Delta Apparel Reports Fiscal Year 2002 Second Quarter Results

DULUTH, Ga., Jan 17, 2002 (BUSINESS WIRE) -- Delta Apparel, Inc. (AMEX:DLA) announces sales of $24.3 million for the quarter ended December 29, 2001, down $2.0 million, or 7.7%, from the prior year quarter.

Decreased sales were the result of a 4.2% decrease in unit volume and a 3.7% decrease in average selling prices from the prior year quarter. Lower average prices were the result of price decreases in certain basic styles. In addition, the drop in retail demand negatively impacted the Company's private label volume for the quarter. Operating earnings were $1.2 million, down $0.8 million from the prior year quarter. Lower operating earnings were primarily the result of lower selling prices, higher raw material cost and additional costs associated with the build in productivity at our new Mexico sewing facility. EBITDA for the quarter was $2.9 million, down $0.7 million from the prior year quarter.

Interest expense was $0.1 million for the quarter, compared to $0.3 million in the prior year quarter. The reduction in interest expense resulted from a decrease in average interest rates of over 300 basis points and a decrease in the average daily borrowings.

The effective income tax rate on pretax income for the three months ended December 29, 2001 was 36.9%, compared to 17.9% for the prior year quarter and 9.0% for the fiscal year ended June 30, 2001. During fiscal year 2001, the Company used $8.6 million in federal net operating loss carryforwards, resulting in the lower effective tax rate. The Company believes that its effective tax rate will be approximately 36% to 38% for fiscal year 2002.

Net earnings for the quarter were $0.7 million, or 2.8% of sales, down $0.7 million from the prior year quarter. Basic and diluted earnings per share for the quarter ended December 29, 2001 were $0.29 and $0.28 per share, respectively, down from $0.58 and $0.56 basic and diluted earnings per share for the prior year quarter.

Sales for the first six months of fiscal year 2002 were $55.4 million, down $1.7 million, or 2.9%, from the first six months of last year. For the six months ended December 29, 2001, operating earnings were $1.5 million, down $5.0 million from the first six months of last year. EBITDA for the first six months of fiscal year 2002 was $4.8 million, down $5.1 million, or 51.7%, from the first six months of last year.

Interest expense was $0.4 million for the six months ended December 29, 2001, compared to $0.6 million in the first six months of last year. This reduction in interest expense resulted from a decrease in average interest rates.

Net earnings for the first six months of fiscal year 2002 were $0.7 million, down $4.2 million from the first six months of last year. Basic and diluted earnings per share for the six months ended December 29, 2001 were $0.32 and $0.30 per share, respectively. For the six months ended December 30, 2000, basic and diluted earnings per share were $2.04 and $2.01 per share, respectively.

As previously reported, the Company's Tender Offer expired January 10, 2002. A total of 338,171 shares were validly tendered, not properly withdrawn, and accepted for purchase by the Company at a purchase price of $22.00 per share.

Robert W. Humphreys, President and CEO, commented, "While results in the December quarter, traditionally our weakest quarter, were below the prior year quarter, we are encouraged with the improvement in profitability compared with the first quarter of the current fiscal year. We expect this improvement to continue in the second half of the year. While activewear demand remains weak, inventories at the distributors have been reduced which should provide a quick rebound for the industry when the general economy improves."

"We are especially pleased with the results of our Tender Offer. We believe the repurchase of our shares is an excellent use of our capital and allows us to provide liquidity for our shareholders. We still have approximately $1.2 million authorized to continue the repurchase of shares in the open market, which we will continue to do at the current trading range. At current prices, share repurchases are accretive to our earnings."

Delta Apparel, Inc. is a vertically integrated manufacturer and marketer of high quality knit apparel. The Company specializes in selling undecorated T-shirts, golf shirts and tank tops to distributors, screen printers and private label accounts. Delta Apparel has operations in five states, two company-operated sewing facilities in Honduras and one company-operated sewing facility in Mexico. The Company employs about 2,700 worldwide.

Statements and other information in this press release that are not reported financial results or other historical information are forward-looking statements. These are based on Delta Apparel's expectations and are necessarily dependent upon assumptions, estimates and data that the Company believes are reasonable and accurate but may be incorrect, incomplete or imprecise. Forward-looking statements are also subject to a number of business risks and uncertainties, any of which could cause actual results to differ materially from those set forth in or implied by the forward-looking statements. These risks and uncertainties include, among others, changes in the retail demand for apparel products, the cost of raw materials, competitive conditions in the apparel and textile industries, the relative strength of the United States dollar as against other currencies, changes in United States trade regulations and the discovery of unknown conditions (such as with respect to environmental matters and similar items). Accordingly, any forward-looking statements do not purport to be predictions of future events or circumstances and may not be realized. The Company does not undertake to publicly update or revise the forward-looking statements even if it becomes clear that any projected results will not be realized.

SELECTED FINANCIAL DATA:
(In thousands, except per share amounts)
                              Three Months Ended     Six Months Ended
                              Dec 29,    Dec 30,    Dec 29,    Dec 30,
                               2001       2000       2001       2000
                             ---------  ---------  --------- ---------
Net Sales                    $ 24,337   $ 26,370   $ 55,351   $ 57,019
Cost of Goods Sold             20,596     21,653     48,643     45,062
                             ---------  ---------  --------- ---------
Gross Margin                    3,741      4,717      6,708     11,957
SG&A                            2,675      2,762      5,340      5,422
Other Income                      147          8        175         14
                             ---------  ---------  --------- ---------
Operating Income                1,213      1,963      1,543      6,549
Interest Expense                  139        261        367        556
Taxes                             396        305        434      1,079
                             ---------  ---------  --------- ---------
Net Income                   $    678   $  1,397   $    742  $   4,914
                             =========  =========  ========= =========
Weighted Average Shares Outstanding
   Basic                        2,319      2,411      2,353      2,409
   Diluted                      2,429      2,477      2,459      2,448
Net Income per Common Share
   Basic                     $   0.29   $   0.58   $   0.32   $   2.04
   Diluted                   $   0.28   $   0.56   $   0.30   $   2.01
                                         Dec 29,   June 30,    Dec 30,
                                          2001       2001       2000
                                        ---------  --------- ---------
Current Assets
 Cash                                   $  5,754   $    165   $    218
 Receivables, Net                         13,531     22,042     18,190
 Income Tax Receivable                       -        1,086        930
 Inventories                              39,581     41,619     39,508
 Deferred Income Taxes                       981        925        516
 Other Assets                              1,119      1,597      1,188
                                        ---------  --------- ---------
Total Current Assets                      60,966     67,434     60,550
Noncurrent Assets
 Property, Plant & Equipment, Net         21,771     23,750     24,655
 Other Noncurrent Assets                      81        139        206
                                        ---------  --------- ---------
Total Noncurrent Assets                   21,852     23,889     24,861
                                        ---------  --------- ---------
Total Assets                            $ 82,818   $ 91,323   $ 85,411
                                        =========  ========= =========
Current Liabilities
 Current Portion of Long Term Debt      $  2,000   $  8,435   $  2,000
 Income Tax Payable                          125        -          -
 Other Current Liabilities                11,495     12,627     14,250
                                        ---------  --------- ---------
Total Current Liabilities                 13,620     21,062     16,250
Noncurrent Liabilities
 Long-Term Debt                            4,667      5,667      9,642
 Deferred Income Taxes                       761        375         22
 Other Noncurrent Liabilities              1,038        736        724
                                        ---------  --------- ---------
Total Noncurrent Liabilities               6,466      6,778     10,388
Stockholders' Equity                      62,732     63,483     58,773
                                        ---------  --------- ---------
Total Liabilities and
 Stockholders' Equity                   $ 82,818   $ 91,323   $ 85,411
                                        =========  ========= =========
CONTACT:          Delta Apparel, Inc.
                  Herb Mueller, 678/775-6948

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