Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Apr. 02, 2016 | May. 06, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | DELTA APPAREL, INC | |
Entity Central Index Key | 1,101,396 | |
Current Fiscal Year End Date | --10-01 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Apr. 2, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 7,713,505 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Apr. 02, 2016 | Oct. 03, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 742 | $ 300 |
Accounts receivable, less allowances of $3,039 and $2,984, respectively | 60,198 | 62,741 |
Inventories, net | 163,659 | 148,372 |
Prepaid expenses and other current assets | 5,312 | 2,844 |
Total current assets | 229,911 | 214,257 |
Property, plant and equipment, net of accumulated depreciation of $84,601 and $81,376, respectively | 42,238 | 39,653 |
Goodwill | 36,729 | 36,729 |
Intangibles, net | 21,497 | 22,162 |
Deferred income taxes | 6,011 | 7,294 |
Other assets | 4,292 | 4,808 |
Total assets | 340,678 | 324,903 |
Current liabilities: | ||
Accounts payable | 56,595 | 53,349 |
Accrued expenses | 16,723 | 20,996 |
Income tax payable | 128 | 87 |
Current portion of long-term debt | 7,663 | 8,340 |
Total current liabilities | 81,109 | 82,772 |
Long-term debt, less current maturities | 107,364 | 93,872 |
Other liabilities | 1,531 | 660 |
Contingent consideration | 2,800 | 3,100 |
Total liabilities | 192,804 | 180,404 |
Shareholders’ equity: | ||
Preferred stock—$0.01 par value, 2,000,000 shares authorized, none issued and outstanding | 0 | 0 |
Common stock —$0.01 par value, 15,000,000 shares authorized, 9,646,972 shares issued, and 7,713,505 and 7,797,166 shares outstanding as of April 2, 2016 and October 3, 2015, respectively | 96 | 96 |
Additional paid-in capital | 59,953 | 59,399 |
Retained earnings | 111,831 | 107,715 |
Accumulated other comprehensive loss | (235) | (429) |
Treasury stock —1,933,467 and 1,849,806 shares as of April 2, 2016 and October 3, 2015, respectively | (23,771) | (22,282) |
Total shareholders’ equity | 147,874 | 144,499 |
Total liabilities and shareholders' equity | $ 340,678 | $ 324,903 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Apr. 02, 2016 | Oct. 03, 2015 |
Statement of Financial Position [Abstract] | ||
Allowances for accounts receivable | $ 3,039 | $ 2,984 |
Accumulated Depreciation | $ 84,601 | $ 81,376 |
Shareholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 15,000,000 | 15,000,000 |
Common stock, shares issued | 9,646,972 | 9,646,972 |
Common stock, shares outstanding | 7,713,505 | 7,797,166 |
Treasury stock, shares | 1,933,467 | 1,849,806 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Apr. 02, 2016 | Mar. 28, 2015 | Apr. 02, 2016 | Mar. 28, 2015 | |
Income Statement [Abstract] | ||||
Net sales | $ 109,160 | $ 115,042 | $ 199,331 | $ 208,422 |
Cost of goods sold | 83,434 | 93,807 | 154,736 | 171,861 |
Gross profit | 25,726 | 21,235 | 44,595 | 36,561 |
Selling, general and administrative expenses | 20,032 | 21,640 | 36,916 | 40,180 |
Change in fair value of contingent consideration | (100) | 65 | (300) | 130 |
Gain on sale of business | 0 | (7,704) | 0 | (7,704) |
Other income, net | (137) | (94) | (177) | (155) |
Operating income | 5,931 | 7,328 | 8,156 | 4,110 |
Interest expense, net | 1,396 | 1,491 | 2,671 | 3,019 |
Income before provision for income taxes | 4,535 | 5,837 | 5,485 | 1,091 |
Provision for income taxes | 1,099 | 2,191 | 1,369 | 1,656 |
Net income (loss) | $ 3,436 | $ 3,646 | $ 4,116 | $ (565) |
Basic earnings (loss) per share (in dollars per share) | $ 0.44 | $ 0.46 | $ 0.53 | $ (0.07) |
Diluted earnings (loss) per share (in dollars per share) | $ 0.43 | $ 0.46 | $ 0.52 | $ (0.07) |
Weighted average number of shares outstanding (in shares) | 7,735 | 7,892 | 7,748 | 7,886 |
Dilutive effect of stock options and awards (in shares) | 229 | 78 | 211 | 0 |
Weighted average number of shares assuming dilution (in shares) | 7,964 | 7,970 | 7,959 | 7,886 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Apr. 02, 2016 | Mar. 28, 2015 | Apr. 02, 2016 | Mar. 28, 2015 | |
Comprehensive income (loss): | ||||
Net income (loss) | $ 3,436 | $ 3,646 | $ 4,116 | $ (565) |
Net unrealized (loss) gain on cash flow hedges, net of tax | (33) | (125) | 193 | (129) |
Comprehensive income (loss) | $ 3,403 | $ 3,521 | $ 4,309 | $ (694) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Apr. 02, 2016 | Mar. 28, 2015 | |
Operating activities: | ||
Net income (loss) | $ 4,116 | $ (565) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Depreciation and amortization | 4,745 | 4,866 |
Amortization of deferred financing fees | 250 | 250 |
Excess tax benefits from exercise of stock options | (89) | 12 |
Provision for deferred income taxes | 1,283 | 851 |
Gain on sale of The Game assets before transaction costs | 0 | (8,114) |
Non-cash stock compensation | 952 | 428 |
Change in fair value of contingent consideration | (300) | 130 |
Loss on disposal of equipment | 28 | 12 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 2,543 | (5,352) |
Inventories | (15,287) | (1,232) |
Prepaid expenses and other assets | (2,469) | (1,330) |
Other non-current assets | 266 | 76 |
Accounts payable | 2,659 | (7,527) |
Accrued expenses | (4,319) | (722) |
Income tax payable/receivable | 130 | 1,072 |
Other liabilities | 139 | (188) |
Net cash used in operating activities | (5,353) | (17,333) |
Investing activities: | ||
Purchases of property and equipment, net | (4,996) | (2,451) |
Proceeds from sale of The Game assets | 0 | 14,913 |
Proceeds from sale of fixed assets | 21 | 470 |
Net cash (used in) provided by investing activities | (4,975) | 12,932 |
Financing activities: | ||
Proceeds from long-term debt | 237,765 | 253,540 |
Repayment of long-term debt | (224,950) | (248,452) |
Repayment of capital financing | (153) | (78) |
Payment of deferred financing fees | 0 | (25) |
Repurchase of common stock | (1,818) | 0 |
Payment of withholding taxes on exercise of stock options | (163) | 0 |
Excess tax benefits from exercise of stock options | 89 | (12) |
Net cash provided by financing activities | 10,770 | 4,973 |
Net increase in cash and cash equivalents | 442 | 572 |
Cash and cash equivalents at beginning of period | 300 | 612 |
Cash and cash equivalents at end of period | 742 | 1,184 |
Supplemental cash flow information: | ||
Cash paid during the period for interest | 2,104 | 2,417 |
Cash paid (received) during the period for income taxes, net of refunds received | 75 | (341) |
Non-cash financing activity - capital lease agreements | $ 1,374 | $ 0 |
Basis of Presentation and Descr
Basis of Presentation and Description of Business | 6 Months Ended |
Apr. 02, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Description of Business | Basis of Presentation and Description of Business We prepared the accompanying interim condensed consolidated financial statements in accordance with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles ("U.S. GAAP") for complete financial statements. We believe these Condensed Consolidated Financial Statements include all normal recurring adjustments considered necessary for a fair presentation. Operating results for the six months ended April 2, 2016 , are not necessarily indicative of the results that may be expected for our fiscal year ending October 1, 2016. Although our various product lines are sold on a year-round basis, the demand for specific products or styles reflects some seasonality, with sales in our June quarter generally being the highest and sales in our December quarter generally being the lowest. For more information regarding our results of operations and financial position, refer to the Consolidated Financial Statements and footnotes included in our Form 10-K for our fiscal year ended October 3, 2015, filed with the United States Securities and Exchange Commission (“SEC”). “Delta Apparel”, the “Company”, and “we”, “us” and “our” are used interchangeably to refer to Delta Apparel, Inc. together with our domestic wholly-owned subsidiaries, including M.J. Soffe, LLC (“Soffe”), Junkfood Clothing Company (“Junkfood”), Salt Life, LLC ("Salt Life"), Art Gun, LLC (“Art Gun”), and other international subsidiaries, as appropriate to the context. Delta Apparel, Inc. is an international apparel design, marketing, manufacturing and sourcing company that features a diverse portfolio of lifestyle basics and branded activewear apparel and headwear. We specialize in selling casual and athletic products through a variety of distribution channels and distribution tiers, including specialty stores, boutiques, department stores, mid and mass channels, e-retailers, and the U.S. military. Our products are also made available direct-to-consumer on our websites and in our retail stores. We believe this diversified distribution allows us to capitalize on our strengths to provide casual activewear to consumers purchasing from most types of retailers. We design and internally manufacture the majority of our products, which allows us to offer a high degree of consistency and quality controls as well as leverage scale efficiencies. One of our strengths is the speed with which we can reach the market from design to delivery. We have manufacturing operations located in the United States, El Salvador, Honduras and Mexico, and use domestic and foreign contractors as additional sources of production. Our distribution facilities are strategically located throughout the United States to better serve our customers with same-day shipping on our catalog products and weekly replenishments to retailers. We were incorporated in Georgia in 1999 and our headquarters is located at 322 South Main Street, Greenville, South Carolina 29601 (telephone number: 864-232-5200). Our common stock trades on the NYSE MKT under the symbol “DLA”. We operate on a 52-53 week fiscal year ending on the Saturday closest to September 30. Our 2016 fiscal year is a 52-week year and will end on October 1, 2016. Our 2015 fiscal year was a 53-week year and ended on October 3, 2015. Reclassifications Certain amounts have been corrected in the October 3, 2015, balance sheet to conform to the classification of those balances as of April 2, 2016. These include the reclassification of deposits from Prepaid expenses and other current assets to Other assets in the amount of $1.2 million and the reclassification of the current portion of interest rate swaps from Other liabilities to Accrued liabilities in the amount of $0.3 million . |
Accounting Policies
Accounting Policies | 6 Months Ended |
Apr. 02, 2016 | |
Accounting Policies [Abstract] | |
Accounting Policies | Accounting Policies Our accounting policies are consistent with those described in our Significant Accounting Policies in our Form 10-K for the fiscal year ended October 3, 2015 , filed with the SEC. |
New Accounting Standards
New Accounting Standards | 6 Months Ended |
Apr. 02, 2016 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Standards | New Accounting Standards Recently Adopted Standards In November 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes , ("ASU 2015-17"). This new guidance requires businesses to classify deferred tax liabilities and assets on their balance sheets as noncurrent. Under existing accounting standards, a business must separate deferred income tax liabilities and assets into current and noncurrent. ASU 2015-17 was issued as a way to simplify the way businesses classify deferred tax liabilities and assets on their balance sheets. Public companies must apply ASU 2015-17 to fiscal years beginning after December 15, 2016. Companies must follow the requirements for interim periods within those fiscal years, but early adoption at the beginning of an interim or annual period is allowed for all entities. ASU 2015-17 was adopted in our fiscal year beginning October 4, 2015. The implementation of ASU 2015-17 was applied retroactively to the October 3, 2015, Condensed Consolidated Balance Sheet included in this Form 10-Q. As a result of this retroactive application, current deferred income tax assets of $7.3 million have been netted with noncurrent deferred income tax liabilities of $7 thousand and reclassified to noncurrent deferred income tax assets. Standards Not Yet Adopted In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers , ("ASU 2014-09"). This new guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. ASU 2014-09 is effective for annual periods beginning after December 15, 2017, for public business entities and permits the use of either the retrospective or cumulative effect transition method. Early application is permitted only for annual reporting periods beginning after December 15, 2016. ASU 2014-09 will therefore be effective in our fiscal year beginning September 30, 2018. We are evaluating the effect that ASU 2014-09 will have on our Consolidated Financial Statements and related disclosures. In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory , ("ASU 2015-11"). This new guidance requires an entity to measure inventory at the lower of cost and net realizable value. Currently, entities measure inventory at the lower of cost or market. ASU 2015-11 replaces market with net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured under last-in, first-out or the retail inventory method. ASU 2015-11 requires prospective adoption for inventory measurements for fiscal years beginning after December 15, 2016, and interim periods within those years for public business entities. Early application is permitted. ASU 2015-11 will therefore be effective in our fiscal year beginning October 1, 2017. We are evaluating the effect that ASU 2015-11 will have on our Consolidated Financial Statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases, (ASU 2016-02). ASU 2016-02 requires lessees to recognize assets and liabilities for most leases. All leases will be required to be recorded on the balance sheet with the exception of short-term leases. Early application is permitted. The guidance must be adopted using a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. ASU 2016-02 is effective for financial statements issued for annual periods beginning after December 15, 2018, and interim periods within those annual periods. ASU 2016-02 will therefore be effective in our fiscal year beginning September 29, 2019. We are evaluating the effect that ASU 2016-02 will have on our Consolidated Financial Statements and related disclosures. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, (ASU 2016-09). ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. ASU 2016-09 will therefore be effective in our fiscal year beginning October 1, 2017. We are evaluating the effect that ASU 2016-09 will have on our Consolidated Financial Statements and related disclosures. |
Sale of The Game
Sale of The Game | 6 Months Ended |
Apr. 02, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Sale of The Game | Sale of The Game On March 2, 2015, we completed the sale of our The Game branded collegiate headwear and apparel business to David Peyser Sportswear, Inc., owner of MV Sport, Inc. for $14.9 million . The business sold consisted of The Game branded products sold nationally in college bookstores and through team dealers. This transaction further strengthened our balance sheet and enables us to focus on areas of our business that are more strategic to our long-term goals. Our Salt Life business and corporate business, Kudzu, previously operated within To The Game, LLC (now Salt Life, LLC) were not included in the sale of the collegiate part of the business. The sale included finished goods inventory of $6.0 million , $0.4 million in fixed assets, and $0.1 million in other assets, along with the requirement that we indemnify up to $0.3 million of legal costs associated with a particular litigation matter which was subsequently settled. The transaction did not include accounts receivable which we subsequently collected in the normal course of business and certain undecorated apparel inventory. We incurred $0.4 million in direct selling expenses associated with the transaction. In addition, we incurred certain indirect costs associated with the transaction, including a $0.8 million devaluation of the inventory not included in the sale and $1.4 million in indirect incentive-based expenses. The pre-tax gain on the sale of The Game assets, inclusive of the direct and indirect expenses, was $5.6 million . The transaction and associated indirect expenses were recorded in our Condensed Consolidated Statements of Operations in our 2015 second quarter as follows: (i) proceeds of $14.9 million less costs of assets sold and direct selling costs resulting in a gain of $7.7 million recorded as a gain on sale of business; (ii) $1.4 million in indirect expenses recorded in our selling, general and administrative expenses; and (iii) $0.8 million of indirect expenses recorded in our cost of goods sold. For income tax purposes, this gain and associated indirect expenses were treated as a discrete item and resulted in $2.2 million in income tax expense being recorded in our 2015 second quarter. |
Salt Life Acquisition
Salt Life Acquisition | 6 Months Ended |
Apr. 02, 2016 | |
Business Combinations [Abstract] | |
Salt Life Acquisition | Salt Life Acquisition On August 27, 2013, Salt Life purchased substantially all of the assets of Salt Life Holdings, LLC ("Salt Life Holdings"), including all of its domestic and international trademark rights in the Salt Life brand (the "Salt Life Acquisition"). The purchase price for the Salt Life Acquisition consisted of: (i) a cash payment at closing of $12,000,000, (ii) a deposit at closing of $3,000,000 into an escrow account to be held to secure indemnification obligations of the seller under the asset purchase agreement and to be held for a period of up to fifty-four months following the closing, and (iii) delivery of two promissory notes in the aggregate principal amount of $22,000,000. An additional amount may be 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. At acquisition, we recorded an accrual of $3.4 million for the fair value of the contingent consideration associated with the Salt Life Acquisition. We financed the cash portion of the purchase price through our Fourth Amended and Restated Loan and Security Agreement, as amended on August 27, 2013. We expensed all acquisition-related costs, totaling $0.3 million , in the selling, general and administrative expense line item of our Condensed Consolidated Statements of Operations in the quarter ended September 28, 2013. On December 6, 2013, we entered into an agreement (the "IMG Agreement") with IMG Worldwide, Inc. ("IMG") that provides for the termination of the Salt Life brand license agreements entered into between Delta Apparel and IMG (as agent on behalf of Salt Life Holdings) prior to the Salt Life Acquisition as well as the agency agreement entered into between Salt Life Holdings and IMG prior to the Salt Life Acquisition. In addition, the IMG Agreement provides that Delta Apparel and Salt Life Holdings are released from all obligations and liabilities under those agreements or relating to the Salt Life Acquisition. Pursuant to the IMG Agreement, Salt Life and IMG entered into a separate, multi-year agency agreement, which has since been terminated, whereby IMG represented Salt Life with respect to the licensing of the Salt Life brand in connection with certain product and service categories. Salt Life agreed to pay IMG installments totaling $3,500,000 to terminate these contractual arrangements. As a result, the above-referenced $3,000,000 indemnification asset was released from escrow during the quarter ended December 28, 2013, and applied towards these payment obligations, along with additional amounts previously accrued for royalty obligations under the above-referenced Salt Life brand license agreements. During the years ended October 3, 2015, and September 27, 2014, we made payments of $0.8 million and $2.1 million , respectively, in accordance with the terms of the agreement. As of April 2, 2016, there was one quarterly installment of $0.2 million remaining . We have recorded the fair value of the liability as of April 2, 2016, on our financials with $0.2 million in accrued expenses. The Salt Life Acquisition continues our strategy of building lifestyle brands that take advantage of our creative capabilities, vertical manufacturing platform and international sourcing competencies. Prior to the Salt Life Acquisition, Salt Life, LLC sold Salt Life-branded products under exclusive license agreements which began in January 2011. As such, the results of Salt Life sales have been included in our Condensed Consolidated Financial Statements since that time. We accounted for the Salt Life Acquisition pursuant to ASC 805, Business Combinations, with the purchase price allocated based upon fair value. We have identified certain intangible assets associated with Salt Life, including tradenames and trademarks, license agreements, non-compete agreements and goodwill. The total amount of goodwill has been accounted for as deductible for tax purposes. Components of the intangible assets recorded at acquisition are as follows (in thousands, except economic life data): Economic Life Goodwill $ 19,917 N/A Intangibles: Tradename/trademarks 16,000 30 years License agreements 2,100 15 – 30 years Non-compete agreements 770 6.6 years Total intangibles 18,870 Total goodwill and intangibles $ 38,787 |
Inventories
Inventories | 6 Months Ended |
Apr. 02, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories, net of reserves of $8.7 million and $8.4 million as of April 2, 2016 , and October 3, 2015 , respectively, consist of the following (in thousands): April 2, October 3, Raw materials $ 12,436 $ 11,412 Work in process 18,183 19,071 Finished goods 133,040 117,889 $ 163,659 $ 148,372 As of April 2, 2016, finished goods inventory included $2.2 million in consignment inventory located at one of our large retail customers that had filed for bankruptcy. |
Debt
Debt | 6 Months Ended |
Apr. 02, 2016 | |
Debt Disclosure [Abstract] | |
Debt | Debt Delta Apparel, Soffe, Junkfood, Salt Life, and Art Gun were previously borrowers under the May 27, 2011, Fourth Amended and Restated Loan and Security Agreement, with the financial institutions named therein, Wells Fargo Bank, National Association, as Administrative Agent, Bank of America, N.A., as Syndication Agent, Wells Fargo Capital Finance, LLC, as Sole Lead Arranger, and Wells Fargo Capital Finance, LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Joint Bookrunners. The May 27, 2011, Fourth Amended and Restated Loan Agreement (as subsequently amended, the "Amended Loan Agreement") was subsequently amended on each of August 27, 2013, September 4, 2013, September 26, 2014, and February 27, 2015. Pursuant to the Amended Loan Agreement, the maximum line of credit under our U.S. revolving credit facility is $145 million (subject to borrowing base limitations), and matures on May 27, 2017. Provided that no event of default exists, we have the option to increase the maximum credit available under the facility to $200 million (subject to borrowing base limitations), conditioned upon the Administrative Agent's ability to secure additional commitments and customary closing conditions. In fiscal year 2014, we paid $0.4 million in financing costs in conjunction with the September 26, 2014, amendment. No financing costs were paid in conjunction with the February 27, 2015, amendment. As of April 2, 2016, there was $94.7 million outstanding under our U.S. revolving credit facility at an average interest rate of 3.25%, and additional borrowing availability of $22.2 million. This credit facility includes a financial covenant requiring that if the amount of availability falls below the threshold amounts set forth in the Amended Loan Agreement, our Fixed Charge Coverage Ratio (“FCCR”) (as defined in the Amended Loan 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 April 2, 2016 , because our availability was above the minimum required under the Amended Loan Agreement. At April 2, 2016, our FCCR was above the required 1.1 to 1.0 ratio and therefore we would have satisfied our financial covenant had we been subject to it. At April 2, 2016, and October 3, 2015, there was $7.6 million and $7.3 million, respectively, of retained earnings free of restrictions to make cash dividends or stock repurchases. The Amended Loan 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 Loan Agreement as long-term debt. In conjunction with the Salt Life Acquisition, we issued two promissory notes in the aggregate principal 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 have imputed interest at 1.92% and 3.62% on the promissory notes that mature on June 30, 2016, and June 30, 2019, respectively. At April 2, 2016 , the discounted value of the promissory notes was $8.7 million . In March, 2011, we entered into a credit facility with Banco Ficohsa, a Honduran bank. This credit facility is secured by a first-priority lien on the assets of our Honduran operations and the loan is not guaranteed by our U.S. entities. The installment portion of the credit facility carries a fixed interest rate of 7% for a term of seven years and is denominated in U.S. dollars. As of April 2, 2016 , there was $2.0 million outstanding on the installment portion of this loan. The revolving credit portion of the loan has an average interest rate of 8.0% with an ongoing 18 -month term (expiring March 2019) and is denominated in U.S. dollars. The revolving credit portion of the loan requires minimum payments during each 6 -month period of the 18 -month term; 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 agreement 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 the objective covenants, the amounts have been classified as long-term debt. As of April 2, 2016 , there was $5.0 million outstanding under the revolving portion of the credit facility. In October, 2013, we entered into two new term loan agreements with Banco Ficohsa to finance our Honduran manufacturing expansion project. These loans are also not guaranteed by our U.S. entities and are secured by a first-priority lien on the assets of our Honduran operations. The first loan, an 18 -month agreement for $1.8 million , with a 7% fixed interest rate, is denominated in U.S. dollars, and has ratable monthly principal and interest payments due through the end of the term. As of April 2, 2016, this loan had been extinguished. The second loan, a seven -year agreement for $4.2 million with a 7% fixed interest rate, was denominated in U.S. dollars and had ratable monthly principal and interest payments due through the end of the term. In November 2014, this loan was re-financed to a six -year agreement for $3.6 million with a 7.5% fixed interest rate. As of April 2, 2016 , there was $2.9 million outstanding under this loan agreement. In April 2015, we entered into another term loan agreement with Banco Ficohsa to finance further capital expansion at our Honduran facilities. This loan is not guaranteed by our U.S. entities and is secured by a first-priority lien on the assets of our Honduran operations. The loan is a seven -year agreement for $2.0 million with an 8% fixed interest rate, is denominated in U.S. dollars, and has ratable monthly principal and interest payments due through the end of the term. The first payment was due in June 2015. As of April 2, 2016 , there was $1.8 million outstanding under this loan agreement. The carrying value of debt approximates the fair value. |
Selling, General and Administra
Selling, General and Administrative Expense | 6 Months Ended |
Apr. 02, 2016 | |
Selling, General and Administrative Expense [Abstract] | |
Selling, General and Administrative Expense | Selling, General and Administrative Expense We include in selling, general and administrative ("SG&A") expenses 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 $3.9 million and $4.1 million for the three months ended April 2, 2016, and March 28, 2015, respectively, and totaled $7.6 million and $7.8 million for the six months ended April 2, 2016, and March 28, 2015, respectively. In addition, SG&A expenses include costs related to sales associates, administrative personnel, advertising and marketing expenses, royalty payments on licensed products and other general and administrative expenses. During the fourth quarter of fiscal year 2014, certain strategic initiatives were implemented to improve net profitability. This effort included streamlining our administrative workforce, delayering our management structure and streamlining decision-making and information flow, as well as reducing duplicative and excess fixed cost. During the fourth quarter of fiscal year 2014, we recorded a total of $4.0 million in SG&A expense associated with these strategic initiatives. As of October 3, 2015, approximately $0.5 million of these expenses were accrued and reported on our Condensed Consolidated Balance Sheets . During the first six months of fiscal year 2016, no additional expense was incurred in association with these strategic initiatives and $67 thousand was disbursed, leaving approximately $0.5 million remaining accrued on our April 2, 2016, Condensed Consolidated Balance Sheets . |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Apr. 02, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation On February 4, 2015, our shareholders re-approved the Delta Apparel, Inc. 2010 Stock Plan ("2010 Stock Plan") that was originally approved by our shareholders on November 11, 2010. The re-approval of the 2010 Stock Plan, including the material terms of the performance goals included in the 2010 Stock Plan, enables us to continue to grant equity incentive compensation awards that are structured in a manner intended to qualify as tax deductible, performance-based compensation under Section 162(m) of the Internal Revenue Code of 1986. Since November 2010, no additional awards have been or will be granted under either the Delta Apparel Stock Option Plan ("Option Plan") or the Delta Apparel Incentive Stock Award Plan ("Award Plan"); instead, all stock awards have been and will continue to be granted 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 and six months ended April 2, 2016 , we recognized $0.7 million and $1.1 million , respectively, in stock-based compensation expense. During the three and six months ended March 28, 2015, we recognized $0.7 million and $0.5 million , respectively, in stock-based compensation expense. 2010 Stock Plan Under the 2010 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 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 any given calendar year. If a participant dies or becomes disabled (as defined in the 2010 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 Stock Plan, to establish, amend and rescind any rules and regulations relating to the 2010 Stock Plan, and to make any other determinations that it deems necessary. During the quarter ended April 2, 2016, restricted stock units representing 83,788 shares of our common stock were granted. These restricted stock units are service-based and 8,438 units are eligible to vest upon the filing of our Annual Report on Form 10-K for the year ending October 1, 2016. The remaining 75,350 units are eligible to vest upon the filing of our Annual Report on Form 10-K for the year ending September 30, 2017. Upon vesting, one -half of these awards are payable in the common stock of Delta Apparel, Inc. and are accounted for under the equity method pursuant to ASC 718 and one -half are payable in cash and are accounted for under the liability method pursuant to ASC 718. During the quarter ended April 2, 2016, performance stock units representing 75,350 shares of our common stock were granted. These performance stock units are based on the achievement of certain performance criteria for the fiscal years ending October 1, 2016, and September 30, 2017, and are eligible to vest upon the filing of our Annual Report on Form 10-K for the year ending September 30, 2017. Upon vesting, one -half of these awards are payable in the common stock of Delta Apparel, Inc. and are accounted for under the equity method pursuant to ASC 718 and one -half are payable in cash and are accounted for under the liability method pursuant to ASC 718. During the three months ended January 2, 2016, performance stock units representing 59,800 shares of our common stock vested upon the filing of our Annual Report on Form 10-K for the fiscal year ended October 2, 2015. Of these performance units, one-half were payable in common stock and one-half were payable in cash and were issued in accordance with their respective agreements. No awards vested under the 2010 Stock Plan during the quarter ended April 2, 2016. As of April 2, 2016 , there was $4.8 million of total unrecognized compensation cost related to non-vested awards granted under the 2010 Stock Plan. This cost is expected to be recognized over a period of 2.7 years . Option Plan All options granted under the Option Plan vested prior to October 3, 2015. As such, no expense was recognized during the three or six months ended April 2, 2016, or for the three or six months ended March 28, 2015. No options were exercised during the six months ended April 2, 2016. During the six months ended March 28, 2015, vested options representing 14,000 shares of our common stock were exercised, and the shares issued, in accordance with their respective agreements. Award Plan All awards granted under the Award Plan have vested and been exercised, and no awards remain outstanding. |
Purchase Contracts
Purchase Contracts | 6 Months Ended |
Apr. 02, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Purchase Contracts | Purchase Contracts We have entered into agreements, and have fixed prices, to purchase yarn, natural gas, finished fabric, and finished apparel products. At April 2, 2016 , minimum payments under these contracts were as follows (in thousands): Yarn $ 37,295 Natural gas 83 Finished fabric 2,752 Finished products 21,512 $ 61,642 |
Business Segments
Business Segments | 6 Months Ended |
Apr. 02, 2016 | |
Segment Reporting [Abstract] | |
Business Segments | Business Segments We operate our business in two distinct segments: branded and basics. 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. In the second quarter of 2016, in connection with the ongoing evaluation of our current and future strategic initiatives, the Chief Operating Decision Maker began reviewing the performance of the branded and basics segments excluding general corporate expenses. Therefore, we will report our financial performance on the two reportable segments, branded and basics, with corporate activities stated separately. Our financial statements reflect this new reporting with prior periods adjusted accordingly. The branded segment is comprised of our business units focused on specialized apparel garments and headwear to meet consumer preferences and fashion trends, and includes the Salt Life, Junkfood, and Soffe business units, as well as The Game business unit prior to its disposition on March 2, 2015. These branded embellished and unembellished products are sold through specialty and boutique shops, upscale and traditional department stores, mid-tier retailers, sporting goods stores, e-retailers, and the U.S. military. Products in this segment are marketed under our lifestyle brands of Salt Life®, Junk Food®, and Soffe®, as well as other labels. The basics segment is comprised of our business units primarily focused on garment styles characterized by low fashion risk, and includes our Delta Activewear (which includes Delta Catalog and FunTees) and Art Gun business units. We market, distribute and manufacture knit apparel under the main brands of Delta Pro Weight® and Delta Magnum Weight® for sale to a diversified audience ranging from large licensed screen printers to small independent businesses. We also manufacture private label products for major branded sportswear companies, retailers, corporate industry programs, e-retailers, and 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 digital print equipment and its proprietary technology, Art Gun embellishes garments to create private label, custom decorated apparel servicing the fast-growing e-retailer channels. Robert W. Humphreys, our 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 earnings (loss)”). Our segment operating earnings (loss) may not be comparable to similarly titled measures used by other companies. Intercompany transfers between operating segments are transacted at cost and have been eliminated within the segment amounts shown in the following table. Information about our operations as of and for the three months ended April 2, 2016 , and March 28, 2015 , by operating segment, is as follows (in thousands): Basics Branded Corporate Consolidated Three months ended April 2, 2016 Net sales $ 69,840 $ 39,320 $ — $ 109,160 Segment operating income (loss) 6,939 2,466 (3,474 ) 5,931 Segment assets 173,025 157,870 9,783 340,678 Three months ended March 28, 2015 Net sales $ 71,388 $ 43,654 $ — $ 115,042 Segment operating income (loss) * 1,707 8,089 (2,468 ) 7,328 Segment assets 175,581 160,078 13,995 349,654 Basics Branded Corporate Consolidated Six months ended April 2, 2016 Net sales $ 131,356 $ 67,975 $ — $ 199,331 Segment operating income (loss) 12,976 1,513 (6,333 ) 8,156 Six months ended March 28, 2015 Net sales $ 129,068 $ 79,354 $ — $ 208,422 Segment operating income (loss) * 1,362 7,313 (4,565 ) 4,110 *The net gain from the sale of The Game that is included in the branded segment operating income is $5.6 million . Excluding the gain the branded the segment's operating income was $2.5 million and $1.7 million for the three and six months ended March 28, 2015, respectively. The following table reconciles the segment operating earnings to the Company's consolidated income before provision from income taxes (in thousands): Three Months Ended Six Months Ended April 2, March 28, April 2, March 28, Segment operating income $ 5,931 $ 7,328 $ 8,156 $ 4,110 Unallocated interest expense 1,396 1,491 2,671 3,019 Consolidated income before provision for income taxes $ 4,535 $ 5,837 $ 5,485 $ 1,091 |
Income Taxes
Income Taxes | 6 Months Ended |
Apr. 02, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Our effective income tax provision for the six months ended April 2, 2016, was 25.0% , compared to an effective income tax provision of 151.8% for the same period in the prior year, and an effective tax provision of 19.9% for the fiscal year ended October 3, 2015. We benefit from having income in foreign jurisdictions that are either exempt from income taxes or have tax rates that are lower than 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 October 1, 2016, is expected to be approximately 25% . However, changes in the mix of U.S. taxable income compared to profits in tax-free jurisdictions can have a significant impact on our overall effective tax rate. We file income tax returns in the U.S. federal jurisdiction and various state, local and foreign jurisdictions. Tax years 2012 through 2013, according to statute and with few exceptions, remain open to examination by various federal, state, local and foreign jurisdictions. |
Derivatives and Fair Value Meas
Derivatives and Fair Value Measurements | 6 Months Ended |
Apr. 02, 2016 | |
Fair Value Disclosures [Abstract] | |
Derivatives and Fair Value Measurements | 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. Outstanding instruments as of April 2, 2016 , are noted below: Effective Date Notational Amount Fixed LIBOR Rate Maturity Date Interest Rate Swap September 9, 2013 $15 million 1.1700 % September 9, 2016 Interest Rate Swap September 9, 2013 $15 million 1.6480 % September 11, 2017 Interest Rate Swap September 19, 2013 $15 million 1.0030 % September 19, 2016 Interest Rate Swap September 19, 2013 $15 million 1.4490 % September 19, 2017 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. 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) are measured at fair value on a recurring basis (in thousands): Fair Value Measurements Using Period Ended Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Interest Rate Swaps April 2, 2016 $ (383 ) — $ (383 ) — October 3, 2015 $ (697 ) — $ (697 ) — Cotton Options April 2, 2016 $ 21 $ 21 — — October 3, 2015 — — — — Contingent Consideration April 2, 2016 $ (2,800 ) — — $ (2,800 ) October 3, 2015 $ (3,100 ) — — $ (3,100 ) The fair value of the interest rate swap agreements were derived from 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. Fair values for debt are 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). 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 April 2, 2016 , and October 3, 2015 : April 2, October 3, Deferred tax assets 148 — Accrued Expenses (302 ) (519 ) Deferred tax liabilities — 269 Other liabilities (81 ) (179 ) Accumulated other comprehensive loss $ (235 ) $ (429 ) The fair value of the cotton option contracts were established based on the daily mark for identical assets on the open market as of the close of business on April 1, 2016, the last business day prior to our quarter ended April 2, 2016, which fall in Level 1 of the fair value hierarchy. The fair value of the cotton option contracts is included in the prepaid and other current assets line item on our Condensed Consolidated Balance Sheets. The Salt Life Acquisition includes contingent consideration 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 a Monte Carlo model which used the historical results and projected cash flows based on the contractually defined terms, discounted as necessary, to estimate the fair value of the contingent consideration for Salt Life at acquisition, as well as to remeasure the contingent consideration related 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. At April 2, 2016 , we had $2.8 million accrued in contingent consideration related to the Salt Life Acquisition, a $0.3 million reduction from the accrual at October 3, 2015. The reduction in the fair value of contingent consideration principally resulted from the reduced remaining time in the measurement period using a Monte Carlo model. We still expect sales in calendar year 2019 to approximate the expectations for calendar 2019 sales used in the valuation of contingent consideration at acquisition. No contingent consideration is expected to be paid under the terms of the Art Gun arrangement. Assets Measured at Fair Value on a Non-Recurring Basis Intangible assets acquired in connection with the Salt Life Acquisition are identified by type in Note E—Salt Life Acquisition. These valuations included significant unobservable inputs (Level 3). |
Legal Proceedings
Legal Proceedings | 6 Months Ended |
Apr. 02, 2016 | |
Legal Proceedings [Abstract] | |
Legal Proceedings | Legal Proceedings California Wage and Hour Litigation We were served with a complaint in the Superior Court of the State of California, County of Los Angeles, on or about March 13, 2013, by a former employee of our Delta Activewear business unit at our Santa Fe Springs, California distribution facility alleging violations of California wage and hour laws and unfair business practices with respect to meal and rest periods, compensation and wage statements, and related claims (the "Complaint"). The Complaint is brought as a class action and seeks to include all of our Delta Activewear business unit's current and certain former employees within California who are or were non-exempt under applicable wage and hour laws. The Complaint also names as defendants Junkfood, Soffe, an independent contractor of Soffe, and a former employee, and sought to include all current and certain former employees of Junkfood, Soffe and the Soffe independent contractor within California who are or were non-exempt under applicable wage and hour laws. Delta Apparel, Inc. is now the only remaining defendant in this case. The Complaint seeks injunctive and declaratory relief, monetary damages and compensation, penalties, attorneys' fees and costs, and pre-judgment interest. On or about August 22, 2014, we were served with an additional complaint in the Superior Court of the State of California, County of Los Angeles, by a former employee of Junkfood and two former employees of Soffe at our Santa Fe Springs, California distribution facility alleging violations of California wage and hour laws and unfair business practices the same or substantially similar to those alleged in the Complaint and seeking the same or substantially similar relief as sought in the Complaint. This complaint is brought as a class action and seeks to include all current and certain former employees of Junkfood, Soffe, our Delta Activewear business unit, the Soffe independent contractor named in the Complaint and an individual employee of such contractor within California who are or were non-exempt under applicable wage and hour laws. Delta Apparel, Inc. and the contractor employee have since been voluntarily dismissed from the case and the remaining defendants are Junkfood, Soffe, and the Soffe contractor. On September 17, 2015, an agreement in principle was reached between all parties to settle the above-referenced wage and hour matters. Pursuant to that agreement, the defendants in the matters have agreed to pay an aggregate amount of $300,000 in exchange for a comprehensive release of all claims at issue in the matters. Delta Apparel, Inc., Soffe and Junkfood have collectively agreed to contribute $200,000 towards the aggregate settlement amount, which remains in our accrued expenses as of April 2, 2016. The settlement agreement requires the approval of the applicable court before it can be finalized and the parties are currently seeking the necessary approvals. Other In addition, 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 effect on our operations, financial condition, or liquidity. |
Repurchase of Common Stock
Repurchase of Common Stock | 6 Months Ended |
Apr. 02, 2016 | |
Equity [Abstract] | |
Repurchase of Common Stock | Repurchase of Common Stock As of April 2, 2016, our Board of Directors authorized management to use up to $40.0 million to repurchase stock in open market transactions under our Stock Repurchase Program. During the March quarter of fiscal year 2016, we purchased 45,460 shares of our common stock for a total cost of $0.7 million. We did not purchase any shares of our common stock during the March quarter of fiscal year 2015. Through April 2, 2016, we have purchased 2,376,372 shares of our common stock for an aggregate of $29.2 million since the inception of our Stock Repurchase Program. All purchases were made at the discretion of management and pursuant to the safe harbor provisions of SEC Rule 10b-18. As of April 2, 2016, $10.8 million remained available for future purchases under our Stock Repurchase Program, which does not have an expiration date. The following table summarizes the purchases of our common stock for the quarter ended April 2, 2016: 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 January 3, 2016 to February 6, 2016 17,078 $ 13.16 17,078 $11.3 million February 7, 2016 to March 5, 2016 15,539 $ 15.83 15,539 $11.0 million March 6, 2016 to April 2, 2016 12,843 $ 17.93 12,843 $10.8 million Total 45,460 $ 15.42 45,460 $10.8 million |
License Agreements
License Agreements | 6 Months Ended |
Apr. 02, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
License Agreements | License Agreements We have entered into license agreements that provide for royalty payments on net sales of licensed products as set forth in the agreements. These license agreements are within our branded segment. We have incurred royalty expense (included in SG&A expenses) of approximately $1.5 million and $2.2 million in the March quarter of fiscal years 2016 and 2015, respectively. Royalty expense for the six months ended April 2, 2016 and March 28, 2015, were approximately $3.4 million and $4.4 million , respectively. The decline in royalty expense for the six months ended April 2, 2016, compared to the prior year is due to the sale of The Game branded collegiate headwear and apparel business, in March, 2015. See Note D—Sale of The Game, for further information on this transaction. At April 2, 2016 , based on minimum sales requirements, future minimum royalty payments required under these license agreements were as follows (in thousands): Fiscal Year Amount 2016 $ 257 2017 286 2018 5 2019 — $ 548 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Apr. 02, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Components of intangible assets consist of the following (in thousands): April 2, 2016 October 3, 2015 Cost Accumulated Amortization Net Value Cost Accumulated Amortization Net Value Economic Life Goodwill $ 36,729 $ — $ 36,729 $ 36,729 $ — $ 36,729 N/A Intangibles: Tradename/trademarks $ 17,530 $ (2,205 ) $ 15,325 $ 17,530 $ (1,896 ) $ 15,634 20 – 30 yrs Customer relationships 7,220 (3,840 ) 3,380 7,220 (3,664 ) 3,556 20 yrs Technology 1,220 (764 ) 456 1,220 (703 ) 517 10 yrs License agreements 2,100 (268 ) 1,832 2,100 (216 ) 1,884 15 – 30 yrs Non-compete agreements 1,287 (783 ) 504 1,287 (716 ) 571 4 – 8.5 yrs Total intangibles $ 29,357 $ (7,860 ) $ 21,497 $ 29,357 $ (7,195 ) $ 22,162 Amortization expense for intangible assets was $0.3 million for the three months ended April 2, 2016 , and $0.4 million for the three months ended March 28, 2015 , and $0.7 million for each of the six months ended April 2, 2016 , and March 28, 2015 . Amortization expense is estimated to be approximately $1.3 million for fiscal years 2016, 2017, 2018, and 2019, $1.2 million for fiscal year 2020 and $1.1 million for fiscal year 2021. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Apr. 02, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Maiden Facility Closure On May 10, 2016, we announced the closure of our textile manufacturing operations located at 100 West Pine Street, Maiden, North Carolina 28650 (the “Maiden Facility”), and the expansion of production at our Ceiba Textiles facility in Honduras in connection with our ongoing strategic manufacturing initiatives. The closure of the Maiden Facility is expected to be completed in the fourth quarter of the 2016 fiscal year. This continues the migration of our internal production to our lower-cost offshore facilities and the expansion and modernization of those facilities to allow us to take advantage of larger scale operations and efficiencies gained from operating those facilities at or nearer to capacity. Once the Maiden Facility closure is complete, we expect to sell the remaining assets, including the land, building, and any equipment we will not use at other facilities. We expect to incur costs of approximately $3 million relating to this manufacturing alignment. This initiative had no impact on our financial results for the quarter ended April 2, 2016. Fifth Amended and Restated Credit Agreement On May 10, 2016, we entered into a Fifth Amended and Restated Credit Agreement (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, Junkfood Clothing Company, Salt Life, LLC, and Art Gun, LLC (together with the Company, the “Companies”), are co-borrowers under the Amended Credit Agreement. The Amended Credit Agreement amends and restates the existing Fourth Amended and Restated Loan and Security Agreement dated May 27, 2011, which was previously amended by four amendments and had a maturity date of May 27, 2017. Bank of America, N.A. is departing from the syndicate of Lenders, and Regions Bank is joining the syndicate of Lenders. Bank of America, N.A. is also ceasing to serve as the syndication agent for the facility, and Merrill Lynch, Pierce, Fenner & Smith Incorporated will no longer be a joint book runner with Wells Fargo. The Amended Credit Agreement allows us to borrow up to $145 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 available 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. See Part II, Item 5 Other Information for additional detail regarding the Amended Credit Agreement. |
Selling, General and Administ25
Selling, General and Administrative Expense (Policies) | 6 Months Ended |
Apr. 02, 2016 | |
Selling, General and Administrative Expense [Abstract] | |
Selling, General and Administrative Expenses | We include in selling, general and administrative ("SG&A") expenses 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. |
Salt Life Acquisition (Tables)
Salt Life Acquisition (Tables) | 6 Months Ended |
Apr. 02, 2016 | |
Business Combinations [Abstract] | |
Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination | Components of the intangible assets recorded at acquisition are as follows (in thousands, except economic life data): Economic Life Goodwill $ 19,917 N/A Intangibles: Tradename/trademarks 16,000 30 years License agreements 2,100 15 – 30 years Non-compete agreements 770 6.6 years Total intangibles 18,870 Total goodwill and intangibles $ 38,787 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Apr. 02, 2016 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories, Net of Reserves | Inventories, net of reserves of $8.7 million and $8.4 million as of April 2, 2016 , and October 3, 2015 , respectively, consist of the following (in thousands): April 2, October 3, Raw materials $ 12,436 $ 11,412 Work in process 18,183 19,071 Finished goods 133,040 117,889 $ 163,659 $ 148,372 |
Purchase Contracts (Tables)
Purchase Contracts (Tables) | 6 Months Ended |
Apr. 02, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Purchase contracts minimum payments | At April 2, 2016 , minimum payments under these contracts were as follows (in thousands): Yarn $ 37,295 Natural gas 83 Finished fabric 2,752 Finished products 21,512 $ 61,642 |
Business Segments (Tables)
Business Segments (Tables) | 6 Months Ended |
Apr. 02, 2016 | |
Segment Reporting [Abstract] | |
Segment reporting information by segment | Information about our operations as of and for the three months ended April 2, 2016 , and March 28, 2015 , by operating segment, is as follows (in thousands): Basics Branded Corporate Consolidated Three months ended April 2, 2016 Net sales $ 69,840 $ 39,320 $ — $ 109,160 Segment operating income (loss) 6,939 2,466 (3,474 ) 5,931 Segment assets 173,025 157,870 9,783 340,678 Three months ended March 28, 2015 Net sales $ 71,388 $ 43,654 $ — $ 115,042 Segment operating income (loss) * 1,707 8,089 (2,468 ) 7,328 Segment assets 175,581 160,078 13,995 349,654 Basics Branded Corporate Consolidated Six months ended April 2, 2016 Net sales $ 131,356 $ 67,975 $ — $ 199,331 Segment operating income (loss) 12,976 1,513 (6,333 ) 8,156 Six months ended March 28, 2015 Net sales $ 129,068 $ 79,354 $ — $ 208,422 Segment operating income (loss) * 1,362 7,313 (4,565 ) 4,110 |
Reconciliation of segment operating income to consolidated income before income taxes | The following table reconciles the segment operating earnings to the Company's consolidated income before provision from income taxes (in thousands): Three Months Ended Six Months Ended April 2, March 28, April 2, March 28, Segment operating income $ 5,931 $ 7,328 $ 8,156 $ 4,110 Unallocated interest expense 1,396 1,491 2,671 3,019 Consolidated income before provision for income taxes $ 4,535 $ 5,837 $ 5,485 $ 1,091 |
Derivatives and Fair Value Me30
Derivatives and Fair Value Measurements (Tables) | 6 Months Ended |
Apr. 02, 2016 | |
Fair Value Disclosures [Abstract] | |
Outstanding financial instruments | Outstanding instruments as of April 2, 2016 , are noted below: Effective Date Notational Amount Fixed LIBOR Rate Maturity Date Interest Rate Swap September 9, 2013 $15 million 1.1700 % September 9, 2016 Interest Rate Swap September 9, 2013 $15 million 1.6480 % September 11, 2017 Interest Rate Swap September 19, 2013 $15 million 1.0030 % September 19, 2016 Interest Rate Swap September 19, 2013 $15 million 1.4490 % September 19, 2017 |
Financial liabilities measure at fair value on a recurring basis | The following financial assets (liabilities) are measured at fair value on a recurring basis (in thousands): Fair Value Measurements Using Period Ended Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Interest Rate Swaps April 2, 2016 $ (383 ) — $ (383 ) — October 3, 2015 $ (697 ) — $ (697 ) — Cotton Options April 2, 2016 $ 21 $ 21 — — October 3, 2015 — — — — Contingent Consideration April 2, 2016 $ (2,800 ) — — $ (2,800 ) October 3, 2015 $ (3,100 ) — — $ (3,100 ) |
Summary of fair value and presentation in the consolidated balance sheets for derivatives | 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 April 2, 2016 , and October 3, 2015 : April 2, October 3, Deferred tax assets 148 — Accrued Expenses (302 ) (519 ) Deferred tax liabilities — 269 Other liabilities (81 ) (179 ) Accumulated other comprehensive loss $ (235 ) $ (429 ) |
Repurchase of Common Stock Repu
Repurchase of Common Stock Repurchase (Tables) | 6 Months Ended |
Apr. 02, 2016 | |
Equity [Abstract] | |
Summary of purchases | The following table summarizes the purchases of our common stock for the quarter ended April 2, 2016: 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 January 3, 2016 to February 6, 2016 17,078 $ 13.16 17,078 $11.3 million February 7, 2016 to March 5, 2016 15,539 $ 15.83 15,539 $11.0 million March 6, 2016 to April 2, 2016 12,843 $ 17.93 12,843 $10.8 million Total 45,460 $ 15.42 45,460 $10.8 million |
License Agreements (Tables)
License Agreements (Tables) | 6 Months Ended |
Apr. 02, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum royalty payments | At April 2, 2016 , based on minimum sales requirements, future minimum royalty payments required under these license agreements were as follows (in thousands): Fiscal Year Amount 2016 $ 257 2017 286 2018 5 2019 — $ 548 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Apr. 02, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Components of Intangible Assets | Components of intangible assets consist of the following (in thousands): April 2, 2016 October 3, 2015 Cost Accumulated Amortization Net Value Cost Accumulated Amortization Net Value Economic Life Goodwill $ 36,729 $ — $ 36,729 $ 36,729 $ — $ 36,729 N/A Intangibles: Tradename/trademarks $ 17,530 $ (2,205 ) $ 15,325 $ 17,530 $ (1,896 ) $ 15,634 20 – 30 yrs Customer relationships 7,220 (3,840 ) 3,380 7,220 (3,664 ) 3,556 20 yrs Technology 1,220 (764 ) 456 1,220 (703 ) 517 10 yrs License agreements 2,100 (268 ) 1,832 2,100 (216 ) 1,884 15 – 30 yrs Non-compete agreements 1,287 (783 ) 504 1,287 (716 ) 571 4 – 8.5 yrs Total intangibles $ 29,357 $ (7,860 ) $ 21,497 $ 29,357 $ (7,195 ) $ 22,162 |
Basis of Presentation and Des34
Basis of Presentation and Description of Business Organization (Details) $ in Millions | 3 Months Ended |
Apr. 02, 2016USD ($) | |
Reclassification of Deposits From Prepaid Expenses and Other Current Asset to Other Assets [Member] | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |
Reclassification adjustment | $ 1.2 |
Reclassification of Current Portion of Interest Rate Swaps From other Liabilities to Accrued Liabilities [Member] | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |
Reclassification adjustment | $ 0.3 |
New Accounting Standards (Detai
New Accounting Standards (Details) - Restatement Adjustment [Member] - Accounting Standards Update 2015-17 [Member] $ in Thousands | Oct. 03, 2015USD ($) |
New Accounting Pronouncement, Early Adoption [Line Items] | |
Current deferred income tax assets | $ 7,300 |
Noncurrent deferred income tax liabilities | $ 7 |
Sale of The Game (Details)
Sale of The Game (Details) - USD ($) $ in Thousands | Mar. 02, 2015 | Apr. 02, 2016 | Mar. 28, 2015 | Apr. 02, 2016 | Mar. 28, 2015 |
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract] | |||||
Income tax expense (benefit) | $ 1,099 | $ 2,191 | $ 1,369 | $ 1,656 | |
Discontinued Operations, Disposed of by Sale [Member] | The Game [Member] | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Sale of business | $ 14,900 | ||||
Disposal Group, Including Discontinued Operation, Balance Sheet Disclosures [Abstract] | |||||
Inventory | 6,000 | ||||
Fixed assets | 400 | ||||
Other assets | 100 | ||||
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract] | |||||
Legal fees | 300 | ||||
Selling costs | 400 | ||||
Inventory devaluation | 800 | ||||
Incentive related costs | $ 1,400 | 1,400 | |||
Gain on sale of asset | $ 5,600 | 7,700 | |||
Other expenses | 800 | ||||
Income tax expense (benefit) | 2,200 | ||||
David Peyser Sportswear [Member] | Discontinued Operations, Disposed of by Sale [Member] | The Game [Member] | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Sale of business | $ 14,900 |
Salt Life Acquisition (Details)
Salt Life Acquisition (Details) | Aug. 27, 2013USD ($)debt_instrument | Apr. 02, 2016USD ($)installment | Sep. 28, 2013USD ($) | Apr. 02, 2016USD ($) | Oct. 03, 2015USD ($) | Sep. 27, 2014USD ($) | Dec. 06, 2013USD ($) |
Business Acquisition [Line Items] | |||||||
Contingent consideration | $ 2,800,000 | $ 2,800,000 | $ 3,100,000 | ||||
Goodwill | 36,729,000 | $ 36,729,000 | 36,729,000 | ||||
Tradename/Trademarks [Member] | Minimum [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Intangibles, economic life | 20 years | ||||||
Tradename/Trademarks [Member] | Maximum [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Intangibles, economic life | 30 years | ||||||
License Agreements [Member] | Minimum [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Intangibles, economic life | 15 years | ||||||
License Agreements [Member] | Maximum [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Intangibles, economic life | 30 years | ||||||
Non-compete Agreements [Member] | Minimum [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Intangibles, economic life | 4 years | ||||||
Non-compete Agreements [Member] | Maximum [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Intangibles, economic life | 8 years 6 months | ||||||
Salt Life Acquisition [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Cash payment at closing | $ 12,000,000 | ||||||
Deposit at closing | $ 3,000,000 | ||||||
Duration of cash held in escrow | 54 months | ||||||
Contingent consideration | $ 3,400,000 | ||||||
Acquisition related costs | $ 300,000 | ||||||
Contractual agreements | $ 3,500,000 | ||||||
Payments during the period | $ 800,000 | $ 2,100,000 | |||||
Quarterly installment | $ 200,000 | $ 200,000 | |||||
Number of quarterly installments | installment | 1 | ||||||
Goodwill | 19,917,000 | ||||||
Total intangibles | 18,870,000 | ||||||
Total goodwill and intangibles | 38,787,000 | ||||||
Salt Life Acquisition [Member] | Tradename/Trademarks [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Total intangibles | $ 16,000,000 | ||||||
Intangibles, economic life | 30 years | ||||||
Salt Life Acquisition [Member] | License Agreements [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Total intangibles | $ 2,100,000 | ||||||
Salt Life Acquisition [Member] | License Agreements [Member] | Minimum [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Intangibles, economic life | 15 years | ||||||
Salt Life Acquisition [Member] | License Agreements [Member] | Maximum [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Intangibles, economic life | 30 years | ||||||
Salt Life Acquisition [Member] | Non-compete Agreements [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Total intangibles | $ 770,000 | ||||||
Intangibles, economic life | 6 years 7 months 6 days | ||||||
Salt Life Acquisition [Member] | Accrued Liabilities [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Contingent liability | $ 200,000 | $ 200,000 | |||||
Salt Life Acquisition [Member] | Promissory Note [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Number of promissory notes delivered (debt instruments) | debt_instrument | 2 | ||||||
Aggregate principal of promissory notes | $ 22,000,000 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Apr. 02, 2016 | Oct. 03, 2015 |
Inventory Disclosure [Abstract] | ||
Inventory valuation reserves | $ 8,700 | $ 8,400 |
Inventories, net of reserves: | ||
Raw materials | 12,436 | 11,412 |
Work in process | 18,183 | 19,071 |
Finished goods | 133,040 | 117,889 |
Inventories, net | 163,659 | $ 148,372 |
Consignment inventory | $ 2,200 |
Debt (Narrative) (Details)
Debt (Narrative) (Details) | Nov. 14, 2014USD ($) | Aug. 27, 2013USD ($)debt_instrument | Apr. 30, 2015USD ($) | Oct. 31, 2013USD ($)debt_instrument | Mar. 31, 2011 | Apr. 02, 2016USD ($) | Mar. 28, 2015USD ($) | Sep. 27, 2014USD ($) | Oct. 03, 2015USD ($) | Feb. 27, 2015USD ($) | Sep. 30, 2014USD ($) |
Debt Instrument [Line Items] | |||||||||||
Payments of deferred financing fees | $ 0 | $ 25,000 | |||||||||
Retained earnings free of restrictions | 7,600,000 | $ 7,300,000 | |||||||||
Payment excluded due to amendment | $ 9,000,000 | ||||||||||
Term Loan [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Number of promissory notes issued (debt instruments) | debt_instrument | 2 | ||||||||||
Revolving Credit Facility, due May 2016 [Member] | Revolving Credit Facility [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Outstanding under credit facility | 94,700,000 | ||||||||||
Payments of deferred financing fees | 0 | $ 400,000 | |||||||||
Unused borrowing capacity | $ 22,200,000 | ||||||||||
Fixed charge coverage ratio, duration | 12 months | ||||||||||
Fixed charge coverage ratio | 1.1 | ||||||||||
Promissory Note, Maturity Date June 30, 2016 [Member] | Promissory Note [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Imputed interest (percent) | 1.92% | ||||||||||
Discounted value of promissory notes | $ 8,700,000 | ||||||||||
Promissory Note, Maturity Date June 30, 2019 [Member] | Promissory Note [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Imputed interest (percent) | 3.62% | ||||||||||
Term Loan [Member] | Revolving Credit Facility [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Outstanding under credit facility | 5,000,000 | ||||||||||
Debt instrument, term | 18 months | ||||||||||
Periodic payment duration | 6 months | ||||||||||
Term Loan [Member] | Loans Payable [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Stated interest rate (percent) | 7.00% | ||||||||||
Long-term debt | $ 2,000,000 | ||||||||||
Debt instrument, term | 7 years | ||||||||||
Weighted average interest rate | 8.00% | ||||||||||
Banco Ficohsa, Loan 1 [Member] | Term Loan [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Aggregate principal of promissory notes | $ 1,800,000 | ||||||||||
Stated interest rate (percent) | 7.00% | ||||||||||
Debt instrument, term | 18 months | ||||||||||
Banco Ficohsa, Loan Due December Twenty Twenty [Member] | Term Loan [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Outstanding under credit facility | $ 2,900,000 | ||||||||||
Aggregate principal of promissory notes | $ 3,600,000 | ||||||||||
Stated interest rate (percent) | 7.50% | ||||||||||
Debt instrument, term | 6 years | ||||||||||
Banco Ficohsa, Loan 2 [Member] | Term Loan [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Aggregate principal of promissory notes | $ 4,200,000 | ||||||||||
Debt instrument, term | 7 years | ||||||||||
Banco Ficohsa, Loan 3 [Member] | Term Loan [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Outstanding under credit facility | $ 1,800,000 | ||||||||||
Aggregate principal of promissory notes | $ 2,000,000 | ||||||||||
Stated interest rate (percent) | 8.00% | ||||||||||
Debt instrument, term | 7 years | ||||||||||
Salt Life Acquisition [Member] | Promissory Note [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Number of promissory notes issued (debt instruments) | debt_instrument | 2 | ||||||||||
Aggregate principal of promissory notes | $ 22,000,000 | ||||||||||
Amount of one-time installment payment | $ 9,000,000 | ||||||||||
Revolving Credit Facility [Member] | Line of Credit [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Line of credit after increase pursuant to amended loan agreement | $ 145,000,000 | ||||||||||
Maximum borrowing capacity | $ 200,000,000 | ||||||||||
Interest rate during period (percent) | 3.25% | ||||||||||
Unused borrowing capacity | $ 22,200,000 |
Selling, General and Administ40
Selling, General and Administrative Expense (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Apr. 02, 2016 | Mar. 28, 2015 | Sep. 27, 2014 | Apr. 02, 2016 | Mar. 28, 2015 | |
Selling, General and Administrative Expense [Abstract] | |||||
Distribution costs | $ 3,900,000 | $ 4,100,000 | $ 7,600,000 | $ 7,800,000 | |
Strategic Initiative [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Accrued strategic initiative charge, opening balance | 500,000 | ||||
Strategic initiative charge | $ 4,000,000 | 0 | |||
Disbursements during the period | 67,000 | ||||
Accrued strategic initiative charge, ending balance | $ 500,000 | $ 500,000 |
Stock-Based Compensation (Narra
Stock-Based Compensation (Narrative) (Details) | 3 Months Ended | 6 Months Ended | |||
Apr. 02, 2016USD ($)shares | Mar. 28, 2015USD ($) | Dec. 27, 2014shares | Apr. 02, 2016USD ($)shares | Mar. 28, 2015USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Allocated share-based compensation expense | $ | $ 700,000 | $ 1,100,000 | $ 700,000 | $ 500,000 | |
Restricted Stock Units (RSUs) [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Grants in the period (shares) | 83,788 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Percentage of Option To Be Paid in Equity | 0.5 | 0.5 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Share-based Liabilities Paid | 0.5 | 0.5 | |||
Performance shares [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Grants in the period (shares) | 75,350 | ||||
Vested in the period (shares) | 59,800 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Percentage of Option To Be Paid in Equity | 0.5 | 0.5 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Share-based Liabilities Paid | 0.5 | 0.5 | |||
2010 Stock Plan [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Total compensation cost not yet recognized | $ | $ 4,800,000 | $ 4,800,000 | |||
Period for recognition | 2 years 8 months 12 days | ||||
Aggregate number of shares that may be delivered (shares) | 500,000 | 500,000 | |||
Option Plan [Member] | Stock Options [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Allocated share-based compensation expense | $ | $ 0 | ||||
Exercises in period (shares) | 14,000 | 0 | |||
Vest Upon Filing of 10-K for the Year Ending October 1, 2016 [Member] | Restricted Stock Units (RSUs) [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Grants in the period (shares) | 8,438 | ||||
Vest Upon Filing of 10-K for the Year Ending September 30, 2017 [Member] | Restricted Stock Units (RSUs) [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Grants in the period (shares) | 75,350 |
Purchase Contracts (Details)
Purchase Contracts (Details) $ in Thousands | Apr. 02, 2016USD ($) |
Long-term Purchase Commitment [Line Items] | |
Outstanding minimum payments | $ 61,642 |
Yarn [Member] | |
Long-term Purchase Commitment [Line Items] | |
Outstanding minimum payments | 37,295 |
Natural Gas [Member] | |
Long-term Purchase Commitment [Line Items] | |
Outstanding minimum payments | 83 |
Finished Fabric [Member] | |
Long-term Purchase Commitment [Line Items] | |
Outstanding minimum payments | 2,752 |
Finished Products [Member] | |
Long-term Purchase Commitment [Line Items] | |
Outstanding minimum payments | $ 21,512 |
Business Segments (Details)
Business Segments (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Apr. 02, 2016USD ($) | Mar. 28, 2015USD ($) | Dec. 27, 2014USD ($) | Apr. 02, 2016USD ($)segment | Mar. 28, 2015USD ($) | Oct. 03, 2015USD ($) | |
Segment Reporting Information [Line Items] | ||||||
Number of business segments | segment | 2 | |||||
Net sales | $ 109,160 | $ 115,042 | $ 199,331 | $ 208,422 | ||
Segment operating income (loss) | 5,931 | 7,328 | 8,156 | 4,110 | ||
Segment assets | 340,678 | 349,654 | 340,678 | 349,654 | $ 324,903 | |
Gain on sale of business | 0 | (7,704) | 0 | (7,704) | ||
Operating income (loss), excluding gain (loss) on disposition of business | 2,500 | |||||
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract] | ||||||
Segment operating income | 5,931 | 7,328 | 8,156 | 4,110 | ||
Unallocated interest expense | 1,396 | 1,491 | 2,671 | 3,019 | ||
Income before provision for income taxes | 4,535 | 5,837 | $ 1,091 | 5,485 | 1,091 | |
Operating Segments [Member] | Basics [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Net sales | 69,840 | 71,388 | 131,356 | 129,068 | ||
Segment operating income (loss) | 6,939 | 1,707 | 12,976 | 1,362 | ||
Segment assets | 173,025 | 175,581 | 173,025 | 175,581 | ||
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract] | ||||||
Segment operating income | 6,939 | 1,707 | 12,976 | 1,362 | ||
Operating Segments [Member] | Branded [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Net sales | 39,320 | 43,654 | 67,975 | 79,354 | ||
Segment operating income (loss) | 2,466 | 8,089 | 1,513 | 7,313 | ||
Segment assets | 157,870 | 160,078 | 157,870 | 160,078 | ||
Operating income (loss), excluding gain (loss) on disposition of business | 1,700 | |||||
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract] | ||||||
Segment operating income | 2,466 | 8,089 | 1,513 | 7,313 | ||
Operating Segments [Member] | Corporate Segment [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Net sales | 0 | 0 | 0 | 0 | ||
Segment operating income (loss) | (3,474) | (2,468) | (6,333) | (4,565) | ||
Segment assets | 9,783 | 13,995 | 9,783 | 13,995 | ||
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract] | ||||||
Segment operating income | $ (3,474) | $ (2,468) | $ (6,333) | (4,565) | ||
Operating Income (Loss) [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Gain on sale of business | $ 5,600 |
Income Taxes (Details)
Income Taxes (Details) | 6 Months Ended | 12 Months Ended | ||
Apr. 02, 2016 | Mar. 28, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | |
Income Tax Contingency [Line Items] | ||||
Effective income tax rate (percent) | 25.00% | 151.80% | 19.90% | |
Forecast [Member] | ||||
Income Tax Contingency [Line Items] | ||||
Effective income tax rate, excluding gain on sale of business, percentage | 25.00% |
Derivatives and Fair Value Me45
Derivatives and Fair Value Measurements (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Apr. 02, 2016 | Mar. 28, 2015 | Apr. 02, 2016 | Mar. 28, 2015 | Oct. 03, 2015 | |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract] | |||||
Decrease in accrual of contingent liability | $ 100,000 | $ (65,000) | $ 300,000 | $ (130,000) | |
Deferred Tax Assets [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract] | |||||
Derivatives related to interest rate swap agreements | 148,000 | 148,000 | $ 0 | ||
Accrued Expenses [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract] | |||||
Derivatives related to interest rate swap agreements | (302,000) | (302,000) | (519,000) | ||
Deferred Tax Liabilities [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract] | |||||
Derivatives related to interest rate swap agreements | 0 | 0 | 269,000 | ||
Other Liabilities [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract] | |||||
Derivatives related to interest rate swap agreements | (81,000) | (81,000) | (179,000) | ||
Accumulated Other Comprehensive Loss [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract] | |||||
Derivatives related to interest rate swap agreements | (235,000) | (235,000) | (429,000) | ||
Maturity Date 9/9/2016 [Member] | |||||
Interest Rate Derivatives [Abstract] | |||||
Notational Amount | $ 15,000,000 | $ 15,000,000 | |||
Fixed LIBOR Rate | 1.17% | 1.17% | |||
Maturity Date 9/11/2017 [Member] | |||||
Interest Rate Derivatives [Abstract] | |||||
Notational Amount | $ 15,000,000 | $ 15,000,000 | |||
Fixed LIBOR Rate | 1.648% | 1.648% | |||
Maturity Date 9/19/2016 [Member] | |||||
Interest Rate Derivatives [Abstract] | |||||
Notational Amount | $ 15,000,000 | $ 15,000,000 | |||
Fixed LIBOR Rate | 1.003% | 1.003% | |||
Maturity Date 9/19/2017 [Member] | |||||
Interest Rate Derivatives [Abstract] | |||||
Notational Amount | $ 15,000,000 | $ 15,000,000 | |||
Fixed LIBOR Rate | 1.449% | 1.449% | |||
Fair Value, Measurements, Recurring [Member] | Interest Rate Swaps [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract] | |||||
Financial derivative liabilities, fair value | $ (383,000) | $ (383,000) | (697,000) | ||
Fair Value, Measurements, Recurring [Member] | Commodity Option [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract] | |||||
Financial derivative asset, fair value | 21,000 | 21,000 | 0 | ||
Fair Value, Measurements, Recurring [Member] | Contingent Consideration Contract [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract] | |||||
Financial derivative liabilities, fair value | (2,800,000) | (2,800,000) | (3,100,000) | ||
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Interest Rate Swaps [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract] | |||||
Financial derivative liabilities, fair value | 0 | 0 | 0 | ||
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Commodity Option [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract] | |||||
Financial derivative asset, fair value | 21,000 | 21,000 | 0 | ||
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Contingent Consideration Contract [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract] | |||||
Financial derivative liabilities, fair value | 0 | 0 | 0 | ||
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Interest Rate Swaps [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract] | |||||
Financial derivative liabilities, fair value | (383,000) | (383,000) | (697,000) | ||
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Commodity Option [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract] | |||||
Financial derivative asset, fair value | 0 | 0 | 0 | ||
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Contingent Consideration Contract [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract] | |||||
Financial derivative liabilities, fair value | 0 | 0 | 0 | ||
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Interest Rate Swaps [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract] | |||||
Financial derivative liabilities, fair value | 0 | 0 | 0 | ||
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Commodity Option [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract] | |||||
Financial derivative asset, fair value | 0 | 0 | 0 | ||
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Contingent Consideration Contract [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract] | |||||
Financial derivative liabilities, fair value | (2,800,000) | (2,800,000) | $ (3,100,000) | ||
Salt Life Acquisition [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract] | |||||
Accrued contingent consideration | $ 2,800,000 | 2,800,000 | |||
Decrease in accrual of contingent liability | $ (300,000) |
Legal Proceedings (Details)
Legal Proceedings (Details) - California Wage and Hour Litigation [Member] $ in Thousands | Sep. 17, 2015USD ($) |
Loss Contingencies [Line Items] | |
Litigation settlement, amount | $ 200 |
Delta Apparel, Soffe and Junkfood [Member] | |
Loss Contingencies [Line Items] | |
Litigation settlement, amount | $ 300 |
Repurchase of Common Stock (Det
Repurchase of Common Stock (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Apr. 02, 2016 | Mar. 05, 2016 | Feb. 06, 2016 | Apr. 02, 2016 | Apr. 02, 2016 | |
Class of Stock [Line Items] | |||||
Authorized amount | $ 40 | $ 40 | $ 40 | ||
Aggregated number of shares repurchased, shares | 2,376,372 | 2,376,372 | 2,376,372 | ||
Aggregated shares repurchased, value | $ 29.2 | $ 29.2 | $ 29.2 | ||
Stock repurchased during period, value | 0.7 | ||||
Total Number of Shares Purchased | 45,460 | ||||
Dollar Value of Shares that May Yet Be Purchased Under the Plans | $ 10.8 | $ 10.8 | 10.8 | ||
Common Stock [Member] | |||||
Class of Stock [Line Items] | |||||
Total Number of Shares Purchased | 12,843 | 15,539 | 17,078 | 45,460 | |
Average Price Paid per Share | $ 17.93 | $ 15.83 | $ 13.16 | $ 15.42 | |
Dollar Value of Shares that May Yet Be Purchased Under the Plans | $ 10.8 | $ 11 | $ 11.3 | $ 10.8 | $ 10.8 |
Publicly Announced Plan [Member] | Common Stock [Member] | |||||
Class of Stock [Line Items] | |||||
Total Number of Shares Purchased | 12,843 | 15,539 | 17,078 | 45,460 |
License Agreements (Details)
License Agreements (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Apr. 02, 2016 | Mar. 28, 2015 | Apr. 02, 2016 | Mar. 28, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Royalty expense | $ 1,500 | $ 2,200 | $ 3,400 | $ 4,400 |
License Agreements, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||||
2,016 | 257 | 257 | ||
2,017 | 286 | 286 | ||
2,018 | 5 | 5 | ||
2,019 | 0 | 0 | ||
Total due | $ 548 | $ 548 |
Goodwill and Intangible Asset49
Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Apr. 02, 2016 | Mar. 28, 2015 | Apr. 02, 2016 | Mar. 28, 2015 | Oct. 03, 2015 | |
Goodwill and Finite-Lived Intangible Assets [Line Items] | |||||
Goodwill, Cost | $ 36,729 | $ 36,729 | $ 36,729 | ||
Goodwill, Accumulated Amortization | 0 | 0 | 0 | ||
Goodwill, Net Value | 36,729 | 36,729 | 36,729 | ||
Intangibles, Cost | 29,357 | 29,357 | 29,357 | ||
Intangibles, Accumulated Amortization | (7,860) | (7,860) | (7,195) | ||
Intangibles, Net Value | 21,497 | 21,497 | 22,162 | ||
Amortization of intangible assets | 300 | $ 400 | 700 | $ 700 | |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |||||
Amortization expense estimate for 2016 | 1,300 | 1,300 | |||
Amortization expense estimate for 2017 | 1,300 | 1,300 | |||
Amortization expense estimate for 2018 | 1,300 | 1,300 | |||
Amortization expense estimate for 2019 | 1,300 | 1,300 | |||
Amortization expense estimate for 2020 | 1,200 | 1,200 | |||
Amortization expense estimate for 2021 | 1,100 | 1,100 | |||
Tradename/Trademarks [Member] | |||||
Goodwill and Finite-Lived Intangible Assets [Line Items] | |||||
Intangibles, Cost | 17,530 | 17,530 | 17,530 | ||
Intangibles, Accumulated Amortization | (2,205) | (2,205) | (1,896) | ||
Intangibles, Net Value | 15,325 | $ 15,325 | 15,634 | ||
Tradename/Trademarks [Member] | Minimum [Member] | |||||
Goodwill and Finite-Lived Intangible Assets [Line Items] | |||||
Intangibles, economic life | 20 years | ||||
Tradename/Trademarks [Member] | Maximum [Member] | |||||
Goodwill and Finite-Lived Intangible Assets [Line Items] | |||||
Intangibles, economic life | 30 years | ||||
Customer Relationships [Member] | |||||
Goodwill and Finite-Lived Intangible Assets [Line Items] | |||||
Intangibles, Cost | 7,220 | $ 7,220 | 7,220 | ||
Intangibles, Accumulated Amortization | (3,840) | (3,840) | (3,664) | ||
Intangibles, Net Value | 3,380 | $ 3,380 | 3,556 | ||
Intangibles, economic life | 20 years | ||||
Technology [Member] | |||||
Goodwill and Finite-Lived Intangible Assets [Line Items] | |||||
Intangibles, Cost | 1,220 | $ 1,220 | 1,220 | ||
Intangibles, Accumulated Amortization | (764) | (764) | (703) | ||
Intangibles, Net Value | 456 | $ 456 | 517 | ||
Intangibles, economic life | 10 years | ||||
License Agreements [Member] | |||||
Goodwill and Finite-Lived Intangible Assets [Line Items] | |||||
Intangibles, Cost | 2,100 | $ 2,100 | 2,100 | ||
Intangibles, Accumulated Amortization | (268) | (268) | (216) | ||
Intangibles, Net Value | 1,832 | $ 1,832 | 1,884 | ||
License Agreements [Member] | Minimum [Member] | |||||
Goodwill and Finite-Lived Intangible Assets [Line Items] | |||||
Intangibles, economic life | 15 years | ||||
License Agreements [Member] | Maximum [Member] | |||||
Goodwill and Finite-Lived Intangible Assets [Line Items] | |||||
Intangibles, economic life | 30 years | ||||
Non-compete Agreements [Member] | |||||
Goodwill and Finite-Lived Intangible Assets [Line Items] | |||||
Intangibles, Cost | 1,287 | $ 1,287 | 1,287 | ||
Intangibles, Accumulated Amortization | (783) | (783) | (716) | ||
Intangibles, Net Value | $ 504 | $ 504 | $ 571 | ||
Non-compete Agreements [Member] | Minimum [Member] | |||||
Goodwill and Finite-Lived Intangible Assets [Line Items] | |||||
Intangibles, economic life | 4 years | ||||
Non-compete Agreements [Member] | Maximum [Member] | |||||
Goodwill and Finite-Lived Intangible Assets [Line Items] | |||||
Intangibles, economic life | 8 years 6 months |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event [Member] | May. 10, 2016USD ($) |
Line of Credit [Member] | |
Subsequent Event [Line Items] | |
Maximum borrowing capacity | $ 145,000,000 |
Additional facility available | 200,000,000 |
Letter of Credit [Member] | Line of Credit [Member] | |
Subsequent Event [Line Items] | |
Maximum borrowing capacity | 25,000,000 |
Facility Closing [Member] | |
Subsequent Event [Line Items] | |
Expected restructuring costs | $ 3,000,000 |