We make available copies of materials we file with, or furnish to, the SEC free of charge at https://ir.deltaapparelinc.com. The information found on our website is not part of this, or any other, report that we file with or furnish to the SEC. In addition, we will provide upon request, at no cost, paper or electronic copies of our reports and other filings made with the SEC. Requests should be directed to: Investor Relations Department, Delta Apparel, Inc., 322 South Main Street, Greenville, South Carolina 29601. Requests can also be made by telephone to 864-232-5200, or via email at investor.relations@deltaapparel.com.

Note E—Inventories

Inventories, net of reserves of ~~$10.2~~$15.0 million and ~~$10.5~~$10.1 million, as of June ~~29,~~27, 2020, and September 28, 2019 ~~and September 29, 2018~~, respectively, consisted of the following (in thousands):

	June 29,		September 29,
	2019		2018		*June 27, 2020*		*September 28, 2019*
Raw materials	$	11,794	$	9,641	$	12,060	$	12,022
Work in process		16,026		18,327		13,018		17,765
Finished goods		149,959		147,015		132,937		149,320
	$	177,779	$	174,983	$	158,015	$	179,107

Raw materials include finished yarn and direct materials for the Delta Group, undecorated garments for the DTG2Go business and direct embellishment materials for the Salt Life Group.

��

Note F—Debt

Credit Facility

On May 10, 2016, we entered into a Fifth Amended and Restated Credit Agreement ~~(the~~(as further amended, the “Amended Credit Agreement”) with Wells Fargo Bank, National Association (“Wells Fargo”), as Administrative Agent, the Sole Lead Arranger and the Sole Book Runner, and the financial institutions named therein as Lenders, which are Wells Fargo, PNC Bank, National Association and Regions Bank. Our subsidiaries M.J. Soffe, LLC, Culver City Clothing Company (f/k/a Junkfood Clothing Company), Salt Life, LLC, and DTG2Go, LLC (f/k/a Art Gun, LLC) (collectively, the "Borrowers"), are co-borrowers under the Amended Credit Agreement. The Borrowers entered into amendments to the Amended Credit Agreement with Wells Fargo and the other lenders on November 27, 2017, March 9, 2018, and October 8, 2018.

On November ~~27, 2017,~~ 19, 2019, the Borrowers entered into a ~~First~~Consent and Fourth Amendment to the Fifth Amended and Restated Credit Agreement with Wells Fargo and the other lenders set forth therein (the ~~“First Amendment”~~"Fourth Amendment"). The ~~First~~Fourth Amendment, among other things, (i) increased the borrowing capacity under the Amended Credit Agreement from $145 million to $170 million (subject to borrowing base limitations), (ii) extended the maturity date from May 21, 2021 to November 19, 2024, (iii) reduced pricing on the revolver and first-in last-out "FILO" borrowing components by 25 basis points, and (iv) added 25% of the fair value of eligible intellectual property to the borrowing base calculation. In addition, the Fourth Amendment amended the definition of Fixed Charge Coverage Ratio ~~within the Amended Credit Agreement~~ to ~~permit~~exclude up to $10 million of the proceeds received from the March 31, 2017, sale of certain assets of the Junkfood business to be used towards share repurchases for up to one year from the date of that transaction. In addition, the definition of Permitted Purchase Money Indebtedness was amended to extend the time period within whichcapital expenditures incurred by the Borrowers ~~may enter into capital leases and to increase~~in connection with the ~~aggregate principal amount~~expansion of ~~such leases into which~~their distribution facility located within the ~~Borrowers may enter to up to $15 million. The definition~~Town of Permitted Investments was also amended to permit the Borrowers to make investments in entities that are not a party to the Amended Credit Agreement in an aggregate amount of up to $2 million. The First Amendment also allowed the change in the name of our Junkfood Clothing Company subsidiary to Culver City Clothing Company. There were no changes to the Amended Credit Agreement related to interest rate, borrowing capacity, or maturity.Clinton, Anderson County, Tennessee.

On ~~March 9, 2018,~~ April 27, 2020, the Borrowers entered into a ~~Consent and Second~~Fifth Amendment to the Fifth Amended and Restated Credit Agreement with Wells Fargo Bank (the “Agent”) and the other lenders set forth therein (the ~~“Second~~“Fifth Amendment”). ~~Pursuant~~The Fifth Amendment amends the financial covenant provisions from the amendment date through October 3, 2020, including effectively lowering the minimum availability thresholds and removing the requirement that our Fixed Charge Coverage Ratio (“FCCR”) for the preceding 12-month period must not be less than 1.1 to ~~the Second~~1.0. The Fifth Amendment ~~Wells Fargo and the~~also, among other ~~lenders set forth therein consented to Art Gun, LLC’s acquisition~~things, (i) allows for an additional 30 days of ~~substantially all of the assets of TeeShirt Ink Inc. d/b/a DTG2Go. The Second Amendment also: (i) revised certain provisions~~aged receivables from customers in the ~~Amended Credit Agreement relating to our ability to pay cash dividends or distributions to shareholders or to repurchase shares~~borrowing base through August 1, 2020, (ii) ceases amortization of ~~our common stock so that~~real estate and machinery and equipment assets in the ~~effects~~borrowing base through August 1, 2020, (iii) postpones amortization of trademark assets in the ~~Tax Cuts and Jobs Act of 2017 would not~~ ~~negatively impact our ability to make such dividends or distributions or to repurchase shares of our common stock during our 2018 fiscal year; (ii) amended~~borrowing base until October 4, 2020; (iv) amends the definition of ~~Permitted Investments in~~Fixed Charge Coverage Ratio to reference the ~~Amended Credit Agreement to allow investments in~~monthly amortization of the ~~Honduras partnership (as defined in~~borrowing bases that were amended as part of the Amended Credit Agreement) in an aggregate original principal amount not to exceed $6 million; (iii) amended the definition of Permitted Purchase Money Indebtedness in the Amended Credit Agreement to increase the aggregate principal amount of capital leases into which we may enter to up to $25 million; (iv) permitted the name change of Art Gun, LLC to DTG2Go, LLC; and (v) added new definitions relating to the DTG2Go acquisition. There were no changes to the Amended Credit Agreement related to interest rate, borrowing capacity, or maturity.

~~On October 8, 2018, the Borrowers entered into a Consent and Third~~Fourth Amendment to the Fifth Amended and Restated Credit Agreement ~~with Wells Fargo~~on November 19, 2019, (v) amends the LIBOR rate definition to include a floor rate of 1.0%, and ~~the other lenders set forth therein (the "Third Amendment"). Pursuant~~(vi) requires weekly reporting of accounts receivable to the Third Amendment, the Lenders consented to DTG2Go's acquisition of substantially all of the assets of SSI. The Third Amendment also: (i) amended the existing loan agreement, including various definitions therein, to add a first-in last-out "FILO" borrowing component and (ii) amended the existing loan agreement, including various definitions therein, to address the potential unavailability or discontinuance of the use of LIBOR rates and updated certain provisions regarding compliance with denied party, sanctioned entity, anti-corruption and anti-money laundering and related laws and regulations and other items.Agent through October 3, 2020.

The Amended Credit Agreement allows us to borrow up to ~~$145~~$170 million (subject to borrowing base limitations), including a maximum of $25 million in letters of credit. Provided that no event of default exists, we have the option to increase the maximum credit to $200 million (subject to borrowing base limitations), conditioned upon the Administrative Agent's ability to secure additional commitments and customary closing conditions. The ~~credit facility matures on May 10, 2021.~~

~~Table~~Amended Credit Agreement contains a subjective acceleration clause and a “springing” lockbox arrangement (as defined in ASC 470, Debt ("ASC 470")) whereby remittances from customers will be forwarded to our general bank account and will not reduce the outstanding debt until and unless a specified event or an event of ~~Contents~~

default occurs. We classify borrowings under the Amended Credit Agreement as long-term debt with consideration of current maturities.

As of June ~~29, 2019~~27, 2020, there was ~~$114.8~~$106.5 million outstanding under our U.S. revolving credit facility at an average interest rate of ~~4.7% and additional borrowing~~2.9%. Our cash on hand combined with the availability ~~of $21.6 million. This~~under the U.S. credit facility includes a financial covenant requiring that if the amount of availability falls below the threshold amounts set forth in the Amended Credit Agreement, our Fixed Charge Coverage Ratio (“FCCR”) (as defined in the Amended Credit Agreement) for the preceding 12-month period must not be less than 1.1 to 1.0. We were not subject to the FCCR covenant at totaled $45.7 million. At June ~~29,~~27, 2020, and September 28, 2019~~, because our availability was above the minimum required under the Amended Credit Agreement, but we would have satisfied our financial covenant had we been subject to it. At~~ ~~June 29, 2019, and September 29, 2018~~, there was ~~$14.4~~$6.3 million and ~~$14.7~~$16.1 million, respectively, of retained earnings free of restrictions to make cash dividends or stock repurchases.

~~The Amended Credit Agreement contains a subjective acceleration clause and a “springing” lockbox arrangement (as defined in FASB Codification No. 470,~~ ~~Debt~~ ("ASC 470")) whereby remittances from customers will be forwarded to our general bank account and will not reduce the outstanding debt until and unless a specified event or an event of default occurs. Pursuant to ASC 470, we classify borrowings under the Amended Credit Agreement as long-term debt.

In August 2013, we acquired Salt Life and issued two promissory notes in the aggregate principal amount of $22.0 million, which included a one-time installment of $9.0 million that was due and paid as required on September 30, 2014, and quarterly installments commencing on March 31, 2015, with the final installment due on June 30, 2019. The promissory notes are zero-interest notes and state that interest will be imputed as required under Section 1274 of the Internal Revenue Code. We imputed interest at 1.92% on the promissory note that matured on June 30, 2016, and was paid in full as required. We impute interest at 3.62% on the promissory note that matured on June 30, 2019. At ~~June 29, 2019, the discounted value of the promissory note outstanding was $0.5 million.~~Promissory Note

On October 8, 2018, we acquired substantially all of the assets of Silk Screen Ink, Ltd. d/b/a SSI Digital Print Services. ~~See Note-D Acquisitions for more information on this transaction.~~ In conjunction with the acquisition, we issued a promissory note in the principal amount of $7.0 million. The promissory note bears interest at 6% with quarterly installments ~~beginning~~ which began January 2, 2019, with the final installment due October 1, 2021. As of June ~~29, 2019~~27, 2020, there was ~~$5.9~~$3.5 million outstanding on the promissory note.

Honduran Debt

Since March 2011, we have entered into term loans and a revolving credit facility with Banco Ficohsa, a Honduran bank, to finance both the operations and capital expansion of our Honduran facilities. Each of these loans is secured by a ~~first-priority~~first-priority lien on the assets of our Honduran operations and is not guaranteed by our U.S. entities. These loans are denominated in U.S. dollars and Honduran lempiras and the carrying value of the debt approximates its fair value. The revolving credit facility requires minimum payments during each ~~nine~~six-month period of the ~~18-month term;~~12 to 18 month terms; however, the loan agreement permits additional drawdowns to the extent payments are made and certain objective covenants are met. The ~~current~~ revolving Honduran debt, by its nature, is not long-term, as it requires scheduled payments each six months. However, as the loan permits us to re-borrow funds up to the amount repaid, subject to certain objective covenants, and we intend to re-borrow funds, subject to those covenants, the amounts have been classified as long-term debt. In response to COVID-19 pandemic, monthly term loan payments were paused during the June fiscal quarter and resumed in the September fiscal quarter.

Additional information about these loans and the outstanding balances as of June ~~29, 2019~~27, 2020, is as follows (in thousands):

	*June 27,*
	*2020*
Revolving credit facility established March 2011, weighted average interest at 7.5% expiring August 2025	$	9,284
Term loan established November 2014, interest at 6.0%, payable monthly with a six-year term		500
Term loan established June 2016, interest at 6.0%, payable monthly with a six-year term		631
Term loan established October 2017, interest at 6.0%, payable monthly with a six-year term		1,420

June 29,

2019

Revolving credit facility established March 2011, interest at 6.2% expiring August 2020
$ 4,984
Term loan established November 2014, interest at 6.0%, payable monthly with a six-year term
950
Term loan established June 2016, interest at 6.0%, payable monthly with a six-year term
849
Term loan established October 2017, interest at 6.0%, payable monthly with a six-year term
2,219

Note G—Leases

We lease property and equipment under operating lease arrangements, most of which relate to distribution centers and manufacturing facilities in the U.S., Honduras, El Salvador, and Mexico. We also lease machinery and equipment in the U.S. under finance lease arrangements. We include both the contractual term as well as any renewal option that we are reasonably certain to exercise in the determination of our lease terms. For leases with a term of greater than 12 months, we value lease liabilities and the related assets as the present value of the lease payments over the related term. We apply the short-term lease exception to leases with a term of 12 months or less and exclude such leases from our Condensed Consolidated Balance Sheet. Payments related to these short-term leases are expensed on a straight-line basis over the lease term and are reflected as a component of lease cost within our Condensed Consolidated Statements of Operations. Our operating lease agreements for buildings generally include provisions for the payment of our proportional share of operating costs, property taxes, and other variable payments. These incremental payments are excluded from our calculation of operating lease liabilities and right of use assets. We have elected to use the practical expedient present in ASC 842 to not separate lease and non-lease components for all significant underlying asset classes and instead account for them together as a single lease component in the measurement of our lease liabilities.

Generally, the rate implicit in our operating leases is not readily determinable. Therefore, we discount future lease payments using our estimated incremental borrowing rate at lease commencement. We determine this rate based on a credit-adjusted risk-free rate, which approximates a secured rate over the lease term. The weighted average discount rate for operating leases as of June 27, 2020, was 4.2%. We discount our finance lease payments based on the rate implicit and stated in the lease. The weighted average discount rate for finance leases as of June 27, 2020, was 5.2%.

The following table presents the future undiscounted payments due on our operating and finance lease liabilities as well as a reconciliation of those payments to our operating and finance lease liabilities, recorded as of June 27, 2020 (in thousands):

	Operating			Finance
	Leases			Leases
2020	$	2,757		$	2,030
2021		11,536			7,679
2022		8,316			4,763
2023		6,284			4,059
2024		4,789			2,580
Thereafter		18,301			690
Undiscounted fixed lease payments	$	51,983		$	21,801
Discount due to interest		(8,111	)		(1,768)
Total lease liabilities	$	43,872		$	20,033
Less current maturities		(8,720	)		(7,099	)
Lease liabilities, excluding current maturities	$	35,152		$	12,934

As of June 27, 2020, we have entered into certain operating leases that have not yet commenced and which will result in annual fixed lease payments that range from $1.0 million to $1.3 million per year for a 10-year period.

~~Table of Contents~~

Our Ceiba Textiles manufacturing facility is leased under an operating lease arrangement with a Honduran company, of which we own 31% of the outstanding capital stock of the lessor at June 27, 2020. During the nine-months ended June 27, 2020, and June 29, 2019, we paid approximately $0.9 million and $1.4 million, respectively, in lease payments under this arrangement.

As of June 27, 2020, we had $42.9 million of operating lease ROU assets which were reflected within Operating lease assets in our Condensed Consolidated Balance Sheet, and $24.5 million of finance lease ROU assets, which were reflected within Property, plant, and equipment, net in our Condensed Consolidated Balance Sheet.

The weighted average remaining lease terms for our operating leases and finance leases were approximately 7 years and 3 years, respectively, as of June 27, 2020.

The components of total lease expense were as follows for the nine months ended June 27, 2020 (in thousands):

Operating lease fixed expense	$	8,355
Operating lease variable cost expense		1,054
Finance lease amortization of ROU assets expense		2,519
Finance lease interest expense		728
Total lease expense	$	12,656

Total operating lease expense, excluding variable lease costs, recognized during the nine months ended June 29, 2019, prior to the adoption of ASC 842, was $7.9 million. In addition, during the nine months ended June 29, 2019, we incurred expenses related to finance leases, including interest expense and depreciation expense, related to financed machinery and equipment.

Cash outflows for operating lease payments and for interest payments on finance leases during the nine months ended June 27, 2020, were $8.2 million and $0.9 million, respectively, and are classified within net cash provided by operating activities on the Condensed Consolidated Statement of Cash Flows. Cash outflows for finance lease payments during the nine months ended June 27, 2020, were $3.2 million and are classified within net cash used in financing activities on the Condensed Consolidated Statement of Cash Flows.

During the three month period ended June 27, 2020, in response to the COVID-19 pandemic, the Company entered into certain lease arrangements deferring approximately $1.7 million of operating lease payments and approximately $1.7 million of finance lease payments. The operating lease deferrals will be paid over the next 12 months while finance lease deferrals will be repaid at the end of each lease.

ROU assets obtained in exchange for operating lease and finance lease liabilities during the nine months ended June 27, 2020, were $6.6 million and $5.0 million, respectively. During the nine-month period ended June 29, 2019, prior to the adoption of ASC 842, we entered into new finance lease obligations totaling $6.7 million.

We do not have significant leasing transactions in which we are the lessor.

Note G—H—Selling, General and Administrative Expense

We include in selling, general and administrative ("SG&A") expenses the costs incurred subsequent to the receipt of finished goods at our distribution facilities, such as the cost of stocking, warehousing, picking, packing, and shipping goods for delivery to our customers. Distribution costs included in SG&A expenses totaled $3.5 million and $4.5 million for ~~both three-month~~the three-month periods ended June 27, 2020, and June 29, 2019, ~~and~~ ~~June 30, 2018, and~~respectively. Distribution costs included in SG&A expenses totaled ~~$12.9~~$13.2 million and ~~$12.8~~$12.9 million for the nine-month periods ended June 27, 2020, and June 29, 2019,~~, and~~ ~~June 30, 2018~~, respectively. In addition, SG&A expenses include costs related to sales associates, administrative personnel, advertising and marketing expenses and other general and administrative expenses.

Note H—I—Stock-Based Compensation

On February ~~4, 2015,~~ 6, 2020, our shareholders ~~re-approved~~approved the Delta Apparel, Inc. ~~2010~~2020 Stock Plan ~~("2010~~("2020 Stock Plan") ~~that~~to replace the 2010 Stock Plan, which was ~~originally approved~~previously re-approved by our shareholders on ~~November 11, 2010. Since November 2010, no additional awards have been or will be granted under either~~February 4, 2015 and was scheduled to expire by its terms on September 14, 2020. The 2020 Stock Plan is substantially similar in both form and substance to the ~~Delta Apparel~~2010 Stock ~~Option~~Plan. The purpose of the 2020 Stock Plan ~~("Option Plan") or the Delta Apparel Incentive Stock Award Plan ("Award Plan") and, instead, all stock awards have been and will~~is to continue to ~~be granted under~~give our Board of Directors and its Compensation Committee the ~~2010 Stock Plan.~~

~~We account for these plans pursuant~~ability to ~~ASC 718, SAB 107, SAB 110,~~offer a variety of compensatory awards designed to enhance the Company’s long-term success by encouraging stock ownership among its executives, key employees and ~~ASU 2016-09. Shares are generally issued from treasury stock upon exercise of the options or the vesting of the restricted stock units, performance units or other awards under the 2010 Stock Plan.~~

~~Compensation expense is recorded on the SG&A expense line item in our Condensed Consolidated Statements of Operations over the vesting periods. During the three-month periods ended~~ ~~June 29, 2019, and~~ ~~June 30, 2018, we recognized $0.5 million and $0.8 million, respectively, in stock-based compensation expense. During the~~ ~~nine-month periods ended~~ ~~June 29, 2019, and~~ ~~June 30, 2018, we recognized $1.8 million and $2.0 million, respectively, in stock-based compensation expense.~~

~~2010 Stock Plan~~

directors. Under the ~~2010~~2020 Stock Plan, the Compensation Committee of our Board of Directors has the authority to determine the employees and directors to whom awards may be granted and the size and type of each award and manner in which such awards will vest. The awards available under the plan consist of stock options, stock appreciation rights, restricted stock, restricted stock units, performance stock, performance units, and other stock and cash awards. The aggregate number of shares of common stock that may be delivered under the 2010 Stock Plan is 500,000 plus any shares of common stock subject to outstanding awards under the Option Plan or Award Plan that are subsequently forfeited or terminated for any reason before being exercised. The 2010 Stock Plan limits the number of shares that may be covered by awards to any participant in a given calendar year and also limits the aggregate awards of restricted stock, restricted stock units and performance stock granted in a given calendar year. If a participant dies or becomes disabled (as defined in the ~~2010~~2020 Stock Plan) while employed by the Company or serving as a director, all unvested awards become fully vested. The Compensation Committee is authorized to establish the terms and conditions of awards granted under the ~~2010~~2020 Stock Plan, to establish, amend and rescind any rules and regulations relating to the ~~2010~~2020 Stock Plan, and to make any other determinations that it deems necessary.

No The aggregate number of shares of common stock that may be delivered under the 2020 Stock Plan is 449,714 plus any shares of common stock subject to outstanding awards under the 2010 Stock Plan that are subsequently forfeited or terminated for any reason before being exercised. Similar to the 2010 Stock Plan, the 2020 Stock Plan limits the number of shares that may be covered by awards to any participant in a given calendar year and also limits the aggregate awards of restricted stock, ~~units or performance units were granted during the three-month and~~ ~~nine-month periods ended~~ ~~June 29, 2019~~.

~~During the three-month period ended December 29, 2018,~~ restricted stock units and performance stock granted in a given calendar year. The 2010 Stock Plan terminated and the 2020 Stock Plan became effective on February 6, 2020, the date of shareholders’ approval.

Shares are generally issued from treasury stock upon the vesting of the restricted stock units, performance units or other awards under the 2010 Stock Plan and 2020 Stock Plan.

Compensation expense is recorded within SG&A in our Condensed Consolidated Statements of Operations over the vesting periods. During the three-month periods ended June 27, 2020, and June 29, 2019, we recognized $0.7 million and $0.5 million, respectively, in stock-based compensation expense. During the nine-month periods ended June 27, 2020, and June 29, 2019, we recognized $2.1 million and $1.8 million, respectively, in stock-based compensation expense.

On May 11, 2020, restricted stock units representing ~~205,000 and 42,000~~100,000 shares of our common stock ~~respectively, vested~~were granted under the 2020 Stock Plan. Of these units, 50,000 are eligible to vest upon the filing of our Annual Report on Form ~~10-K~~10-K for the fiscal year ~~ended~~ ~~September 29, 2018~~, ending October 2, 2021, and ~~were issued in accordance with their respective agreements. All vested awards were paid in common stock.~~

~~During the three-month period ended December 30, 2017, restricted stock units and performance units representing 54,602 and 92,068 shares of our common stock, respectively, vested~~50,000 are eligible to vest upon the filing of our Annual Report on Form ~~10-K~~10-K for the fiscal year ending October 1, 2022. All units are payable in common stock.

On February 5, 2020, restricted stock units representing 74,000 shares of our common stock were granted under the 2010 Stock Plan and are eligible to vest upon the filing of our Annual Report on Form 10-K for the fiscal year ending October 1, 2022 and are payable in common stock.

During the three months ended ~~September 30, 2017,~~December 28, 2019, restricted stock units and performance units, each consisting of 66,000 shares of our common stock, were ~~issued in accordance with their respective agreements.~~ granted under the 2010 Stock Plan and are eligible to vest upon the filing of our Annual Report on Form 10-K for the fiscal year ending October 2, 2021. One-half of the restricted stock units ~~were paid~~and one-half of the performance units are payable in common stock ~~and one-half were paid in cash. Of~~with the ~~performance units, 72,138 were paid in common stock and 19,930 were paid~~remainder payable in cash.

As of June ~~29, 2019~~27, 2020, there was ~~$1.7~~$4.5 million of total unrecognized compensation cost related to unvested awards granted under the 2010 Stock Plan. This cost is expected to be recognized over a period of ~~1.5~~2.4 years.

Note I—J—Purchase Contracts

We have entered into agreements, and have fixed prices, to purchase yarn, finished fabric, and finished apparel and headwear products. At June ~~29, 2019~~27, 2020, minimum payments under these contracts were as follows (in thousands):

Yarn	$	31,824
Finished fabric		2,772
Finished products		6,362
	$	40,958

Yarn
$ 21,866
Finished fabric
3,061
Finished products
10,716
$ 35,643

~~Table of Contents~~

Note J—K—Business Segments

~~We operate our business~~Our operations are managed and reported in two segments, ~~the~~ Delta Group and the Salt Life Group. During fiscal year 2018, we made a strategic decision to re-align our business into segments that better reflect our operating model and allow us to better leverage and more efficiently manage our cost structure as we plan future growth. With this re-alignment, we changed and renamed our reportable segments to reflect how our Chief Operating Decision Maker and management currently make financial decisions and allocate resources. We report our results under the Delta Group, comprising our Delta Activewear, DTG2Go and Soffe business units, and the Salt Life Group, ~~comprising~~which reflect the manner in which the business is managed and results are reviewed by the Chief Executive Officer, who is our Salt Life and Coast business units. Although the two segments are similar in their production processes and regulatory environments, they are distinct in their economic characteristics, products, marketing, and distribution methods.chief operating decision maker.

The Delta Group is comprised of our business units primarily focused on core activewear styles, and includes our Delta Activewear ~~(which includes~~(encompassing our Delta Catalog and ~~FunTees)~~FunTees businesses), Soffe, and DTG2Go business units. We market, distribute and manufacture unembellished knit apparel under the main brands of Soffe^®, Delta Platinum, Delta Pro Weight^®, and Delta Magnum Weight^® for sale to a diversified audience ranging from large licensed screen printers to small independent businesses. Through our FunTees business, we serve our customers as their supply chain partner, from product development to shipment of their branded products, with the majority of products sold with value-added services including embellishment, hangers, hangtags and ticketing, so that they are ready for retail sale to the end consumers. We assist our customers in managing their production and inventory needs and provide technology tools to help them manage and grow their business. We sell our products to a diversified audience, including sporting goods retailers, large licensed screen printers, specialty and resort stores, and ad-specialty and promotional products ~~businesses, the U.S. military and others.~~businesses. We also ~~manufacture private label products for~~service major branded sportswear companies, trendy regional brands, retailers, and ~~sports licensed~~sports-licensed apparel marketers. ~~Typically, our private label products are sold with value-added services such as hangtags, ticketing, hangers, and embellishment so that they are fully ready for retail. Using~~Our DTG2Go business is a market leader in the direct-to-garment digital print ~~equipment~~ and fulfillment industry, bringing technology and innovation to the supply chain of our many customers. We use highly-automated factory processes and our proprietary software to deliver on-demand, digitally printed apparel direct to consumers on behalf of our customers. Utilizing its ~~proprietary technology,~~ seven fulfillment facilities throughout the United States, DTG2Go ~~embellishes garments~~ offers a robust digital supply chain to ~~create private label,~~ship custom ~~decorated apparel servicing~~graphic products typically within 24 to 48 hours to consumers in the ~~fast-growing e-retailer channels, as well as the ad-specialty, promotional products, screen print, traditional retail, social media,~~United States and ~~licensed apparel marketplaces, among others.~~to over 100 countries worldwide.

The Salt Life Group is comprised of our lifestyle brands focused on a broad range of apparel garments, headwear and related accessories to meet consumer preferences and fashion trends, and includes our Salt Life and Coast business units. These products are sold through specialty and boutique shops, traditional department stores, and outdoor retailers, as well as direct-to-consumer through branded ecommerce sites and branded retail stores. Products in this segment are marketed under our lifestyle brands of Salt ~~Life~~^®Life® and ~~COAST~~^®.COAST®, as well as other labels.

Our ~~Chief Operating Decision Maker~~chief operating decision maker and management evaluate performance and allocate resources based on profit or loss from operations before interest, income taxes and special charges ("segment operating ~~income"~~earnings"). Our segment operating income may not be comparable to similarly titled measures used by other companies. The accounting policies of our reportable segments are the same as those described in Note 2 in our Annual Report on Form ~~10-K~~10-K for the fiscal year ended September ~~29, 2018~~, 28, 2019, filed with the SEC. Intercompany transfers between operating segments are transacted at cost and have been eliminated within the segment amounts shown in the following table (in thousands).

	Three Months Ended				Nine Months Ended				*Three Months Ended*					*Nine Months Ended*
	June 29, 2019		June 30, 2018		June 29, 2019		June 30, 2018		*June 27, 2020*			*June 29, 2019*		*June 27, 2020*			*June 29, 2019*
Segment net sales:
Delta Group	$	107,409	$	102,107	$	291,325	$	272,157	$	65,543		$	107,409	$	238,685		$	291,325
Salt Life Group		11,851		10,075		32,448		30,371		6,258			11,851		25,666			32,448
Total net sales	$	119,260	$	112,182	$	323,773	$	302,528	$	71,801		$	119,260	$	264,351		$	323,773

Segment operating income:
Segment operating (loss) income:
Delta Group ⁽¹⁾	$	9,248	$	9,137	$	15,393	$	19,337	$	(17,468	)	$	9,247	$	(5,133	)	$	15,392
Salt Life Group ⁽²⁾		2,596		1,085		5,608		4,295		(628	)		2,597		175			5,609
Total segment operating income	$	11,844	$	10,222	$	21,001	$	23,632
Total segment operating (loss) income									$	(18,096	)	$	11,844	$	(4,958	)	$	21,001

⁽¹⁾⁽¹⁾For the three-months and nine-months ended June 27, 2020, the Delta Group operating (loss) income included $23.1 million and $25.0 million, respectively, of expenses related to the COVID-19 pandemic. For the firstthree months of fiscal 2020, these costs primarily related to the curtailment of manufacturing operations ($9.8 million), incremental costs to right size production to new forecasted demand ($2.6 million), increased accounts receivable and inventory reserves related to the heightened risks in the market as the U.S. continues its recovery ($6.6 million), and other expenses ($4.1 million). These costs are included within net sales ($0.5 million), cost of goods sold ($12.1 million), SG&A expenses ($2.4 million), and other loss (income), net ($8.1 million). The firstnine months of fiscal 2020 includes an additional $1.9 million of costs related to the curtailment of manufacturing operations in cost of goods sold. In the quarter ended December 29, 2018, the Delta Group operating income included $2.5 million of expense incurred in connection with the settlement of litigation related to the 2016 bankruptcy filing of ~~The Sports Authority. See Note M - Legal Proceedings.~~a customer.

⁽²⁾⁽²⁾In the quarter ended June 29, 2019, the Salt Life Group operating income included ~~a discrete gain of~~ $1.3 million ~~realized from~~in other income as the ~~settlement~~result of a ~~commercial~~ litigation ~~matter.~~ settlement.

~~Table of Contents~~

The following table reconciles the segment operating income to the consolidated ~~income~~(loss) earnings before provision for income taxes (in thousands):

	Three Months Ended				Nine Months Ended				*Three Months Ended*					*Nine Months Ended*
	June 29, 2019		June 30, 2018		June 29, 2019		June 30, 2018		*June 27, 2020*			*June 29, 2019*		*June 27, 2020*			*June 29, 2019*
Segment operating income	$	11,844	$	10,222	$	21,001	$	23,632
Segment operating (loss) income									$	(18,096	)	$	11,844	$	(4,958	)	$	21,001
Unallocated corporate expenses		3,508		3,554		9,930		9,613		3,492			3,508		10,438			9,930
Unallocated interest expense		1,989		1,522		5,739		4,207		1,710			1,989		5,320			5,739
Consolidated income (loss) before provision for income taxes	$	6,347	$	5,146	$	5,332	$	9,812
Consolidated (loss) earnings before provision for income taxes									$	(23,298	)	$	6,347	$	(20,716	)	$	5,332

The Delta Group segment assets have increased by ~~$32.7~~$17.2 million since September ~~29, 2018~~, 28, 2019, to ~~$316.6~~$332.9 million as of June ~~29, 2019~~27, 2020, primarily as a result of ~~our recent digital print acquisition as well as increases~~the adoption of ASU 2016-02 which were partially offset by decreases in working capital due to the seasonality of the ~~business. See Note D—Acquisitions for further information on our recent digital print acquisition.~~business and lower production due to the COVID-19 pandemic. The Salt Life Group segment assets have increased by ~~$6.1~~$9.0 million since September ~~29, 2018~~28, 2019, to ~~$61.1~~$66.5 million as of June ~~29, 2019~~27, 2020, primarily due ~~to higher receivables.~~the adoption of ASU 2016-02.

Note K—L—Income Taxes

The Tax Cuts and Jobs Act of 2017 (the “New Tax Legislation”) was enacted on December 22, 2017, which significantly revised the U.S. corporate income tax code by, among other things, lowering federal corporate income tax rates, implementing a modified territorial tax system and imposing a repatriation tax ("transition tax") on deemed repatriated cumulative earnings of foreign ~~subsidiaries. The New Tax Legislation created, among other things, a new requirement that certain income earned by controlled foreign corporations (“CFCs”) must~~subsidiaries which will be ~~included currently in the gross income of the CFCs’ U.S. shareholder.~~paid over eight years. In addition, new taxes were imposed related to foreign income, including a tax on global intangible low-taxed income (“GILTI”) as well as a limitation on the deduction for business interest expense (“Section ~~163(j)~~163(j)")".

GILTI is the excess of the shareholder’s net ~~CFC~~controlled foreign corporations ("CFC") net tested income over the net deemed tangible income. GILTI income is eligible for a deduction of up to 50% of the income inclusion, but the deduction is limited to the amount of U.S. adjusted taxable income. The Section ~~163(j)~~163(j) limitation does not allow the amount of deductible interest to exceed the sum of the taxpayer's business interest income or 30% of the taxpayer’s adjusted taxable income ~~and the taxpayer’s floor plan financing interest expense~~ for the year. We have included in our calculation of our effective tax rate the estimated impact of GILTI and Section ~~163(j).~~163(j) which were effective for us beginning in fiscal year 2019. We have elected to account for the tax on GILTI as a period cost and, therefore, do not record deferred taxes related to GILTI on our foreign subsidiaries.

~~In the quarter ended December 30, 2017, when~~The Coronavirus Aid, Relief, and Economic Security (“CARES Act”), which was enacted on March 27, 2020, provided temporary changes to income and non-income-based tax laws, including some provisions which were previously enacted under the New Tax ~~Legislation was enacted, we made reasonable estimates~~Legislation. The CARES Act revised the U.S. corporate income tax code on a temporary basis by, among other things, eliminating the 80% of taxable income limitation on net operating loss (“NOL”) carryforwards, allowing NOL carrybacks, and increasing the ~~effects on our existing deferred tax balances and~~Section 163(j) interest limitation deduction from 30% to 50% of adjusted taxable income. We have included the ~~transition tax, recording $10.6 million~~estimated impact of ~~tax expense based on an estimate of our total earnings and profits (E&P) from our foreign subsidiaries which were previously deferred from U.S. taxes. During the quarter ended~~ ~~September 29, 2018, we increased the provisional amount by $0.1 million based on our E&P study resulting in $10.7 million recorded~~these provisions in our ~~2018 fiscal year. The transition~~effective tax ~~will be paid over eight years. The transitional tax was finalized during the first quarter of fiscal year 2019 and is no longer considered provisional.~~rate calculation.

Our effective income tax rate on operations for the nine-month period ended June ~~29, 2019~~, 27, 2020, was 23.6% compared to a rate of 16.8%~~. For~~ in the ~~nine-month~~same period ~~ended~~ ~~June 30, 2018, our~~of the prior year and an effective ~~income tax~~ rate ~~excluding the $10.6 million provision related to the New Tax Legislation, was 10.5%. Our effective income tax rate on operations~~of 5.5% for ~~the~~ fiscal year ~~ended~~ ~~September 29, 2018, excluding the $10.7 million provision related to the New Tax Legislation, was a benefit of 1.7%.~~

2019.We intend to reinvest all of our unremitted earnings of our foreign subsidiaries and therefore, outside of the transition tax mentioned previously, we have provided no provision for income taxes which may result from withholding taxes and/or other outside basis differences. We believe that the determination of such income taxes is impracticable.

Wegenerally benefit from having income in foreign jurisdictions that are either exempt from income taxes or have tax rates that are lower than those in the United States. Based on our current projected pre-tax income and the anticipated amount of U.S. taxable income compared to profits in the offshore taxable and tax-free jurisdictions in which we operate, our estimated annual income tax rate for the fiscal year ending September 28, 2019, is currently expected to be approximately 17%-19%. However,As such, changes in the mix of U.S. taxable income compared to profits in tax-free or lower-tax jurisdictions can have a significant impact on our overall effective tax rate. Furthermore, we may be limited in our ability to deduct 50% of applicable foreign earnings under the GILTI income inclusion or to deduct U.S. interest expense based on anticipated lower U.S. taxable income due to the COVID-19 pandemic. In addition, the ~~final~~future impact of the CARES Act and New Tax Legislation may differ from ~~our estimates,~~historical amounts, possibly materially, due to, among other things, changes in interpretations ~~additional regulatory~~and assumptions made regarding the CARES Act and New Tax Legislation, guidance that may be issued, ~~additional information that may become available to us,~~ and actions we may take as a result of the CARES Act and New Tax Legislation.

We file income tax returns in the U.S. federal jurisdiction and various state, local and foreign jurisdictions. Tax years 2015, 2016, and 2017, according to statute and with few exceptions, remain open to examination by various federal, state, local and foreign jurisdictions.

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Note L—M—Derivatives and Fair Value Measurements

From time to time, we may use interest rate swaps or other instruments to manage our interest rate exposure and reduce the impact of future interest rate changes. These financial instruments are not used for trading or speculative purposes. We have designated our interest rate swap contracts as cash flow hedges of our future interest payments. As a result, the gains and losses on the swap contracts are reported as a component of other comprehensive income and are reclassified into interest expense as the related interest payments are made. ~~All components~~As of June 27, 2020, all of other comprehensive income ~~are~~was attributable to ~~shareholders. As of~~ ~~June 29, 2019, there are no components~~shareholders; none related to the non-controlling interest. Outstanding instruments as of June ~~29, 2019~~27, 2020, are as follows:

		**~~Notational~~Notional**
	*Effective Date*	*Amount*	*Fixed LIBOR Rate*		*Maturity Date*
Interest Rate Swap	July 19, 2017	$10.0 million	~~1.74%~~1.99%		~~July 19, 2019~~May 10, 2021
Interest Rate Swap	July ~~19, 2017~~25, 2018	~~$10.0 million~~	~~1.99%~~		~~May 10, 2021~~
~~Interest Rate Swap~~	~~July 25, 2018~~	$20.0 million		3.18%		July 25, 2023

The following table summarizes the fair value and presentation in the Condensed Consolidated Balance Sheets for derivatives related to our interest swap agreements as of June 27, 2020, and September 28, 2019 (in thousands):

	June 27,			September 28,
	2020			2019
Deferred tax liabilities	$	481		$	324
Accrued expenses		(145)			—
Other non-current liabilities		(1,766	)		(1,293	)
Accumulated other comprehensive loss	$	(1,430	)	$	(969	)

From time to time, we may purchase cotton option contracts to economically hedge the risk related to market fluctuations in the cost of cotton used in our operations. We do not receive hedge accounting treatment for these derivatives. As such, the realized and unrealized gains and losses associated with them are recorded within cost of goods sold on the Condensed Consolidated Statement of Operations. No such cotton contracts were outstanding at June 27, 2020, or September 28, 2019.

ASC 820,Fair Value Measurements and Disclosures (“ASC 820”), defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Assets and liabilities measured at fair value are grouped in three levels. The levels prioritize the inputs used to measure the fair value of the assets or liabilities. These levels are:

○

~~FASB Codification No. 820,~~ ~~Fair Value Measurements and Disclosures~~ (“ASC 820”), defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Assets and liabilities measured at fair value are grouped in three levels. The levels prioritize the inputs used to measure the fair value of the assets or liabilities. These levels are:

	○	Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.

	○	Level 2 – Inputs other than quoted prices that are observable for assets and liabilities, either directly or indirectly. These inputs include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are less active.

	○	Level 3 – Unobservable inputs that are supported by little or no market activity for assets or liabilities and includes certain pricing models, discounted cash flow methodologies and similar techniques.

The following financial ~~assets (liabilities)~~liabilities are measured at fair value on a recurring basis (in thousands):

Fair Value Measurements Using

Quoted Prices in

Significant Other

Significant

Active Markets for

Observable

Unobservable

Identical Assets

Inputs

Inputs

Period Ended

Total

(Level 1)

(Level 2)

(Level 3)

Interest Rate Swaps

June 29, 2019
$ (1,184 ) — $ (1,184 ) —
September 29, 2018
183 — 183 —

Cotton Options

June 29, 2019
$ — — — —
September 29, 2018
(110 ) (110 ) — —

Contingent Consideration

June 29, 2019
$ (9,394 ) — — $ (9,394 )
September 29, 2018
(10,542 ) — — (10,542 )

	*Fair Value Measurements Using*
				*Quoted Prices in*		*Significant Other*			*Significant*
				*Active Markets for*		*Observable*			*Unobservable*
				*Identical Assets*		*Inputs*			*Inputs*
Period Ended	*Total*			*(Level 1)*		*(Level 2)*			*(Level 3)*
Interest Rate Swaps
June 27, 2020	$	(1,911	)		—	$	(1,911	)		—
September 28, 2019	$	(1,293	)		—	$	(1,293	)		—

Contingent Consideration
June 27, 2020	$	(6,781	)		—		—		$	(6,781	)
September 28, 2019	$	(9,094	)		—		—		$	(9,094	)

The fair value of the interest rate swap agreements was derived from a discounted cash flow analysis based on the terms of the contract and the forward interest rate curves adjusted for our credit risk, which fall in Level 2 of the fair value hierarchy. At June ~~29,~~27, 2020 and September 28, 2019,, book value for fixed rate debt approximates fair value based on quoted market prices for the same or similar issues or on the current rates offered to us for debt of the same remaining maturities (a Level 2 fair value measurement).

~~Table~~

The DTG2Go acquisition purchase price consisted of ~~Contents~~

additional payments contingent on the combined business’s achievement of certain performance targets related to sales and earnings before interest, taxes, depreciation and amortization ("EBITDA") for the period from April 1, 2018, through September 29, 2018, as well as for our fiscal years 2019,2020,2021 and 2022.The ~~following table summarizes~~valuation of the fair value of the contingent consideration is based upon inputs into the Monte Carlo model, including projected results, which then are discounted to a present value to derive the fair value. The fair value of the contingent consideration is sensitive to changes in our projected results and ~~presentation~~discount rates. At September 28, 2019, the fair value of contingent consideration was estimated at $8.9 million. During the nine-months ended June 27, 2020, $2.5 million was paid related to the 2019 period. As of June 27, 2020, we estimate the fair value of contingent consideration to be $6.8 million, a $0.4 million increase, excluding the $2.5 million payment, from September 28, 2019, resulting from changes in the ~~Condensed Consolidated Balance Sheets for derivatives related~~projections and adjustments to ~~our interest swap agreements as of~~ ~~June 29, 2019, and~~ ~~September 29, 2018~~ ~~(in thousands):~~the discount rate.

June 29,

September 29,

2019

2018

Other assets
$ — $ 182
Deferred tax assets
297 (46
)
Other non-current liabilities
(1,184 ) —
Accumulated other comprehensive (loss) income
$ (887 ) $ 136

In August 2013, we acquired Salt Life, ~~and issued~~which included contingent consideration as part of the purchase price and which is payable in cash after the end of calendar year 2019 if financial performance targets involving the sale of Salt Life-branded products are met during the 2019 calendar year. ~~We used~~During fiscal year 2020, it was determined that the calendar year 2019 performance targets were not achieved and, as a ~~Monte Carlo model utilizing~~result, the ~~historical results and projected cash flows based on the contractually defined terms, discounted~~$0.2 million accrual as ~~necessary, to estimate the fair value~~ of ~~the~~September 28, 2019, was reversed. At June 27, 2020, no amount was accrued for contingent consideration ~~for Salt Life at the acquisition date as well as to remeasure the contingent consideration related~~in relation to the acquisition of Salt ~~Life at each reporting period. Accordingly, the fair value measurement for contingent consideration falls in Level 3 of the fair value hierarchy.~~Life.

Note N—Legal Proceedings

At~~June 29, 2019, we had $0.2 million accrued in contingent consideration related to the Salt Life acquisition, a $1.1 million reduction from the accrual at~~ ~~September 29, 2018~~. The reduction in the fair value of contingent consideration is recorded in other income and is based on the inputs into the Monte Carlo model, including the time remaining in the measurement period and our expectations of sales in calendar year 2019 which have been reduced based on our current view of the retail environment.

On March 9, 2018, we acquired Teeshirt Ink, Inc. d/b/a DTG2Go. The purchase price consisted of $16.6 million in cash and additional contingent consideration based on achievement of certain performance targets related to sales and EBITDA for the period from April 1, 2018, through ~~September 29, 2018~~, as well as for our fiscal years 2019, 2020, 2021 and 2022. In the second quarter of fiscal year 2019, in accordance with the purchase agreement, contingent consideration of $0.6 million was paid to the sellers for the earn-out period from April 1, 2018, through ~~September 29, 2018. During the nine-months ended June 29, 2019, we expensed $0.6 million to increase the contingent consideration primarily driven from the time value from the discount period.~~

At ~~June 29, 2019, we had a total of $9.4 million accrued in contingent consideration, a $1.1 million decrease from the accrual at~~ ~~September 29, 2018~~. The decrease is driven by the $0.6 million payment made during the second fiscal quarter along with a $0.5 million decrease in the accrual which is recorded in other income. The fair value of contingent consideration is based on the inputs into the Monte Carlo model, including the time remaining in the measurement period. Accordingly, the fair value measurement for contingent consideration falls in Level 3 of the fair value hierarchy.

~~Note M—Legal Proceedings~~

~~The Sports Authority Bankruptcy Litigation~~

Soffe was previously involved in several related litigation matters stemming from The Sports Authority's ("TSA") March 2, 2016, filing of a voluntary petition(s) for relief under Chapter 11 of the United States Bankruptcy Code (the "TSA Bankruptcy"). Prior to such filing, Soffe provided TSA with products to be sold on a consignment basis pursuant to a "pay by scan" agreement and the litigation matters related to Soffe's interest in the products it provided TSA on a consignment basis (the "Products") and the proceeds derived from the sale of such products (the "Proceeds").

TSA Stores, Inc. and related entities TSA Ponce, Inc. and TSA Caribe, Inc. filed an action against Soffe on March 16, 2016, in the United States Bankruptcy Court for the District of Delaware (the "TSA Action") including requests for declaratory judgment on a variety of matters related to the Products and Proceeds as well as several related claims. TSA lender Wilmington Savings Fund Society, FSB, as Successor Administrative and Collateral Agent ("WSFS"), intervened in the TSA Action seeking declaratory judgment on a variety of matters related to the Products and Proceeds and including several related claims. Soffe subsequently asserted counterclaims against WSFS in the TSA Action seeking declaratory judgment on a variety of matters related to the Products and Proceeds.

On November 26, 2018, the court issued an order in favor of WSFS with respect to its claimed interest in the majority of the Products and Proceeds. Soffe, WSFS, TSA Stores, Inc., TSA Ponce, Inc. and TSA Caribe, Inc. subsequently reached agreement to settle the above-referenced matters, with Soffe agreeing to pay approximately $2.5 million in exchange for a comprehensive release of all claims at issue in the matters. These matters have now been finally resolved, with the agreed amounts funded on December 31, 2018. We recorded the settlement expense in other expense, net in our Condensed Consolidated Statement of Operations for the three-month period ended December 29, 2018.

~~In addition to the foregoing, at~~ times we are party to various legal claims, actions and complaints. We believe that, as a result of legal defenses, insurance arrangements, and indemnification provisions with parties believed to be financially capable, such actions should not have a material adverse effect on our operations, financial condition, or liquidity.

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~~Table of Contents~~

Note N—O—Repurchase of Common Stock

As of September ~~29, 2018~~, 28, 2019, our Board of Directors authorized management to use up to $60.0 million to repurchase stock in open market transactions under our Stock Repurchase Program.

~~During the~~ Through June ~~quarter of fiscal year 2019, we purchased 14,000 shares of our common stock for a total cost of $0.3 million. Through~~ ~~June 29, 2019~~27, 2020, we have purchased ~~3,498,962~~3,598,933 shares of our common stock for an aggregate of ~~$50.5~~$52.5 million ~~since the inception of~~under our Stock Repurchase ~~Program.~~Program since its inception. All purchases were made at the discretion of management and pursuant to the safe harbor provisions of SEC Rule ~~10b-18.~~10b-18. As of June ~~29, 2019~~27, 2020, ~~$9.5~~$7.5 million remained available for future purchases under our Stock Repurchase Program, which does not have an expiration date. During March 2020, we temporarily suspended share repurchases in an effort to preserve liquidity during the COVID-19 pandemic.

~~The following table summarizes the purchases of our common stock for the quarter ended~~ ~~June 29, 2019~~:

Period

Total Number of Shares Purchased

Average Price Paid per Share

Total Number of Shares Purchased as Part of Publicly Announced Plans

Dollar Value of Shares that May Yet Be Purchased Under the Plans
March 31, 2019 to May 4, 2019
— — —
$9.9 million
May 5, 2019 to June 1, 2019
14,000 $ 21.97 14,000
9.5 million
June 2, 2019 to June 29, 2019
— — —
9.5 million
Total
14,000 $ 21.97 14,000
$9.5 million

Note O—P—Goodwill and Intangible Assets

Components of intangible assets consist of the following (in thousands):

	June 29, 2019							September 29, 2018								June 27, 2020							September 28, 2019
	Cost		Accumulated Amortization			Net Value		Cost		Accumulated Amortization			Net Value		Economic Life	Cost		Accumulated Amortization			Net Value		Cost		Accumulated Amortization			Net Value		Economic Life

Goodwill	$	37,897	$	—		$	37,897	$	33,217	$	—		$	33,217	N/A	$	37,897	$	—		$	37,897	$	37,897	$	—		$	37,897	N/A

Intangibles:
Tradename/trademarks	$	16,090	$	(3,143	)	$	12,947	$	16,090	$	(2,736	)	$	13,354	20 – 30 yrs	$	16,090	$	(3,685	)	$	12,405	$	16,090	$	(3,278	)	$	12,812	20 – 30 yrs
Customer relationships		7,400		(808	)		6,592		4,500		(253	)		4,247	8 – 10 yrs		7,400		(1,548	)		5,852		7,400		(993	)		6,407	8 – 10 yrs
Technology		1,720		(1,243	)		477		1,720		(1,105	)		615	10 yrs		1,720		(1,365	)		355		1,720		(1,289	)		431	10 yrs
License agreements		2,100		(604	)		1,418		2,100		(527	)		1,573	15 – 30 yrs		2,100		(707	)		1,393		2,100		(630	)		1,470	15 – 30 yrs
Non-compete agreements		1,657		(1,110	)		625		1,637		(928	)		709	4 – 8.5 yrs		1,657		(1,321	)		336		1,657		(1,170	)		487	4 – 8.5 yrs
Total intangibles	$	28,967	$	(6,908	)	$	22,059	$	26,047	$	(5,549	)	$	20,498		$	28,967	$	(8,626	)	$	20,341	$	28,967	$	(7,360	)	$	21,607

Goodwill was recorded in conjunction with our acquisitions of Salt Life and DTG2Go businesses and represents the acquired goodwill, net of the $0.6 million cumulative impairment losses recorded in fiscal year 2011. ~~The goodwill recorded on our financial statements is included in both of our segments, with $18.0 million~~ At June 27, 2020, the Salt Life reporting unit within the Salt Life Group segment and ~~$19.9 million included in~~DTG2Go reporting unit within the Delta Group segment had goodwill of $19.9 million and $18.0 million, respectively. We evaluate the carrying value of goodwill annually on the first day of our third fiscal quarter or more frequently if events or circumstances indicate that an impairment loss may have occurred. Such circumstances could include, but are not limited to, a significant adverse change in business climate, increased competition or other economic conditions.

As of March 29, 2020, we performed our annual goodwill impairment evaluation and concluded that the goodwill for the Salt Life ~~Group, respectively.~~

~~On October 8, 2018, we acquired substantially~~and DTG2Go reporting units were not impaired. The goodwill impairment testing process involved the use of significant assumptions, estimates and judgments with respect to a variety of factors, including projected sales, gross margins, selling, general and administrative expenses, capital expenditures and cash flows and the selection of an appropriate discount rate, all of which are subject to inherent uncertainties and subjectivity. Our assumptions were based on annual business plans and other forecasted results as well as the ~~assets~~selection of ~~Silk Screen Ink, Ltd. d/b/~~a ~~SSI Digital Print Services. See Note D—Acquisitions.~~discount rate, all of which we believe represent those of a market participant. We ~~have identified certain~~also believe these assumptions are reflective of the current macro-economic environment, including our best estimate of the impacts of the recent COVID-19 pandemic. Although we are aggressively managing our response to the pandemic, its impact on the Salt Life and DTG2Go reporting units' full year fiscal 2020 and beyond results and cash flows is uncertain. We believe that the most significant elements of uncertainty are the intensity and duration of the impact on retailers as well as the ability of our customers, supply chain, and distribution to operate with minimal disruption for the remainder of fiscal 2020 and beyond, all of which could negatively impact the reporting units' financial position, results of operations, and cash flows. Given the current macro-economic environment and the uncertainties regarding its potential impact on our business, there can be no assurance that our estimates and assumptions used in our impairment tests will prove to be accurate predictions of the future. If our assumptions regarding fair value are not achieved, it is possible that an impairment review may be triggered and goodwill or other intangible assets ~~associated with the acquisition, including technology, customer relationships, non-compete agreements and goodwill. While we are still~~may be impaired in the process of finalizing the valuations of the intangible assets acquired, we provisionally valued goodwill associated with SSI at $4.7 million, and customer relationships and non-compete agreements at $2.9 million.a future period.

Amortization expense for intangible assets was $0.4 million for the ~~three-month~~three-month periods ended June 27, 2020, and June 29, 2019, respectively, and ~~June 30, 2018. Amortization expense for intangible assets was~~$1.3 million and $1.4 million for the nine-month ~~period~~periods ended June 27, 2020, and June 29, 2019,~~, and $0.9 million for the~~ ~~nine-month period ended~~ ~~June 30, 2018~~.respectively. Amortization expense is estimated to be approximately ~~$2.0~~$1.7 million for fiscal year ~~2019, $1.8 million for fiscal year~~ 2020, ~~and $1.7~~ $1.6 million for each of fiscal years 2021 ~~2022~~ and ~~2023.~~2022, $1.5 million for fiscal year 2023, and approximately $1.4 million for fiscal year 2024.

~~Note P—Subsequent Events~~

~~None~~

Note Q—Subsequent Events

None.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Note Regarding Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of the Company. We may from time to time make written or oral statements that are “forward-looking,” including statements contained in this report and other filings with the SEC, in our press releases, and in other reports to our shareholders. All statements, other than statements of historical fact, which address activities, events or developments that we expect or anticipate will or may occur in the future are forward-looking statements. The words “plan”, “estimate”, “project”, “forecast”, “anticipate”, “expect”, “intend”, “seek", “believe”, “may”, “should” and similar expressions, and discussions of strategy or intentions, are intended to identify forward-looking statements.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on our current expectations and are necessarily dependent upon assumptions, estimates and data that we believe are reasonable and accurate but may be incorrect, incomplete or imprecise. Forward-looking statements are subject to a number of business risks and inherent uncertainties, any of which could cause actual results to differ materially from those set forth in or implied by the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in forward-looking statements include, among others, the following:

	•	the volatility and uncertainty of cotton and other raw material ~~prices;~~prices and availability;
	•	the general U.S. and international economic conditions;
	•	the COVID-19 pandemic impact on our operations, financial condition, liquidity, and capital investments:
	•	the competitive conditions in the apparel industry;
	•	restrictions on our ability to borrow capital or service our indebtedness;
	•	deterioration in the financial condition of our customers and suppliers and changes in the operations and strategies of our customers and suppliers;
	•	our ability to predict or react to changing consumer preferences or trends;
	•	our ability to successfully open and operate new retail stores in a timely and cost-effective manner;
	•	changes in economic, political or social stability at our offshore locations;
	•	significant interruptions or disruptions within our manufacturing, distribution or other operations;
	•	our ability to attract and retain key management;
	•	significant changes in our effective tax rate;
	•	interest rate fluctuations increasing our obligations under our variable rate indebtedness;
	•	the ability to raise additional capital;
	•	the ability to grow, achieve synergies and realize the expected profitability of acquisitions;
	•	the volatility and uncertainty of energy, fuel and related costs;
	•	material disruptions in our information systems related to our business operations;
	•	compromises of our data security;
	•	significant litigation in either domestic or international jurisdictions;
	•	recalls, claims and negative publicity associated with product liability issues;
	•	the ability to protect our trademarks and other intellectual property;
	•	the impairment of acquired intangible assets;
	•	changes in international trade regulations;
	•	our ability to comply with trade regulations;
	•	changes in employment laws or regulations or our relationship with employees;
	•	foreign currency exchange rate fluctuations;
	•	negative publicity resulting from violations of manufacturing standards or labor laws or unethical business practices by our suppliers and independent contractors;
	•	the illiquidity of our shares; and
	•	price volatility in our shares and the general volatility of the stock market.

A detailed discussion of significant risk factors that have the potential to cause actual results to differ materially from our expectations is set forth in Item 1A of this report entitled "Risk Factors" in this Form 10-Q and in Part 1 under the subheading "Risk Factors" in our Annual Report on Form 10-K for our fiscal year ended September ~~29, 2018~~,28, 2019, filed with the SEC. Any forward-looking statements in this Quarterly Report on Form 10-Q do not purport to be predictions of future events or circumstances and may not be realized. Further, any forward-looking statements are made only as of the date of this Quarterly Report on Form 10-Q, and we do not undertake to publicly update or revise the forward-looking statements, except as required by the federal securities laws.

~~Table of Contents~~

Business Outlook

~~Business Outlook~~Our fiscal 2020 third quarter results were impacted by the COVID-19 pandemic, which halted retail in the U.S. beginning in mid-March through the first half of the quarter, as well as disrupted our offshore manufacturing plant operations for most of the quarter. Net sales were approximately 60% of net sales in the prior year quarter, with monthly sales performance sequentially accelerating from April sales at 33% of prior year to June sales tracking at nearly 90% of prior year levels.

We ~~were pleased~~are encouraged at the momentum experienced across our business segments as the third quarter progressed, which further validates our strategic advantages, including our diversification of sales channels, our broad geographic footprint, and the strong connection our Salt Life and Soffe brands have with consumers. During the third quarter, direct-to-consumer sales significantly increased, including ecommerce sales that more than doubled compared to ~~deliver overall~~prior year, led by sales growth of approximately 140% on the Salt Life ecommerce site and ~~earnings~~80% on the Soffe consumer site. We anticipate continued strength in orders from ecommerce channels, both on our branded consumer sites and our retail partners’ sites.

The June quarter delivered record non-holiday performance in the DTG2Go business, a market leader in the direct-to-garment digital print and fulfillment industry, which registered net sales growth for ~~our third~~the quarter ~~with both our Delta Group and Salt Life Group segments performing well. Our investments~~of 32%, including 38% year-over-year growth in ~~new manufacturing technologies, speed-to-market distribution strategies, and additional sales channels~~the month of June. We continue to ~~generate growth opportunities~~see impressive demand for our unique DTG2Go model. We are the only digital print supplier in the world that can offer a seamless, vertically-integrated solution, utilizing our proprietary software and internal supply chain to offer a fully-decorated, on-demand product shipped directly to the consumer, eliminating non-value added costs and reducing the risk of third-party supply chains. We see this as a tremendous competitive advantage. With the recent disruptions in supply chains and the inability for consumers to shop in traditional retail stores due to COVID-19, the benefits of our DTG2Go model have become apparent in the marketplace. We were able to continue operations, utilizing our network of facilities across the country, giving our ~~businesses~~existing customers, and ~~differentiate us from competitors. We expect to capitalize on this momentum and further accelerate our top and bottom-line performance as we bring our fiscal year to~~new customers, a ~~close.~~ source of expanded revenue during times when needed most.

~~Customer diversification remains~~To provide the expanded capacity needed for DTG2Go to meet the rapidly growing demands for our digital print model, we plan to open a ~~key strategic focus~~new integrated digital print and ~~our DTG2Go~~distribution facility in Phoenix, Arizona, combining DTG2Go’s digital print business ~~is taking advantage~~with Delta Apparel’s own supply of ~~exciting~~garments. The Phoenix facility will increase DTG2Go’s footprint to eight digital printing locations across the U.S., further expanding its one-day shipping reach to multiple markets, including Phoenix, Tucson, and into portions of southern California. As a part of the expansion, the Company plans to increase its fleet of digital printers by 10%, including adding eight new ~~opportunities in~~Kornit Atlas printers to Phoenix. Overall, the Phoenix facility gives DTG2Go the space to ultimately operate sixteen digital print machines, giving DTG2Go future expansion opportunities.

The Phoenix facility will join our network of U.S.-based distribution centers that have generally remained open and operational throughout the third quarter. We are committed to servicing our customers with same-day shipping, picking to the piece level, retail ready packaging and EDI support, and operate the majority of our business based on at-once orders. We maintain an inventory position at these distribution centers to service our customers’ needs.

During the latter half of the quarter, we saw orders accelerating and coming from a ~~variety~~broader base of ~~channels including its traditional e-retailer base. The adoption~~sales channels. Our Activewear business experienced sequential sales growth each month of ~~DTG2Go’s virtual inventory model~~the quarter, which included our Catalog business returning to sales growth in the ~~brick and mortar retailer channel demonstrates~~month of June compared to prior year driven by strength in the significant untapped potential for on-demand printing and fulfillment. We recently began offering customers in this channel the additional "retail-ready" service of affixing unique universal product codes (UPC) and other packaging options to products to allow a seamless customer experience with on-demand and in-store purchases. We see similar growth opportunities within other channels, including retail license, promotional products, large brands, screen printers, team uniforms and social media, as we continue to differentiate ourselves from competitors through not only value-added services but also our first-to-market adoption of polyester printing technology. To further solidify our leadership position in this area we are expanding our fulfillment footprint and capacity through the opening of two new facilities in New Jersey and Texas. These new facilities will continue our strategy of integrating DTG2Go’s on-demand platform with our Activewear business’s cost-effective blank garment supply in combined locations and also give DTG2Go the unique ability to reach over half of all U.S. consumers with one-day shipping, including the key New York City and Dallas metropolitan areas.

~~Market conditions in our core Activewear business are solid, with demand for our higher-margin Catalog fashion basics products and Western Hemisphere manufacturing platform continuing to accelerate.~~licensing channel. Our FunTees private label business remains on pace for record unit sales for the year and, as expected, profitability is improving as we move past the new customer start-up expenses and other costs impacting prior periods. Our emphasis on newdiversified sales channels ~~such as direct-to-retail and ecommerce, and~~coupled with cross-selling opportunities involving the DTG2Go and Soffe decoration platforms, ~~is driving~~should continue to drive new Catalog business. Our FunTees business ~~along with valuable~~was impacted by our El Salvador plant being closed for the majority of the quarter, although we were able to service several orders utilizing our Mexico facilities which were operational for several weeks during the quarter. We expect that our diversified customer ~~diversification. We anticipate more~~base within the FunTees business, as well as our new direct-to-retail programs, will provide a balanced growth ~~at Activewear as we further leverage our internal manufacturing capacity and build out our distribution network with unique, single-solution facilities integrated with DTG2Go’s digital printing.~~ strategy for this business.

~~We were pleased to see both top and bottom-line improvement from our Soffe~~The strength of the Salt Life brand with consumers was apparent during the ~~third quarter and believe there are~~quarter. Sales on the Salt Life branded consumer site more ~~opportunities for growth going forward. We are pursuing a variety of programs~~than doubled in the ~~military channel and look for conditions~~quarter compared to prior year. Following the opening of all our branded retail stores by the end of May 2020, we experienced same store sales increases of 5% compared to prior year. In addition, our newly opened stores generated approximately 50% incremental sales dollars compared to prior year. As our retail partners opened their stores in the ~~specialty channel~~latter half of the quarter, the Salt Life wholesale orders resumed, resulting in a 7% net sales growth for the Salt Life Group segment in June compared to remain solid going into the holiday season. The Soffe brand also continues to gain momentum with key ecommerce partners and the growth to date in direct-to-consumer sales from Soffe’s ecommerce and brick and mortar retail platforms indicates that the brand’s authenticity and heritage are resonating with consumers.prior year.

WeWhile our non-U.S. manufacturing operations were ~~pleased~~closed for most of the quarter, we are encouraged that by the end of June we had resumed production at all of our manufacturing plants. In accordance with ~~the strong double-digit sales growth in our Salt Life business during the third quarter, including expansion across all major sales channels. We expect the momentum~~local regulations, we have implemented strict safety protocols and will operate at Salt Life to continue as the brand expands geographically through growth with national and regional retailers, and to potentially escalate with several new key account opportunities on the horizon. The increasing penetration of Salt Life’s higher-priced performance products within both wholesale and direct-to-consumer channels and the success of brand extensions such as Salt Life Lager and Salt Life Food Shack restaurants continue to broaden the brand’s audience and lifestyle positioning. Salt Life Lager is now sold in Florida, Georgia, Alabama, Tennessee and South Carolina, and we expect it to be available in additional marketsa reduced capacity in the near ~~term. New Salt Life-branded brick~~term for the safety our employees and ~~mortar retail stores in Orlando~~to align our production levels with anticipated future business.

Our third quarter fiscal 2020 results included approximately $23.1 million of expenses associated with the impacts from the COVID-19 pandemic. These costs primarily related to the curtailment of our manufacturing operations, incremental costs to right size production to new forecasted demand, and ~~Key West, Florida are scheduled~~increased accounts receivable and inventory reserves related to ~~open~~the heightened risks in the ~~next few quarters, along with several more locations in Florida and South Carolina now under development, should also drive more consumer awareness and revenue for~~market as the ~~brand.~~U.S. continues its recovery. We anticipate incurring approximately $3 million of higher production expenses during the September quarter related to the start-up of manufacturing production.

~~Overall~~Our liquidity improved as the quarter progressed, resulting in a nearly 50% increase in our cash on hand and availability under our credit facility at June compared to the March levels. In April 2020, we ~~expect~~secured a bridge amendment to ~~see~~our U.S. revolving credit facility, which provides additional ~~sales~~flexibility and ~~earnings growth~~increased access to ~~finish~~ the ~~year, driven by~~availability provided under the ~~extensive new product development~~agreement. We continue to evaluate other available debt financing options that may be prudent.

During these unprecedented times, we are benefiting from our fully-integrated and ~~customer diversification efforts ongoing across our business.~~diversified business model. Our ~~focus on a broad range of go-to-market strategies supported by a flexible back-end platform~~business is recovering much quicker than we originally anticipated, and we believe this momentum will continue, allowing us to ~~internally manufacture the majority of~~return to profitability in our products and deliver them quickly with the retail customization and sophistication customers demand has us, we believe, in a uniquely strong position to capitalize on the shifting trends within retail.September quarter.

Results of Operations

Our financial results have been presented on a generally accepted accounting principles ("GAAP") basis and, in certain limited instances, we have presented our financial results on a GAAP and non-GAAP (“adjusted”) basis, which is further described in the sections entitled “Non-GAAP Financial Measures.”

Net sales for the ~~third~~June quarter were $71.8 million compared to sales of $119.3 million ~~up $7.1 million, or over 6%, from~~in the prior year period’s net sales of $112.2 million. DTG2Go continued its accelerated sales growth with an increase of 63% from the prior quarter. Organic growth as well as the acquisition of the SSI Digital Print business acquired in fiscal year 2019 drove this increase. Salt Life and Soffe had sales growth of approximately 18% and 3%, respectively, and Activewear sales were flat with the prior yearJune quarter. For the first nine months of ~~2019,~~2020, net sales ~~grew 7%~~were $264.4 million compared to $323.8 ~~million from $302.5 million~~million. The mid-March shutdowns in retail channels dramatically halted revenue until retail doors began to reopen in the ~~prior year. DTG2Go~~latter half of the June quarter.

Our direct-to-consumer sales channels, comprised of consumer-facing ecommerce sites and our branded retail stores, increased ~~153% to over $47 million, and Salt Life sales grew by 7% to over $30 million. These sales increases were partially offset by lower sales at Activewear and Soffe. Changes~~59% in the ~~private label product mix drove sales declines in Activewear although unit sales increased~~current quarter compared to the prior year ~~quarter. Soffe~~with sales ~~were hindered by declines~~more than doubling on our ecommerce platforms. Business-to-business ecommerce sales in the ~~military channel in the first half~~June 2020 quarter were approximately 60% of ~~the year, offsetting increases being achieved in other sales channels.~~

~~Our retail stores and ecommerce sales, including our B2C and B2B ecommerce sites, increased 120 and 70 basis points over the~~ prior year ~~three-month~~levels, consistent with the overall consolidated net sales results. Retail and ~~nine-month periods, respectively. The growth was driven by increased sales on our Soffe and Activewear ecommerce sites as well as at our Salt Life and Soffe retail stores. Retail and~~total ecommerce sales represented ~~8.7%~~12% and ~~7.7%~~10% of total revenues for the three-month and ~~nine-month~~nine-month periods ended June 27, 2020, compared to 8% for the three-month and nine-month periods ended June 29, 2019,, respectively.

Net sales in the Delta Group segment were $65.5 million compared to ~~7.5%~~$107.4 million in the prior year. The sales decreases in our Activewear and ~~7.0%~~Soffe businesses were partially offset by growth in our DTG2Go business, which grew by 32% over prior year from onboarding new customers as well as additional print volumes from existing customers. Our FunTees business was impacted by our El Salvador plant being closed for the majority of ~~total revenues~~the quarter, although we were able to service several orders from our Mexico facilities which were operational for several weeks during the quarter. Catalog sales continued to accelerate throughout the quarter and returned to sales growth in the month of June. Soffe direct-to-consumer web sales increased 80% over the prior year.

The Salt Life Group segment third quarter revenue was $6.3 million compared to $11.9 million in the prior year ~~periods, respectively.~~period. The segment was impacted by the temporary closure of retail, including our Salt Life branded retail stores. The wholesale business, as well as our own retail stores, began to accelerate in late May into June, leading to a 7% sales growth in June compared to prior year. Our direct-to-consumer web sales increased by nearly 140% from the prior year.

Gross margins were 4.2% compared to 20.8% in ~~our~~the prior year third quarter. Adjusting for $12.6 million of COVID-19 related expenses, gross margins would have been 21.6%, an 80 basis point improvement over the prior year and attributable to continued efficiencies and process improvements within the Delta Group segment’s integrated vertical manufacturing platform. For the first nine months of fiscal year 2020, gross margins were 16.4% compared to the prior year 19.2%. Adjusting for $14.5 million of COVID-19 expenses, gross margins would have been 21.9%, a 270 basis point improvement over the prior year 19.2%.

The Delta Group segment gross margins of 0.7% were unfavorably impacted by the $12.6 million of COVID-19 related expenses. Adjusting for these discrete impacts, gross margins would have been 19.7% during the June 2020 quarter, ~~expanded 240~~an improvement of 180 basis points from the ~~second quarter~~prior year. Gross margins for the first nine months of fiscal year 2020 were 13.4% compared to ~~20.8%, but declined from the 21.6%~~prior year of 16.0%. Adjusting for $14.5 million of year-to-date COVID impacts, gross margins ~~in the~~would have been 19.4%, an expansion of 340 basis points from prior year.

The Salt Life Group segment gross margins were ~~47.3%~~40.8% in the third quarter compared to ~~49.1%~~47.3% in the prior year ~~quarter due to a change~~quarter. Margins were impacted by increased product costs from recently-enacted tariffs and by fewer garments produced off-shore in the current quarter, partially offset by a higher sales mix of more profitable direct-to-consumer ecommerce and retail sales. ~~The Delta Group segment gross~~Gross margins ~~declined~~for the first nine months of fiscal year 2020 were 44.9% when compared to ~~17.9% from 18.9% in~~ the prior year ~~from the costs associated with the diversification of our private label products.~~ 48.0%.

Selling, general, and administrative expenses ("SG&A") were $15.2 million, or 21.2% of sales, compared to $17.9 million, ~~for the third fiscal quarter in both years, but down 100 basis points from the prior year to~~ 15.0% of sales, ~~as we continue to leverage our~~in the prior year. Adjusting for $2.4 million of COVID-related expenses, adjusted SG&A for the June quarter was $12.8 million or 17.7% of net sales. Expenses decreased due to lower variable selling costs ~~with~~as well as cost controls put in place, but expenses were higher as a percentage of sales ~~volumes.~~due to fixed costs on a lower sales base. SG&A for the first nine months was $51.1 million, or 19.3% of sales, compared to $51.8 million, or 16.0% of sales, in the prior year. Adjusting for $2.4 million of COVID-related expenses, adjusted SG&A for the first nine months of fiscal year 2020 was $48.7 million, or 18.4% of net sales.

~~Table~~

Driven from the growth being achieved and projected to continue in our digital print business, the change in the fair value of ~~Contents~~

contingent consideration associated with our DTG2Go acquisition was $1.2 million and included in other expense for the June quarter. Other ~~income includes~~expense also included $8.1 million of COVID-19 related expenses for the June quarter primarily related to incremental costs to right size production to new forecasted demand and increased inventory reserves related to the heightened risks in the market as the U.S. continues its recovery. The prior year included profits related to our Honduran equity method investment, valuation changes in our contingent consideration, a $1.3 million discrete gain realized from the settlement of a commercial litigation matter in the Salt Life Group segment, and other less significant items.

Operating profit in the third quarter was a loss of $21.6 million compared to income of $8.3 million in the prior year. Operating income, adjusted for discrete items, was $1.5 million for the current quarter compared to $7.0 million in the prior year. For the first nine months, the operating loss was $15.4 million compared to operating income of $11.1 million in the prior year. Adjusted operating income for the first nine months was $9.6 million compared to $12.2 million in the same period in the prior year.

The Delta Group segment incurred an operating loss in the current fiscal year quarter of $17.5 million or 26.7% of net sales, compared to $9.2 million of income or 8.6% of net sales in the prior year. Adjusting for $23.1 million of COVID-related expenses in the current year, operating income for the June quarter would have been $5.6 million of income or 8.5% of net sales. The decrease is attributable to lower sales volume, partially offset by gross margin expansion and cost controls. For the first nine months of fiscal year 2020, Delta Group segment incurred an operating loss of $5.1 million compared to operating income of $15.4 million in the prior year. When adjusted for $25.0 million of COVID-related expenses, the segment’s operating income for the first nine months was $19.9 million or 8.3% of net sales. When excluding the $2.5 million of unfavorable litigation settlement in the prior year, adjusted operating income for the first nine months of fiscal year 2019 was $17.9 million or 6.1% of net sales. The increase is attributable to gross margin expansion and cost controls, partially offset by lower sales volumes and the change in fair value of the DTG2Go contingent consideration liability.

The Salt Life Group segment operating income was a loss of $0.6 million compared to prior year income of $2.6 million. For the first nine months of fiscal year 2020, Salt Life Group segment income was $0.2 million compared to $5.6 million in the prior year. Operating income declined from lower sales coupled with higher product costs from the newly-enacted tariffs on imported goods. In addition, the prior year benefited from a $1.3 million discrete gain realized from the settlement of a commercial litigation matter ~~amounts~~in the June quarter as well as favorable adjustments to ~~$1.3 million and derives from a claim Salt Life previously filed with~~ the BP Deepwater Horizon claims fund administration established in connection with the 2010 oil spill off of the Gulf Coast seeking damages for the impacts of the spill on Salt Life's business. The change in fair value of contingent ~~consideration was associated with the DTG2Go acquisitions. Based upon our updated analysis, the fair value of this~~earn-out liability ~~increased $0.1 million~~ in the ~~2019~~first half of fiscal ~~third quarter.~~year 2019.

Net interest expense for the third quarter of fiscal year ~~2019~~2020 was ~~$2.0~~$1.7 million as compared to ~~$1.4~~$2.0 million in the prior year period due to ~~higher debt levels principally from our recent acquisitions, coupled with increased~~decreased interest rates. For the first nine months of fiscal year 2020, interest expense was $5.3 million compared to $5.7 million in the prior year.

Our effective tax ~~rate~~benefit on operations for the ~~nine-month~~nine-month period ended June ~~29, 2019~~,27, 2020, was ~~16.8%~~23.6%. This compares to an effective tax rate of ~~10.5%~~16.8% for the same period in the prior year, and a ~~benefit of 1.7%~~5.5% for the fiscal year ended September ~~29, 2018, when excluding the impact of the New Tax Legislation.~~28, 2019. See Note K—Income taxes for more information.

~~We achieved~~The net loss for the third quarter of 2020 was $17.8 million, or $2.58 per diluted share, and the adjusted net loss was $0.1 million, or $0.01 per diluted share. The prior year net income for the third quarter ~~of $4.9~~was $4.8 million, or $0.70 per diluted share, ~~compared to~~and the adjusted net income was $4.2 million or $0.60 per diluted share. For the nine months ended June 27, 2020, the net loss was $15.5 million, or $2.24 per diluted share, and the adjusted net income was $3.6 million, or $0.52 per diluted share. The prior year net income ~~of $4.6 million, or $0.62 per diluted share. Net Income~~ for the first nine months was $4.7 million, or $0.67 per diluted share, ~~compared to~~and the ~~prior year~~adjusted net ~~loss of $1.8~~income was $5.6 million or ~~$0.25~~$0.79 per diluted share.

Accounts receivable were ~~$67.2~~$51.4 million at June ~~29, 2019~~,27, 2020, compared to ~~$45.6~~$60.9 million as of September ~~29, 2018~~.28, 2019. Days sales outstanding ("DSO") as of June ~~29, 2019~~,27, 2020, were 49 days, ~~in line with~~slightly higher than 48 days at September ~~29, 2018~~.28, 2019.

Net inventory was ~~$177.8~~$158.0 million as of June 29, 2019,~~, an increase~~ a decrease of ~~$2.8~~$21.2 million from September ~~29, 2018~~.28, 2019. The ~~higher~~lower inventory levels resulted from ~~increased units from~~sales during the ~~SSI Acquisition~~third quarter with less inventory production due to manufacturing plant curtailments as ~~well as an increase in~~a result of the ~~higher average cost of inventory with the stronger mix of fashion basics, fleece and performance products in inventory to support the growth in these categories.~~COVID-19 pandemic.

Capital spending was ~~$6.6~~$1.5 million during the June quarter of fiscal year ~~2019~~2020 and primarily related to ~~digital print equipment~~retail and direct to consumer initiatives as well as ~~information technology enhancements.~~printing equipment. Capital spending was $8.1 million during the first nine months of fiscal year 2020 and primarily related to investments in our distribution network as well as retail and direct to consumer initiatives and printing equipment. Depreciation and amortization expense, including non-cash compensation, was ~~$10.3~~$11.5 million for the first nine months of fiscal year ~~2019.~~2020.

Total debt net of cash, excluding capital leases, at June ~~29, 2019~~,27, 2020, was ~~$130.1~~$108.0 million compared with ~~$105.0~~$115.2 million at ~~June 30, 2018~~.2019 fiscal year end. The ~~increase~~decrease from ~~the prior~~ year end was primarily driven from sales and collections during the ~~recent acquisitions and investments in~~year with less production costs incurred during the ~~digital print business coupled~~June quarter with ~~higher working capital to support the overall growth of the Company.~~COVID-related manufacturing plant curtailments.

~~Salt Life Group Segment~~

The Salt Life Group segment third quarter revenue grew by 18% to $11.9 million from $10.1 million in the prior year period. Sales for the first nine months increased by 7% to $32.5 million from the prior year $30.4 million.

Gross margins were 47.3% for the third quarter compared to 49.1% in the prior year. The margins were impacted by the mix of sales including Salt Life beer which carries a lower gross margin. For the first nine months, gross margins were relatively flat to the prior year at 48%. Operating income in the Salt Life Group segment for the third quarter was $2.7 million compared to $1.1 million in the prior year period. Operating income for the first nine months was $5.9 million compared to $4.3 million in the prior year period.

~~Delta Group Segment~~

The Delta Group segment revenue grew over 5% during the third quarter to $107.4 million from $102.1 million in the prior year period. DTG2Go sales increased over $5 million from the prior year driven from organic growth as well as the SSI acquisition. Soffe achieved nearly 3% revenue growth driven from strong military sales. Activewear sales were relatively flat to the prior year at $81.5 million. The higher-margin fashion basics products growth continued with 45% sales growth, and represented 26% of total catalog sales. Net sales for the first nine months grew 7% to $291.3 million compared to $272.2 million in the prior year.

Gross margins expanded 390 basis points from the March 2019 quarter to 17.9%, but were still 100 basis points below the prior year quarter. While Soffe experienced improved margins, this was offset by the sales mix in our private label business at Activewear. For the first nine months of fiscal year 2019 gross margins were 16.0% compared to the prior year 17.7%. Operating income for the third quarter was $9.2 million compared to $9.1 million in the prior year. Delta Group segment operating income for the first nine months was impacted by $2.5 million of litigation expense and was $15.4 million compared to $19.3 million in the prior year.

~~Table of Contents~~

Non-GAAP Financial Measures

We provide all information required in accordance with U.S. GAAP, but we believe that evaluating our ongoing operating results may be difficult if limited to reviewing only U.S. GAAP financial measures. In an effort to provide investors with additional information regarding our results, we also provide non-GAAP information that management believes is useful to investors. We discuss gross margin, SG&A expenses, operating income, net income and earnings per diluted share performance measures that are, for comparison purposes, adjusted to eliminate items or results stemming from discrete events. We do this because management uses these measures in evaluating our underlying performance on a consistent basis across periods. We also believe these measures are frequently used by securities analysts, investors and other interested parties in the evaluation of our ongoing performance. These non-GAAP measures have limitations as analytical tools, and securities analysts, investors and other interested parties should not consider any of these non-GAAP measures in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. These non-GAAP measures may not be comparable to similarly titled measures used by other companies. The tables below reconcile operating income, net income and earnings per diluted share to adjusted operating income, adjusted net income and adjusted earnings per diluted share (in thousands except per share data):

	Three Months Ended						Nine Months Ended
	June 27, 2020			June 29, 2019			June 27, 2020			June 29, 2019

Operating (loss)/income	$	(21,588	)	$	8,336		$	(15,396	)	$	11,071
Adjustments for COVID-19 expenses (1)		23,100			-			25,000			-
Adjustments for litigation settlements (2)		-			(1,306	)		-			1,158
Adjusted operating (loss) income	$	1,512		$	7,030		$	9,604		$	12,229

Net (loss) earnings attributable to shareholders	$	(17,781	)	$	4,837		$	(15,546	)	$	4,719
Adjustments for COVID-19 expenses, net of tax (1)		17,722			-			19,180			-
Adjustments for litigation settlements, net of tax (2)		- -			(653	)		-			864
Adjusted net (loss) earnings attributable to shareholders	$	(59	)	$	4,184		$	3,634		$	5,583

Reported diluted (loss) earnings per share	$	(2.58	)	$	0.70		$	(2.24	)	$	0.67
Adjustments for COVID-19 expenses, net of tax (1)	$	2.57		$	-		$	2.77		$	-
Adjustments for litigation settlements, net of tax (2)	$	-		$	(0.10	)	$	-		$	0.12
Adjusted diluted (loss) earnings per share	$	(0.01	)	$	0.60		$	0.52		$	0.79

(1) Our third quarter fiscal 2020 results included approximately $23.1 million of pre-tax expenses associated with the impacts from the COVID-19 pandemic and primarily related to the curtailment of manufacturing operations ($9.8 million), incremental costs to right size production to new forecasted demand ($2.6 million), increased accounts receivable and inventory reserves related to the heightened risks in the market as the U.S. continues its recovery ($6.6 million), and other expenses ($4.1 million). These costs are included within net sales ($0.5 million), cost of goods sold ($12.1 million), SG&A expenses ($2.4 million), and other loss (income), net ($8.1 million). The first nine months of fiscal 2020 included approximately $25.0 million of pre-tax expenses associated with the impacts from the COVID-19 pandemic and included an additional $1.9 million of costs related to the curtailment of manufacturing operations in cost of goods sold.

(2) Our third quarter fiscal 2019 results included approximately $1.3 million in other income as the result of a favorable litigation settlement in the Salt Life Group segment in the third quarter fiscal year 2019. The first nine months of fiscal 2019 included approximately $2.5 million of unfavorable litigation settlement due to the bankruptcy of a customer in the Delta Group segment in the first quarter fiscal year 2019, partially offset by approximately $1.3 million in other income as the result of a favorable litigation settlement in the Salt Life Group segment in the third quarter fiscal year 2019.

Liquidity and Capital Resources

~~Our current primary cash needs are for working capital, capital expenditures, and debt service, as well as to fund share repurchases under our Stock Repurchase Program.~~

Operating Cash Flows

Operating activities ~~used $8.5~~provided $22.0 million in cash in the first nine months of fiscal year ~~2019~~2020 compared to $8.5 million of cash ~~provided in operations of $4.0 million~~used in the first nine months of fiscal year ~~2018.~~2019. The ~~increased use~~improved operating cash flows in 2020 relate to an increase in direct-to-consumer and DTG2Go sales during the June quarter, which benefited us with a quicker cash collections cycle, while reducing inventory levels as inventory sold was not replaced because of ~~cash from~~ the ~~prior year is primarily due~~manufacturing disruptions beginning in mid-March 2020. In addition, we slowed payments to ~~more inventory units from expansion~~our suppliers during the June quarter and negotiated deferrals for the June quarter with the majority of ~~skus and the SSI acquisition as well as timing of payments from~~ our ~~customers.~~operating lease landlords.

Investing Cash Flows

~~Cash used for capital~~Capital expenditures ~~was $4.2~~were $4.4 million during the first nine months of fiscal year ~~2019~~2020 compared to ~~$4.3~~$4.2 million in the same period last year. Capital expenditures ~~in both periods~~related primarily ~~related~~ to ~~machinery and equipment, including~~ investments in our ~~digital print business. In addition,~~distribution expansion, retail stores, and printing equipment. During fiscal year 2019, property, plant, and equipment of $3.4 million ~~was~~were acquired as part of the SSI acquisition during fiscal year 2019. There was an additional $6.7 million in expenditures financed under capital lease arrangements and $0.8 million in unpaid expenditures as of June 29, 2019. During the first nine months of fiscal year 2018, investing cash flows also included $1.9 million in proceeds received from the promissory note related to the sale of our Junkfood business.

Investing activities for the first nine months of fiscal year 2018 included $5.8 million of proceeds from the sale of fixed assets. Property, plant, and equipment (“equipment”) of $5.0 million was acquired as part of the DTG2Go acquisition. ~~Subsequently, a capital lease arrangement was entered into to finance the purchase of the equipment.~~ There were ~~$6.7~~$3.8 million in expenditures financed under a capital lease arrangement and ~~$0.8~~$1.8 million in unpaid expenditures as of June ~~29, 2019~~.27, 2020.

We anticipate our fiscal year ~~2019~~2020 capital expenditures, including those financed under capital leases, to be approximately ~~$15~~$18 million and to be focused primarily on digital print equipment and our distribution expansion, along with information technology and direct-to-consumer enhancements.

Financing Activities

During the nine months ended June ~~29, 2019~~,27, 2020, cash ~~provided~~used by financing activities was ~~$17.3~~$1.4 million compared to ~~$4.1~~$17.3 million provided by financing activities for the nine months ended June ~~30, 2018~~.29, 2019. The cash provided by financing activities during the first nine months of fiscal year 2020 was used to fund our operating activities, certain capital investments, and share repurchases. The cash provided by our financing activities during the first nine months of fiscal year 2019 was used to fund the SSI digital print acquisition as well as fund our operating activities and share repurchases.

~~Based on~~Future Liquidity and Capital Resources

See Note F – Debt to the Condensed Consolidated Financial Statements for discussion of our ~~current expectations, we believe that~~various financing arrangements, including the terms of our revolving U.S. credit facility.

Our credit facility, ~~should be sufficient~~as amended on April 27, 2020, as well as cash flows from operations, are intended to satisfy our foreseeable working capital needs, and that cash flow generated by our operations and funds available under our credit facility should be sufficient to service our debt payment requirements, to satisfyfund our day-to-day working capital needs, and along with capital lease financing arrangements, to fund our planned capital expenditures. ~~Any~~However, any material deterioration in our results of operations, ~~however,~~such as could occur with the COVID-19 pandemic, may result in the loss of our ability to borrow under our U.S. revolving credit facility and to issue letters of credit to suppliers, or may cause the borrowing availability under that facility to be insufficient for our needs. Availability under our credit facility is primarily a function of the levels of our accounts receivable and inventory. A significant deterioration in our accounts receivable or inventory levels could restrict our ability to borrow additional funds or service our indebtedness. ~~Moreover,~~

Prior to the Fifth Amendment executed on April 27, 2020, our credit facility ~~includes~~included a financial covenant that if the availability under our credit facility falls below the amounts specified in our U.S. credit agreement, our fixed charge coverage ratio ~~(FCCR)~~("FCCR") for the preceding 12-month period must not be less than 1.1 to 1.0. ~~While~~The Fifth Amendment amends the financial covenant provisions from the amendment date through October 3, 2020, including effectively lowering the minimum availability thresholds and removing the requirement that our ~~availability at~~ FCCR for the preceding 12-month period must not be less than 1.1 to 1.0. As of June ~~29, 2019, was~~27, 2020, we maintained availability above the minimum availability thresholds ~~specified in our credit agreement,~~but were below the 1.1 to 1.0 FCCR for the preceding 12-month period primarily due to the non-recurring expenses recorded during the June 2020 quarter. Following the expiration of these Fifth Amendment terms on October 3, 2020, a significant deterioration in our business could cause our availability to fall below ~~such~~minimum thresholds, thereby requiring us to maintain the minimum FCCR specified in our credit ~~agreement.~~agreement, which we may not be able to maintain.

Purchases By Delta Apparel Of Its Own Shares

During the nine months ended June ~~29, 2019~~,27, 2020, we purchased ~~141,501~~99,971 shares ~~of our~~ common stock for an aggregate amount of ~~$2.7~~$2.0 million (see Note N—Repurchase of Common Stock). As of June ~~29, 2019~~,27, 2020, there was ~~$9.5~~$7.5 million of repurchase authorization remaining under our Stock Repurchase Program. ~~We evaluate current leverage, working capital requirements, our free cash flow outlook, stock valuation and future business opportunities~~During March 2020, we temporarily suspended share repurchases in an effort to ~~determine when we believe~~preserve liquidity during the ~~repurchase of our stock is a sound investment opportunity that we can pursue without sacrificing future growth plans.~~COVID-19 pandemic.

~~Table of Contents~~

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our Condensed Consolidated Financial Statements, which were prepared in accordance with U.S. GAAP. The preparation of our Condensed Consolidated Financial Statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We base our estimates and judgments on historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The most significant estimates and assumptions relate to revenue recognition, accounts receivable and related reserves, inventory and related reserves, the carrying value of goodwill, and the accounting for income taxes.

A detailed discussion of critical accounting policies is contained in the Significant Accounting Policies included in Note 2 to the Audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended September ~~29, 2018~~,28, 2019, and there have been no changes in those policies, except as disclosed in Note C—New Accounting Standards related to the adoption of the new ~~revenue recognition~~lease accounting standard, since the filing of that Annual Report on Form 10-K with the SEC.

Environmental and Regulatory Matters

We are subject to various federal, state and local environmental laws and regulations concerning, among other things, wastewater discharges, storm water flows, air emissions and solid waste disposal. Some of our facilities generate small quantities of hazardous waste that are either recycled or disposed of off-site.

The environmental regulations applicable to our business are becoming increasingly stringent and we incur capital and other expenditures annually to achieve compliance with environmental standards. We currently do not expect that the amount of expenditures required to comply with environmental laws and regulations will have a material adverse effect on our operations, financial condition or liquidity. There can be no assurance, however, that future changes in federal, state, or local regulations, interpretations of existing regulations or the discovery of currently unknown problems or conditions will not require substantial additional expenditures. Similarly, while we believe that we are currently in material compliance with all applicable environmental requirements, the extent of our liability, if any, for past failures to comply with laws, regulations and permits applicable to our operations cannot be determined and could have a material adverse effect on our operations, financial condition and liquidity.

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to reasonably assure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s requirements. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information we are required to disclose in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of June ~~29, 2019~~,27, 2020, and, based on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that these controls and procedures were effective ~~at the evaluation date.~~as of June 27, 2020.

Changes in Internal Control Over Financial Reporting

There was no change during the third quarter of fiscal year ~~2019~~2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II.

OTHER INFORMATION

Item 1.

Legal Proceedings

See Note M—N—Legal Proceedings, in Part I, Item 1, which is incorporated herein by reference.

~~Table of Contents~~

Item 1A.

Risk Factors

~~Other than as set forth~~We operate in a rapidly changing, highly competitive business environment that involves substantial risks and uncertainties. The risk factors described in Part ~~II,~~1, Item ~~1A of the Company's Quarterly~~1A. Risk Factors in our Annual Report on Form ~~10-Q~~10-K for the ~~quarter~~year ended ~~March 30,~~September 28, 2019, ~~there have been no~~as revised below, as well as risks described elsewhere in this report or in our other filings with the SEC, could materially affect our business, financial condition or operating results and the value of Company securities held by investors and should be carefully considered in evaluating our Company and the forward-looking statements contained in this report or future reports. The risks described below are not the only risks facing Delta Apparel. Additional risks not presently known to us or that we currently do not view as material ~~changes~~may become material and may impair our business operations. Any of these risks could cause, or contribute to causing, our actual results to differ materially from expectations.

The risk factor described below updates the risk factors disclosed in Part I, Item ~~1A of the Company's~~1A. Risk Factors in our Annual Report on Form 10-K for the ~~fiscal~~ year ended September ~~29, 2018.~~28, 2019, to include additional information.

The COVID-19 pandemic has had, and could continue to have, a material adverse effect on our ability to operate, results of operations, financial condition, liquidity, and capital investments. The World Health Organization has declared the COVID-19 outbreak a pandemic, and the virus continues to spread in areas where we operate and sell our products. The COVID-19 pandemic, and similar pandemics or disruptions in the future, have had an adverse effect and could continue to adversely effect our performance and results of operations. These pandemics or disruptions could also impact our financial condition, liquidity, and capital investments. Several public health organizations have recommended, and some local and foreign governments have implemented, certain measures to slow and limit the transmission of the virus, including shelter in place and social distancing ordinances. Such preventive measures, or others we may voluntarily put in place, may have a material adverse effect on our business for an indefinite period of time, such as the potential shutdown of certain locations, decreased employee availability, potential border closures, and others. In mid-March 2020, all of our branded retail locations were temporarily closed in compliance with guidelines for retail store operations and were re-opened by the end of May 2020. Our facilities in El Salvador and Honduras were temporarily closed in mid-March through late June due to government-mandated country shutdowns. In addition, we experienced intermittent closures during the June quarter at our manufacturing facilities in Mexico and North Carolina. As of June 27, 2020, all our manufacturing facilities were open and operating. Uncertainty remains whether our retail stores and plants may be required to close again.

Many of our customers and suppliers also face these and other challenges, which could lead to reduced demand for our products and services and a disruption in our supply chain. These challenges could impair our customers' ability to pay all or a portion of amounts owed to us per the sales agreements, resulting in reduced cash flows and charges incurred for bad debt. These issues may also materially affect our future access to our sources of liquidity, particularly our cash flows from operations, financial condition, capitalization, and capital investments.

The extent to which COVID-19 impacts our business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the pandemic, a resurgence of the pandemic, new information that may emerge concerning the severity of COVID-19, and public and private actions to contain COVID-19 or treat its impact. The COVID-19 pandemic has and will likely continue to result in social, economic, and labor instability in the countries in which we, or the third parties with whom we engage, operate. The long-term economic impact and near-term financial impacts of the COVID-19 pandemic, including but not limited to, possible impairment, restructuring, and other charges, as well as overall impact on our business, results of operations, financial condition, liquidity, or capital resources and investments, cannot be reliably quantified or estimated at this time due to the uncertainty of future developments.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

See Note N—O—Repurchase of Common Stock, ~~and Note F—Debt,~~Part I, in Item 1, which ~~are~~is incorporated herein by reference.

Item 5.

Other Information

None

~~Table of Contents~~

Item 6.

Exhibits

31.1		Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase

104		Cover Page Interactive Data File - (formatted as Inline XBRL and contained in Exhibit 101)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			DELTA APPAREL, INC. (Registrant)

Date	~~August 1, 2019~~July 30, 2020	By:	/s/ Deborah H. Merrill
			Deborah H. Merrill Chief Financial Officer and President, Delta Group

~~GEORGIA~~Georgia		58-2508794
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

322 South Main Street
Greenville, SC		29601
(Address of principal executive offices)		(Zip Code)

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Stock, par value $0.01		DLA		NYSE American

Large accelerated filer ☐		Accelerated filer ☑		Non-accelerated filer ☐		Smaller reporting company ☑		Emerging growth company ☐
				~~(Do not check if a smaller reporting company)~~

~~Title of each class~~		~~Trading Symbol~~		~~Name of each exchange on which registered~~
~~Common~~		~~DLA~~		~~NYSE American~~

	June 29,			September 29,
	2019			2018			*June 27, 2020*			*September 28, 2019*
Assets
Current assets:
Current Assets:
Cash and cash equivalents	$	371		$	460		$	14,520		$	605
Accounts receivable, less allowances of $506 and $1,475, respectively		67,200			45,605
Accounts receivable, less allowances of $1,563 and $327, respectively								51,397			59,337
Other receivables		1,563			1,274			470			1,550
Income tax receivable		—			38			700			729
Inventories, net		177,779			174,983			158,015			179,107
Note receivable		—			100
Prepaid expenses and other current assets		3,384			2,962			3,085			2,270
Total current assets		250,297			225,422			228,187			243,598

Property, plant and equipment, net of accumulated depreciation of $79,954 and $74,018, respectively		58,422			52,114
Property, plant and equipment, net of accumulated depreciation of $89,634 and $81,787, respectively								61,273			61,404
Goodwill		37,897			33,217			37,897			37,897
Intangibles, net		22,060			20,498			20,341			21,607
Deferred income taxes		1,053			1,374			7,143			1,514
Operating lease assets								42,920			-
Equity method investment		10,038			8,980			10,273			10,388
Other assets		1,658			2,004			2,398			1,580
Total assets	$	381,425		$	343,609		$	410,432		$	377,988

Liabilities and Equity
Current liabilities:
Accounts payable	$	48,235		$	48,008		$	55,004		$	52,320
Accrued expenses		16,834			16,742			18,927			20,791
Income taxes payable		593			—
Current portion of contingent consideration		2,790			638			2,685			2,790
Current portion of capital lease financing		6,084			3,846
Current portion of finance leases								7,099			6,434
Current portion of operating leases								8,720			-
Current portion of long-term debt		7,040			6,577			8,046			6,540
Total current liabilities		81,576			75,811			100,481			88,875

Long-term taxes payable		3,492			4,259			3,585			3,977
Long-term contingent consideration, less current maturities		6,604			9,904
Long-term capital lease financing, less current maturities		13,012			9,302
Long-term contingent consideration								4,096			6,304
Long-term finance leases, less current maturities								12,934			12,836
Long-term operating leases, less current maturities								35,152			-
Long-term debt, less current maturities		123,236			92,083			113,939			109,296
Deferred income taxes		2,036			2,132			1,356			1,519
Other non-current liabilities		1,184			—			2,379			1,293
Total liabilities	$	231,140		$	193,491		$	273,922		$	224,100

Shareholders’ 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 6,921,417 and 6,909,446 shares outstanding as of June 29, 2019, and September 29, 2018, respectively		96			96
Shareholder's 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 authorized, 9,646,972 shares issued, and 6,890,118 and 6,921,417 shares outstanding as of June 27, 2020, and September 28, 2019, respectively								96			96
Additional paid-in capital		59,602			61,979			60,154			59,855
Retained earnings		133,414			128,695			121,390			136,937
Accumulated other comprehensive (loss) income		(887	)		136
Treasury stock —2,725,555 and 2,737,526 shares as of June 29, 2019, and September 29, 2018, respectively		(41,750	)		(40,881	)
Accumulated other comprehensive loss								(1,430	)		(969	)
Treasury stock - 2,756,854 and 2,725,555 shares as of June 27, 2020, and September 28, 2019, respectively								(43,133	)		(41,750	)
Equity attributable to Delta Apparel, Inc.		150,475			150,025			137,077			154,169
Equity attributable to non-controlling interest		(190	)		93			(567	)		(281	)
Total equity		150,285			150,118			136,510			153,888
Total liabilities and equity	$	381,425		$	343,609		$	410,432		$	377,988

		Page
PART I.	Financial Information

Item 1.	Financial Statements:

	Condensed Consolidated Balance Sheets — June ~~29, 2019,~~27, 2020, and September ~~29, 2018~~28, 2019 (unaudited)	3

	Condensed Consolidated Statements of Operations — Three and nine months ended June ~~29, 2019,~~27, 2020, and June ~~30, 2018~~29, 2019 (unaudited)	4

	Condensed Consolidated Statements of Comprehensive (Loss) Income ~~(Loss)~~ — Three and nine months ended June ~~29, 2019,~~27, 2020, and June ~~30, 2018~~29, 2019 (unaudited)	5

	Condensed Consolidated ~~Statement~~Statements of Shareholders' Equity — ~~Three and nine~~Nine months ended June ~~29, 2019,~~27, 2020, and June ~~30, 2018~~29, 2019 (unaudited)	6

	Condensed Consolidated Statements of Cash Flows — Nine months ended June ~~29, 2019,~~27, 2020, and June ~~30, 2018~~29, 2019 (unaudited)	7

	Notes to Condensed Consolidated Financial Statements (unaudited)	8
	Note A—Basis of Presentation and Description of Business	8
	Note B—Accounting Policies	8
	Note C—New Accounting Standards	8
	Note D—Revenue Recognition	9
	Note E—Inventories	9
	Note F—Debt	10
	Note G—Leases	10
	Note H—Selling, General and Administrative Expense	11
	Note I—Stock-Based Compensation	11
	Note J—Purchase Contracts	11
	Note K—Business Segments	12
	Note L—Income Taxes	12
	Note M—Derivatives and Fair Value Measurements	13
	Note N—Legal Proceedings	13
	Note O—Repurchase of Common Stock	14
	Note P—Goodwill and Intangible Assets	14
	Note Q—Subsequent Events	14

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1915

Item 4.	Controls and Procedures	2416

PART II.	Other Information

Item 1.	Legal Proceedings	2416

Item 1A.	Risk Factors	2516

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2516

Item 5.	Other Information	2516

Item 6.	Exhibits	2516

Signatures		2617

Exhibits
~~Exhibits~~		EX-31.1
~~EX-31.1~~EX-31.2
~~EX-31.2~~EX-32.1
~~EX-32.1~~EX-32.2
~~EX-32.2~~

	Three Months Ended						Nine Months Ended
	June 27, 2020			June 29, 2019			June 27, 2020			June 29, 2019

Net sales	$	71,801		$	119,260		$	264,351		$	323,773
Cost of goods sold		68,819			94,470			220,893			261,505
Gross profit		2,982			24,790			43,458			62,268

Selling, general and administrative expenses		15,206			17,931			51,130			51,771
Other loss (income), net		9,364			(1,477	)		7,724			(574	)
Operating (loss) income		(21,588	)		8,336			(15,396	)		11,071

Interest expense, net		1,710			1,989			5,320			5,739
(Loss) earnings before (benefit from) provision for income taxes		(23,298	)		6,347			(20,716	)		5,332
(Benefit from) provision for income taxes		(5,454	)		1,510			(4,884	)		896
Consolidated net (loss) earnings		(17,844	)		4,837			(15,832	)		4,436
Net loss attributable to non-controlling interest		63			89			286			283
Net (loss) earnings attributable to shareholders	$	(17,781	)	$	4,926		$	(15,546	)	$	4,719

Basic (loss) earnings per share	$	(2.58	)	$	0.71		$	(2.24	)	$	0.68
Diluted (loss) earnings per share	$	(2.58	)	$	0.70		$	(2.24	)	$	0.67

Weighted average number of shares outstanding		6,890			6,928			6,932			6,931
Dilutive effect of stock awards		-			152			-			134
Weighted average number of shares assuming dilution		6,890			7,080			6,932			7,065

											Accumulated
					Additional						Other									Non-
	Common Stock				Paid-In			Retained			Comprehensive			Treasury Stock						Controlling
	Shares		Amount		Capital			Earnings			Income (Loss)			Shares			Amount			Interest		Total
Balance at September 30, 2017		9,646,972	$	96	$	61,065		$	127,358		$	(35	)		2,346,675		$	(32,597	)	$	—	$	155,887
Net earnings		—		—		—			(9,956	)		—			—			—			—		(9,956	)
Other comprehensive income		—		—		—			—			86			—			—			—		86
Vested stock awards		—		—		(1,647	)		—			—			(72,201	)		702			—		(945	)
Stock based compensation		—		—		438			—			—			—			—			—		438
Purchase of common stock		—		—		—			—			—			145,124			(3,000	)		—		(3,000	)
Balance at December 30, 2017		9,646,972		96		59,856			117,402			51			2,419,598			(34,895	)		—		142,510
Net earnings		—		—		—			3,630			—			—			—			—		3,630
Other comprehensive income		—		—		—			—			116			—			—			—		116
Stock based compensation		—		—		705			—			—			—			—			—		705
Purchase of common stock		—		—		—			—			—			74,934			(1,463	)		—		(1,463	)
Balance at March 31, 2018		9,646,972		96		60,561			121,032			167			2,494,532			(36,358	)		—		145,498
Net earnings		—		—		—			4,549			—			—			—			—		4,549
Other comprehensive income		—		—		—			—			100			—			—			—		100
Vested stock awards		—		—		(20	)		—			—			(922	)		16			—		(4	)
Stock based compensation		—		—		777			—			—			—			—			—		777
Purchase of common stock		—		—		—			—			—			63,300			(1,210	)		—		(1,210	)
Balance at June 30, 2018		9,646,972	$	96	$	61,318		$	125,581		$	267			2,556,910		$	(37,552	)	$	—	$	149,710

											Accumulated																									*Accumulated*
					Additional						Other									Non-										*Additional*						*Other*									*Non-*
	Common Stock				Paid-In						Comprehensive			Treasury Stock						Controlling						*Common Stock*				*Paid-In*			*Retained*			*Comprehensive*			*Treasury Stock*						*Controlling*
	Shares		Amount		Capital			Earnings			Income (Loss)			Shares			Amount			Interest			Total			*Shares*		*Amount*		*Capital*			*Earnings*			*Income (Loss)*			*Shares*			*Amount*			*Interest*			*Total*
Balance at September 29, 2018		9,646,972	$	96	$	61,979		$	128,695		$	136			2,737,526		$	(40,881	)	$	93		$	150,118
Balance as of September 29, 2018																											9,646,972	$	96	$	61,979		$	128,695		$	136			2,737,526		$	(40,881	)	$	93		$	150,118

Net loss																											-		-		-			(1,151	)		-			-			-			-			(1,151	)
Other comprehensive loss																											-		-		-			-			(372	)		-			-			-			(372	)
Net loss attributable to non-controlling interest																											-		-		-			-			-			-			-			(76	)		(76	)
Vested stock awards																											-		-		(3,981	)		-			-			(153,472	)		1,867			-			(2,114	)
Purchase of common stock																											-		-		-			-			-			92,148			(1,711	)		-			(1,711	)
Stock based compensation																											-		-		660			-			-			-			-			-			660
Balance as of December 29, 2018																											9,646,972		96		58,658			127,544			(236	)		2,676,202			(40,725	)		17			145,354

Net earnings																											-		-		-			942			-			-			-			-			942
Other comprehensive loss																											-		-		-			-			(257	)		-			-			-			(257	)
Net loss attributable to non-controlling interest																											-		-		-			-			-			-			-			(117	)		(117	)
Purchase of common stock																											-		-		-			-			-			35,353			(718	)		-			(718	)
Stock based compensation																											-		-		463			-			-			-			-			-			463
Balance as of March 30, 2019																											9,646,972		96		59,121			128,486			(493	)		2,711,555			(41,443	)		(100	)		145,667

Net earnings																											-		-		-			4,926			-			-			-			-			4,926
Other comprehensive loss																											-		-		-			-			(394	)		-			-			-			(394	)
Net loss attributable to non-controlling interest																											-		-		-			-			-			-			-			(90	)		(90	)
Purchase of common stock																											-		-		-			-			-			14,000			(307	)		-			(307	)
Stock based compensation																											-		-		483			-			-			-			-			-			483
Balance as of June 29, 2019																											9,646,972	$	96	$	59,604		$	133,412		$	(887	)		2,725,555		$	(41,750	)	$	(190	)	$	150,285

																																				*Accumulated*
																														*Additional*						*Other*									*Non-*
																										*Common Stock*				*Paid-In*			*Retained*			*Comprehensive*			*Treasury Stock*						*Controlling*
																										*Shares*		*Amount*		*Capital*			*Earnings*			*Income (Loss)*			*Shares*			*Amount*			*Interest*			*Total*
Balance as of September 28, 2019																											9,646,972	$	96	$	59,855		$	136,937		$	(969	)		2,725,555		$	(41,750	)	$	(281	)	$	153,888

Net earnings		—		—		—			(1,156	)		—			—			—			—			(1,156	)		-		-		-			923			-			-			-			-			923
Other comprehensive income		—		—		—			—			(372	)		—			—			—			(372	)		-		-		-			-			131			-			-			-			131
Net loss attributable to non-controlling interest		—		—		—			—			—			—			—			(76	)		(76	)		-		-		-			-			-			-			-			(132	)		(132	)
Vested stock awards		—		—		(3,980	)		—			—			(153,472	)		1,866			—			(2,114	)		-		-		(1,615	)		-			-			(67,406	)		631			-			(984	)
Stock based compensation		—		—		664			—			—			—			—			—			664			-		-		585			-			-			-			-			-			585
Balance as of December 28, 2019																											9,646,972		96		58,825			137,860			(838	)		2,658,149			(41,119	)		(413	)		154,411

Net earnings																											-		-		-			1,311			-			-			-			-			1,311
Other comprehensive loss																											-		-		-			-			(595	)		-			-			-			(595	)
Net loss attributable to non-controlling interest																											-		-		-			-			-			-			-			(91	)		(91	)
Vested stock awards																											-		-		4			-			-			(1,266	)		15			-			19
Purchase of common stock		—		—		—			—			—			92,148			(1,709	)		—			(1,709	)		-		-		-			-			-			99,971			(2,029	)		-			(2,029	)
Balance at December 29, 2018		9,646,972		96		58,663			127,539			(236	)		2,676,202			(40,724	)		17			145,355
Net earnings		—		—		—			940			—			—			—			—			940
Stock based compensation																											-		-		611			-			-			-			-			-			611
Balance as of March 28, 2020																											9,646,972		96		59,440			139,171			(1,433	)		2,756,854			(43,133	)		(504	)		153,637

Net loss																											-		-		-			(17,781	)		-			-			-			-			(17,781	)
Other comprehensive income		—		—		—			—			(257	)		—			—			—			(257	)		-		-		-			-			3			-			-			-			3
Net loss attributable to non-controlling interest		—		—		—			—			—			—			—			(117	)		(117	)		-		-		-			-			-			-			-			(63	)		(63	)
Stock based compensation		—		—		463			—			—			—			—			—			463			-		-		714			-			-			-			-			-			714
Purchase of common stock		—		—		—			—			—			35,353			(717	)		—			(717	)
Balance at March 30, 2019		9,646,972		96		59,126			128,479			(493	)		2,711,555			(41,441	)		(100	)		145,667
Net earnings		—		—		—			4,935			—			—			—			—			4,935
Other comprehensive income		—		—		—			—			(394	)		—			—			—			(394	)
Net loss attributable to non-controlling interest		—		—		—			—			—			—			—			(90	)		(90	)
Stock based compensation		—		—		476			—			—			—			—			—			476
Purchase of common stock		—		—		—			—			—			14,000			(309	)		—			(309	)
Balance at June 29, 2019		9,646,972	$	96	$	59,602		$	133,414		$	(887	)		2,725,555		$	(41,750	)	$	(190	)	$	150,285
Balance as of June 27, 2020																											9,646,972	$	96	$	60,154		$	121,390		$	(1,430	)		2,756,854		$	(43,133	)	$	(567	)	$	136,510

	Nine Months Ended
	June 29,			June 30,			*Nine Months Ended*
	2019			2018			*June 27, 2020*			*June 29, 2019*
Operating activities:
Consolidated net loss	$	4,436		$	(1,771	)
Adjustments to reconcile net loss to net cash used in operating activities:
Consolidated net (loss) earnings							$	(15,832	)	$	4,436
Adjustment to reconcile net (loss) earnings to net cash used in operating activities:
Depreciation and amortization		8,728			7,398			9,566			8,728
Amortization of deferred financing fees		234			229			233			234
Provision for deferred income taxes		225			3,514
Provision for (benefit from) allowances on accounts receivable								1,236			(287	)
Provision for inventory market reserves								4,897			152
(Benefit from) provision for deferred income taxes								(5,629	)		225
Non-cash stock compensation		1,603			1,914			1,911			1,603
(Gain) loss on disposal of equipment								(29	)		18
Other, net		(1,642	)		(300	)		(318	)		(1,642	)
Loss on disposal of equipment		18			62
Changes in operating assets and liabilities, net of effect of acquisition:
Accounts receivable, net		(20,700	)		(14,222	)
Changes in operating assets and liabilities, net of effect of acquisition
Accounts receivable								7,784			(19,731	)
Inventories, net		(1,669	)		6,096			16,195			(1,821	)
Prepaid expenses and other assets		(236	)		(1,019	)
Prepaid expenses and other current assets								31			(236	)
Other non-current assets		(71	)		(247	)		(198	)		(71	)
Accounts payable		209			(2,279	)		2,957			209
Accrued expenses		110			(2,098	)		(1,899	)		(572	)
Change in net operating lease liabilities								952			-
Income taxes		(136	)		8,057			(328	)		(136	)
Other liabilities		344			(1,355	)		462			344
Net cash (used in) provided by operating activities		(8,547	)		3,979

Net cash provided by (used in) operating activities								21,991			(8,547	)
Investing activities:
Purchases of property and equipment, net		(4,211	)		(4,313	)		(4,443	)		(4,211	)
Proceeds from sale of Junkfood assets		—			1,946
Proceeds from sale of fixed assets		—			5,779
Investment in partnership		—			(300	)
Cash paid for business		(4,599	)		(11,350	)		(2,243	)		(4,599	)
Net cash used in investing activities		(8,810	)		(8,238	)		(6,686	)		(8,810	)

Financing activities:
Proceeds from long-term debt		356,141			346,218			312,251			356,141
Repayment of long-term debt		(330,359	)		(334,059	)		(304,352	)		(330,359	)
Repayment of capital financing		(3,041	)		(1,461	)		(2,714	)		(3,041	)
Payment of contingent consideration		(564	)		—			(2,500	)		(564	)
Payment of deferred financing fees		—			2
Payment of deferred financing costs								(1,079	)		-
Repurchase of common stock		(2,796	)		(5,673	)		(2,029	)		(2,796	)
Payment of withholding taxes on stock awards		(2,113	)		(947	)		(967	)		(2,113	)
Net cash provided by financing activities		17,268			4,080
Net decrease in cash and cash equivalents		(89	)		(179	)
Net cash (used in) provided by financing activities								(1,390	)		17,268
Net increase (decrease) in cash and cash equivalents								13,915			(89	)
Cash and cash equivalents at beginning of period		460			572			605			460
Cash and cash equivalents at end of period	$	371		$	393		$	14,520		$	371

Supplemental cash flow information:
Non-cash financing activity - seller financing	$	—		$	5,000
Non-cash financing activity - capital lease agreements	$	9,693		$	9,131

	Third Quarter Fiscal Year 2019
	Net Sales		Retail			Ecommerce			Wholesale
Delta Group	$	107,409		0.3	%		0.3	%		99.4	%
Salt Life Group		11,851		8.6	%		9.0	%		82.4	%
Total	$	119,260

	Third Quarter Fiscal Year 2018
	Net Sales		Retail			Ecommerce			Wholesale
Delta Group	$	102,107		0.3	%		0.3	%		99.4	%
Salt Life Group		10,075		7.3	%		11.3	%		81.4	%
Total	$	112,182

	Year To Date Fiscal Year 2019
	Net Sales		Retail			Ecommerce			Wholesale
Delta Group	$	291,325		0.3	%		0.3	%		99.4	%
Salt Life Group		32,448		7.1	%		9.3	%		83.6	%
Total	$	323,773

	Year To Date Fiscal Year 2018
	Net Sales		Retail			Ecommerce			Wholesale
Delta Group	$	272,157		0.4	%		0.3	%		99.3	%
Salt Life Group		30,371		5.8	%		10.1	%		84.1	%
Total	$	302,528

	As Reported June 29, 2019		Effect of Standard			Balances without Adoption
Accounts receivable, net	$	67,200	$	(748	)	$	66,452
Prepaid expenses and other current assets		3,384		(166	)		3,218
Total Current Assets		250,297		(914	)		249,383
Total assets		381,425		(914	)		380,511
Accrued liabilities		16,834		(1,163	)		15,671
Total current liabilities		81,576		(1,163	)		80,413
Total liabilities		231,140		(1,163	)		229,977
Total liabilities and equity		381,425		(1,163	)		380,262

	Allocation as of March 30, 2019			Measurement Period Adjustments			Allocation as of June 29, 2019
Accounts receivable	$	1,184		$	-		$	1,184
Inventory		1,127			-			1,127
Other current assets		86			-			86
Property, plant, and equipment		3,400			-			3,400
Goodwill		3,380			1,300			4,680
Intangible assets		4,020			(1,100	)		2,920
Accounts payable		(668	)		-			(668	)
Consideration paid	$	12,529		$	200		$	12,729

Cash	$	2,000
Promissory note		7,000
Capital lease financing		3,000
Net working capital adjustment		729
Total consideration	$	12,729

	*Third Quarter Fiscal Year 2020*
	*Net Sales*		*Retail*			*Direct-to-consumer ecommerce*			*Wholesale*
Delta Group	$	65,543		0.2	%		1.0	%		98.8	%
Salt Life Group		6,258		17.0	%		40.4	%		42.6	%
Total	$	71,801

	*Third Quarter Fiscal Year 2019*
	*Net Sales*		*Retail*			*Direct-to-consumer ecommerce*			*Wholesale*
Delta Group	$	107,409		0.3	%		0.3	%		99.4	%
Salt Life Group		11,851		5.0	%		9.1	%		85.9	%
Total	$	119,260

	*Year To Date Fiscal Year 2020*
	*Net Sales*		*Retail*			*Direct-to-consumer ecommerce*			*Wholesale*
Delta Group	$	238,685		0.2	%		0.5	%		99.3	%
Salt Life Group		25,666		10.9	%		18.9	%		70.2	%
Total	$	264,351

	*Year To Date Fiscal Year 2019*
	*Net Sales*		*Retail*			*Direct-to-consumer ecommerce*			*Wholesale*
Delta Group	$	291,325		0.3	%		0.3	%		99.4	%
Salt Life Group		32,448		7.0	%		9.5	%		83.5	%
Total	$	323,773

Yarn	$	21,866
Finished fabric		3,061
Finished products		10,716
	$	35,643

	Fair Value Measurements Using
				Quoted Prices in			Significant Other			Significant
				Active Markets for			Observable			Unobservable
				Identical Assets			Inputs			Inputs
Period Ended	Total			(Level 1)			(Level 2)			(Level 3)
Interest Rate Swaps
June 29, 2019	$	(1,184	)		—		$	(1,184	)		—
September 29, 2018		183			—			183			—

Cotton Options
June 29, 2019	$	—			—			—			—
September 29, 2018		(110	)		(110	)		—			—

Contingent Consideration
June 29, 2019	$	(9,394	)		—			—		$	(9,394	)
September 29, 2018		(10,542	)		—			—			(10,542	)

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans		Dollar Value of Shares that May Yet Be Purchased Under the Plans
March 31, 2019 to May 4, 2019		—		—		—	$9.9 million
May 5, 2019 to June 1, 2019		14,000	$	21.97		14,000	9.5 million
June 2, 2019 to June 29, 2019		—		—		—	9.5 million
Total		14,000	$	21.97		14,000	$9.5 million