##### Table of Contents



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 June 27, 2009
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File No. 1-15583
 DELTA APPAREL, INC.
 (Exact name of registrant as specified in its charter)
 Georgia
    
    58-2508794(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)
 322 South Main Street
Greenville, SC 29601
(Address of principal executive offices) (zip code)
 Registrants telephone number, including area code: (864) 232-5200
 Securities registered pursuant to Section 12(b) of the Act:
 Title of Each Class
    
    Name of Each Exchange on Which RegisteredCommon Stock, par value $0.01
    
    NYSE Amex
 Securities registered pursuant to Section 12(g) of the Act:
 o þ
 o þ
 þ o
 þ o
 þ
  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
   DOCUMENTS INCORPORATED BY REFERENCE




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TABLE OF CONTENTS  PART IITEM 1. BUSINESSITEM 1A. RISK FACTORSITEM 1B. UNRESOLVED STAFF COMMENTSITEM 2. PROPERTIESITEM 3. LEGAL PROCEEDINGSITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSPART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIESITEM 6. SELECTED FINANCIAL DATAITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREITEM 9A. CONTROLS AND PROCEDURESITEM 9B. OTHER INFORMATIONPART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEITEM 11. EXECUTIVE COMPENSATIONITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESPART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULESSIGNATURESEX-3.1.4EX-3.2.1EX-3.2.2EX-3.2.3EX-3.2.4EX-3.2.5EX-3.2.6EX-10.2.1EX-10.7.1EX-10.11EX-21EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2    Table of Contents  FORWARD LOOKING STATEMENTS
    
 PART I
 
 ITEM 1. BUSINESS
  www.deltaapparelinc.com
 OVERVIEW
   2




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ACQUISITIONS AND BUSINESS DEVELOPMENTS
 To The Game Acquisition
 ® ® ® ®
   Closing of U.S. Textile Operation
  Restructuring Plan
  FY 07 Qtr 4
    
    FY 08 Qtr 1
    
    FY 08 Qtr 2
    
    FY 08 Qtr 3
    
    TotalCost of Sales
    
    $
    5.4
    million
    
    $
    1.9
    million
    
    $
    2.0
    million
    
    $
    0.9
    million
    
    $
    10.2
    millionRestructuring
Charges
    
    
    1.5
    million
    
    
    0.1
    million
    
    
    
    
    
    
    
    
    
    
    1.6
    millionTotal
    
    $
    6.9
    million
    
    $
    2.0
    million
    
    $
    2.0
    million
    
    $
    0.9
    million
    
    $
    11.8
    millionDiluted EPS Impact
    
    $
    0.51
    
    
    $
    0.16
    
    
    $
    0.15
    
    
    $
    0.08
    
    
    $
    0.90
 3




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##### Table of Contents



FunTees Acquisition
   Offshore Textiles
   Junkfood Acquisition
  4




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##### Table of Contents



Soffe Acquisition
 ®
 BUSINESS SEGMENTS
  ®
 ® ® ® ® ®
  PRODUCTS
  ®
 5




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® ® release release ® ® ® ® ®
 MARKETING
    COMPETITION
 ®
 6




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SEASONALITY
  MANUFACTURING
    RAW MATERIALS
   7




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TRADEMARKS
 ® ® ® ® ® ® ® ® ®
 LICENSES
  EMPLOYEES
  AVAILABLE INFORMATION
 www.deltaapparelinc.com
  ENVIRONMENTAL AND REGULATORY MATTERS
  8




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##### Table of Contents



ITEM 1A. RISK FACTORS
  Current economic conditions may adversely impact demand for our products.
 If the financial condition of our customers declines, our financial condition and results of
operations could be adversely impacted.
 Our Activewear segment is subject to significant pricing pressures, and we must implement our cost
reduction business strategies to be successful.
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##### Table of Contents



The activewear industry is highly competitive, and we face significant competitive threats to our
business.
 Our success depends, in part, on our ability to predict or effectively react to changing consumer
preferences and trends.
 We may need to raise additional capital to grow our business.
 Our business operations rely on our information systems.
 Our business could be harmed if we are unable to deliver our products to the market due to problems
with our distribution network.
 We may be restricted in our ability to borrow under our credit agreement.
 10




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The cost to borrow under our credit agreement may impact our results of operations.
 We rely on the strength of our trademarks. ® ® ® ® ® ® TM ® ®
 A significant portion of our business relies upon license agreements.
 Our operations are subject to political, social, economic, and climate risks in Mexico, Honduras
and El Salvador.
 We are subject to international trade regulations.
    Our operations are subject to environmental regulation.
 11




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We may be subject to the impairment of acquired intangible assets.
 The price of our purchased raw materials is prone to significant fluctuations and volatility.
 The price of energy is prone to significant fluctuations and volatility.
 Our business incurs significant freight and transportation costs.
 We currently pay income taxes at lower than statutory rates, which could change in the future.
 The market price of Delta Apparel shares is affected by illiquidity of our shares.
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Our principal shareholders may exert substantial influence.
 
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
  Location
    
    Utilization
    
    SegmentGreenville, SC*
    
    Principal executive offices
    
    Activewear and Retail-ReadyDuluth, GA*
    
    Administration/sales
    
    ActivewearMaiden Plant, Maiden, NC
    
    Knit/dye/finish/cut
    
    Activewear and Retail-ReadyCeiba Textiles, Honduras*
    
    Knit/dye/finish/cut
    
    Activewear and Retail-ReadyFayetteville Plant 1, Fayetteville, NC
    
    Sew/decoration/distribution/administration
    
    Retail-ReadyFayetteville Plant 2, Fayetteville, NC
    
    Currently not in use
    
    Retail-ReadyRowland Plant, Rowland, NC
    
    Sew
    
    Retail-ReadyDowning Drive, Phenix City, AL*
    
    Administration/distribution/decoration
    
    Retail-ReadyHonduras Plant, San Pedro Sula, Honduras*
    
    Sew
    
    Activewear and Retail-ReadyCortes Plant, San Pedro Sula, Honduras*
    
    Sew
    
    Activewear and Retail-ReadyLa Paz Plant, La Paz, El Salvador*
    
    Sew/decoration
    
    Activewear and Retail-ReadyCampeche Sportswear, Campeche, Mexico*
    
    Sew/decoration
    
    Activewear and Retail-ReadyMexico Plant, Campeche, Mexico*
    
    Sew
    
    Activewear and Retail-ReadyFunTees Design, Concord, NC*
    
    Research/development
    
    Activewear and Retail-ReadyFunTees Samples, Concord, NC*
    
    Research/development
    
    Activewear and Retail-ReadyWarehouse, Louisville, KY*
    
    Warehouse/distribution
    
    Retail-ReadyDistribution Center, Clinton, TN*
    
    Distribution
    
    ActivewearDistribution Center, Santa Fe Springs, CA*
    
    Distribution
    
    Activewear and Retail-ReadyDistribution Center, Miami, FL*
    
    Distribution
    
    Activewear and Retail-ReadyDistribution Center, Cranbury NJ*
    
    Distribution
    
    Activewear and Retail-ReadyDC Annex, Fayetteville, NC*
    
    Distribution
    
    Retail-ReadyDistribution Center, Lansing, MI*
    
    Distribution
    
    Retail-ReadySoffe Outlet Store, Smithfield, NC*
    
    Retail sales
    
    Retail-ReadyTo The Game Outlet Store, Columbus, GA*
    
    Retail sales
    
    Retail-ReadyNew York Office, New York, NY*
(two office locations)
    
    Sales
    
    Activewear and Retail-ReadyFunTees Office, Concord, NC*
    
    Administration/sales
    
    ActivewearLos Angeles Office, Los Angeles, CA*
    
    Administration/sales
    
    Retail-Ready
 
 *
    
    - Denotes leased location  13




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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 STOCKHOLDER MATTERS AND ISSUER PURCHASES
OF EQUITY SECURITIES.
 Market Information for Common Stock:
  Fiscal Year 2009
    
    Fiscal Year 2008High
    
    Low
    
    High
    
    LowFirst Quarter
    
    $
    7.30
    
    
    $
    3.64
    
    
    $
    19.99
    
    
    $
    16.38Second Quarter
    
    
    8.35
    
    
    
    3.27
    
    
    
    17.30
    
    
    
    6.06Third Quarter
    
    
    4.60
    
    
    
    2.72
    
    
    
    9.24
    
    
    
    6.04Fourth Quarter
    
    
    9.00
    
    
    
    4.25
    
    
    
    7.45
    
    
    
    2.09
 Dividends:
 14




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Purchases of our Own Shares of Common Stock:
 Securities Authorized for Issuance Under Equity Compensation Plans:
 COMPARISON OF TOTAL RETURN AMONG DELTA APPAREL, INC., NYSE Amex US MARKET INDEX, AND NYSE Amex WHOLESALE & RETAIL TRADE INDEX
  
 2004
    
    2005
    
    2006
    
    2007
    
    2008
    
    2009Delta Apparel, Inc.
    
    
    100.00
    
    
    
    112.40
    
    
    
    148.64
    
    
    
    159.14
    
    
    
    32.88
    
    
    
    60.87NYSE Amex US Market Index
    
    
    100.00
    
    
    
    112.47
    
    
    
    125.56
    
    
    
    149.36
    
    
    
    133.98
    
    
    
    97.94NYSE Amex Wholesale & Retail Trade Index
    
    
    100.00
    
    
    
    121.16
    
    
    
    161.82
    
    
    
    202.49
    
    
    
    179.36
    
    
    
    137.41
  15




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ITEM 6. SELECTED FINANCIAL DATA
  Fiscal Year EndedJune 27,
    
    
    June 28,
    
    
    June 30,
    
    
    July 1,
    
    
    July 2,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(In thousands, except per share amounts)Statement of Operations Data:Net sales
    
    $
    355,197
    
    
    $
    322,034
    
    
    $
    312,438
    
    
    $
    270,108
    
    
    $
    228,065Cost of goods sold
    
    
    (278,758
    )
    
    
    (257,319
    )
    
    
    (239,365
    )
    
    
    (190,222
    )
    
    
    (174,156
    )Selling, general and administrative expenses
    
    
    (64,388
    )
    
    
    (59,898
    )
    
    
    (59,187
    )
    
    
    (53,530
    )
    
    
    (37,881
    )Other income (loss), net
    
    
    96
    
    
    
    132
    
    
    
    (89
    )
    
    
    657
    
    
    
    4,117Restructuring costs
    
    
    
    
    
    
    (62
    )
    
    
    (1,498
    )
    
    
    
    
    
    
    Operating income
    
    
    12,147
    
    
    
    4,887
    
    
    
    12,299
    
    
    
    27,013
    
    
    
    20,145Interest expense, net
    
    
    (4,718
    )
    
    
    (6,042
    )
    
    
    (5,157
    )
    
    
    (3,819
    )
    
    
    (3,022
    )Income (loss) before income taxes
    
    
    7,429
    
    
    
    (1,155
    )
    
    
    7,142
    
    
    
    23,194
    
    
    
    17,123Provision (benefit) for income taxes
    
    
    973
    
    
    
    (647
    )
    
    
    1,471
    
    
    
    8,350
    
    
    
    5,880Extraordinary gain, net of taxes
    
    
    
    
    
    
    
    
    
    
    672
    
    
    
    
    
    
    
    Net income (loss)
    
    $
    6,456
    
    
    $
    (508
    )
    
    $
    6,343
    
    
    $
    14,844
    
    
    $
    11,243Basic earnings (loss) per common share:Income (loss) before extraordinary gain
    
    $
    0.76
    
    
    $
    (0.06
    )
    
    $
    0.67
    
    
    $
    1.73
    
    
    $
    1.35Extraordinary gain, net of income taxes
    
    
    
    
    
    
    
    
    
    
    0.08
    
    
    
    
    
    
    
    Net income (loss)
    
    $
    0.76
    
    
    $
    (0.06
    )
    
    $
    0.75
    
    
    $
    1.73
    
    
    $
    1.35Diluted earnings (loss) per common share:Income (loss) before extraordinary gain
    
    $
    0.76
    
    
    $
    (0.06
    )
    
    $
    0.65
    
    
    $
    1.71
    
    
    $
    1.33Extraordinary gain, net of income taxes
    
    
    
    
    
    
    
    
    
    
    0.08
    
    
    
    
    
    
    
    Net income (loss)
    
    $
    0.76
    
    
    $
    (0.06
    )
    
    $
    0.73
    
    
    $
    1.71
    
    
    $
    1.33Dividends declared per common share
    
    $
    0.000
    
    
    $
    0.050
    
    
    $
    0.200
    
    
    $
    0.170
    
    
    $
    0.145Balance Sheet Data (at year end):Working capital
    
    $
    135,369
    
    
    $
    133,917
    
    
    $
    120,645
    
    
    $
    103,210
    
    
    $
    86,910Total assets
    
    
    256,993
    
    
    
    261,623
    
    
    
    232,790
    
    
    
    203,123
    
    
    
    159,514Total long-term debt, less current maturities
    
    
    85,936
    
    
    
    95,542
    
    
    
    70,491
    
    
    
    46,967
    
    
    
    17,236Shareholders equity
    
    
    112,145
    
    
    
    104,893
    
    
    
    103,669
    
    
    
    100,988
    
    
    
    86,464
 
 ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 BUSINESS OUTLOOK
  16




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EARNINGS GUIDANCE
   17




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RESULTS OF OPERATIONS
 Overview
      Quarterly Financial Data
  Fiscal Year 2009 versus Fiscal Year 2008
    18




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Fiscal Year 2008 versus Fiscal Year 2007
      19




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LIQUIDITY AND CAPITAL RESOURCES
 Credit Facility and Other Financial Obligations
       20




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Derivative Instruments
    Operating Cash Flows
  21




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Investing Cash Flows
      Financing Activities
   Future Liquidity and Capital Resources
   Payments Due by Period (in thousands)Total
    
    
    Less than  1 year
    
    
    1 - 3  years
    
    
    3  5  years
    
    
    After 5  yearsContractual Obligations:Long-term debt (a)
    
    $
    91,654
    
    
    $
    5,718
    
    
    $
    11,436
    
    
    $
    74,500
    
    
    $
    Operating leases
    
    
    37,300
    
    
    
    7,560
    
    
    
    12,307
    
    
    
    11,953
    
    
    
    5,480Letters of credit
    
    
    1,122
    
    
    
    1,122
    
    
    
    
    
    
    
    
    
    
    
    Purchase obligations
    
    
    32,550
    
    
    
    32,550
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    162,626
    
    
    $
    46,950
    
    
    $
    23,743
    
    
    $
    86,453
    
    
    $
    5,480
 22




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(a)
    
    We exclude interest payments from these amounts because the cash outlay for the
interest is unknown and can not be reliably estimated because 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. Off-Balance Sheet Arrangements
  Dividends and Purchases of our Own Shares
   Dividend Program
  CRITICAL ACCOUNTING POLICIES
   Revenue Recognition, Accounts Receivable and Related Reserves
  23




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Inventories
  Self-Insurance
  Share-Based Compensation
 Share-Based Payment
 Income Taxes
 , Accounting for Income Taxes,
  RECENT ACCOUNTING STANDARDS
  24




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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Commodity Risk Sensitivity
    Interest Rate Sensitivity
  Derivatives
   25




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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
 Evaluation of Disclosure Controls and Procedures
   Managements Annual Report on Internal Control over Financial Reporting
  Internal Control  Integrated Framework
  26




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Changes in Internal Control over Financial Reporting
  Report of Independent Registered Public Accounting Firm
          
 27




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ITEM 9B. OTHER INFORMATION
  
 PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  www.deltaapparelinc.com
 
 ITEM 11. EXECUTIVE COMPENSATION
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER 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
    
    
    1,012,344
    
    
    $
    11.91
    
    
    
    547,718Total
    
    
    1,012,344
    
    
    $
    11.91
    
    
    
    547,718
   28




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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 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 June 27, 2009 and June 28, 2008.
    
    Consolidated Statements of Operations for the years ended June 27, 2009, June 28, 2008
and June 30, 2007.
    
    Consolidated Statements of Shareholders Equity and Comprehensive Income (Loss) for the
years ended June 27, 2009, June 28, 2008 and June 30, 2007.
    
    Consolidated Statements of Cash Flows for the years ended June 27, 2009, June 28, 2008
and June 30, 2007.
    
    Notes to Consolidated Financial Statements.
         29




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30




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*
    
    All reports previously filed by the Company with the Commission pursuant to the Securities
Exchange Act, and the rules and regulations promulgated thereunder, exhibits of which are
incorporated to this Report by reference thereto, were filed under Commission File Number 1-15583.**
    
    Portions of this exhibit have been omitted pursuant to a request for confidential
treatment and have been filed
separately with the Securities and Exchange Commission.***
    
    This is a management contract or compensatory plan or arrangement.      31




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SIGNATURES
  DELTA APPAREL, INC.
(Registrant)August 28, 2009

Date
    
    By: /s/ Deborah H. Merrill

Deborah H. MerrillVice President, Chief FinancialOfficer and Treasurer(principal financial and accounting officer)
  /s/ James A. Cochran
    
    8-25-09
    
    /s/ E. Erwin Maddrey, II
    
    8-24-09James A. Cochran
    
    Date
    
    E. Erwin Maddrey, II
    
    DateDirector
    
    
    
    Director/s/ David S. Fraser
    
    8-24-09
    
    /s/ Deborah H. Merrill
    
    8-28-09David S. Fraser
    
    Date
    
    Deborah H. Merrill
    
    DateDirector
    
    
    
    Vice President, Chief FinancialOfficer and Treasurer (principalfinancial and accounting officer)/s/ William F. Garrett
    
    8-22-09
    
    /s/ Buck A. Mickel
    
    8-24-09William F. Garrett
    
    Date
    
    Buck A. Mickel
    
    DateDirector
    
    
    
    Director/s/ Elizabeth J. Gatewood
    
    8-24-09
    
    /s/ David Peterson
    
    8-25-09Elizabeth J. Gatewood
    
    Date
    
    David Peterson
    
    DateDirector
    
    
    
    Director/s/ Robert W. Humphreys
    
    8-21-09
    
    /s/ Robert E. Staton, Sr
    
    8-24-09Robert W. Humphreys
    
    Date
    
    Robert E. Staton, Sr.
    
    DateChairman,
Chief Executive Officer,
    
    
    
    DirectorPresident and Director/s/ Max Lennon
    
    8-24-09Max Lennon
    
    DateDirector
 32




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##### Table of Contents



Delta Apparel, Inc. and Subsidiaries
 Index to Consolidated Financial Statements
 Report of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets as of June 27, 2009 and June 28, 2008
    
    
    F-3Consolidated Statements of Operations for the years ended June 27, 2009, June 28, 2008 and June 30, 2007
    
    
    F-4Consolidated Statements of Shareholders Equity and Comprehensive Income (Loss) for the years ended
June 27, 2009, June 28, 2008 and June 30, 2007
    
    
    F-5Consolidated Statements of Cash Flows for the years ended June 27, 2009, June 28, 2008 and June 30, 2007
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-7
 F-1




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Report of Independent Registered Public Accounting Firm
     Fair Value Measurement The
Fair Value Option for Financial Assets and Financial Liabilities, Disclosures about Derivative Instruments and Hedging Activities
   
 F-2




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Delta Apparel, Inc. and Subsidiaries


Consolidated Balance Sheets
 June 27, 2009
    
    
    June 28, 2008AssetsCurrent assets:Cash
    
    $
    654
    
    
    $
    586Accounts receivable, less allowances of $3,039
and $2,813, respectively
    
    
    55,855
    
    
    
    61,048Other receivables
    
    
    2,029
    
    
    
    964Income tax receivable
    
    
    1,755
    
    
    
    1,007Inventories, net
    
    
    125,887
    
    
    
    124,746Prepaid expenses and other current assets
    
    
    3,387
    
    
    
    2,916Deferred income taxes
    
    
    3,475
    
    
    
    2,542Total current assets
    
    
    193,042
    
    
    
    193,809Property, plant and equipment, net
    
    
    36,480
    
    
    
    40,042Goodwill
    
    
    16,814
    
    
    
    16,814Intangibles, net
    
    
    7,114
    
    
    
    7,603Other assets
    
    
    3,543
    
    
    
    3,355$
    256,993
    
    
    $
    261,623Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    34,103
    
    
    $
    35,423Accrued expenses
    
    
    17,852
    
    
    
    17,689Current portion of long-term debt
    
    
    5,718
    
    
    
    6,780Total current liabilities
    
    
    57,673
    
    
    
    59,892Long-term debt, less current maturities
    
    
    85,936
    
    
    
    95,542Deferred income taxes
    
    
    1,223
    
    
    
    578Other liabilities
    
    
    16
    
    
    
    718Total liabilities
    
    
    144,848
    
    
    
    156,730Commitments and contingenciesShareholders 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 8,502,699 and 8,496,749 shares
outstanding as of June 27, 2009 and June 28, 2008, respectively
    
    
    96
    
    
    
    96Additional paid-in capital
    
    
    58,301
    
    
    
    57,431Retained earnings
    
    
    63,763
    
    
    
    57,307Accumulated other comprehensive loss
    
    
    (565
    )
    
    
    (441
    )Treasury stock 1,144,273 and 1,150,223 shares as of June 27, 2009
and June 28, 2008, respectively
    
    
    (9,450
    )
    
    
    (9,500
    )Total shareholders equity
    
    
    112,145
    
    
    
    104,893$
    256,993
    
    
    $
    261,623
  F-3




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##### Table of Contents



Delta Apparel, Inc. and Subsidiaries


Consolidated Statements of Operations
 Year EndedJune 27, 2009
    
    
    June 28, 2008
    
    
    June 30, 2007Net sales
    
    $
    355,197
    
    
    $
    322,034
    
    
    $
    312,438Cost of goods sold
    
    
    278,758
    
    
    
    257,319
    
    
    
    239,365Gross profit
    
    
    76,439
    
    
    
    64,715
    
    
    
    73,073Selling, general and administrative expenses
    
    
    64,388
    
    
    
    59,898
    
    
    
    59,187Other (income) expense, net
    
    
    (96
    )
    
    
    (132
    )
    
    
    89Restructuring costs
    
    
    
    
    
    
    62
    
    
    
    1,498Operating income
    
    
    12,147
    
    
    
    4,887
    
    
    
    12,299Interest expense, net
    
    
    4,718
    
    
    
    6,042
    
    
    
    5,157Income (loss) before provision (benefit) for income
taxes and extraordinary gain
    
    
    7,429
    
    
    
    (1,155
    )
    
    
    7,142Provision (benefit) for income taxes
    
    
    973
    
    
    
    (647
    )
    
    
    1,471Income (loss) before extraordinary gain
    
    
    6,456
    
    
    
    (508
    )
    
    
    5,671Extraordinary gain
    
    
    
    
    
    
    
    
    
    
    672Net income (loss)
    
    $
    6,456
    
    
    $
    (508
    )
    
    $
    6,343Basic earnings (loss) per shareIncome (loss) before extraordinary gain
    
    $
    0.76
    
    
    $
    (0.06
    )
    
    $
    0.67Extraordinary gain
    
    
    
    
    
    
    
    
    
    
    0.08Net income (loss)
    
    $
    0.76
    
    
    $
    (0.06
    )
    
    $
    0.75Diluted earnings (loss) per shareIncome (loss) before extraordinary gain
    
    $
    0.76
    
    
    $
    (0.06
    )
    
    $
    0.65Extraordinary gain
    
    
    
    
    
    
    
    
    
    
    0.08Net income (loss)
    
    $
    0.76
    
    
    $
    (0.06
    )
    
    $
    0.73Weighted average number of shares outstanding
    
    
    8,502
    
    
    
    8,480
    
    
    
    8,506Dilutive effect of stock options
    
    
    
    
    
    
    
    
    
    
    169Weighted average number of shares assuming dilution
    
    
    8,502
    
    
    
    8,480
    
    
    
    8,675Cash dividends declared per common share
    
    $
    0.00
    
    
    $
    0.05
    
    
    $
    0.20
  F-4




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##### Table of Contents



Delta Apparel, Inc. and Subsidiaries


Consolidated Statements of Shareholders Equity and Comprehensive Income (Loss)
 AccumulatedAdditional
    
    
    
    
    
    
    OtherCommon Stock
    
    
    Paid-In
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury StockShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Shares
    
    
    Amount
    
    
    TotalBalance at July 1, 2006
    
    
    9,646,972
    
    
    $
    96
    
    
    $
    54,672
    
    
    $
    53,412
    
    
    $
    
    
    
    
    1,084,151
    
    
    $
    (7,192
    )
    
    $
    100,988Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,343
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,343Unrealized gain on derivatives
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    140
    
    
    
    
    
    
    
    
    
    
    
    140Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,483Treasury stock acquired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    196,770
    
    
    
    (3,378
    )
    
    
    (3,378
    )Stock grant
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56
    
    
    
    
    
    
    
    (4,844
    )
    
    
    33
    
    
    
    89Employee stock based
compensation
    
    
    
    
    
    
    
    
    
    
    838
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    838Stock options exercised under
Option
Plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    123
    
    
    
    
    
    
    
    (27,500
    )
    
    
    225
    
    
    
    348Cash dividend ($0.20 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,699
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,699
    )Balance at June 30, 2007
    
    
    9,646,972
    
    
    
    96
    
    
    
    55,510
    
    
    
    58,235
    
    
    
    140
    
    
    
    1,248,577
    
    
    
    (10,312
    )
    
    
    103,669Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (508
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (508
    )Unrealized loss on derivatives
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (581
    )
    
    
    
    
    
    
    
    
    
    
    (581
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,089
    )Stock grant
    
    
    
    
    
    
    
    
    
    
    49
    
    
    
    
    
    
    
    
    
    
    
    (5,438
    )
    
    
    45
    
    
    
    94Employee stock based
compensation
    
    
    
    
    
    
    
    
    
    
    1,030
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,030Stock options exercised under
Awards Plan
    
    
    
    
    
    
    
    
    
    
    842
    
    
    
    
    
    
    
    
    
    
    
    (92,916
    )
    
    
    767
    
    
    
    1,609Cash dividend ($0.05 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (420
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (420
    )Balance at June 28, 2008
    
    
    9,646,972
    
    
    
    96
    
    
    
    57,431
    
    
    
    57,307
    
    
    
    (441
    )
    
    
    1,150,223
    
    
    
    (9,500
    )
    
    
    104,893Comprehensive income (loss):Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,456
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,456Unrealized loss on derivatives
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (124
    )
    
    
    
    
    
    
    
    
    
    
    (124
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,332Stock grant
    
    
    
    
    
    
    
    
    
    
    (7
    )
    
    
    
    
    
    
    
    
    
    
    (5,950
    )
    
    
    50
    
    
    
    43Employee stock based
compensation
    
    
    
    
    
    
    
    
    
    
    877
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    877Balance at June 27, 2009
    
    
    9,646,972
    
    
    $
    96
    
    
    $
    58,301
    
    
    $
    63,763
    
    
    $
    (565
    )
    
    
    1,144,273
    
    
    $
    (9,450
    )
    
    $
    112,145
  F-5




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##### Table of Contents



Delta Apparel, Inc. and Subsidiaries


Consolidated Statements of Cash Flows
 Year EndedJune 27, 2009
    
    
    June 28, 2008
    
    
    June 30, 2007Operating activities:Net income (loss)
    
    $
    6,456
    
    
    $
    (508
    )
    
    $
    6,343Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:Depreciation
    
    
    6,589
    
    
    
    5,843
    
    
    
    4,785Amortization
    
    
    489
    
    
    
    488
    
    
    
    488(Benefit from) provision for deferred income taxes
    
    
    (288
    )
    
    
    (822
    )
    
    
    24(Benefit from) provision for allowances on accounts
receivable, net
    
    
    (384
    )
    
    
    870
    
    
    
    (226
    )Non-cash stock compensation
    
    
    1,004
    
    
    
    1,208
    
    
    
    1,778Extraordinary gain on earn-out payment
    
    
    
    
    
    
    
    
    
    
    (672
    )(Gain) loss on disposal and impairment of property
    
    
    (9
    )
    
    
    105
    
    
    
    1,758Changes in operating assets and liabilities, net of
effect of acquisitions:Accounts receivable
    
    
    8,980
    
    
    
    (16,438
    )
    
    
    10,784Inventories
    
    
    2,152
    
    
    
    (142
    )
    
    
    (1,541
    )Prepaid expenses and other current assets
    
    
    (219
    )
    
    
    (319
    )
    
    
    237Other non-current assets
    
    
    (188
    )
    
    
    (805
    )
    
    
    50Accounts payable
    
    
    (1,912
    )
    
    
    (483
    )
    
    
    (1,147
    )Accrued expenses
    
    
    635
    
    
    
    (2,420
    )
    
    
    1,288Income taxes
    
    
    (748
    )
    
    
    1,185
    
    
    
    (3,178
    )Other liabilities
    
    
    (826
    )
    
    
    131
    
    
    
    (321
    )Net cash provided by (used in) operating activities
    
    
    21,731
    
    
    
    (12,107
    )
    
    
    20,450Investing activities:Purchases of equipment
    
    
    (3,058
    )
    
    
    (16,590
    )
    
    
    (10,915
    )Proceeds from sale of equipment
    
    
    40
    
    
    
    7
    
    
    
    6Cash paid for businesses, net of cash acquired
    
    
    (7,977
    )
    
    
    
    
    
    
    (27,430
    )Net cash used in investing activities
    
    
    (10,995
    )
    
    
    (16,583
    )
    
    
    (38,339
    )Financing activities:Proceeds from long-term debt
    
    
    362,297
    
    
    
    353,703
    
    
    
    317,634Repayment of long-term debt
    
    
    (372,965
    )
    
    
    (324,799
    )
    
    
    (294,864
    )Dividends paid
    
    
    
    
    
    
    (420
    )
    
    
    (1,699
    )Treasury stock acquired
    
    
    
    
    
    
    
    
    
    
    (3,378
    )Proceeds from exercise of stock options
    
    
    
    
    
    
    
    
    
    
    346Net cash (used in) provided by financing activities
    
    
    (10,668
    )
    
    
    28,484
    
    
    
    18,039Increase (decrease) in cash
    
    
    68
    
    
    
    (206
    )
    
    
    150Cash at beginning of year
    
    
    586
    
    
    
    792
    
    
    
    642Cash at end of year
    
    $
    654
    
    
    $
    586
    
    
    $
    792Supplemental cash flow information:Cash paid during the year for interest
    
    $
    4,867
    
    
    $
    5,219
    
    
    $
    5,292Cash paid (refunded) during the year for income taxes
    
    $
    1,887
    
    
    $
    (1,394
    )
    
    $
    4,781Non-cash financing activityissuance of common stock
    
    $
    43
    
    
    $
    1,703
    
    
    $
    89
  F-6




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##### Table of Contents



Delta Apparel, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 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: Accounting for Transfers
and Servicing of Financial Assets and Extinguishments
 F-7




---



##### Table of Contents



of Liabilities
 (g) Inventories:
 (h) Property, Plant and Equipment:
 (i) Impairment of Long-Lived Assets (Including Amortizable Intangible Assets): Accounting for the Impairment or Disposal of
Long-Lived Assets
 (j) Goodwill and Intangibles:
 (k) Impairment of Goodwill:
 F-8




---



##### Table of Contents



(l) Self-Insurance Reserves:
 (m) Internally Developed Software Costs. Accounting for Computer Software Developed for or
obtained for Internal Use
 (n) Income Taxes:
 (o) Cost of Goods Sold:
 (p) Selling, General and Administrative Expense:
 F-9




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##### Table of Contents



(q) Advertising Costs: Accounting for Consideration
Given by a Vendor to a Customer (Including a Reseller of the Vendors Products)
 (r) Sales Tax:
 (s) Foreign Currency Translation:
 (t) Earnings (Loss) per Share: Earnings Per Share
 (u) Yarn and Cotton Procurements:
 (v) Stock Option and Incentive Award Plans: Share-Based Payment
 F-10




---



##### Table of Contents



(w) Comprehensive (Loss) Income:
 (x) Fair Value of Financial Instruments:
 (y) Derivatives:
 Accounting for
Derivative Instruments and Hedging Activities
    (z) Recent Accounting Pronouncements: 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
 F-11




---



##### Table of Contents



Fair Value Measurements
 Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and
Identifying Transactions That Are Not Orderly
 The Fair Value Option for Financial
Assets and Financial Liabilities
 Non-controlling Interests in Consolidated
Financial Statements
 Disclosures about Derivative Instruments and Hedging
Activities
 Subsequent Events
 FASB Accounting
Standards and the Hierarchy of Generally Accepted Accounting Principles
 , Determination of the Useful Life of
Intangible Assets Goodwill and Other Intangible
Assets
 F-12




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##### Table of Contents



Equity Method Investment Accounting
Considerations
 (aa) Subsequent Events:
 NOTE 3ACQUISITIONS
 To The Game Acquisition
 ® ®
 FunTees Acquisition
  NOTE 4INVENTORIES
  June 27,
    
    
    June 28,2009
    
    
    2008Raw materials
    
    $
    9,626
    
    
    $
    10,881Work in process
    
    
    21,842
    
    
    
    23,198Finished goods
    
    
    94,419
    
    
    
    90,667$
    125,887
    
    
    $
    124,746
  F-13




---



##### Table of Contents



NOTE 5PROPERTY, PLANT AND EQUIPMENT
  Estimated
    
    June 27,
    
    
    June 28,Useful Life
    
    2009
    
    
    2008Land and land improvements
    
    N/A
    
    $
    993
    
    
    $
    993Buildings
    
    10-20 years
    
    
    7,227
    
    
    
    7,189Machinery and equipment
    
    5-15 years
    
    
    56,834
    
    
    
    56,938Computers and software
    
    3-10 years
    
    
    10,073
    
    
    
    10,926Furniture and fixtures
    
    7 years
    
    
    4,104
    
    
    
    3,897Leasehold improvements
    
    3-10 years
    
    
    1,797
    
    
    
    1,712Automobiles
    
    5 years
    
    
    453
    
    
    
    367Construction in progress
    
    N/A
    
    
    3,559
    
    
    
    3,07885,040
    
    
    
    85,100Less accumulated depreciation and amortization
    
    
    
    
    (48,560
    )
    
    
    (45,058
    )$
    36,480
    
    
    $
    40,042
 NOTE 6GOODWILL AND INTANGIBLE ASSETS
  June 27,
    
    June 28,
    
    Economic2009
    
    2008
    
    LifeGoodwill
    
    $
    16,814
    
    
    $
    16,814
    
    
    N/AIntangibles:Tradename/trademarks
    
    
    1,530
    
    
    
    1,530
    
    
    20 yrsCustomer relationships
    
    
    7,220
    
    
    
    7,220
    
    
    20 yrsNon-compete agreements
    
    
    250
    
    
    
    250
    
    
    5 yrsTotal intangibles
    
    
    9,000
    
    
    
    9,000Less accumulated amortization
    
    
    (1,886
    )
    
    
    (1,397
    )$
    7,114
    
    
    $
    7,603
  NOTE 7ACCRUED EXPENSES
  June 27,
    
    
    June 28,2009
    
    
    2008Accrued employee compensation and benefits
    
    $
    7,610
    
    
    $
    6,310Taxes accrued and withheld
    
    
    770
    
    
    
    516Accrued insurance
    
    
    637
    
    
    
    734Accrued advertising
    
    
    909
    
    
    
    657Accrued earnout payment
    
    
    
    
    
    
    2,592Accrued royalties
    
    
    1,611
    
    
    
    1,682Accrued acquisition cost
    
    
    700
    
    
    
    Derivative liability
    
    
    902
    
    
    
    Other
    
    
    4,713
    
    
    
    5,198$
    17,852
    
    
    $
    17,689
 F-14




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##### Table of Contents



NOTE 8LONG-TERM DEBT
  June 27,
    
    
    June 28,2009
    
    
    2008Revolving credit facility secured by receivables,
inventory, property and equipment, interest at
prime rate or LIBOR rate plus an applicable margin
(interest at 2.15% on June 27, 2009) due September
2012
    
    $
    81,352
    
    
    $
    87,120Capital expansion loan agreement with Banco
Ficohsa, a Honduran bank, interest at 6% until
June 2010, 6.5% for the remainder of the term
(interest at 6% on June 27, 2009), payable monthly
with a five year term (denominated in U. S.
dollars)
    
    
    10,302
    
    
    
    13,952Junkfood Seller note
    
    
    
    
    
    
    1,25091,654
    
    
    
    102,322Less current installments
    
    
    (5,718
    )
    
    
    (6,780
    )Long-term debt, excluding current installments
    
    $
    85,936
    
    
    $
    95,542
       F-15




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##### Table of Contents



Fiscal Year2010
    
    $
    5,7182011
    
    
    5,7182012
    
    
    5,7182013
    
    
    74,500$
    91,654
 NOTE 9INCOME TAXES
  Year endedJune 27,
    
    
    June 28,
    
    
    June 30,2009
    
    
    2008
    
    
    2007Current:Federal
    
    $
    954
    
    
    $
    (687
    )
    
    $
    (10
    )State
    
    
    262
    
    
    
    599
    
    
    
    140Foreign
    
    
    154
    
    
    
    119
    
    
    
    216Total current
    
    
    1,370
    
    
    
    31
    
    
    
    346Deferred:Federal
    
    $
    33
    
    
    $
    (539
    )
    
    
    869State
    
    
    (430
    )
    
    
    (139
    )
    
    
    256Total deferred
    
    
    (397
    )
    
    
    (678
    )
    
    
    1,125Provision (benefit) for income taxes
    
    $
    973
    
    
    $
    (647
    )
    
    $
    1,471
  Year endedJune 27,
    
    
    June 28,
    
    
    June 30,2009
    
    
    2008
    
    
    2007Income tax expense at the statutory rate
    
    $
    2,525
    
    
    $
    (393
    )
    
    $
    2,428State income tax expense net of federal income tax effect
    
    
    112
    
    
    
    (375
    )
    
    
    257Rate difference and nondeductible items in foreign jurisdictions
    
    
    25
    
    
    
    (33
    )
    
    
    (72
    )Permanent reinvestment of foreign earnings
    
    
    (1,441
    )
    
    
    (580
    )
    
    
    (271
    )Section 199 deduction under the American Jobs Creation Act of 2004
    
    
    
    
    
    
    
    
    
    
    14Valuation allowance adjustments
    
    
    (374
    )
    
    
    681
    
    
    
    109Nondeductible amortization and other permanent differences
    
    
    59
    
    
    
    (138
    )
    
    
    (643
    )Amended return and charitable contribution adjustments
    
    
    24
    
    
    
    177
    
    
    
    (348
    )Other
    
    
    43
    
    
    
    14
    
    
    
    (3
    )Income tax expense (benefit)
    
    $
    973
    
    
    $
    (647
    )
    
    $
    1,471
  F-16




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##### Table of Contents



June 27,
    
    
    June 28,2009
    
    
    2008Deferred tax assets:State net operating loss carryforward
    
    $
    952
    
    
    $
    1,427Charitable donation carryforward
    
    
    1,039
    
    
    
    1,187Derivative  interest rate contract
    
    
    354
    
    
    
    276Currently nondeductible accruals
    
    
    3,596
    
    
    
    3,196Gross deferred tax assets
    
    
    5,941
    
    
    
    6,086Less valuation allowance  Charitable
    
    
    (353
    )
    
    
    (353
    )Less valuation allowance  State NOL
    
    
    (25
    )
    
    
    (936
    )Net deferred tax assets
    
    $
    5,563
    
    
    $
    4,797Deferred tax liabilities:Depreciation
    
    
    (1,590
    )
    
    
    (1,670
    )Goodwill and intangibles
    
    
    (1,636
    )
    
    
    (1,161
    )Other
    
    
    (85
    )
    
    
    (2
    )Gross deferred tax liabilities
    
    
    (3,311
    )
    
    
    (2,833
    )Net deferred tax asset
    
    $
    2,252
    
    
    $
    1,964
   Accounting for Uncertainty in Income Taxes
 NOTE 10LEASES
  F-17




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##### Table of Contents



Fiscal Year2010
    
    $
    7,5602011
    
    
    6,6402012
    
    
    5,6672013
    
    
    4,9042014
    
    
    4,126Thereafter
    
    
    8,403$
    37,300
  NOTE 11EMPLOYEE BENEFIT PLANS
   June 27,
    
    
    June 28,2009
    
    
    2008Change in benefit obligations:Balance at beginning of year
    
    $
    945
    
    
    $
    964Interest (credit) cost
    
    
    (80
    )
    
    
    80Benefits paid
    
    
    (83
    )
    
    
    (99
    )Actuarial adjustment
    
    
    (66
    )
    
    
    Balance at end of year
    
    $
    716
    
    
    $
    945
 NOTE 12STOCK OPTIONS AND INCENTIVE STOCK AWARDS
  Option Plan
  F-18




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##### Table of Contents



2009
    
    2008
    
    2007Risk-free interest rate
    
    
    2.27
    %
    
    
    3.11
    %
    
    
    4.85
    %Expected life
    
    
    6.1
    yrs
    
    
    6.7
    yrs
    
    
    6
    yrsExpected volatility
    
    
    49.7
    %
    
    
    34.3
    %
    
    
    31.7
    %Expected dividend yield
    
    
    0.00
    %
    
    
    1.20
    %
    
    
    1.13
    %Weighted-average per share fair
value of options granted
    
    $
    2.00
    
    
    $
    2.95
    
    
    $
    6.16
   WeightedAverageWeighted
    
    Remaining
    
    AggregateAverage
    
    Contractual
    
    Intrinsic ValueShares
    
    Exercise Price
    
    Term
    
    (thousands)Outstanding at June 28, 2008
    
    
    996,500
    
    
    $
    12.06Granted
    
    
    10,000
    
    
    $
    4.01Exercised
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Expired
    
    
    
    
    
    
    Outstanding at June 27, 2009
    
    
    1,006,500
    
    
    $
    11.98
    
    
    
    6.5
    
    
    
    Exercisable at June 27, 2009
    
    
    720,500
    
    
    $
    13.50
    
    
    
    5.9
    
    
    
    
   Weighted-AverageGrant-DateShares
    
    
    Fair ValueNonvested at June 28, 2008
    
    
    441,000
    
    
    $
    3.86Granted
    
    
    10,000
    
    
    $
    2.00Vested
    
    
    (165,000
    )
    
    $
    5.39Forfeited
    
    
    
    
    
    
    Expired
    
    
    
    
    
    
    Nonvested at June 27, 2009
    
    
    286,000
    
    
    $
    2.92
 F-19




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##### Table of Contents



Award Plan
    WeightedAverageExerciseShares
    
    
    PriceNonvested at June 28, 2008
    
    
    73,550
    
    
    $
    0.01Granted
    
    
    
    
    
    
    Vested
    
    
    
    
    
    
    Forfeited
    
    
    (67,706
    )
    
    $
    0.01Expired
    
    
    
    
    
    
    Nonvested at June 27, 2009
    
    
    5,844
    
    
    $
    0.01
  NOTE 13BUSINESS SEGMENTS
  ®
 ® ® ® ® ®
 F-20




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##### Table of Contents



Activewear
    
    Retail-ReadyApparel
    
    Apparel
    
    ConsolidatedFiscal Year 2009:Net sales
    
    $
    199,027
    
    
    $
    156,170
    
    
    $
    355,197Segment operating (loss) income
    
    
    (5,444
    )
    
    
    17,591
    
    
    
    12,147Segment assets
    
    
    141,013
    
    
    
    115,980
    
    
    
    256,993Purchases of property, plant and equipment
    
    
    1,248
    
    
    
    1,810
    
    
    
    3,058Fiscal Year 2008:Net sales
    
    $
    179,394
    
    
    $
    142,640
    
    
    $
    322,034Segment operating (loss) income
    
    
    (14,027
    )
    
    
    18,914
    
    
    
    4,887Segment assets
    
    
    146,499
    
    
    
    115,124
    
    
    
    261,623Purchases of property, plant and equipment
    
    
    14,148
    
    
    
    2,442
    
    
    
    16,590Fiscal Year 2007:Net sales
    
    $
    178,249
    
    
    $
    134,189
    
    
    $
    312,438Segment operating (loss) income
    
    
    (4,804
    )
    
    
    17,103
    
    
    
    12,299Segment assets
    
    
    126,086
    
    
    
    106,704
    
    
    
    232,790Purchases of property, plant and equipment
    
    
    8,422
    
    
    
    2,493
    
    
    
    10,915
  Year EndedJune 27,
    
    
    June 28,
    
    
    June 30,2009
    
    
    2008
    
    
    2007Segment operating income
    
    $
    12,147
    
    
    $
    4,887
    
    
    $
    12,299Unallocated interest expense
    
    
    4,718
    
    
    
    6,042
    
    
    
    5,157Consolidated income (loss) before
taxes
    
    $
    7,429
    
    
    $
    (1,155
    )
    
    $
    7,142
  June 27, 2009
    
    
    June 28, 2008Long Lived Assets:United States
    
    $
    17,886
    
    
    $
    19,388Honduras
    
    
    16,537
    
    
    
    18,044El Salvador
    
    
    670
    
    
    
    978Mexico
    
    
    1,387
    
    
    
    1,632All Foreign Countries
    
    
    18,594
    
    
    
    20,654Total Long-lived Assets
    
    $
    36,480
    
    
    $
    40,042
 F-21




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##### Table of Contents



NOTE 14COMMITMENTS AND CONTINGENCIES
 (a) Litigation
    (b) Purchase Contracts
  Yarn
    
    $
    22,682Natural Gas
    
    
    1,059Chemicals
    
    
    24Finished fabric
    
    
    1,763Finished products
    
    
    7,022$
    32,550
 (c) Letters of Credit
  (d) Derivatives
   F-22




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##### Table of Contents



June 27,
    
    
    June 28,2009
    
    
    2008Accrued expenses
    
    $
    902
    
    
    $
    Deferred tax liabilities
    
    
    (353
    )
    
    
    (275
    )Other liabilities
    
    
    16
    
    
    
    716Accumulated other comprehensive loss
    
    $
    565
    
    
    $
    441
 NOTE 15RESTRUCTURING PLAN
  NOTE 16QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
  2009 Quarter Ended
    
    2008 Quarter EndedSeptember 27
    
    December 27
    
    March 28
    
    June 27
    
    September 29
    
    December 29
    
    March 29
    
    June 28(a)
    
    (b)
    
    (c)Net sales
    
    $
    91,412
    
    
    $
    73,361
    
    
    $
    85,685
    
    
    $
    104,739
    
    
    $
    72,562
    
    
    $
    68,780
    
    
    $
    75,364
    
    
    $
    105,328Gross profit
    
    
    19,306
    
    
    
    16,055
    
    
    
    16,770
    
    
    
    24,308
    
    
    
    12,991
    
    
    
    10,883
    
    
    
    15,710
    
    
    
    25,131Operating income
(loss)
    
    
    2,440
    
    
    
    1,506
    
    
    
    2,286
    
    
    
    5,915
    
    
    
    (1,192
    )
    
    
    (2,597
    )
    
    
    1,074
    
    
    
    7,602Net income (loss)
    
    
    674
    
    
    
    595
    
    
    
    1,163
    
    
    
    4,024
    
    
    
    (1,548
    )
    
    
    (2,834
    )
    
    
    (385
    )
    
    
    4,259Basic EPS
    
    $
    0.08
    
    
    $
    0.07
    
    
    $
    0.14
    
    
    $
    0.47
    
    
    $
    (0.18
    )
    
    $
    (0.33
    )
    
    $
    (0.05
    )
    
    $
    0.50Diluted EPS
    
    $
    0.08
    
    
    $
    0.07
    
    
    $
    0.14
    
    
    $
    0.47
    
    
    $
    (0.18
    )
    
    $
    (0.33
    )
    
    $
    (0.05
    )
    
    $
    0.50
 
 (a)
    
    The quarter ended September 29, 2007 includes $2.0 million excess manufacturing costs
in gross profit with an additional $0.1 million of restructuring costs in operating loss.(b)
    
    The quarter ended December 29, 2007 includes excess manufacturing costs of $2.0 million
in gross profit.(c)
    
    The quarter ended March 29, 2008 includes excess manufacturing costs of $0.8 million in
gross profit. NOTE 17EXTRAORDINARY GAIN
  F-23




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##### Table of Contents



SCHEDULE II  CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
 DELTA APPAREL, INC. AND SUBSIDIARIES
 ALLOWANCE FOR DOUBTFUL ACCOUNTS
 Beginning
    
    Purchase
    
    
    
    
    
    
    
    
    
    EndingBalance
    
    Accounting *
    
    Expense
    
    Write-Offs
    
    Balance2009
    
    $
    1,117
    
    
    $
    897
    
    
    $
    936
    
    
    $
    (1,631
    )
    
    $
    1,3192008
    
    
    341
    
    
    
    
    
    
    
    1,301
    
    
    
    (525
    )
    
    
    1,1172007
    
    
    1,051
    
    
    
    
    
    
    
    467
    
    
    
    (1,177
    )
    
    
    341
 RETURNS AND ALLOWANCES
 Beginning
    
    Purchase
    
    
    
    
    
    
    
    
    
    EndingBalance
    
    Accounting *
    
    Expense
    
    Credits Issued
    
    Balance2009
    
    $
    1,696
    
    
    $
    66
    
    
    $
    3,935
    
    
    $
    (3,977
    )
    
    $
    1,7202008
    
    
    1,602
    
    
    
    
    
    
    
    6,078
    
    
    
    (5,984
    )
    
    
    1,6962007
    
    
    1,118
    
    
    
    300
    
    
    
    9,894
    
    
    
    (9,710
    )
    
    
    1,602
 TOTAL RESERVES FOR ALLOWANCES
 Beginning
    
    Purchase
    
    
    
    
    
    Write-Offs/
    
    EndingBalance
    
    Accounting *
    
    Expense
    
    Credits Issued
    
    Balance2009
    
    $
    2,813
    
    
    $
    963
    
    
    $
    4,871
    
    
    $
    (5,608
    )
    
    $
    3,0392008
    
    
    1,943
    
    
    
    
    
    
    
    7,379
    
    
    
    (6,509
    )
    
    
    2,8132007
    
    
    2,169
    
    
    
    300
    
    
    
    10,361
    
    
    
    (10,887
    )
    
    
    1,943
 MARKET AND OBSOLESCENCE RESERVE
 Beginning
    
    Purchase
    
    
    
    
    
    
    
    
    
    EndingBalance
    
    Accounting *
    
    Expense **
    
    Deductions **
    
    Balance2009
    
    $
    2,215
    
    
    $
    1,486
    
    
    $
    373
    
    
    $
    
    
    
    $
    4,0742008
    
    
    2,039
    
    
    
    
    
    
    
    176
    
    
    
    
    
    
    
    2,2152007
    
    
    1,614
    
    
    
    
    
    
    
    425
    
    
    
    
    
    
    
    2,039
 SELF INSURANCE RESERVE
 Beginning
    
    Purchase
    
    
    
    
    
    
    
    
    
    EndingBalance
    
    Accounting *
    
    Expense **
    
    Deductions **
    
    Balance2009
    
    $
    595
    
    
    $
    
    
    
    $
    (98
    )
    
    $
    
    
    
    $
    4972008
    
    
    445
    
    
    
    
    
    
    
    150
    
    
    
    
    
    
    
    5952007
    
    
    478
    
    
    
    
    
    
    
    (33
    )
    
    
    
    
    
    
    445
 DEFERRED TAX ASSET VALUATION ALLOWANCE
 Beginning
    
    Purchase
    
    
    
    
    
    
    
    
    
    EndingBalance
    
    Accounting *
    
    Expense **
    
    Deductions **
    
    Balance2009
    
    $
    1,289
    
    
    $
    
    
    
    $
    (911
    )
    
    $
    
    
    
    $
    3782008
    
    
    255
    
    
    
    
    
    
    
    1,034
    
    
    
    
    
    
    
    1,2892007
    
    
    146
    
    
    
    
    
    
    
    109
    
    
    
    
    
    
    
    225
 
 *
    
    Represents the allowance provided for as a result of the To The Game Acquisition on March
29, 2009 and the FunTees Acquisition on October 2, 2006.**
    
    Net change in the market and obsolescence and self insurance reserves are shown in the expense
column.