DELTA APPAREL, INC. TO ACQUIRE M.J. SOFFE CO.
DULUTH, Ga.--(BUSINESS WIRE)--July 7, 2003--Delta Apparel, Inc. (AMEX-DLA)
announces that it has signed a definitive agreement to purchase all of the
outstanding capital stock of M.J. Soffe Co.
The transaction is valued at up to $72 million, consisting of $52 million of
cash including retirement of debt, $8 million in promissory notes, and up to $12
million in contingent payments subject to the achievement of certain performance
targets. All outstanding bank debt of Soffe will be satisfied upon consummation
of the sale. The acquisition is expected to close in September of 2003, and is
subject to regulatory approval, satisfactory completion of due diligence, and
financing approval.
Delta Apparel expects to finance the cash portion of the selling price primarily
from new asset based secured term loans and secured revolving credit agreements,
both of which will be subject to the satisfaction of customary conditions.
M. J. Soffe was founded in 1946 and has a long history of profitability and
growth in the branded activewear market. For the twelve months ended December
31, 2002 Soffe had sales of approximately $100 million and served four distinct
channels of distribution. The Soffe brand is well recognized at specialty
sporting goods stores and department stores. In addition to these retail
channels, Soffe also supplies college bookstores and has a long history of
producing activewear products for the U.S. Military. Delta Apparel expects the
Soffe acquisition will add approximately $100 million in sales to Delta Apparel
and increase per share earnings sixty to eighty cents per share in the first
full year of operations.
Robert W. Humphreys, President and CEO of Delta Apparel, Inc. commented, "The
Soffe management team has done an outstanding job of building a profitable,
branded activewear business. The addition of the Soffe business to Delta Apparel
represents an exceptional opportunity to participate in four additional distinct
channels of distribution for activewear products. We believe the manufacturing,
distribution, and marketing synergies between the companies will allow both
operations to expand at a faster pace than would be possible on a stand-alone
basis. We are delighted to welcome Jim Soffe, who will continue to serve as
Chief Executive Officer of M.J. Soffe, and his current management team to Delta
Apparel and we are looking forward to their continued leadership in directing
this business."
Jim Soffe, Chief Executive Officer of M. J. Soffe Co. said, "Teaming up with
Delta Apparel represents a great milestone in the history of our company. This
will give us the resources to continue our growth and will offer future
opportunities for our employees as the Soffe brand continues to grow in
popularity. We look forward to this new association with high expectations."
Kurt Salmon Associates Capital Advisors served as M.J. Soffe's financial advisor
in connection with the proposed sale.
Delta Apparel, Inc. also announces its preliminary results of operation for the
fiscal quarter and fiscal year ended June 28, 2003. For the quarter ended June
28, 2003 sales are expected to be approximately $36.8 million. For the twelve
months ended June 28, 2003 sales are expected to be approximately $129.5
million. Basic earnings per share for the quarter are expected to be in the
range of $0.34 to $0.39. Basic earnings per share for the year ended June 28,
2003 are expected to be in the range of $1.43 to $1.48.
Robert W. Humphreys, President and CEO, commented on Delta Apparel's results,
"Basic commodity T-shirt pricing remained soft in our fourth fiscal quarter
resulting in sales and operating income below our expectations. Average selling
prices for the quarter were down approximately 10% from last year, and down
approximately 7% from the March quarter. Our sales to distributors were down
over 50% for the quarter and represented approximately 10% of our sales for the
quarter. During the fourth fiscal quarter we also idled our textile operations
for a week to help balance inventories.
"New customer growth continued at a strong pace for the quarter and was up 49%
for the year. New product sales continued to increase with good margins. We feel
that our continued efforts to grow our non-commodity business and increase sales
to our direct customers will serve us well in the future."
Delta Apparel will hold a conference call on Wednesday, July 9, 2003 at 10:00 AM
ET to discuss the acquisition of M.J. Soffe Co. In addition, the Company will
discuss its preliminary fourth quarter and fiscal year results, business
highlights and market outlook. During the call, the Company may answer questions
concerning business and financial developments and trends and other business and
financial matters affecting the Company, some of the responses to which may
contain information that has not been previously disclosed.
Delta Apparel, Inc. is a vertically integrated manufacturer and marketer of high
quality knit apparel. The Company specializes in selling undecorated T-shirts,
golf shirts and tank tops to screen printers, private label accounts and
distributors. Delta Apparel has operations in six states, two company-operated
sewing facilities in Honduras and one company-operated sewing facility in
Mexico. The Company employs about 3,200 worldwide.
Statements and other information in this press release that are not reported
financial results or other historical information are forward-looking
statements. These are based on Delta Apparel's expectations and are necessarily
dependent upon assumptions, estimates and data that the Company believes are
reasonable and accurate but may be incorrect, incomplete or imprecise.
Forward-looking statements are also subject to a number of business risks and
uncertainties, any of which could cause actual results to differ materially from
those set forth in or implied by the forward-looking statements. The risks and
uncertainties include, among others, changes in the retail demand for apparel
products, the cost of raw materials, competitive conditions in the apparel and
textile industries, the relative strength of the United States dollar as against
other currencies, changes in United States trade regulations, the discovery of
unknown conditions (such as with respect to environmental matters and similar
items) and other risks described from time to time in the Company's reports
filed with the Securities and Exchange Commission. There is also the business
risk that the Soffe acquisition may not be able to be completed as described
above. In addition, there are risks and uncertainties associated with the Soffe
business that may not be known at this time. Accordingly, any forward-looking
statements do not purport to be predictions of future events or circumstances
and may not be realized. The Company does not undertake publicly to update or
revise the forward-looking statements even if it becomes clear that any
projected results will not be realized.
Contact: Delta Apparel, Inc.
Herb Mueller 678/775-6900