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Delta Apparel Inc Reports Operating Results (10-K)

September 01, 2010 | About:
Barel Karsan

10qk

18 followers
Delta Apparel Inc (DLA) filed Annual Report for the period ended 2010-07-03.

Delta Apparel Inc has a market cap of $110.8 million; its shares were traded at around $13.01 with a P/E ratio of 9.1 and P/S ratio of 0.3. DLA is in the portfolios of John Buckingham of Al Frank Asset Management, Inc..

Highlight of Business Operations:

Under the Delta Pro Weight®, Delta Magnum Weight®, Quail Hollow® and FunTees® brand names we market more basic, high quality apparel garments for the entire family. Delta products are offered in a wide range of colors available in 6-month infant to adult sizes up to 4X. The Pro Weight line represents a diverse selection of mid-weight, 100% cotton silhouettes in a large color selection, including our new heathered color offerings. The Magnum Weight line is designed to give our customers a variety of silhouettes in a heavier-weight, 100% cotton fabric. The Quail Hollow® line features styles developed specifically for ladies, juniors and girls. We can also outfit infants with our Healthknit® snap tee available in sizes up to 24 months. Through FunTees we expanded our business of designing, marketing, and manufacturing private label custom knit t-shirts primarily to major branded sportswear companies. The majority of the merchandise is embellished, and we offer our customers a wide variety of packaging services so the products can be shipped store-ready.

During fiscal year 2010, we served approximately 16,000 customers. No single customer accounted for more than 10% of our sales in fiscal years 2010, 2009 or 2008 and our strategy is to not become dependent on any single customer. Substantially all of our sales are domestic with revenue attributable to foreign countries representing approximately 3% of our total consolidated net sales in each of fiscal years 2010, 2009 and 2008.

Although our various product lines are sold on a year-round basis, the demand for specific products or styles reflects some seasonality, with sales in our fourth fiscal quarter generally being the highest and sales in our second fiscal quarter generally being the lowest. The percentage of net sales by quarter for the year ended July 3, 2010 was 23%, 22%, 25% and 30% for the first, second, third, and fourth fiscal quarters, respectively. Consumer demand for apparel is largely influenced by the overall U.S. economy and consumer spending in general. Therefore, the distribution of sales by quarter in fiscal year 2010 may not be indicative of the distribution in future years.

We manufacture fabrics in our company-owned plant located in Maiden, North Carolina and in Ceiba Textiles, a leased facility located near San Pedro Sula, Honduras. During the fourth quarter of fiscal year 2009, we completed the move of Soffe textile production from our plant in Fayetteville, North Carolina to our Maiden and Ceiba Textiles facilities. We believe this move will create a more efficient and cost-effective supply chain. Our garments are sewn in our company-owned plants in Fayetteville, North Carolina and Rowland, North Carolina, and are cut and sewn in a leased facility in La Paz, El Salvador, in two leased facilities in Campeche, Mexico and in two leased facilities in San Pedro Sula, Honduras. In fiscal years 2010, 2009 and 2008 approximately 74%, 76% and 68%, respectively, of our manufactured products were sewn in company-operated locations. The remaining products were sewn by outside contractors located in the Caribbean basin.

At the 2010, 2009 and 2008 fiscal year-ends, our long-lived assets in Honduras, El Salvador and Mexico collectively comprised approximately 49%, 51% and 50%, respectively, of our total net property, plant and equipment, with our long-lived assets in Honduras comprising 43%, 45% and 45%, respectively. For a description of risks associated with our operations located in Honduras, El Salvador and Mexico, see Item 1A. Risk Factors.

Along with our internal manufacturing, we source fabric, undecorated products and full-package products through independent sources throughout the world. In fiscal years 2010, 2009 and 2008, we sourced approximately 25%, 11% and 12%, respectively, of our products from third parties. We expanded our product line into headwear in the fourth quarter of fiscal year 2009 with the acquisition of The Game® and Kudzu®. Our headwear merchandise is all sourced from third parties, driving the increase in sourced products in fiscal year 2010.

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