Delta Apparel Reports Increased Earnings for the First Quarter of Fiscal Year 2003

DULUTH, Ga., Oct 22, 2002 (BUSINESS WIRE) -- Delta Apparel, Inc. (AMEX:DLA) announces net income for the quarter ended September 28, 2002 of $1.8 million, or 6.2% of sales, up $1.7 million from the prior year quarter.

Sales were $28.9 million for the quarter ended September 28, 2002, down $2.1 million, or 6.9%, from the prior year quarter. The lower sales were the result of a 9.8% decrease in unit volume, partially offset by a 3.2% increase in average selling prices. Higher unit volume and lower average selling prices in the prior year quarter resulted from the increased demand for basic white products as a result of the events of September 11, 2001. Operating income was $3.1 million for the quarter, an increase of $2.7 million from $0.3 million in the first fiscal quarter of the prior year. This increase was primarily the result of lower raw material prices and lower manufacturing cost, driven by increased manufacturing schedules and improvements in sewing efficiency in both the Honduras and Mexico facilities. EBITDA for the quarter was $4.7 million, up $2.9 million from the prior year quarter.

Interest expense was $0.1 million for the quarter, compared to $0.2 million in the prior year quarter. The reduction in interest expense resulted from a decrease of approximately $5.0 million in average debt outstanding and a reduction in the average interest rates of over 200 basis points.

The effective income tax rate on pretax income for the three months ended September 28, 2002 was 38.5%, compared to 37.3% for the first fiscal quarter of the prior year and 33.0% for the fiscal year ended June 29, 2002. In fiscal year 2002, the Company reversed the valuation allowance against its net operating loss carryforwards, resulting in the effective tax rate of 33.0%. The Company expects its annualized effective tax rate to more closely approximate statutory rates for fiscal year 2003.

Net earnings for the quarter were $1.8 million, or 6.2% of sales, up $1.7 million from the prior year quarter. Basic and diluted earnings per share for the quarter ended September 28, 2002 were $0.44 and $0.43 per share on 4.05 million and 4.21 million shares, respectively. Basic and diluted earnings per share for the quarter ended September 29, 2001 were $0.01 on 4.77 million and 4.97 million shares, respectively (after giving effect to the 2-for-1 stock split effective as of September 20, 2002). On September 28, 2002, the Company had 4.08 million shares outstanding.

Accounts receivable decreased $6.2 million from September 29, 2001 to $14.5 million on September 28, 2002. The decrease was a result of lower sales during the current year quarter, as well as lower days sales outstanding. Days sales outstanding decreased to 45 days compared to 48 days in the prior year.

Inventories on September 28, 2002 were $48.4 million, up $12.9 million from June 29, 2002 and up $12.8 million from the prior year quarter. The Company increased inventory to support its expanded product line and anticipated sales growth for fiscal year 2003. The Company will be opening a new distribution center in Florida and is increasing its field sales personnel to achieve the anticipated sales growth. The Company expects to further increase its inventory of finished product in the second quarter to prepare for the spring selling season. The Company has also increased its raw material inventory to take advantage of lower cotton prices and to support its increased textile capacity. The Company expects raw material inventories to return to traditional levels in the second half of the year.

On August 15, 2002, the Company's Board of Directors approved a 2-for-1 stock split of the Company's common stock. The stock split took the form of a 100% stock dividend payable on September 20, 2002 to shareholders of record as of September 6, 2002. In addition, the Company's Board of Directors declared a cash dividend of ten cents per common share of stock (pre-split), that was paid on September 16, 2002 to shareholders of record as of the close of business on September 3, 2002.

On September 13, 2002, the Company's Board of Directors authorized the repurchase by the Company in open market transactions of up to an additional $3.0 million of Delta Apparel common stock pursuant to its Stock Repurchase Program, bringing the total amount authorized to $6.0 million. The Company purchased 18,604 shares of its stock through its Stock Repurchase Program during the quarter ended September 28, 2002 for a total cost of $0.3 million. The Company has continued to repurchase its stock in the second quarter of fiscal year 2003.

Robert W. Humphreys, President and CEO, commented, "We are pleased with the increase in earnings for the quarter and the progress we made in building the foundation to grow Delta Apparel in the future. We continued to add new customers during the quarter and increased our sales percentage in the catalog direct segment. Our West Coast Distribution Center continues to allow us to reach new customers in this important geographic region. We have now signed a lease on a distribution center in Miami, which will be open in time to support our spring selling season."

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 six states, two company-operated sewing facilities in Honduras and one company-operated sewing facility in Mexico. The Company employs about 3,100 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. The risks and uncertainties include, among others, changes in the retail demand for apparel products, the cost of raw materials, competitive conditions in the apparel and textile industries, the relative strength of the United States dollar as against other currencies, changes in United States trade regulations, the discovery of unknown conditions (such as with respect to environmental matters and similar items) and other risks described from time to time in the Company's reports filed with the Securities and Exchange Commission. Accordingly, any forward-looking statements do not purport to be predictions of future events or circumstances and may not be realized. The Company does not undertake publicly to update or revise the forward-looking statements even if it becomes clear that any projected results will not be realized.

(In thousands, except per share amounts)
                                              Three Months Ended
                                         Sept 28, 2002  Sept 29, 2001
                                         -------------- --------------
Net Sales                                      $28,883        $31,014
Cost of Goods Sold                              22,879         28,047
                                         -------------- --------------
Gross Margin                                     6,004          2,967
SG&A                                             2,835          2,665
Other Income (Expense)                            (108)            28
                                         -------------- --------------
Operating Income                                 3,061            330
Interest Expense                                   148            228
Taxes                                            1,122             38
                                         -------------- --------------
Net Income                                      $1,791            $64
                                         ============== ==============
Weighted Average Shares Outstanding (a)
     Basic                                       4,053          4,772
     Diluted                                     4,209          4,970
Net Income per Common Share
     Basic                                       $0.44          $0.01
     Diluted                                     $0.43          $0.01
                                     Sept 28,     June 29,   Sept 29,
                                       2002         2002       2001
                                    ----------  ----------  ----------
Current Assets
  Cash                                 $1,115      $4,102      $2,376
  Receivables, Net                     14,486      22,812      20,691
  Income Tax Receivable                     -           -         420
  Inventories                          48,395      35,483      35,609
  Deferred Income Taxes                   818       1,119         931
  Other Assets                          1,220       1,835       1,455
                                    ----------  ----------  ----------
Total Current Assets                   66,034      65,351      61,482
Noncurrent Assets
  Property, Plant & Equipment, Net     22,058      22,992      22,921
  Other Noncurrent Assets                  97           3         110
                                    ----------  ----------  ----------
Total Noncurrent Assets                22,155      22,995      23,031
                                    ----------  ----------  ----------
Total Assets                          $88,189     $88,346     $84,513
                                    ==========  ==========  ==========
Current Liabilities
  Current Portion of Long Term Debt    $2,000      $2,000      $2,000
  Income Tax Payable                      789       1,860           -
Other Current Liabilities              17,100      17,718      12,805
                                    ----------  ----------  ----------
Total Current Liabilities              19,889      21,578      14,805
Noncurrent Liabilities
  Long-Term Debt                        3,167       3,667       5,167
  Deferred Income Taxes                   448         700         878
Other Noncurrent Liabilities            1,275       1,123         997
                                    ----------  ----------  ----------
Total Noncurrent Liabilities            4,890       5,490       7,042
Stockholders' Equity                   63,410      61,278      62,666
                                    ----------  ----------  ----------
Total Liabilities and
 Stockholders' Equity                 $88,189     $88,346     $84,513
                                    ==========  ==========  ==========
    (a) Adjusted for 2-for-1 stock split effective as of September 20,

Delta Apparel, Inc.
Herb Mueller, 678/775-6948