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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 26, 2009
 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.
  GEORGIA
    
    58-2508794(State or Other Jurisdiction of
    
    (I.R.S. EmployerIncorporation or Organization)
    
    Identification No.)322 South Main Street 
Greenville, SC
    
    29601(Address of principal executive offices)
    
    (Zip Code)
 (864) 232-5200
 
  
   þ o
  þ o
  Large accelerated filer o   
    Accelerated filer o
    Non-accelerated filer þ
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ




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INDEX
 PagePART I. Financial InformationItem 1. Financial StatementsCondensed Consolidated Financial Statements:Condensed Consolidated Balance Sheets 
September 26, 2009 and June 27, 2009
    
    
    3Condensed Consolidated Statements of Income 
Three months ended September 26, 2009 and September 27, 2008
    
    
    4Condensed Consolidated Statements of Cash Flows 
Three months ended September 26, 2009 and September 27, 2008
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    11Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    15Item 4. Controls and Procedures
    
    
    16PART II. Other InformationItem 1. Legal Proceedings
    
    
    16Item 6. Exhibits
    
    
    17Signatures
    
    
    18Exhibits
    
    
    19EX-31.1EX-31.2EX-32.1EX-32.2
   
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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 DELTA APPAREL, INC. AND SUBSIDIARIES
 
 Condensed Consolidated Balance Sheets
 (Amounts in thousands, except share amounts and per share data)  (Unaudited)
 September 26,
    
    
    June 27,2009
    
    
    2009AssetsCurrent assets:Cash
    
    $
    589
    
    
    $
    654Accounts receivable, net
    
    
    55,816
    
    
    
    57,884Income taxes receivable
    
    
    965
    
    
    
    1,755Inventories, net
    
    
    123,895
    
    
    
    125,887Prepaid expenses and other current assets
    
    
    3,358
    
    
    
    3,387Deferred income taxes
    
    
    3,075
    
    
    
    3,475Total current assets
    
    
    187,698
    
    
    
    193,042Property, plant and equipment, net
    
    
    36,201
    
    
    
    36,480Goodwill
    
    
    16,814
    
    
    
    16,814Intangibles, net
    
    
    6,992
    
    
    
    7,114Other assets
    
    
    3,440
    
    
    
    3,543Total assets
    
    $
    251,145
    
    
    $
    256,993Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    35,816
    
    
    $
    34,103Accrued expenses
    
    
    18,430
    
    
    
    17,852Current portion of long-term debt
    
    
    5,718
    
    
    
    5,718Total current liabilities
    
    
    59,964
    
    
    
    57,673Long-term debt, less current maturities
    
    
    74,624
    
    
    
    85,936Deferred income taxes
    
    
    1,314
    
    
    
    1,223Other liabilities
    
    
    112
    
    
    
    16Total liabilities
    
    
    136,014
    
    
    
    144,848Stockholders equity:Preferred stock$0.01 par value, 2,000,000 shares authorized; none
issued and outstanding
    
    
    
    
    
    
    Common stock$0.01 par value, 15,000,000 shares authorized,
9,646,972 shares issued, and 8,516,293 and 8,502,699
shares outstanding as of September 26, 2009 and June 27, 2009,
respectively
    
    
    96
    
    
    
    96Additional paid-in capital
    
    
    58,504
    
    
    
    58,301Retained earnings
    
    
    66,346
    
    
    
    63,763Accumulated other comprehensive loss
    
    
    (477
    )
    
    
    (565
    )Treasury stock1,130,679 and 1,144,273 shares as of September 26,
2009 and June 27, 2009, respectively
    
    
    (9,338
    )
    
    
    (9,450
    )Total stockholders equity
    
    
    115,131
    
    
    
    112,145Total liabilities and stockholders equity
    
    $
    251,145
    
    
    $
    256,993
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DELTA APPAREL, INC. AND SUBSIDIARIES
 
 Condensed Consolidated Statements of Income
 (Amounts
in thousands, except per share data)  (Unaudited)
 Three Months EndedSeptember 26,
    
    
    September 27,2009
    
    
    2008Net sales
    
    $
    99,122
    
    
    $
    91,412Cost of goods sold
    
    
    75,477
    
    
    
    72,106Gross profit
    
    
    23,645
    
    
    
    19,306Selling, general and administrative expenses
    
    
    19,258
    
    
    
    16,841Other (income) expense, net
    
    
    (105
    )
    
    
    25Operating income
    
    
    4,492
    
    
    
    2,440Interest expense, net
    
    
    954
    
    
    
    1,419Income before provision for income taxes
    
    
    3,538
    
    
    
    1,021Provision for income taxes
    
    
    955
    
    
    
    347Net income
    
    $
    2,583
    
    
    $
    674Basic earnings per share
    
    $
    0.30
    
    
    $
    0.08Diluted earnings per share
    
    $
    0.30
    
    
    $
    0.08Weighted average number of shares outstanding
    
    
    8,507
    
    
    
    8,499Dilutive effect of stock options
    
    
    21
    
    
    
    9Weighted average number of shares assuming dilution
    
    
    8,528
    
    
    
    8,508
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DELTA APPAREL, INC. AND SUBSIDIARIES
 
 Condensed Consolidated Statements of Cash Flows
 (Amounts in thousands)  (Unaudited)
 Three Months EndedSeptember 26,
    
    
    September 27,2009
    
    
    2008Operating activities:Net income
    
    $
    2,583
    
    
    $
    674Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    1,680
    
    
    
    1,862Provision for deferred income taxes
    
    
    491
    
    
    
    537Loss on disposal of property and equipment
    
    
    
    
    
    
    41Non-cash stock compensation
    
    
    363
    
    
    
    268Changes in operating assets and liabilities,
net of effect of acquisitions:Accounts receivable
    
    
    2,068
    
    
    
    15,456Inventories
    
    
    1,992
    
    
    
    (3,768
    )Prepaid expenses and other current assets
    
    
    29
    
    
    
    (60
    )Other non-current assets
    
    
    103
    
    
    
    (6
    )Accounts payable and accrued expenses
    
    
    2,944
    
    
    
    2,143Income taxes
    
    
    790
    
    
    
    (682
    )Other liabilities
    
    
    183
    
    
    
    (30
    )Net cash provided by operating activities
    
    
    13,226
    
    
    
    16,435Investing activities:Purchases of property and equipment
    
    
    (1,279
    )
    
    
    (1,037
    )Cash paid for business
    
    
    (700
    )
    
    
    (2,592
    )Net cash used in investing activities
    
    
    (1,979
    )
    
    
    (3,629
    )Financing activities:Proceeds from long-term debt
    
    
    91,400
    
    
    
    97,600Repayment of long-term debt
    
    
    (102,712
    )
    
    
    (110,397
    )Net cash used in financing activities
    
    
    (11,312
    )
    
    
    (12,797
    )Net (decrease) increase in cash
    
    
    (65
    )
    
    
    9Cash at beginning of period
    
    
    654
    
    
    
    586Cash at end of period
    
    $
    589
    
    
    $
    595Supplemental cash flow information:Cash paid for interest
    
    $
    868
    
    
    $
    1,479Cash (refunded) paid for income taxes, net
    
    $
    (271
    )
    
    $
    521Non-cash financing activityissuance of common stock
    
    $
    118
    
    
    $
    41
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DELTA APPAREL, INC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Note ABasis of Presentation
   Note BAccounting Policies
  Note CNew Accounting Standards
 FASB Accounting Standards and the Hierarchy of Generally Accepted Accounting
Principles
 Business Combinations
 Accounting for Assets Acquired
and Liabilities Assumed in a Business Combination That Arise from Contingencies Accounting for Contingencies Reasonable Estimation of the Amount of
the Loss
 Non-controlling Interests in Consolidated
Financial Statements
 Determination of the Useful Life of Intangible Assets Goodwill and Other Intangible Assets
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Equity Method Investment Accounting
Considerations
 Note DInventories
  September
    
    
    June26,
    
    
    27,2009
    
    
    2009Raw materials
    
    $
    10,267
    
    
    $
    9,626Work in process
    
    
    19,428
    
    
    
    21,842Finished goods
    
    
    94,200
    
    
    
    94,419$
    123,895
    
    
    $
    125,887
  Note EDebt
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Note FSelling, General and Administrative Expense
  Note GStock Options and Incentive Stock Awards
 Share-Based Payment
 Delta Apparel Stock Option Plan (Option Plan)
  Delta Apparel Incentive Stock Award Plan (Award Plan)
    Note HPurchase Contracts
  Natural gas
    
    $
    1,065Yarn
    
    
    11,707Finished fabric
    
    
    1,487Finished apparel products
    
    
    8,382$
    22,641
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Note ISegment Reporting
  ®
 ® ® ® ® ®
   Activewear
    
    Retail-Ready
    
    ConsolidatedThree months ended September 26, 2009:Net sales
    
    $
    47,145
    
    
    $
    51,977
    
    
    $
    99,122Segment operating (loss) income
    
    
    (1,085
    )
    
    
    5,577
    
    
    
    4,492Segment assets
    
    
    134,965
    
    
    
    116,180
    
    
    
    251,145Purchases of property, plant and equipment
    
    
    878
    
    
    
    401
    
    
    
    1,279Three months ended September 27, 2008:Net sales
    
    $
    49,988
    
    
    $
    41,424
    
    
    $
    91,412Segment operating (loss) income
    
    
    (2,905
    )
    
    
    5,345
    
    
    
    2,440Segment assets
    
    
    141,802
    
    
    
    107,884
    
    
    
    249,686Purchases of property, plant and equipment
    
    
    438
    
    
    
    599
    
    
    
    1,037
  Three Months EndedSeptember 26,
 2009
    
    
    September 27,
 2008Segment operating income
    
    $
    4,492
    
    
    $
    2,440Unallocated interest expense
    
    
    954
    
    
    
    1,419Consolidated income before taxes
    
    $
    3,538
    
    
    $
    1,021
 Note JIncome Taxes
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Note KFactored Receivables
 Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities, a replacement of FASB Statement 125
 Note LDerivatives
  Accounting for Derivative Instruments and
Hedging
  September 26,
    
    
    June 27,2009
    
    
    2009Accrued expenses
    
    $
    662
    
    
    $
    902Deferred tax liabilities
    
    
    (297
    )
    
    
    (353
    )Other liabilities
    
    
    112
    
    
    
    16Accumulated other comprehensive loss
    
    $
    477
    
    
    $
    565
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Note MLegal Proceedings
    Note NSubsequent Events
  
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 FORWARD LOOKING STATEMENTS
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®
            13




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Operating Cash Flows
  Investing Cash Flows
  Financing Activities
   Purchases by Delta Apparel of its Own Shares
  CRITICAL ACCOUNTING POLICIES
   ENVIRONMENTAL AND REGULATORY MATTERS
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
       15




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Derivatives
    
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   Changes in Internal Control Over Financial Reporting
  
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  16




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Item 6. Exhibits
  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.
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SIGNATURES
  DELTA APPAREL, INC.
(Registrant)November 2, 2009 Date
    By:
    /s/ Deborah H. MerrillDeborah H. MerrillVice President, Chief FinancialOfficer and Treasurer 18