2004. Price increases have taken effect in January and although the Company
expects pricing to improve in the last half of fiscal year 2004, there can be
no assurance that this will occur.

Gross profit as a percentage of net sales increased to 19.5% in the second
quarter of fiscal year 2004 from 17.1% in the second quarter of the prior year.
The improvement in gross margin was primarily the result of the higher gross
profits associated with M. J. Soffe Co., offset partially by lower gross
profits in the Delta basic tee shirt business. The gross margin on basic tee
shirts declined in the second fiscal quarter compared to the prior year quarter
primarily due to lower average selling prices and higher raw material costs.
During the quarter ended December 27, 2003, the Delta business was able to
achieve an approximate 6% reduction in its converting costs through a series of
process improvement programs in its manufacturing facilities. Since
the inventory costs are calculated using a standard cost system, this
reduction in converting costs achieved during the second fiscal quarter was capitalized in
inventory at December 27, 2003. The Company expects that during the third
fiscal quarter the effect of these improvements will be partially offset by
higher raw material costs and the costs associated with reduced production
schedules. Although the Company expects the improved converting results to
continue in the future, there can be no assurance that this will occur. For
the first six months of fiscal year 2004, gross profit as a percentage of net
sales decreased to 17.0% from 18.9% for the first six months of the prior year.
The $1.9 million decrease in gross profit was primarily the result of lower
average selling prices, offset partially by the acquisition of the M. J. Soffe
Co. in the second quarter of fiscal year 2004.

Selling, general and administrative expenses, including the provision for bad
debts, for the second quarter of fiscal year 2004 were $8.1 million, or 17.9%
of sales, an increase of $5.1 million from $3.0 million, or 10.1% of sales, in
the second quarter of the prior year primarily as the result of the addition of
the M. J. Soffe Co. Selling costs increased as a percentage of sales
primarily as a result of the higher selling costs associated with branded
apparel products. Selling, general and administrative expenses, including the
provision for bad debts, for the first six months of fiscal year 2004 were
$11.2 million, or 14.7% of net sales, an increase of $5.3 million from $5.9
million, or 10.0% of net sales, in the first six months of the prior year
primarily as the result of the addition of the M. J. Soffe Co. in the second
quarter of fiscal year 2004.

Other income for the first six months of fiscal year 2004 was $0.1 million
compared with other expense of $0.1 million for the first six months of the
prior year. Other income in the six months ended December 27, 2003 primarily
relates to a net gain on the sale of cotton options. Other expense in the six
months ended December 28, 2002 primarily relates to a net loss on the sale of
cotton options. The Company owned options valued at $38 thousand on December
27, 2003.

Operating income for the second quarter of fiscal year 2004 was $0.7 million, a
decrease of $1.3 million, or 64.5%, from $2.1 million for the second quarter of
the prior year. Operating income for the first six months of fiscal year 2004
was $1.8 million, a decrease of $3.3 million, or 64.2%, from $5.1 million for
the first six months of the prior year. The decrease in operating income was
the result of the increased selling, general and administrative expenses,
partially offset by an increase in gross profit.

Net interest expense for the second quarter of fiscal year 2004 was $0.9
million, an increase of $0.7 million from the second quarter of the prior year.
Net interest expense for the first six months of fiscal year 2004 was $1.0
million, an increase of $0.7 million from the first six months of the prior
year. The increase in interest expense resulted primarily from the increase in
average debt outstanding, resulting from the M. J. Soffe acquisition.

The effective tax rate for the second quarter of fiscal year 2004 was 43.8%
compared to 38.7% for the second quarter of the prior year and 38.3% for the
fiscal year ended June 28, 2003. The higher effective tax rate for the second
quarter of fiscal year 2004 is the result of the impact on the effective tax
rate percentage of small changes in income tax benefit due to the level of
pre-tax loss during the quarter.

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Net loss for the second quarter of fiscal year 2004 was $0.1 million compared
to net income of $1.2 million in the prior year second fiscal quarter. Net
income for the first six months of fiscal year 2004 was $0.5 million, a
decrease of $2.4 million from net income of $2.9 million for the first six
months of the prior year.

Accounts receivable increased $1.5 million from June 28, 2003 to $23.7 million
on December 27, 2003. The increase was the result of the addition of the M. J.
Soffe Co., partially offset by lower sales during the quarter ended December
27, 2003 compared to the quarter ended June 28, 2003. In addition days sales
outstanding were 52 days at December 27, 2003 compared to 55 days at June 28,
2003.

Inventories at December 27, 2003 were $111.3 million, an increase of $64.1
million, compared to $47.2 million at June 28, 2003. The acquisition of M. J.
Soffe Co. resulted in an increase of $54.7 million in inventory compared to
June 28, 2003. The remaining increase in inventory was the result of lower
than expected sales of tee shirts during the quarter and a strategy to build
inventories to take advantage of lower cost raw materials that were available
during the previous quarters.

Other liabilities increased $11.4 million from June 28, 2003 to $12.8 million
on December 27, 2003. The increase was primarily the result of the addition of
the M. J. Soffe Co. As part of the Stock Purchase Agreement, additional
Earnout Amounts are payable in cash during each of fiscal years 2005, 2006, and
2007 if specified financial performance targets are met by M. J. Soffe Co. The
Earnout Amounts are capped at a maximum aggregate amount of $12 million. Based
on the preliminary allocation of purchase price, the Company has included in
other liabilities $7.5 million related to the Earnout Amounts. The remaining
increase in other liabilities primarily relates to the M. J. Soffe deferred
compensation plan.

Capital expenditures in the second quarter of fiscal year 2003 were $0.6
million compared to $1.3 million in the second quarter of the prior year.
Capital expenditures in the first six months of fiscal year 2004 were $1.1
million compared to $2.0 million in the first six months of the prior year.
The expenditures during fiscal year 2004 primarily related to increasing
capacity and lowering costs in the Companys Edgefield, and Fayette facilities.
The expenditures during fiscal year 2003 primarily related to increasing
capacity and lowering costs in its Edgefield, Maiden and Fayette facilities.

LIQUIDITY AND CAPITAL RESOURCES

The Companys primary cash needs are for working capital and capital
expenditures. In addition, the Company uses cash to pay dividends fund its
share repurchases under its Stock Repurchase Program. The Company has financed
its working capital and capital expenditure requirements through its operating
profits and its credit agreements with Congress Financial Corporation
(Southern).

On October 3, 2003, Delta Apparel entered into an Amended and Restated Loan and
Security Agreement with Congress Financial Corporation (Southern), pursuant to
which Delta Apparels existing line of credit (the Delta Facility) was
increased to $40 million. Also on October 3, 2003, the MJS Acquisition
Company, a newly-formed, wholly-owned subsidiary of Delta Apparel, purchased
all of the outstanding stock of the M. J. Soffe Co. The M. J. Soffe Co. was
merged into MJS Acquisition Company, and MJS Acquisition Company changed its
name to M. J. Soffe Co. Pursuant to this transaction, MJS Acquisition Company
entered into a Loan and Security Agreement with Congress Financial Corporation
(Southern) which provides M. J. Soffe Co. with a $38.5 million line of credit
(the Soffe Facility). Together, the Delta Facility and the Soffe Facility
provide for lines of credit in an aggregate amount of $78.5 million. All loans
under the credit agreements bear interest at rates based on an adjusted LIBOR
rate plus an applicable margin or a banks prime rate plus an applicable
margin. The Delta Facility and the Soffe Facility are secured by a first
priority lien on all of the assets of Delta Apparel and M. J. Soffe Co. Delta
Apparel is a guarantor of the Soffe Facility, and M. J. Soffe Co. is a
guarantor of the Delta Facility. M. J. Soffe Co. has the option to increase
the Soffe Facility from $38.5 million to $41.0 million, provided that no event
of default exists under the facility.

The Soffe Facility contains both a subjective acceleration clause and a lockbox
arrangement, whereby remittances from the customers reduce the current
outstanding borrowings. Pursuant to Emerging Issues Task Force (EITF) 95-22,
the Company is classifying borrowings under the Soffe Facility as current debt.
The Delta Facility contains a subjective acceleration clause and a springing
lockbox arrangement  [as defined in EITF 95-22], whereby remittances from the customers are forwarded to the Companys general
bank account and do not reduce the outstanding debt until and unless a
specified event or an event of default occurs. Pursuant to EITF 95-22, the
Company is classifying borrowings under the Delta Facility as noncurrent debt.

Delta Apparels operating activities provided cash of $4.0 million in the first
six months of fiscal year 2004 and used cash of $8.8 million in the first six
months of fiscal year 2003. The cash provided in the first six months of
fiscal year 2004 was primarily the result of a reduction in accounts receivable
and net income plus depreciation, offset partially by increases in inventory.
The cash used in the first six months of the prior year was primarily the
result of increases in inventory and decreases in accrued expenses, offset
partially by net income plus depreciation and a reduction in accounts
receivable. In December 2003, the Company received a net $7.7 million cash
refund of federal taxes, resulting from a tax loss generated as a result of no
value being allocated in the purchase price allocation to the property, plant
and equipment of M. J. Soffe Co.

At December 27, 2003, the Company had a $50.8 million outstanding balance under
its credit facilities at an average interest rate of 3.4%.

Based on its expectations, Delta Apparel believes that its $78.5 million credit
facilities should be sufficient to satisfy its foreseeable working capital
needs, and that the cash flow generated by its operations and funds available
under its credit facilities should be sufficient to service its

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debt payment
requirements, to satisfy its day-to-day working capital needs, to fund its
planned capital expenditures, to fund purchases of its stock as described below
and to fund the payment of dividends as described below. Any material
deterioration in Delta Apparels results of operations, however, may result in
Delta Apparel losing its ability to borrow under its credit facilities and to
issue letters of credit to suppliers or may cause the borrowing availability
under the facilities to be insufficient for the Companys needs.

Purchases by Delta Apparel of its Own Shares

During the second quarter of fiscal year 2003, the Company purchased 7,853
shares of common stock for a total cost of $0.1 million pursuant to its Stock
Repurchase Program. Since the inception of the program, the Company has
purchased 368,057 shares of its stock under the program for a total cost of
$4.2 million. The Company has authorization from the Board of Directors to
spend up to an aggregate of $6.0 million for share repurchases under the Stock
Repurchase Program. All purchases are made at the discretion of management.

Dividend Program

On October 20, 2003, the Board declared a cash dividend pursuant to the
Companys quarterly dividend program of six cents per share of common stock.
The dividend was paid on November 17, 2003 to shareholders of record as of the
close of business on November 5, 2003. On January 28, 2004, the Board declared
a cash dividend of six cents per share of common stock payable February 23,
2004 to shareholders of record as of the close of business on February 11,
2004. Although the Board may terminate or amend the program at any time, the
Company currently expects to continue the quarterly dividend program.

CRITICAL ACCOUNTING POLICIES

There have been no changes in our critical accounting policies since the filing
of our Annual Report on Form 10-K for the year ended June 28, 2003.

NEW ACCOUNTING STANDARDS

In January 2003, the FASB issued FASB Interpretation No. 46 (FIN 46),
Consolidation of Variable Interest Entities, which addresses consolidation of
variable interest entities. FIN 46 expands the criteria for consideration in
determining whether a variable interest entity should be consolidated by a
business entity, and requires existing unconsolidated variable interest
entities (which include, but are not limited to, Special Purpose Entities, or
SPEs) to be consolidated by their primary beneficiaries if the entities do not
effectively disperse risks among parties involved. The Company is currently
evaluating the impact of FIN 46 on its financial statements and does not
believe that the adoption of FIN 46 will have a material impact on the
Companys financial statements.

ENVIRONMENTAL AND REGULATORY MATTERS

On May 27, 2002, the Company received a renewal of its National Pollution
Discharge Elimination System (NPDES) permit from the North Carolina
Department of Environment and Natural Resources, Division of Water Quality
(DWQ) for its Maiden, North Carolina textile plant. Among other things, the
new permit requires the Company to reduce its effluent (waste discharge) color
to specified color concentration limits. The Company believed that the DWQ
exceeded its authority and acted arbitrarily in imposing the specific color
concentration limitations within the new permit and, on July 23, 2002 contested
the permit by filing a petition with the North Carolina Office of
Administrative Hearings. The Company and the DWQ have reached a tentative
settlement and have stayed the contested case. The
tentative settlement provides that Delta Apparel will have one year to research
and test alternative color removal technologies and thereafter must select and
implement a technology. In addition, Delta Apparel must continue to monitor
its color removal.

The Company does not currently have an estimate of the amount of additional
annual expenses, if any, that the Company may incur in the future in order to
comply with the new permit, and there can be no assurance that the cost of
compliance will not be material to the financial condition of the Company.




Item 3. Quantitative and Qualitative Disclosures about Market Risk

COMMODITY RISK SENSITIVITY

The Company purchases cotton from approximately eleven established merchants
with whom it has long-standing relationships. The majority of the Companys
purchases are executed using on-call contracts. These on-call arrangements
are used to ensure that an adequate supply of cotton is available for the
Companys requirements. Under on-call contracts, the Company agrees to
purchase specific quantities for delivery on specific dates, with pricing to be
determined at a later time. Prices are set according to prevailing prices, as
reported by the New York Cotton Exchange, at the time of the Companys election
to fix specific contracts.

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Cotton on-call with a fixed price at December 27, 2003 was valued at $20.3
million, and is scheduled for delivery between January 2004 and September 2004.
At December 27, 2003, the Company had unpriced contracts for deliveries
between April 2004 and September 2004. Based on the prevailing price at
December 27, 2003, the value of these unpriced commitments is approximately
$4.0 million. At December 27, 2003, a 10% decline in the market price of the
cotton covered by Delta Apparels fixed price contracts would have had a
negative impact of approximately $2.0 million on the value of the contracts.
At June 28, 2003, cotton on-call with a fixed price was valued at $7.2 million.
At June 28, 2003, a 10% decline in the market price of the cotton covered by
Delta Apparels fixed price contracts would have had a negative impact of
approximately $0.7 million. The effect of a 10% decline in the market price of
cotton on Delta Apparels fixed price contracts would have been more December
27, 2003 than at June 27, 2003 because the value of Delta Apparels fixed price
cotton on-call contracts was more on December 27, 2003. Daily price
fluctuations are minimal, yet long-term trends in price movement can result in
unfavorable pricing of cotton for Delta Apparel. The Company also purchases
yarn from third party vendors. The price of yarn is primarily impacted by the
price of cotton, as discussed above.

The Company uses derivatives, including cotton option contracts, to manage its
exposure to movements in commodity prices. The Company did not designate its
options as hedge instrument upon inception. Accordingly, changes in the fair
market value are marked to market. The Company owned options valued at $38
thousand on December 27, 2003.

INTEREST RATE SENSITIVITY

Delta Apparels credit agreements provide that the interest rates on
outstanding amounts owed shall bear interest at variable rates. If the amount
of outstanding indebtedness at December 27, 2003 under the revolving credit
facilities had been the amount outstanding during the entire three months ended
December 27, 2003 and the interest rate on this outstanding indebtedness had
been increased by 100 basis points, Delta Apparels interest expense would have
been approximately $127,000, or 14.2%, higher during the quarter. This
compares to an increase of $99,000 or 13.5% for the 2003 fiscal year, or an
average of $24,750 per quarter, based on the outstanding indebtedness at June
28, 2003. The increase is due to the amount outstanding under the Companys
revolving credit facilities being higher at December 27, 2003 than at June 28,
2003 primarily as the result of the acquisition of M. J. Soffe Co. The actual
increase in interest expense resulting from a change in interest rates would
depend on the magnitude of the increase in rates and the average principal
balance outstanding.




Item 4: Controls and Procedures

Under the supervision and with the participation of our management, including
the Chief Executive Officer and Chief Financial Officer, we have evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures within 90 days of the filing date of this quarterly report, and,
based on their evaluation, our Chief Executive Officer and Chief Financial
Officer have concluded that these controls and procedures are effective. There
were no significant changes in our internal controls or in other factors that
could significantly affect these controls subsequent to the date of their
evaluation.

Our disclosure controls and procedures are designed to ensure that information
required to be disclosed by us in the reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the Securities and Exchange Commissions rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed by us
in the reports that we file or submit under the Exchange Act is accumulated and
communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate to allow timely decisions regarding required
disclosure.




PART II. OTHER INFORMATION




Item 1. Legal Proceedings

On May 27, 2002, the Company received a renewal of its National Pollution
Discharge Elimination System (NPDES) permit from the North Carolina
Department of Environment and Natural Resources, Division of Water Quality
(DWQ) for its Maiden, North Carolina textile plant. Among other things, the
new permit requires the Company to reduce its effluent (waste discharge) color
to specified color concentration limits. The Company believed that the DWQ
exceeded its authority and acted arbitrarily in imposing the specific color
concentration limitations within the new permit and, on July 23, 2002 contested
the permit by filing a petition with the North Carolina Office of
Administrative Hearings. The Company and the DWQ have reached a tentative
settlement and have stayed the contested case. The tentative settlement
provides that Delta Apparel will have one year to research and test alternative
color removal technologies and thereafter must select and implement a
technology. In addition, Delta Apparel must continue to monitor its color
removal.

The Company does not currently have an estimate of the amount of additional
annual expenses, if any, that the Company may incur in the future in order to
comply with the new permit, and there can be no assurance that the cost of
compliance will not be material to the financial condition of the Company.

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Item 4. Submission of Matters to a Vote of Security Holders

The following summarizes the votes at the Annual Meeting of the Companys
shareholders held on November 13, 2003:

BrokerElection of Directors
    
    For
    
    Against
    
    Withheld
    
    Abstentions
    
    NonvotesDavid S. Fraser
    
    
    3,968,206
    
    
    
    N/A
    
    
    
    16,834
    
    
    
    N/A
    
    
    
    N/AWilliam F. Garrett
    
    
    3,852,042
    
    
    
    N/A
    
    
    
    132,998
    
    
    
    N/A
    
    
    
    N/AC.C. Guy
    
    
    3,968,164
    
    
    
    N/A
    
    
    
    16,876
    
    
    
    N/A
    
    
    
    N/ARobert W. Humphreys
    
    
    3,981,576
    
    
    
    N/A
    
    
    
    3,464
    
    
    
    N/A
    
    
    
    N/ADr. Max Lennon
    
    
    3,951,664
    
    
    
    N/A
    
    
    
    33,376
    
    
    
    N/A
    
    
    
    N/AE. Erwin Maddrey, II
    
    
    3,852,042
    
    
    
    N/A
    
    
    
    132,998
    
    
    
    N/A
    
    
    
    N/ABuck A. Mickel
    
    
    3,965,414
    
    
    
    N/A
    
    
    
    19,626
    
    
    
    N/A
    
    
    
    N/ADavid Peterson
    
    
    3,982,376
    
    
    
    N/A
    
    
    
    2,664
    
    
    
    N/A
    
    
    
    N/ARatification of the Appointment of
Ernst & Young LLP as Independent
Auditors for Fiscal Year 2004
    
    
    3,966,998
    
    
    
    15,578
    
    
    
    0
    
    
    
    2,464
    
    
    
    N/A





Item 6. Exhibits and Reports on Form 8-K

(a)
    
    Exhibits.2.1
    
    Amended and Restated Stock Purchase Agreement dated as of October 3, 2003 among Delta Apparel, Inc., MJS Acquisition
Company, M. J. Soffe Co., James F. Soffe, John D. Soffe, and Anthony M. Cimaglia.*: Incorporated by reference to Exhibit
2.1 to the Companys Form 8-K filed on October 17, 2003.*Certain exhibits and schedules to Exhibit 2.1 have been omitted in accordance with Item 601(b)(2) of Regulation S-K. Delta
Apparel, Inc. will furnish supplementally a copy of any omitted exhibit or schedule to the Commission upon request.10.1
    
    Amended and Restated Loan and Security Agreement dated as of October
3, 2003 among Delta Apparel, Inc., Congress Financial Corporation
(Southern), as Agent, and certain financial institutions named
therein, as Lenders: Incorporated by reference to Exhibit 10.1 to the
Companys Form 8-K filed on October 17, 2003.10.2
    
    Loan and Security Agreement dated as of October 3, 2003 among MJS
Acquisition Company, Congress Financial Corporation (Southern), as
Agent, and certain financial institutions named therein, as Lenders: Incorporated by reference to Exhibit 10.2 to the Companys Form 8-K
filed on October 17, 2003.10.3
    
    General Security Agreement of MJS Acquisition Company and SAIM, LLC in
favor of Congress Financial Corporation (Southern), as Agent, dated as
of October 3, 2003: Incorporated by reference to Exhibit 10.3 to the
Companys Form 8-K filed on October 17, 2003.10.4
    
    General Security Agreement of Delta Apparel, Inc. and SAIM, LLC in favor or Congress Financial Corporation (Southern), as
Agent, dated as of October 3, 2003: Incorporated by reference to Exhibit 10.4 to the Companys Form 8-K filed on October
17, 2003.10.5
    
    Trademark Security Agreement dated as of October 3, 2003 between MJS
Acquisition Company and Congress Financial Corporation (Southern), as
Agent: Incorporated by reference to Exhibit 10.5 to the Companys Form
8-K filed on October 17, 2003.10.6
    
    Form of Deed of Trust of M. J. Soffe Co. in favor of Congress Financial Corporation (Southern), as Agent, dated as of
October 3, 2003: Incorporated by reference to Exhibit 10.6 to the Companys Form 8-K filed on October 17, 2003.10.7
    
    Stock Pledge Agreement dated as of October 3, 2003 by and among Delta
Apparel, Inc., MJS Acquisition Company, and Congress Financial
Corporation (Southern), as Agent: Incorporated by reference to Exhibit
10.7 to the Companys Form 8-K filed on October 17, 2003.10.8
    
    Guarantee of MJS Acquisition Company and SAIM, LLC in favor of
Congress Financial Corporation (Southern), as Agent, dated as of
October 3, 2003: Incorporated by reference to Exhibit 10.8 to the
Companys Form 8-K filed on October 17, 2003.10.9
    
    Guarantee of Delta Apparel, Inc. and SAIM, LLC in favor of Congress Financial Corporation (Southern), as Agent, dated as of
October 3, 2003: Incorporated by reference to Exhibit 10.9 to the Companys Form 8-K filed on October 17, 2003.


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|      |  |                                                                                                                                                                                                                                                                                                                            
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.10 |  | Collateral Assignment of Purchase Agreements dated as of October 3,
2003 by and among Delta Apparel, Inc., MJS Acquisition Company, and
Congress Financial Corporation (Southern), as Agent: Incorporated by
reference to Exhibit 10.10 to the Companys Form 8-K filed on October
17, 2003.                               
|      |  |                                                                                                                                                                                                                                                                                                                            
|10.11 |  | Subordination Agreement dated as of October 3, 2003 by and among Delta Apparel, Inc., MJS Acquisition Company, James F.
Soffe, John D. Soffe, Anthony M. Cimaglia, and Congress Financial Corporation (Southern), as Agent: Incorporated by
reference to Exhibit 10.11 to the Companys Form 8-K filed on October 17, 2003.
|      |  |                                                                                                                                                                                                                                                                                                                            
|10.12 |  | Promissory Note of MJS Acquisition Company issued to James F. Soffe, John D. Soffe, and Anthony M. Cimaglia dated as of
October 3, 2003: Incorporated by reference to Exhibit 10.12 to the Companys Form 8-K filed on October 17, 2003.                                                                                   
|      |  |                                                                                                                                                                                                                                                                                                                            
|10.13 |  | Security Agreement of MJS Acquisition Company in favor of James F. Soffe, John D. Soffe, and Anthony M. Cimaglia dated as
of October 3, 2003: Incorporated by reference to Exhibit 10.13 to the Companys Form 8-K filed on October 17, 2003.                                                                              
|      |  |                                                                                                                                                                                                                                                                                                                            
|10.14 |  | Form of Deed of Trust, Assignment of Rents and Security Agreement of M. J. Soffe Co. in favor of James F. Soffe, John D.
Soffe, and Anthony M. Cimaglia dated as of October 3, 2003: Incorporated by reference to Exhibit 10.14 to the Companys
Form 8-K filed on October 17, 2003.                                       
|      |  |                                                                                                                                                                                                                                                                                                                            
|10.15 |  | Guaranty of Delta Apparel, Inc. in favor of James F. Soffe, John D. Soffe, and Anthony M. Cimaglia dated as of October 3,
2003: Incorporated by reference to Exhibit 10.15 to the Companys Form 8-K filed on October 17, 2003.                                                                                            
|      |  |                                                                                                                                                                                                                                                                                                                            
|10.16 |  | Pledge Agreement of Delta Apparel, Inc. in favor of James F. Soffe, John D. Soffe, and Anthony M. Cimaglia dated as of
October 3, 2003: Incorporated by reference to Exhibit 10.16 to the Companys Form 8-K filed on October 17, 2003.                                                                                    
|      |  |                                                                                                                                                                                                                                                                                                                            
|10.17 |  | Employment and Non-Solicitation Agreement dated as of October 3, 2003 among Delta Apparel, Inc., M. J. Soffe Co., and James
F. Soffe: Incorporated by reference to Exhibit 10.17 to the Companys Form 8-K filed on October 17, 2003.                                                                                      
|      |  |                                                                                                                                                                                                                                                                                                                            
|10.18 |  | Employment and Non-Solicitation Agreement dated as of October 3, 2003 among Delta Apparel, Inc., M. J. Soffe Co., and John
D. Soffe: Incorporated by reference to Exhibit 10.18 to the Companys Form 8-K filed on October 17, 2003.                                                                                       
|      |  |                                                                                                                                                                                                                                                                                                                            
|10.19 |  | Employment and Non-Solicitation Agreement dated as of October 3, 2003 among Delta Apparel, Inc., M. J. Soffe Co., and
Anthony M. Cimaglia: Incorporated by reference to Exhibit 10.19 to the Companys Form 8-K filed on October 17, 2003.                                                                                 
|      |  |                                                                                                                                                                                                                                                                                                                            
|10.20 |  | Real Estate Exchange Contract dated as of October 3, 2003 between MJS
Acquisition Company and Middle Road Properties, LLC: Incorporated by
reference to Exhibit 10.20 to the Companys Form 8-K filed on October
17, 2003.                                                                                                 
|      |  |                                                                                                                                                                                                                                                                                                                            
|10.21 |  | Industrial Lease Agreement dated as of October 3, 2003 between M. J. Soffe Co. and Middle Road Properties, LLC:                                                                                                                                                                                                            
|      |  | Incorporated by reference to Exhibit 10.21 to the Companys Form 8-K filed on October 17, 2003.                                                                                                                                                                                                                            
|      |  |                                                                                                                                                                                                                                                                                                                            
|10.22 |  | Employment Agreement between Delta Apparel, Inc. and Herbert M. Mueller dated September 30, 2003: Incorporated by reference
to Exhibit 10.22 to the Companys Form 10-Q filed on November 5, 2003.                                                                                                                         
|      |  |                                                                                                                                                                                                                                                                                                                            
|10.23 |  | Employment Agreement between Delta Apparel, Inc. and Martha M. Watson dated September 30, 2003: Incorporated by reference
to Exhibit 10.23 to the Companys Form 10-Q filed on November 5, 2003.                                                                                                                           
|      |  |                                                                                                                                                                                                                                                                                                                            
|31.1  |  | Certification of the Chief Executive Officer pursuant to Rule
13a-14(a) under the Securities Exchange Act of 1934, as amended, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                       
|      |  |                                                                                                                                                                                                                                                                                                                            
|31.2  |  | Certification of the Chief Financial Officer pursuant to Rule
13a-14(a) under the Securities Exchange Act of 1934, as amended, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                       
|      |  |                                                                                                                                                                                                                                                                                                                            
|32.1  |  | Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.                                                                                                                                                                     
|      |  |                                                                                                                                                                                                                                                                                                                            
|32.2  |  | Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.                                                                                                                                                                     
|     
|(b)   |  | Reports on Form 8-K.                                                                                                                                                                                                                                                                                                       
|     
|      |  | On October 3, 2003, the Company filed and furnished a Current Report on Form
8-K reporting information under Item 5 (Other Events) and Item 7 (Financial
Statements and Exhibits).                                                                                                                                         

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| |  | On October 17, 2003, the Company filed and furnished a Current Report on Form
8-K reporting information under Item 2 (Acquisition or Disposition of Assets)
and Item 7 (Financial Statements, Pro Forma Financial Information and
Exhibits). This Current Report on Form 8-K contained the following financial
statements for M. J. Soffe Co.: Restated Balance Sheets as of December 31,
2001 and December 31, 2002; Restated Statements of Income for the periods
ended December 31, 2000, December 31, 2001 and December 31, 2002; Restated
Statements of Stockholders Equity; and Restated Statements of Cash Flows for
the periods ended December 31, 2000, December 31, 2001 and December 31, 2002.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | On October 17, 2003, the Company furnished a Current Report on Form 8-K
reporting information under Item 7 (Financial Statements and Exhibits), Item
9 (Regulation F-D Disclosure), and Item 12 (Results of Operation and
Financial Condition).
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.

DELTA APPAREL, INC.
(Registrant)February 6, 2004Date
    
    By:  /s/ Herbert M. MuellerHerbert M. Mueller
Vice President, Chief FinancialOfficer and Treasurer


18