##### 



SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D. C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For The Fiscal Year Ended July 2, 2005
 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 No. 1-15583
 DELTA APPAREL, INC.
 (Exact name of registrant as specified in its charter)
 Georgia
(State or other jurisdiction of
incorporation or organization)
    
    58-2508794
(I.R.S. Employer Identification No.)
 2750 Premiere Parkway, Suite 100
Duluth, Georgia 30097
(Address of principal executive offices) (zip code)
 Registrants telephone number, including area code: (678) 775-6900
 Securities registered pursuant to Section 12(b) of the Act:
 Name of Each ExchangeTitle of Each Class
    
    on Which RegisteredCommon Stock, par value $0.01
    
    American Stock Exchange
 Securities registered pursuant to Section 12(g) of the Act:
 þ o
 o
 o þ
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



FORWARD LOOKING STATEMENTS
    PART I
 ITEM 1. BUSINESS
  OVERVIEW
    STOCK SPLIT
  2




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##### 



BUSINESS DEVELOPMENTS
        BUSINESS SEGMENTS
    3




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##### 



PRODUCTS
   release release
 MARKETING
    4




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##### 



MANUFACTURING
   RAW MATERIALS
    COMPETITION
  TRADEMARKS
  5




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##### 



LICENSES
  EMPLOYEES
  AVAILABLE INFORMATION
 www.deltaapparel.com
  ENVIRONMENTAL AND REGULATORY MATTERS
     6




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##### 



RISK FACTORS
  PRICING PRESSURES.
 COMPETITION.
 FASHION TRENDS.
 YARN PRICING AND AVAILABILTY.
 DISRUPTION IN DISTRIBUTION OPERATIONS.
 INFORMATION SYSTEMS.
 7




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##### 



CREDIT RISK.
 TRANSPORTATION COSTS.
 AVAILABILITY OF CASH.
 ACCOUNTING FOR STOCK OPTIONS.
 MARKET PRICE OF DELTA APPAREL SHARES.
  PRINCIPAL SHAREHOLDERS EXERT SUBSTANTIAL INFLUENCE.
 POLITICAL AND ECONOMIC UNCERTAINTY IN HONDURAS, MEXICO AND COSTA RICA.
 8




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##### 



U.S. TRADE REGULATIONS.
     ENVIRONMENTAL RULES.
 OUTSIDE PRODUCTION.
 TRADEMARKS. TM 9
        LICENSE AGREEMENTS.
 KEY MANAGEMENT.
 ITEM 2. PROPERTIES
  Location
    
    Utilization
    
    SegmentMaiden Plant, Maiden, NC
    
    Knit/dye/finish/cut
    
    ActivewearFayette Plant, Fayette, AL
    
    Knit/dye/finish/cut
    
    ActivewearFayetteville Plant 1, Fayetteville, NC
    
    Cut/sew/decoration/distribution/administration
    
    Retail-ReadyFayetteville Plant 2, Fayetteville, NC
    
    Knit/dye/finish/cut
    
    Retail-ReadyRowland Plant, Rowland, NC
    
    Sew
    
    Retail-ReadyHonduras Plant, San Pedro Sula, Honduras
    
    Sew
    
    ActivewearCortes Plant, San Pedro Sula, Honduras
    
    Sew
    
    ActivewearMexico Plant, Campeche, Mexico
    
    Sew
    
    ActivewearShannon Drive Warehouse, Fayetteville, NC
    
    Warehouse
    
    Retail-ReadyWarehouse Center, Knoxville, TN
    
    Warehouse
    
    ActivewearDistribution Center, Clinton, TN
    
    Distribution
    
    ActivewearDistribution Center, Buena Park, CA
    
    Distribution
    
    ActivewearDistribution Center, Miami, FL
    
    Distribution
    
    Activewear and Retail-ReadyDistribution Center, Cranbury NJ
    
    Distribution
    
    Activewear and Retail-ReadyDC Annex, Fayetteville, NC
    
    Distribution
    
    Retail-ReadyDistribution Center, Kansas City, MO
    
    Distribution
    
    Retail-ReadyDistribution Center, El Monte, CA
    
    Distribution
    
    Retail-ReadyDistribution Center, Lansing, MI
    
    Distribution
    
    Retail-ReadyNew York Office, New York, NY
    
    Sales
    
    ActivewearNew York Office, New York, NY
    
    Sales
    
    Activewear and Retail-ReadyNew York Office, New York, NY
    
    Sales
    
    Retail-ReadyGreenville Executive Office, Greenville, SC
    
    Administration
    
    Activewear and Retail-ReadyGreenville Office, Greenville, SC
    
    Administration
    
    Activewear and Retail-ReadyLos Angeles Office, Los Angeles, CA
    
    Administration and Distribution
    
    Retail-Ready
    10




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##### 



ITEM 3. LEGAL PROCEEDINGS
    ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  PART II
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER REPURCHASES
OF EQUITY SECURITIES.
 Market Information for Common Stock:
  Fiscal Year 2005
    
    
    Fiscal Year 2004High *
    
    
    Low *
    
    
    High *
    
    
    Low *First Quarter
    
    $
    12.95
    
    
    $
    10.60
    
    
    $
    8.33
    
    
    $
    7.45Second Quarter
    
    
    12.13
    
    
    
    10.52
    
    
    
    8.90
    
    
    
    7.50Third Quarter
    
    
    15.65
    
    
    
    11.83
    
    
    
    10.12
    
    
    
    8.80Fourth Quarter
    
    
    15.89
    
    
    
    11.93
    
    
    
    12.40
    
    
    
    9.88
 
 *Adjusted to reflect 2-for-1 stock split effective as of May 31, 2005 Dividends:
 11




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##### 



First
    
    
    
    
    
    
    ThirdQuarter
    
    
    Second Quarter
    
    
    Quarter
    
    
    Fourth QuarterFiscal Year 2005
    
    $
    0.035
    *
    
    $
    0.035
    *
    
    $
    0.035
    *
    
    $
    0.040Fiscal Year 2004
    
    $
    0.030
    *
    
    $
    0.030
    *
    
    $
    0.030
    *
    
    $
    0.035
    *
 
 *Adjusted to reflect 2-for-1 stock split effective as of May 31, 2005    Purchases of our Own Shares of Common Stock:
 Total
    
    
    
    
    
    Total Number of
    
    Dollar Value ofNumber
    
    Average
    
    Shares Purchased
    
    Shares that Mayof Shares
    
    Price Paid
    
    as Part of Publicly
    
    Yet Be PurchasedPeriod
    
    Purchased
    
    per Share
    
    Announced Plans
    
    Under the PlansApril Period
(April 3, 2005 to May 7, 2005)
    
    
    5,070
    
    
    $
    12.61
    
    
    
    5,070
    
    
    $1.7 millionMay Period
(May 8, 2005 to June 4, 2005)
    
    
    14,340
    
    
    $
    13.74
    
    
    
    14,340
    
    
    $1.5 millionJune Period 
(June 5, 2005 to July 2, 2005)
    
    
    0
    
    
    
    N/A
    
    
    
    N/A
    
    
    $1.5 million
  Stock Split:
 Securities Authorized for Issuance Under Equity Compensation Plans:
 ITEM 6. SELECTED FINANCIAL DATA
  12




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##### 



Fiscal Year EndedJuly 2,
    
    
    July 3,
    
    
    June 28,
    
    
    June 29,
    
    
    June 30,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(In thousands, except share amounts)Statement of Income Data:Net sales
    
    $
    228,065
    
    
    $
    208,113
    
    
    $
    129,521
    
    
    $
    131,601
    
    
    $
    120,400Cost of goods sold
    
    
    (174,156
    )
    
    
    (159,852
    )
    
    
    (105,552
    )
    
    
    (110,273
    )
    
    
    (97,101
    )Selling, general and administrative expenses
    
    
    (37,881
    )
    
    
    (31,043
    )
    
    
    (13,220
    )
    
    
    (11,807
    )
    
    
    (11,024
    )Other income (loss)
    
    
    4,117
    
    
    
    (192
    )
    
    
    (194
    )
    
    
    816
    
    
    
    28Operating income
    
    
    20,145
    
    
    
    17,026
    
    
    
    10,555
    
    
    
    10,337
    
    
    
    12,303Interest expense, net
    
    
    (3,022
    )
    
    
    (2,622
    )
    
    
    (732
    )
    
    
    (677
    )
    
    
    (1,339
    )Income before taxes
    
    
    17,123
    
    
    
    14,404
    
    
    
    9,823
    
    
    
    9,660
    
    
    
    10,964Income tax expense
    
    
    5,880
    
    
    
    4,674
    
    
    
    3,760
    
    
    
    3,188
    
    
    
    987Net income
    
    $
    11,243
    
    
    $
    9,730
    
    
    $
    6,063
    
    
    $
    6,472
    
    
    $
    9,977Net Income Per Common Share *:Basic
    
    $
    1.35
    
    
    $
    1.19
    
    
    $
    0.75
    
    
    $
    0.74
    
    
    $
    1.04Diluted
    
    $
    1.33
    
    
    $
    1.16
    
    
    $
    0.73
    
    
    $
    0.71
    
    
    $
    1.01Dividends Declared per Common Share*
    
    $
    0.145
    
    
    $
    0.125
    
    
    $
    0.105
    
    
    $
    0.025
    
    
    
    Balance Sheet Data (at year end):Working capital
    
    $
    86,910
    
    
    $
    94,408
    
    
    $
    54,283
    
    
    $
    43,773
    
    
    $
    46,372Total assets
    
    
    159,514
    
    
    
    169,379
    
    
    
    94,447
    
    
    
    88,346
    
    
    
    91,323Total long-term debt
    
    
    17,236
    
    
    
    29,246
    
    
    
    7,865
    
    
    
    3,667
    
    
    
    5,667Shareholders equity
    
    
    86,464
    
    
    
    75,492
    
    
    
    65,969
    
    
    
    61,278
    
    
    
    63,483
 
 *
    
    Adjusted to reflect 2-for-1 stock split effective as of May 31, 2005 ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 BUSINESS OUTLOOK
    13




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##### 



Actual FY05 Basic Earnings per Share
    
    $
    1.35Sale of Edgefield Plant
    
    
    (0.26
    )Reversal of Foreign Earnings Tax Liability
    
    
    (0.08
    )Adjusted FY05 Basic Earnings per Share
    
    $
    1.01
  RESULTS OF OPERATIONS
 Overview
  14




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##### 



Quarterly Financial Data
  Fiscal Year 2005 versus Fiscal Year 2004
    15




---



##### 



Fiscal Year 2004 versus Fiscal Year 2003
     16




---



##### 



LIQUIDITY AND CAPITAL RESOURCES
 Credit Facilities
        17




---



##### 



Operating Cash Flows
  Investing Cash Flows
  Financing Activities
  18




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##### 



Future Liquidity and Capital Resources
   Payments Due by Period (in thousands)Less than
    
    
    1 - 3
    
    
    3 - 5
    
    
    After 5Total
    
    
    1 year
    
    
    years
    
    
    years
    
    
    yearsContractual ObligationsLong-term debt (a)
    
    $
    32,301
    
    
    $
    15,065
    
    
    $
    16,836
    
    
    $
    400
    
    
    $
    Operating leases
    
    
    25,880
    
    
    
    4,440
    
    
    
    7,548
    
    
    
    6,181
    
    
    
    7,711Letters of credit
    
    
    810
    
    
    
    810
    
    
    
    
    
    
    
    
    
    
    
    Purchase obligations
    
    
    40,149
    
    
    
    40,149
    
    
    
    
    
    
    
    
    
    
    
    Contingent purchase price (b)
    
    
    4,931
    
    
    
    1,533
    
    
    
    3,398
    
    
    
    
    
    
    
    Total
    
    $
    104,071
    
    
    $
    61,997
    
    
    $
    27,782
    
    
    $
    6,581
    
    
    $
    7,711
 
 (a)
    
    We exclude interest payments from these amounts as the cash outlay for the interest is
unknown and could not be reliably estimated as the majority of the debt is under a
revolving credit facility. Interest payments will be determined based upon the daily
outstanding balance of the revolving credit facility and the prevailing interest rate
during that time. The interest on the Soffe Seller Note is immaterial and therefore was
excluded.(b)
    
    Represents the amount expected to be paid to the former shareholders of M. J. Soffe
Co., pursuant to the earn-out provisions of the 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. Dividends and Purchases of our Own Shares
  19




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##### 



Dividend Program
  Stock Split
  CRITICAL ACCOUNTING POLICIES
   Revenue Recognition and Accounts Receivable
  Inventories
  20




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##### 



Self Insurance
  Income Taxes
 , Accounting for Income Taxes
 RECENT ACCOUNTING STANDARDS
 Inventory Costs Inventory Pricing
 Share-Based Payment Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees Statements of Cash Flows
  Share-Based Payment
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Commodity Risk Sensitivity
  21




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##### 



Interest Rate Sensitivity
  ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
  ITEM 9A. CONTROLS AND PROCEDURES
    ITEM 9B. OTHER INFORMATION
  22




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##### 



PART III
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
  www.deltaapparel.com
 ITEM 11. EXECUTIVE COMPENSATION
  ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER
MATTERS
   Number of securitiesWeighted-average
    
    
    remaining available forNumber of securities to
    
    
    exercise price of
    
    
    future issuance under equitybe issued upon exercise
    
    
    outstanding
    
    
    compensation plansof outstanding options,
    
    
    options, warrants
    
    
    (excluding securitiesPlan Category
    
    warrants and rights *
    
    
    and rights *
    
    
    reflected in column (a)) *(a)
    
    
    (b)
    
    
    (c)Equity compensation
plans approved by
security holders
    
    
    
    
    
    
    
    
    
    
    Equity compensation
plans not approved by
security holders
    
    
    252,902
    
    
    $
    7.07
    
    
    
    1,504,758Total
    
    
    252,902
    
    
    $
    7.07
    
    
    
    1,504,758
 
 *
    
    Adjusted to reflect 2-for-1 stock split effective as of May 31, 2005   23




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##### 



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  PART IV
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
  
    
    Report of Independent Registered Public Accounting Firm.
    
    Consolidated Balance Sheets as of July 2, 2005 and July 3, 2004.
    
    Consolidated Statements of Income for the years ended July 2, 2005, July 3 2004 and June 28, 2003.
    
    Consolidated Statements of Shareholders Equity for the years ended July 2, 2005, July
3, 2004 and June 28, 2003.
    
    Consolidated Statements of Cash Flows for the years ended July 2, 2005, July 3, 2004 and June 28, 2003.
    
    Notes to Consolidated Financial Statements.
          24




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##### 



25




---



##### 



26




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##### 



27




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##### 



SIGNATURES
  DELTA APPAREL, INC.(Registrant)September 9, 2005
    
    By: /s/ Herbert M. MuellerDate
    
    Herbert M. MuellerVice President, Chief FinancialOfficer and Treasurer
  /s/ David S. Fraser
    
    9-14-05
    
    /s/ Philip J. Mazzilli, Jr.
    
    9-14-05David S. Fraser

Director
    
    Date
    
    Philip J. Mazzilli, Jr.

Director
    
    Date/s/ William F. Garrett
    
    9-14-05
    
    /s/ Buck A. Mickel
    
    9-13-05William F. Garrett
    
    Date
    
    Buck A. Mickel
    
    DateDirector
    
    
    
    Director/s/ Robert W. Humphreys
    
    9-9-05
    
    /s/ Herbert M. Mueller
    
    9-9-05Robert W. Humphreys
    
    Date
    
    Herbert M. Mueller
    
    DatePresident, Chief
    
    
    
    Vice President, Chief FinancialExecutive Officer
    
    
    
    Officer & Treasurer (principaland Director
    
    
    
    financial officer and principalaccounting officer)/s/ Max Lennon
    
    9-14-05
    
    /s/ David Peterson
    
    9-16-05Max Lennon
    
    Date
    
    David Peterson
    
    DateDirector
    
    
    
    Director/s/ E. Erwin Maddrey, II
    
    9-13-05E. Erwin Maddrey, II
    
    DateDirector
 28




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##### 



Delta Apparel, Inc and Subsidiaries
 Index to Consolidated Financial Statements
 Report of Independent Registered Public Accounting Firm
    
    F-2Consolidated Balance Sheets as of July 2, 2005 and July 3, 2004
    
    F-3Consolidated Statements of Income for the years ended July 2, 2005, July 3, 2004 and June 28, 2003
    
    F-4Consolidated Statements of Shareholders Equity for the years ended July 2, 2005, July 3, 2004 and
June 28, 2003
    
    F-5Consolidated Statements of Cash Flows for the years ended July 2, 2005, July 3, 2004 and June 28, 2003
    
    F-6Notes to Consolidated Financial Statements
    
    F-7
  F-1




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##### 



/s/ ERNST & YOUNG LLP 
 F-2




---



##### 



Delta Apparel, Inc. and Subsidiaries
 
 Consolidated Balance Sheets
  July 2, 2005
    
    
    July 3, 2004AssetsCurrent assets:Cash
    
    $
    298
    
    
    $
    333Accounts receivable, net
    
    
    35,295
    
    
    
    37,302Other receivables
    
    
    1,316
    
    
    
    1,308Inventories
    
    
    99,026
    
    
    
    105,888Prepaid expenses and other current assets
    
    
    1,968
    
    
    
    1,616Deferred income taxes
    
    
    1,252
    
    
    
    1,075Total current assets
    
    
    139,155
    
    
    
    147,522Property, plant and equipment, net
    
    
    19,950
    
    
    
    19,529Deferred income taxes
    
    
    
    
    
    
    178Other assets
    
    
    409
    
    
    
    2,150$
    159,514
    
    
    $
    169,379Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    19,868
    
    
    $
    16,036Accrued expenses
    
    
    16,832
    
    
    
    14,475Current portion of long-term debt
    
    
    15,065
    
    
    
    20,810Income taxes payable
    
    
    480
    
    
    
    1,793Total current liabilities
    
    
    52,245
    
    
    
    53,114Long-term debt
    
    
    17,236
    
    
    
    29,246Deferred income taxes
    
    
    171
    
    
    
    Other liabilities
    
    
    3,398
    
    
    
    11,527Total liabilities
    
    
    73,050
    
    
    
    93,887Commitments and contingenciesShareholders equity:Preferred
stock2,000,000 shares authorized, none issued
and outstanding
    
    
    
    
    
    
    Common stock *par value $.01 a share, 15,000,000 shares authorized,
9,646,972 shares issued, and 8,522,052 and 8,272,518 shares
outstanding as of July 2, 2005 and July 3, 2004, respectively
    
    
    96
    
    
    
    96Additional paid-in capital
    
    
    53,867
    
    
    
    53,867Retained earnings
    
    
    39,106
    
    
    
    29,425Treasury stock *1,124,920 and 1,374,454 shares as of July 2, 2005
and July 3, 2004, respectively
    
    
    (6,605
    )
    
    
    (7,896
    )Total shareholders equity
    
    
    86,464
    
    
    
    75,492$
    159,514
    
    
    $
    169,379
 
 *
    
    Adjusted to reflect 2-for-1 stock split effective as of May 31, 2005  F-3




---



##### 



Delta Apparel, Inc. and Subsidiaries
 
 Consolidated Statements of Income
  Year EndedJuly 2, 2005
    
    
    July 3, 2004
    
    
    June 28, 2003Net sales
    
    $
    228,065
    
    
    $
    208,113
    
    
    $
    129,521Cost of goods sold
    
    
    174,156
    
    
    
    159,852
    
    
    
    105,552Gross profit
    
    
    53,909
    
    
    
    48,261
    
    
    
    23,969Selling, general and administrative expenses
    
    
    37,881
    
    
    
    31,043
    
    
    
    13,220Other (income) expense
    
    
    (4,117
    )
    
    
    192
    
    
    
    194Operating income
    
    
    20,145
    
    
    
    17,026
    
    
    
    10,555Interest expense, net
    
    
    3,022
    
    
    
    2,622
    
    
    
    732Income before income taxes
    
    
    17,123
    
    
    
    14,404
    
    
    
    9,823Income tax expense
    
    
    5,880
    
    
    
    4,674
    
    
    
    3,760Net income
    
    $
    11,243
    
    
    $
    9,730
    
    
    $
    6,063Earnings per share *Basic
    
    $
    1.35
    
    
    $
    1.19
    
    
    $
    0.75Diluted
    
    $
    1.33
    
    
    $
    1.16
    
    
    $
    0.73Weighted average number of shares outstanding *
    
    
    8,355
    
    
    
    8,156
    
    
    
    8,090Dilutive effect of stock options *
    
    
    108
    
    
    
    220
    
    
    
    263Weighted average number of shares assuming dilution *
    
    
    8,463
    
    
    
    8,376
    
    
    
    8,353Cash dividends declared per common share *
    
    $
    0.145
    
    
    $
    0.125
    
    
    $
    0.105
 
 *
    
    Adjusted to reflect 2-for-1 stock split effective as of May 31, 2005  F-4




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##### 



Delta Apparel, Inc. and Subsidiaries
 
 Consolidated Statements of Shareholders Equity
 AdditionalCommon Stock
    
    
    Paid-In
    
    
    Retained
    
    
    Treasury StockShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Shares
    
    
    Amount
    
    
    TotalBalance at June 29, 2002
    
    
    4,823,486
    
    
    $
    48
    
    
    $
    53,889
    
    
    $
    15,912
    
    
    
    794,184
    
    
    $
    (8,571
    )
    
    $
    61,278Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,063
    
    
    
    
    
    
    
    
    
    
    
    6,063Treasury stock acquired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    130,204
    
    
    
    (1,919
    )
    
    
    (1,919
    )Stock grant
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    (2,012
    )
    
    
    22
    
    
    
    29Stock options exercised under Awards Plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    281
    
    
    
    (71,720
    )
    
    
    791
    
    
    
    1,072Stock options exercised under Option Plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (403
    )
    
    
    (64,250
    )
    
    
    702
    
    
    
    299Cash dividend ($.21 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (853
    )
    
    
    
    
    
    
    
    
    
    
    (853
    )Balance at June 28, 2003
    
    
    4,823,486
    
    
    
    48
    
    
    
    53,889
    
    
    
    21,007
    
    
    
    786,406
    
    
    
    (8,975
    )
    
    
    65,969Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,730
    
    
    
    
    
    
    
    
    
    
    
    9,730Treasury stock acquired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,853
    
    
    
    (148
    )
    
    
    (148
    )Stock grant
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    (2,422
    )
    
    
    27
    
    
    
    37Stock options exercised under Awards Plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    294
    
    
    
    (24,360
    )
    
    
    280
    
    
    
    574Stock options exercised under Option Plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (547
    )
    
    
    (80,250
    )
    
    
    920
    
    
    
    373Stock exchange share listing fees
    
    
    
    
    
    
    
    
    
    
    (22
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22
    )Cash dividend ($.25 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,021
    )
    
    
    
    
    
    
    
    
    
    
    (1,021
    )Balance at July 3, 2004
    
    
    4,823,486
    
    
    
    48
    
    
    
    53,867
    
    
    
    29,473
    
    
    
    687,227
    
    
    
    (7,896
    )
    
    
    75,492Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,243
    
    
    
    
    
    
    
    
    
    
    
    11,243Treasury stock acquired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,705
    
    
    
    (261
    )
    
    
    (261
    )Stock grant
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31
    
    
    
    (2,422
    )
    
    
    28
    
    
    
    59Stock options exercised under Awards Plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    344
    
    
    
    (23,800
    )
    
    
    279
    
    
    
    623Stock options exercised under Option Plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (723
    )
    
    
    (108,250
    )
    
    
    1,245
    
    
    
    522Cash dividend ($.25 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,214
    )
    
    
    
    
    
    
    
    
    
    
    (1,214
    )2-for-1 stock split (See Note 16)
    
    
    4,823,486
    
    
    
    48
    
    
    
    
    
    
    
    (48
    )
    
    
    562,460
    
    
    
    
    
    
    
    Balance at July 2, 2005
    
    
    9,646,972
    
    
    $
    96
    
    
    $
    53,867
    
    
    $
    39,106
    
    
    
    1,124,920
    
    
    $
    (6,605
    )
    
    $
    86,464
  F- 5




---



##### 



Delta Apparel, Inc. and Subsidiaries
 
 Consolidated Statements of Cash Flows
 Year EndedJuly 2, 2005
    
    
    July 3, 2004
    
    
    June 28, 2003Operating activities:Net income
    
    $
    11,243
    
    
    $
    9,730
    
    
    $
    6,063Adjustments to reconcile net income
to net cash provided by (used in) operating activities:Depreciation
    
    
    4,289
    
    
    
    4,561
    
    
    
    5,506Provision for (benefit from) deferred income taxes
    
    
    1,685
    
    
    
    (1,224
    )
    
    
    961Provision for (benefit from) allowances on accounts
receivable, net
    
    
    728
    
    
    
    (1,104
    )
    
    
    11Noncash compensation
    
    
    1,864
    
    
    
    1,835
    
    
    
    1,251(Gain) loss on sale of property and equipment
    
    
    (4,036
    )
    
    
    192
    
    
    
    78Changes in operating assets and liabilities:Accounts receivable
    
    
    1,271
    
    
    
    (2,258
    )
    
    
    605Inventories
    
    
    6,862
    
    
    
    (6,850
    )
    
    
    (11,691
    )Prepaid expenses and other current assets
    
    
    (352
    )
    
    
    291
    
    
    
    146Other noncurrent assets
    
    
    1,741
    
    
    
    1,992
    
    
    
    (51
    )Accounts payable
    
    
    3,832
    
    
    
    2,153
    
    
    
    (456
    )Accrued expenses
    
    
    1,175
    
    
    
    1,724
    
    
    
    (1,380
    )Income taxes
    
    
    (2,826
    )
    
    
    2,722
    
    
    
    (2,294
    )Other liabilities
    
    
    (8,129
    )
    
    
    (447
    )
    
    
    295Net cash provided by (used in) operating activities
    
    
    19,347
    
    
    
    13,317
    
    
    
    (956
    )Investing activities:Purchases of property, plant and equipment
    
    
    (10,968
    )
    
    
    (2,209
    )
    
    
    (4,704
    )Proceeds from sale of property, plant and equipment
    
    
    10,294
    
    
    
    4
    
    
    
    35Cash paid for business, net of cash received
    
    
    
    
    
    
    (51,520
    )
    
    
    Net cash used in investing activities
    
    
    (674
    )
    
    
    (53,725
    )
    
    
    (4,669
    )Financing activities:(Repayment of) proceeds from Soffe revolving credit facility, net
    
    
    (5,428
    )
    
    
    18,374
    
    
    
    Proceeds from long-term debt
    
    
    41,302
    
    
    
    44,164
    
    
    
    47,310Repayment of long-term debt
    
    
    (53,629
    )
    
    
    (21,183
    )
    
    
    (43,111
    )Dividends paid
    
    
    (1,214
    )
    
    
    (1,021
    )
    
    
    (853
    )Stock exchange listing fees
    
    
    
    
    
    
    (22
    )
    
    
    Treasury stock acquired
    
    
    (261
    )
    
    
    (148
    )
    
    
    (1,919
    )Proceeds from exercise of stock options
    
    
    522
    
    
    
    374
    
    
    
    299Net cash (used in) provided by financing activities
    
    
    (18,708
    )
    
    
    40,538
    
    
    
    1,726(Decrease) increase in cash
    
    
    (35
    )
    
    
    130
    
    
    
    (3,899
    )Cash at beginning of year
    
    
    333
    
    
    
    203
    
    
    
    4,102Cash at end of year
    
    $
    298
    
    
    $
    333
    
    
    $
    203Supplemental cash flow information:Cash paid during the year for interest
    
    $
    2,811
    
    
    $
    2,133
    
    
    $
    512Cash paid during the year for income taxes
    
    $
    8,192
    
    
    $
    3,177
    
    
    $
    5,102Noncash financing activityissuance of common stock
    
    $
    682
    
    
    $
    610
    
    
    $
    1,101
  F- 6




---



##### 



Delta Apparel, Inc. and Subsidiaries
 
 Notes to Consolidated Financial Statements
(Amounts in thousands)
 NOTE 1THE COMPANY
   NOTE 2SIGNIFICANT ACCOUNTING POLICIES
 (a) Basis of Presentation:
  (b) Fiscal Year:
 (c) Use of Estimates:
 (d) Revenue Recognition:
 (e) Cash:
 (f) Accounts Receivable:
 F- 7




---



##### 



(g) Inventories:
 (h) Property, Plant and Equipment:
 (i) Impairment of Long-Lived Assets:
 (j) Income Taxes:
 (k) Costs of Goods Sold:
 (l) Selling, General and Administrative Expense:
 (m) Advertising Costs:
 (n) Foreign Currency Translation:
 F- 8




---



##### 



(o) Earnings Per Share:
 (p) Yarn and Cotton Procurements:
  (q) Stock Option and Incentive Award Plans:
  Year EndedJuly 2,
    
    
    July 3,
    
    
    June 28,2005
    
    
    2004
    
    
    2003Net income, as reported
    
    $
    11,243
    
    
    $
    9,730
    
    
    $
    6,063Add: Stock-based employee
compensation expense included in
reported net income, net of
related tax effects
    
    
    705
    
    
    
    702
    
    
    
    458Deduct: Total stock-based
employee compensation expense
determined under fair value based
method for all options and awards,
net of related tax effects
    
    
    (1,146
    )
    
    
    (825
    )
    
    
    (571
    )Pro forma net income
    
    $
    10,802
    
    
    $
    9,607
    
    
    $
    5,950Earnings per share *:Basicas reported
    
    $
    1.35
    
    
    $
    1.19
    
    
    $
    0.75Basicpro forma
    
    $
    1.29
    
    
    $
    1.18
    
    
    $
    0.74Dilutedas reported
    
    $
    1.33
    
    
    $
    1.16
    
    
    $
    0.73Dilutedpro forma
    
    $
    1.28
    
    
    $
    1.15
    
    
    $
    0.71
 
 *
    
    Adjusted to reflect 2-for-1 stock split effective as of May 31, 2005 F- 9




---



##### 



(r) Comprehensive Income:
 (s) Fair Value of Financial Instruments:
 (t) Derivatives:
 (u) Reclassifications:
 (v) Recent Accounting Pronouncements: Inventory Costs Inventory Pricing
 Share-Based Payment Accounting for
Stock-Based Compensation Accounting for Stock
Issued to Employees Statements of Cash Flows
  Share-Based Payment
 NOTE 3INVENTORIES
  July 2,
    
    
    July 3,2005
    
    
    2004Raw materials
    
    $
    4,496
    
    
    $
    5,406Work in process
    
    
    21,231
    
    
    
    26,540Finished goods
    
    
    73,299
    
    
    
    73,942$
    99,026
    
    
    $
    105,888
 F- 10




---



##### 



NOTE 4PROPERTY, PLANT AND EQUIPMENT
  Estimated

    
    July 2,
    
    
    July 3,Useful Life

    
    2005
    
    
    2004Land and land improvements
    
    
    N/A
    
    
    $
    1,354
    
    
    $
    1,356Buildings
    
    10-20 years
    
    
    8,701
    
    
    
    9,560Machinery and equipment
    
    5-15 years
    
    
    35,912
    
    
    
    43,831Computers and software
    
    3 years
    
    
    5,138
    
    
    
    4,894Furniture and fixtures
    
    7 years
    
    
    2,540
    
    
    
    1,057Leasehold improvements
    
    3-10 years
    
    
    987
    
    
    
    862Automobiles
    
    5 years
    
    
    205
    
    
    
    234Construction in progress
    
    
    N/A
    
    
    
    899
    
    
    
    81455,736
    
    
    
    62,608Less accumulated depreciation and amortization
    
    
    
    
    
    
    (35,786
    )
    
    
    (43,079
    )$
    19,950
    
    
    $
    19,529
 NOTE 5ACCRUED EXPENSES
  July 2,
    
    
    July 3,2005
    
    
    2004Accrued employee compensation and benefits
    
    $
    9,832
    
    
    $
    8,742Taxes accrued and withheld
    
    
    992
    
    
    
    263Accrued insurance
    
    
    1,347
    
    
    
    1,442Accrued advertising
    
    
    470
    
    
    
    527Accrued contingent earnout payments
    
    
    1,533
    
    
    
    1,228Other
    
    
    2,658
    
    
    
    2,273$
    16,832
    
    
    $
    14,475
 NOTE 6LONG-TERM DEBT
  July 2,
    
    
    July 3,2005
    
    
    2004Revolving credit facilities secured by
receivables, inventory and property and
equipment, interest at prime rate or LIBOR rate
plus an applicable margin (5.533% at July 2,
2005) due October 3, 2006
    
    $
    27,101
    
    
    $
    43,256Seller note, interest at 8% payable monthly,
principal amounts due in quarterly installments
of $400 with final payment due October 1, 2008
    
    
    5,200
    
    
    
    6,80032,301
    
    
    
    50,056Less current installments
    
    
    15,065
    
    
    
    20,810Long-term debt, excluding current installments
    
    $
    17,236
    
    
    $
    29,246
  F- 11




---



##### 



F- 12




---



##### 



Fiscal Year2006
    
    $
    15,0652007
    
    
    15,2362008
    
    
    1,6002009
    
    
    4002010
    
    
    Thereafter
    
    
    $
    32,301
  NOTE 7SALE OF YARN MANUFACTURING PLANT
   NOTE 8INCOME TAXES
  Year endedJuly 2,
    
    
    July 3,
    
    
    June 28,2005
    
    
    2004
    
    
    2003Current:Federal
    
    $
    3,458
    
    
    $
    5,049
    
    
    $
    2,405State
    
    
    681
    
    
    
    658
    
    
    
    304Foreign
    
    
    56
    
    
    
    191
    
    
    
    90Total current
    
    
    4,195
    
    
    
    5,898
    
    
    
    2,799Deferred:Federal
    
    
    1,270
    
    
    
    (1,221
    )
    
    
    811State
    
    
    415
    
    
    
    (3
    )
    
    
    150Total deferred
    
    
    1,685
    
    
    
    (1,224
    )
    
    
    961Income tax expense
    
    $
    5,880
    
    
    $
    4,674
    
    
    $
    3,760
 F-13




---



##### 



Year endedJuly 2,
    
    
    July 3,
    
    
    June 28,2005
    
    
    2004
    
    
    2003Income tax expense at the statutory rate
    
    $
    5,993
    
    
    $
    5,041
    
    
    $
    3,340State income tax expense net of federal income tax effect
    
    
    712
    
    
    
    426
    
    
    
    200Nondeductible items in foreign jurisdictions
    
    
    6
    
    
    
    139
    
    
    
    Reversal of liability associated with tax sharing agreement
    
    
    
    
    
    
    (940
    )
    
    
    Permanent reinvestment of foreign earnings
    
    
    (909
    )
    
    
    
    
    
    
    Valuation allowance adjustments
    
    
    88
    
    
    
    
    
    
    
    Nondeductible amortization and other permanent differences
    
    
    43
    
    
    
    79
    
    
    
    (71
    )Other
    
    
    (53
    )
    
    
    (71
    )
    
    
    291Income tax expense
    
    $
    5,880
    
    
    $
    4,674
    
    
    $
    3,760
  July 2,
    
    
    July 3,2005
    
    
    2004Deferred tax assets:State net operating loss carryforward
    
    $
    475
    
    
    $
    487Deferred compensation
    
    
    
    
    
    
    2,160Earnout provision
    
    
    1,898
    
    
    
    Currently nondeductible accruals
    
    
    1,030
    
    
    
    2,071Gross deferred tax assets
    
    
    3,403
    
    
    
    4,718Less valuation allowance
    
    
    (146
    )
    
    
    (58
    )Net deferred tax assets
    
    
    3,257
    
    
    
    4,660Deferred tax liabilities:Depreciation
    
    
    (1,574
    )
    
    
    (1,510
    )Undistributed earnings in foreign subsidiaries
    
    
    
    
    
    
    (684
    )Other
    
    
    (602
    )
    
    
    (1,213
    )Gross deferred tax liabilities
    
    
    (2,176
    )
    
    
    (3,407
    )Net deferred tax asset
    
    $
    1,081
    
    
    $
    1,253
    NOTE 9LEASES
  F-14




---



##### 



Fiscal Year2006
    
    $
    4,4402007
    
    
    3,9722008
    
    
    3,5762009
    
    
    3,1952010
    
    
    2,986Thereafter
    
    
    7,711$
    25,880
  NOTE 10EMPLOYEE BENEFIT PLANS
    July 2,
    
    
    July 3,
    
    
    June 28,2005
    
    
    2004
    
    
    2003Change in benefit obligations:Balance at beginning of year
    
    $
    939
    
    
    $
    956
    
    
    $
    1,125Interest cost
    
    
    80
    
    
    
    74
    
    
    
    74Benefits paid
    
    
    (77
    )
    
    
    (97
    )
    
    
    (118
    )Actuarial adjustment
    
    
    20
    
    
    
    6
    
    
    
    (125
    )Balance at end of year
    
    $
    962
    
    
    $
    939
    
    
    $
    956
 NOTE 11STOCK OPTIONS AND INCENTIVE STOCK AWARDS
   F-15




---



##### 



2005
    
    
    2004
    
    
    2003Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageShares
    
    

Exercise Price
    
    
    Shares
    
    
    Exercise Price
    
    
    Shares
    
    
    Exercise PriceOutstanding at beginning of year
    
    
    313,142
    
    
    $
    1.67
    
    
    
    483,400
    
    
    $
    1.89
    
    
    
    615,740
    
    
    $
    2.00Granted
    
    
    213,240
    
    
    $
    8.65
    
    
    
    51,602
    
    
    $
    0.01
    
    
    
    148,800
    
    
    $
    0.01Exercised
    
    
    (264,100
    )
    
    $
    1.98
    
    
    
    (209,220
    )
    
    $
    1.79
    
    
    
    (271,940
    )
    
    $
    1.11Forfeited
    
    
    (9,380
    )
    
    $
    6.01
    
    
    
    (12,640
    )
    
    $
    1.48
    
    
    
    (9,200
    )
    
    $
    2.03Outstanding at end of year
    
    
    252,902
    
    
    $
    7.07
    
    
    
    313,142
    
    
    $
    1.67
    
    
    
    483,400
    
    
    $
    1.89Exercisable at end of year
    
    
    
    
    
    
    
    
    
    
    65,000
    
    
    
    
    
    
    
    70,000Weighted-average fair value of
options granted during the year
    
    $
    6.30
    
    
    
    
    
    
    $
    7.97
    
    
    
    
    
    
    $
    6.39Shares available for future grants
    
    
    1,504,758
    
    
    
    
    
    
    
    1,717,998
    
    
    
    
    
    
    
    1,769,600
    NOTE 12BUSINESS SEGMENTS
   F-16




---



##### 



CorporateActivewear
    
    
    Retail-Ready
    
    
    andApparel
    
    
    Apparel
    
    
    Unallocated
    
    
    ConsolidatedFiscal Year 2005:Net sales
    
    $
    143,434
    
    
    $
    84,631
    
    
    $
    
    
    
    $
    228,065Segment operating income
    
    
    10,013
    
    
    
    10,421
    
    
    
    (289
    )
    
    
    20,145Segment assets
    
    
    91,382
    
    
    
    68,132
    
    
    
    
    
    
    
    159,514Purchases of property, plant and equipment
    
    
    10,308
    
    
    
    660
    
    
    
    
    
    
    
    10,968Fiscal Year 2004:Net sales
    
    $
    137,419
    
    
    $
    70,694
    
    
    $
    
    
    
    $
    208,113Segment operating income
    
    
    7,638
    
    
    
    9,631
    
    
    
    (243
    )
    
    
    17,026Segment assets
    
    
    95,691
    
    
    
    73,688
    
    
    
    
    
    
    
    169,379Purchases of property, plant and equipment
    
    
    1,968
    
    
    
    241
    
    
    
    
    
    
    
    2,209Fiscal Year 2003:Net sales
    
    $
    129,521
    
    
    
    
    
    
    
    
    
    
    $
    129,521Segment operating income
    
    
    10,555
    
    
    
    
    
    
    
    
    
    
    
    10,555Segment assets
    
    
    94,447
    
    
    
    
    
    
    
    
    
    
    
    94,447Purchases of property, plant and equipment
    
    
    4,704
    
    
    
    
    
    
    
    
    
    
    
    4,704
  Year EndedJuly 2,
    
    
    July 3,
    
    
    June 28,2005
    
    
    2004
    
    
    2003Segment operating income
    
    $
    20,145
    
    
    $
    17,026
    
    
    $
    10,555Unallocated interest expense
    
    
    3,022
    
    
    
    2,622
    
    
    
    732Consolidated income before taxes
    
    $
    17,123
    
    
    $
    14,404
    
    
    $
    9,823
 NOTE 13COMMITMENTS AND CONTINGENCIES
 (a) Litigation
  F-17




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##### 



(b) Purchase Contracts
  Yarn
    
    
    37,961Finished fabric
    
    
    178Finished apparel products
    
    
    2,010$
    40,149
 (c) Letters of Credit
  NOTE 14RELATED PARTY TRANSACTIONS
  NOTE 15QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
  2005 Quarter Ended
    
    

    2004 Quarter EndedOctober 2
    
    
    January 1
    
    
    April 2 **
    
    
    July 2
    
    
    September 27
    
    
    December 27
    
    
    March 27
    
    
    July 3Net sales
    
    $
    54,300
    
    
    $
    49,195
    
    
    $
    58,272
    
    
    $
    66,297
    
    
    $
    30,802
    
    
    $
    45,623
    
    
    $
    58,805
    
    
    $
    72,883Gross profit
    
    
    11,577
    
    
    
    10,816
    
    
    
    14,744
    
    
    
    16,773
    
    
    
    4,082
    
    
    
    8,909
    
    
    
    14,431
    
    
    
    20,839Operating income
    
    
    3,141
    
    
    
    2,707
    
    
    
    7,968
    
    
    
    6,329
    
    
    
    1,104
    
    
    
    730
    
    
    
    5,532
    
    
    
    9,659Net income (loss)
    
    
    1,444
    
    
    
    1,154
    
    
    
    5,445
    
    
    
    3,200
    
    
    
    589
    
    
    
    (91
    )
    
    
    3,813
    
    
    
    5,419Basic EPS *
    
    $
    0.17
    
    
    $
    0.14
    
    
    $
    0.65
    
    
    $
    0.38
    
    
    $
    0.07
    
    
    
    ($0.01
    )
    
    $
    0.47
    
    
    $
    0.66Diluted EPS *
    
    $
    0.17
    
    
    $
    0.13
    
    
    $
    0.64
    
    
    $
    0.37
    
    
    $
    0.07
    
    
    
    ($0.01
    )
    
    $
    0.46
    
    
    $
    0.64
 
 *
    
    Adjusted for 2-for-1 stock split effective as of May 31, 2005**
    
    On January 5, 2005, we completed the sale of our yarn manufacturing plant in Edgefield, South Carolina to Parkdale America, LLC for $10 million in
cash. The sale of the Edgefield Plant resulted in a pre-tax financial gain of $3.6 million, or estimated after-tax gain of $0.26 per diluted share and
was recorded in the quarter ended April 2, 2005. NOTE 16STOCK SPLIT
  NOTE 17SUBSEQUENT EVENT
  F-18




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##### 



F-19




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##### 



SCHEDULE II  CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
 DELTA APPAREL, INC. AND SUBSIDIARIES
 ALLOWANCE FOR DOUBTFUL ACCOUNTS
 Beginning
    
    
    Purchase
    
    
    
    
    
    
    
    
    
    
    EndingBalance
    
    
    Accounting *
    
    
    Expense
    
    
    Write-Offs
    
    
    Balance2005
    
    $
    529
    
    
    $
    
    
    
    $
    793
    
    
    $
    (32
    )
    
    $
    1,2902004
    
    
    1,307
    
    
    
    378
    
    
    
    (153
    )
    
    
    (1,003
    )
    
    
    5292003
    
    
    969
    
    
    
    
    
    
    
    722
    
    
    
    (384
    )
    
    
    1,307
 RETURNS AND ALLOWANCES
 Beginning
    
    
    Purchase
    
    
    
    
    
    
    
    
    
    
    EndingBalance
    
    
    Accounting *
    
    
    Expense
    
    
    Credits Issued
    
    
    Balance2005
    
    $
    637
    
    
    $
    
    
    
    $
    6,419
    
    
    $
    (6,452
    )
    
    $
    6042004
    
    
    216
    
    
    
    369
    
    
    
    3,942
    
    
    
    (3,890
    )
    
    
    6372003
    
    
    543
    
    
    
    
    
    
    
    3,195
    
    
    
    (3,522
    )
    
    
    216
 TOTAL
 Beginning
    
    
    Purchase
    
    
    
    
    
    
    Write-Offs/
    
    
    EndingBalance
    
    
    Accounting *
    
    
    Expense
    
    
    Credits Issued
    
    
    Balance2005
    
    $
    1,166
    
    
    $
    
    
    
    $
    7,212
    
    
    $
    (6,484
    )
    
    $
    1,8942004
    
    
    1,523
    
    
    
    747
    
    
    
    3,789
    
    
    
    (4,893
    )
    
    
    1,1662003
    
    
    1,512
    
    
    
    
    
    
    
    3,917
    
    
    
    (3,906
    )
    
    
    1,523
 MARKET AND OBSOLESCENCE RESERVE
 Beginning
    
    
    Purchase
    
    
    
    
    
    
    
    
    
    
    EndingBalance
    
    
    Accounting *
    
    
    Expense **
    
    
    Deductions **
    
    
    Balance2005
    
    $
    2,820
    
    
    $
    
    
    
    $
    (449
    )
    
    $
    
    
    
    $
    2,3712004
    
    
    648
    
    
    
    2,762
    
    
    
    (590
    )
    
    
    
    
    
    
    2,8202003
    
    
    677
    
    
    
    
    
    
    
    (29
    )
    
    
    
    
    
    
    648
 
 *
    
    Represents the allowance provided for as a result of the acquisition of M. J. Soffe Co. on
October 3, 2003.**
    
    Net change in the market and obsolescence reserve is shown in the expense column. F-20