DELTA APPAREL, INC, 10-K filed on 8/29/2013
Annual Report
Document and Entity Information (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Jun. 29, 2013
Aug. 22, 2013
Dec. 29, 2012
Document and Entity Information [Abstract]
 
 
 
Entity Registrant Name
DELTA APPAREL, INC 
 
 
Entity Central Index Key
0001101396 
 
 
Current Fiscal Year End Date
--06-29 
 
 
Entity Filer Category
Accelerated Filer 
 
 
Document Type
10-K 
 
 
Document Period End Date
Jun. 29, 2013 
 
 
Document Fiscal Year Focus
2013 
 
 
Document Fiscal Period Focus
FY 
 
 
Amendment Flag
false 
 
 
Entity Common Stock, Shares Outstanding
 
7,809,948 
 
Entity Well-known Seasoned Issuer
No 
 
 
Entity Voluntary Filers
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Public Float
 
 
$ 105.8 
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Jun. 29, 2013
Jun. 30, 2012
Assets
 
 
Cash and cash equivalents
$ 598 
$ 467 
Accounts receivable, net
74,415 
73,349 
Other receivables
412 
507 
Income tax receivable
2,238 
8,796 
Inventories, net
159,514 
161,633 
Prepaid expenses and other current assets
4,129 
3,770 
Deferred income taxes
4,556 
4,964 
Total current assets
245,862 
253,486 
Property, plant and equipment, net
39,446 
39,425 
Goodwill
16,812 
16,812 
Intangibles, net
6,190 
6,797 
Other assets
3,600 
3,874 
Total assets
311,910 1
320,394 1
Liabilities:
 
 
Accounts payable
50,472 
46,320 
Accrued expenses
18,426 
16,608 
Current portion of long-term debt
3,529 
3,529 
Total current liabilities
72,427 
66,457 
Long-term debt, less current maturities
94,763 
110,949 
Deferred income taxes
3,571 
3,803 
Other liabilities
83 
218 
Total liabilities
170,844 
181,427 
Commitments and contingencies
   
   
Shareholders’ equity:
 
 
Preferred stock—$0.01 par value, 2,000,000 shares authorized, none issued and outstanding
Common stock —$0.01 par value, 15,000,000 shares authorized, 9,646,972 shares issued, and 7,922,784 and 8,424,709 shares outstanding as of June 29, 2013 and June 30, 2012, respectively
96 
96 
Additional paid-in capital
60,598 
60,367 
Retained earnings
100,014 
90,830 
Accumulated other comprehensive loss
(82)
(129)
Treasury stock —1,724,188 and 1,222,263 shares as of June 29, 2013 and June 30, 2012, respectively
(19,560)
(12,197)
Total shareholders’ equity
141,066 
138,967 
Total liabilities and shareholders’ equity
$ 311,910 
$ 320,394 
Consolidated Balance Sheets (Parenthetical) (USD $)
Jun. 29, 2013
Jun. 30, 2012
Shareholders' equity:
 
 
Preferred stock, par value
$ 0.01 
$ 0.01 
Preferred stock, shares authorized
2,000,000 
2,000,000 
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value
$ 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
7,922,784 
8,424,709 
Treasury stock, shares
1,724,188 
1,222,263 
Consolidated Statements of Operations (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Jun. 29, 2013
Jun. 30, 2012
Jul. 2, 2011
Income Statement [Abstract]
 
 
 
Net sales
$ 490,523 
$ 489,923 
$ 475,236 
Cost of goods sold
381,014 
406,200 
359,001 
Gross profit
109,509 
83,723 
116,235 
Selling, general and administrative expenses
94,944 
89,973 
91,512 
Change in fair value of contingent consideration
(1,530)
Goodwill impairment charge
612 
Other expense (income), net
662 
(28)
345 
Operating income
13,903 
(6,222)
25,296 
Interest expense, net
3,997 
4,132 
2,616 
Income before provision for income taxes
9,906 
(10,354)
22,680 
(Benefit from) Provision for income taxes
722 
(7,907)
5,353 
Net (loss) income
$ 9,184 
$ (2,447)
$ 17,327 
Basic (loss) earnings per share
$ 1.12 
$ (0.29)
$ 2.04 
Diluted (loss) earnings per share
$ 1.08 
$ (0.29)
$ 1.98 
Weighted average number of shares outstanding
8,234 
8,453 
8,486 
Dilutive effect of stock options
252 
261 
Weighted average number of shares assuming dilution
8,486 
8,453 
8,747 
Consolidated Statements of Comprehensive Income Statement (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Jun. 29, 2013
Jun. 30, 2012
Jul. 2, 2011
Statement of Other Comprehensive Income [Abstract]
 
 
 
Net earnings (loss)
$ 9,184 
$ (2,447)
$ 17,327 
Other comprehensive income (loss) related to unrealized gain (loss) on derivatives
47 
(115)
91 
Comprehensive income (loss)
$ 9,231 
$ (2,562)
$ 17,418 
Consolidated Statements of Shareholders' Equity (USD $)
In Thousands, except Share data, unless otherwise specified
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Treasury Stock [Member]
Beginning Balance at Jul. 03, 2010
$ 125,714 
$ 96 
$ 59,111 
$ 75,950 
$ (105)
$ (9,338)
Beginning Balance, shares at Jul. 03, 2010
 
9,646,972 
 
 
 
1,130,679 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Net loss and other comprehensive loss
17,418 
 
 
17,327 
91 
 
Stock grant
98 
 
40 
 
 
58 
Stock grant, shares
 
 
 
 
 
(7,000)
Stock options exercised
102 
 
(541)
 
 
643 
Stock options exercised, shares
 
 
 
 
 
(75,326)
Excess tax benefits from option exercises
84 
 
84 
 
 
 
Purchase of common stock
(2,507)
 
 
 
 
(2,507)
Purchase of common stock, shares
 
 
 
 
 
176,756 
Employee stock based compensation
1,056 
 
1,056 
 
 
 
Ending Balance at Jul. 02, 2011
141,965 
96 
59,750 
93,277 
(14)
(11,144)
Ending Balance, shares at Jul. 02, 2011
 
9,646,972 
 
 
 
1,225,109 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Net loss and other comprehensive loss
(2,562)
 
 
(2,447)
(115)
 
Stock grant
 
(83)
 
 
83 
Stock grant, shares
 
 
 
 
 
(9,000)
Stock options exercised
(53)
 
(1,559)
 
 
1,506 
Stock options exercised, shares
 
 
 
 
 
(161,966)
Excess tax benefits from option exercises
529 
 
529 
 
 
 
Purchase of common stock
(2,642)
 
 
 
 
(2,642)
Purchase of common stock, shares
 
 
 
 
 
168,120 
Employee stock based compensation
1,730 
 
1,730 
 
 
 
Ending Balance at Jun. 30, 2012
138,967 
96 
60,367 
90,830 
(129)
(12,197)
Ending Balance, shares at Jun. 30, 2012
 
9,646,972 
 
 
 
1,222,263 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Net loss and other comprehensive loss
9,231 
 
 
9,184 
47 
 
Stock grant
 
(115)
 
 
115 
Stock grant, shares
 
 
 
 
 
(11,250)
Stock options exercised
(214)
 
(553)
 
 
339 
Stock options exercised, shares
 
 
 
 
 
(31,401)
Excess tax benefits from option exercises
34 
 
34 
 
 
 
Purchase of common stock
(7,817)
 
 
 
 
(7,817)
Purchase of common stock, shares
 
 
 
 
 
544,576 
Employee stock based compensation
(865)
 
865 
 
 
 
Ending Balance at Jun. 29, 2013
$ 141,066 
$ 96 
$ 60,598 
$ 100,014 
$ (82)
$ (19,560)
Ending Balance, shares at Jun. 29, 2013
 
9,646,972 
 
 
 
1,724,188 
Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Jun. 29, 2013
Jun. 30, 2012
Jul. 2, 2011
Operating activities:
 
 
 
Net earnings (loss)
$ 9,184 
$ (2,447)
$ 17,327 
Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities:
 
 
 
Depreciation
7,407 
6,884 
6,644 
Amortization of intangibles
607 
608 
613 
Amortization of deferred financing fees
363 
361 
313 
Excess tax benefits from exercise of stock options
(34)
(529)
(84)
Provision for (benefit from) deferred income taxes
176 
(1,107)
1,282 
(Benefit from) provision for allowances on accounts receivable, net
(513)
530 
(354)
Non-cash stock compensation
865 
1,730 
1,056 
Change in fair value of contingent consideration
(1,530)
Goodwill impairment charge
612 
Loss on disposal of property and equipment
93 
73 
111 
Fixed asset impairment charge
328 
Inventory write down
16,195 
Changes in operating assets and liabilities, net of effect of acquisitions:
 
 
 
Accounts receivable
(458)
2,435 
(11,673)
Inventories
2,119 
(18,619)
(36,441)
Prepaid expenses and other current assets
(358)
289 
(411)
Other non-current assets
(90)
(19)
125 
Accounts payable
4,152 
(9,234)
20,897 
Accrued expenses
1,818 
(7,099)
4,109 
Income taxes
6,592 
(9,236)
341 
Other liabilities
(88)
84 
(47)
Net cash provided by (used in) operating activities
32,163 
(19,101)
2,890 
Investing activities:
 
 
 
Purchases of property and equipment
(7,922)
(6,626)
(7,966)
Proceeds from sale of equipment
72 
Cash paid for businesses, net of cash acquired
(9,884)
Net cash used in investing activities
(7,850)
(6,626)
(17,850)
Financing activities:
 
 
 
Proceeds from long-term debt
486,908 
544,295 
511,358 
Repayment of long-term debt
(503,094)
(516,590)
(492,658)
Payment of financing fees
(1,450)
Repurchase of common stock
(7,817)
(2,642)
(2,507)
Proceeds from exercise of stock options
23 
18 
263 
Payment of withholding taxes on exercise of stock options
(236)
(72)
(161)
Excess tax benefits from exercise of stock options
34 
529 
84 
Net cash (used in) provided by financing activities
(24,182)
25,538 
14,929 
Net increase (decrease) in cash and cash equivalents
131 
(189)
(31)
Cash and cash equivalents at beginning of year
467 
656 
687 
Cash and cash equivalents at end of year
598 
467 
656 
Supplemental cash flow information:
 
 
 
Cash paid during the year for interest
3,458 
3,532 
2,229 
Cash (received) paid during the year for income taxes, net of refunds received
(6,013)
2,370 
3,922 
Non-cash financing activity—issuance of common stock
$ 0 
$ 0 
$ 98 
The Company
The Company
THE COMPANY
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, college bookstores and the U.S. military. Our products are made available direct-to-consumer on our websites at www.soffe.com, www.junkfoodclothing.com, www.saltlife.com and www.deltaapparel.com. 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. 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.
Significant Accounting Policies
Significant Accounting Policies
SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation: Our consolidated financial statements include the accounts of Delta Apparel and its wholly-owned domestic and foreign subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. We apply the equity method of accounting for investments in companies where we have less than a 50% ownership interest and over which we exert significant influence. We do not exercise control over these companies and do not have substantive participating rights. As such, these are not considered variable interest entities.
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.
(b) Fiscal Year: We operate on a 52-53 week fiscal year ending on the Saturday closest to June 30. The 2013, 2012 and 2011 fiscal years were 52-week years and ended on June 29, 2013, June 30, 2012 and July 2, 2011, respectively.
(c) Use of Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make certain estimates and assumptions that affect the reported amounts and disclosures of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are adjusted to reflect actual experience when necessary. Significant estimates and assumptions affect many items in our financial statements, for example: allowance for doubtful trade receivables, sales returns and allowances, inventory obsolescence, the carrying value of goodwill, and income tax assets and related valuation allowance. Our actual results may differ from our estimates.
(d) Revenue Recognition: Revenues from product sales are recognized when ownership is transfered to the customer, which includes not only the passage of title, but also the transfer of the risk of loss related to the product. At this point, the sales price is fixed and determinable, and we are reasonably assured of the collectibility of the sale. The majority of our sales are shipped FOB shipping point and revenue is therefore recognized when the goods are shipped to the customer. For sales that are shipped FOB destination point, we do not recognize the revenue until the goods are received by the customer. Shipping and handling charges billed to our customers are included in net revenue and the related costs are included in cost of goods sold. Revenues are reported on net sales basis, which is computed by deducting product returns, discounts and estimated returns and allowances. We estimate returns and allowances on an ongoing basis by considering historical and current trends.
Royalty revenue is primarily derived from royalties paid to us by licensees of our intellectual property rights, which include, among other things, trademarks and copyrights. We execute license agreements with our licensees detailing the terms of the licensing arrangement. Royalties are generally recognized upon receipt of the licensees' royalty report, in accordance with the terms of the executed license agreement, and when all other revenue recognition criteria have been met.
(e) Sales Tax: Sales tax collected from customers and remitted to various government agencies are presented on a net basis (excluded from revenues) in the Consolidated Statements of Operations.
(f) Cash and Cash Equivalents: Cash and cash equivalents consists of cash and temporary investments with original maturities of three months or less.
(g) Accounts Receivable: Accounts receivable consists primarily of receivables from our customers arising from the sale of our products, and we generally do not require collateral from our customers. We actively monitor our exposure to credit risk through the use of credit approvals and credit limits. At June 29, 2013, our net accounts receivable was $74.4 million, consisting of $76.2 million in accounts receivable and $1.8 million in reserves. At June 30, 2012, our net accounts receivable was $73.3 million, consisting of $75.6 million  in accounts receivable and $2.3 million in reserves.
We estimate the net collectibility of our accounts receivable and establish an allowance for doubtful accounts based upon this assessment. In situations where we are aware of a specific customer’s inability to meet its financial obligation, such as in the case of a bankruptcy filing, a specific reserve for bad debts is recorded against amounts due to reduce the net recognized receivable to the amount reasonably expected to be collected. For all other customers, reserves are determined through analysis of the aging of accounts receivable balances, historical bad debts, customer concentrations, customer credit-worthiness, current economic trends and changes in customer payment terms. In addition, reserves are established for other concessions that have been extended to customers, including advertising, markdowns and other accommodations, net of historical recoveries. These reserves are determined based upon historical deduction trends and evaluation of current market conditions. Bad debt expense was less than 0.1%, 0.1% and 0.1%, of net sales in 2013, 2012 and 2011, respectively.
(h) Inventories: We state inventories at the lower of cost or market using the first-in, first-out method. Inventory cost includes materials, labor and manufacturing overhead on manufactured inventory, and all direct and associated costs, including inbound freight, to acquire sourced products. We regularly review inventory quantities on hand and record reserves for obsolescence, excess quantities, irregulars and slow moving inventory based on historical selling prices, current market conditions, and forecasted product demand to reduce inventory to its net realizable value. See Note 2(x) for further information regarding yarn procurements.
During the second quarter of fiscal year 2012, we recorded a $16.2 million lower of cost or market write-down on the inventory in the basics segment and its firm purchase commitments for yarn resulting from historically high cotton prices in its inventory costs combined with declining selling prices. The estimation of the total write-down involved management judgments and assumptions including assumptions regarding future selling price forecasts, the allocation of raw materials between business units, the estimated costs to complete, disposal costs and a normal profit margin. The inventory and yarn firm purchase commitments associated with this inventory write-down was sold during our fiscal year 2012.
(i) Property, Plant and Equipment: Property, plant and equipment are stated at cost. We depreciate and amortize our assets on a straight-line method over the estimated useful lives of the assets, which range from three to twenty-five years. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the improvements. Assets that we acquire under non-cancelable leases that meet the criteria of capital leases are capitalized in property, plant and equipment and amortized over the useful lives of the related assets. When we retire or dispose of assets, the costs and accumulated depreciation or amortization are removed from the respective accounts and we recognize any related gain or loss. Repairs and maintenance costs are charged to expense when incurred. Major replacements that substantially extend the useful life of an asset are capitalized and depreciated.
(j) Internally Developed Software Costs. We account for internally developed software in accordance with FASB Codification No. 350-40, Intangibles-Goodwill and Other, Internal-Use Software. After technical feasibility has been established, we capitalize the cost of our software development process, including payroll and payroll benefits, by tracking the software development hours invested in the software projects. We amortize our software development costs in accordance with the estimated economic life of the software, which is generally three to ten years.
(k) Impairment of Long-Lived Assets (Including Amortizable Intangible Assets): In accordance with FASB Codification No. 360, Property, Plant, and Equipment, our long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. When evaluating assets for potential impairment, we compare the carrying amount of the asset to the undiscounted future net cash flows expected to be generated by the asset. If impairment is indicated, the asset is permanently written down to its estimated fair market value (based upon future discounted cash flows) and an impairment loss is recognized.
During the fourth quarter of fiscal year 2013, the decision was made to consolidate our domestic screen print operations, resulting in the closure of the Wendell, North Carolina decorating facility. Due to the expected closure, we performed an impairment analysis which resulted in a $0.3 million impairment that we recorded in the other income (expense) line item in our Consolidated Statements of Operations.
(l) Goodwill and Intangibles: We recorded goodwill and intangibles with definite lives, including trade names and trademarks, customer relationships, technology, and non-compete agreements, in conjunction with the acquisitions of Junkfood Clothing Company and Art Gun. Intangible assets are amortized based on their estimated economic lives, ranging from four to twenty years. Goodwill represents the excess of the purchase price over the fair value of net identified tangible and intangible assets and liabilities acquired, and is not amortized. The total amount of goodwill is expected to be deductible for tax purposes. See Note 6 — Goodwill and Intangible Assets for further details.
(m) Impairment of Goodwill: We evaluate the carrying value of goodwill annually or more frequently if events or circumstances indicate that an impairment loss may have occurred. Such circumstances could include, but are not limited to, a significant adverse change in business climate, increased competition or other economic conditions. Under FASB Codification No. 350, Intangibles — Goodwill and Other ("ASC 350"), goodwill is tested at a reporting unit level. As of the beginning of fiscal year 2012, Junkfood was the only reporting unit with recorded goodwill.
The Company adopted ASU No. 2011-08, Intangibles - Goodwill and Other (Topic 350), Testing for Goodwill Impairment ("ASU 2011-08") on July 1, 2012. ASU 2011-08 simplifies how companies are required to test goodwill for impairment. Companies now have the option to first assess qualitative factors to determine whether it is more likely than not (likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount. If after considering the totality of events and circumstances a company determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, it will not have to perform the two-step impairment test.
If the company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or it chooses to not take the simplified approach, the company will have to perform the two-step impairment test. The first step involves comparing the fair value of the reporting unit to which the goodwill is assigned to its carrying amount. If this comparison indicates that a reporting unit’s estimated fair value is less than its carrying value, a second step is required. If applicable, the second step requires a company to allocate the estimated fair value of the reporting unit to the estimated fair value of the reporting unit’s net assets, with any fair value in excess of amounts allocated to such net assets representing the implied fair value of goodwill for that reporting unit. If the carrying value of the goodwill exceeds its implied fair value, the carrying value is written down by an amount equal to such excess.
We complete our annual impairment test of goodwill on the first day of our third fiscal quarter. We estimate fair value of the applicable reporting unit or units using a discounted cash flow methodology. This represents a level 3 fair value measurement as defined under ASC 820, Fair Value Measurements and Disclosures, since the inputs are not readily observable in the marketplace. The goodwill impairment testing process involves the use of significant assumptions, estimates and judgments with respect to a variety of factors, including sales, gross margins, selling, general and administrative expenses, capital expenditures, cash flows and the selection of an appropriate discount rate, all of which are subject to inherent uncertainties and subjectivity. When we perform goodwill impairment testing, our assumptions are based on annual business plans and other forecasted results, which we believe represent those of a market participant. We select a discount rate, which is used to reflect market-based estimates of the risks associated with the projected cash flows, based on the best information available as of the date of the impairment assessment. Based on the valuation, there is not an impairment on the goodwill associated with Junkfood, the only goodwill recorded on our financial statements.
At the end of each reporting period, we are required to remeasure the fair value of the contingent consideration related to the Art Gun acquisition in accordance with FASB Codification No. 805, Business Combinations (“ASC 805”). Based on the operating results and projections for Art Gun, we analyzed and concluded that the fair value of the contingent consideration was de minimis, resulting in a $1.5 million favorable adjustment recorded in the second fiscal quarter of 2011. The change in fair value of the contingent consideration created an indicator of impairment for the goodwill associated with Art Gun.  In accordance with ASC 350, we performed an interim impairment test of goodwill as of the end of the second quarter of fiscal year 2011.  Under the first step of the impairment analysis for Art Gun, we considered both the income approach, which estimates the fair value based on the future discounted cash flows, and the market approach, which estimates the fair value based on comparable market prices, both of which fall in level 3 of the fair value hierarchy.  The results of step one of the impairment test indicated that the carrying value of the Art Gun reporting unit exceeded its fair value.  The second step of the impairment test required us to allocate the estimated fair value of Art Gun to the estimated fair value of Art Gun's net assets, with any fair value in excess of amounts allocated to such net assets representing the implied fair value of goodwill. The result indicated that the goodwill at Art Gun was fully impaired, resulting in a $0.6 million impairment charge recorded in the second quarter of fiscal 2011. The change in contingent consideration and goodwill impairment charge resulted in a net favorable adjustment of $0.9 million, which is included in the branded segment in fiscal year 2011.   At June 29, 2013, the fair value of the contingent consideration was remeasured based on Art Gun's historical and current operating results and projections, remained de minimis, and no amounts are expected to be paid under the terms of the arrangements.
Given the current macro-economic environment and the uncertainties regarding its potential impact on our business, there can be no assurance that our estimates and assumptions used in our impairment tests will prove to be accurate predictions of the future. If our assumptions regarding forecasted cash flows are not achieved, it is possible that an impairment review may be triggered and goodwill may be determined to be impaired.
(n) Self-Insurance Reserves: Our medical, prescription and dental care benefits are primarily self-insured. Our self-insurance accruals are based on claims filed and estimates of claims incurred but not reported. We develop estimates of claims incurred but not reported based upon the historical time it takes for a claim to be reported and paid and historical claim amounts. We had self-insurance reserves of approximately $0.5 million and $0.7 million at June 29, 2013 and June 30, 2012, respectively.
(o) Income Taxes: We account for income taxes under the liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
(p) Cost of Goods Sold: We include in cost of goods sold all manufacturing and sourcing costs incurred prior to the receipt of finished goods at our distribution facilities. The cost of goods sold principally includes product cost, purchasing costs, inbound freight charges, insurance, and inventory write-downs. Our gross margins may not be comparable to other companies, since some entities include costs related to their distribution network in cost of goods sold and we exclude them from gross margin, including them instead in selling, general and administrative expenses.
(q) Selling, General and Administrative Expense: We include in selling, general and administrative expenses costs incurred subsequent to the receipt of finished goods at our distribution facilities, such as the cost of stocking, warehousing, picking and packing, and shipping goods for delivery to our customers. Distribution costs included in selling, general and administrative expenses totaled $17.5 million, $16.4 million  and $14.3 million in fiscal years 2013, 2012 and 2011, respectively. In addition, selling, general and administrative expenses include costs related to sales associates, administrative personnel cost, advertising and marketing expenses, royalty payments on licensed products, and other general and administrative expenses.
(r) Advertising Costs: All costs associated with advertising and promoting our products are expensed during the year in which they are incurred and are included in selling, general and administrative expenses in the Consolidated Statements of Operations. We participate in cooperative advertising programs with our customers. Depending on the customer, our defined cooperative programs allow the customer to use from 1% to 5% of its net purchases from us towards advertisements of our products. Because our products are being specifically advertised, we are receiving an identifiable benefit resulting from the consideration for cooperative advertising. Therefore, pursuant to FASB Codification No. 605-50, Revenue Recognition, Customers Payments and Incentives, we record cooperative advertising costs as a selling expense and the related cooperative advertising reserve as an accrued liability. Advertising costs totaled $3.8 million, $4.3 million  and $6.7 million in fiscal years 2013, 2012 and 2011, respectively. Included in these costs were $1.5 million, $2.0 million and $1.9 million in fiscal years 2013, 2012 and 2011, respectively, related to our cooperative advertising programs.
(s) Stock-Based Compensation: Stock-based compensation cost is accounted for under the provisions of FASB Codification No. 718, Compensation – Stock Compensation (“ASC 718”), the Securities and Exchange Commission Staff Accounting bulletin No. 107 ("SAB 107"), and the Securities and Exchange Commission Staff Accounting Bulletin No. 110 ("SAB 110"). ASC 718 requires all stock-based payments to employees, including grants of employee stock options, to be recognized as expense over the vesting period using a fair value method. We estimate the fair value of stock options using the Black-Scholes options pricing model. The fair value of our restricted stock awards is the quoted market value of Delta Apparel's stock on the grant date.  For performance-based stock awards, in the event we determine it is no longer probable that we will achieve the minimum performance criteria specified in the award, we reverse all of the previously recognized compensation expense in the period such a determination is made. We recognize the fair value, net of estimated forfeitures, as a component of cost of sales and selling, general and administrative expense in the Consolidated Statements of Operations over the vesting period.
(t) Earnings per Share: We compute basic earnings per share ("EPS") by dividing net income by the weighted average number of common shares outstanding during the year pursuant to FASB Codification No. 260, Earnings Per Share (“ASC 260”). Basic EPS includes no dilution. Diluted EPS is calculated, as set forth in ASC 260, by dividing net income by the weighted average number of common shares outstanding adjusted for the issuance of potentially dilutive shares. Potential dilutive shares consist of common stock issuable under the assumed exercise of outstanding stock options and awards using the treasury stock method. This method, as required by ASC 718, assumes that the potential common shares are issued and the proceeds from the exercise, along with the amount of compensation expense attributable to future services, are used to purchase common stock at the exercise date. The difference between the number of potential shares issued and the number of shares purchased is added as incremental shares to the actual number of shares outstanding to compute diluted EPS. Outstanding stock options and awards that result in lower potential shares issued than shares purchased under the treasury stock method are not included in the computation of diluted EPS since their inclusion would have an anti-dilutive effect on EPS.
(u) Foreign Currency Translation: Our functional currency for our foreign operated manufacturing facilities is the United States dollar. We remeasure those assets and liabilities denominated in foreign currencies using exchange rates in effect at each balance sheet date. Fixed assets and the related accumulated depreciation or amortization are recorded at the exchange rates in effect on the date we acquired the assets. Revenues and expenses denominated in foreign currencies are remeasured using average exchange rates for all periods presented. We recognize the resulting foreign exchange gains and losses as a component of other income and expense in the Consolidated Statements of Operations. These gains and losses are immaterial for all periods presented.
(v) Fair Value of Financial Instruments: We use financial instruments in the normal course of our business. The carrying values approximate fair values for financial instruments that are short-term in nature, such as cash, accounts receivable and accounts payable. We estimate that the carrying value of our long-term debt approximates fair value based on the current rates offered to us for debt of the same remaining maturities.
(w) Other Comprehensive Income (Loss): Other Comprehensive Income (Loss) consists of net earnings and unrealized gains (losses) from cash flow hedges, net of tax, and is presented in the Consolidated Statements of Shareholders’ Equity. Accumulated other comprehensive loss contained in the shareholders’ equity section of the Consolidated Balance Sheets in fiscal years 2013 and 2012 consisted of $82 thousand and $129 thousand, respectively, related to interest rate swap agreements.
(x) Yarn and Cotton Procurements: We have a supply agreement with Parkdale to supply our yarn requirements until December 31, 2015. Under the supply agreement, we purchase from Parkdale all of our yarn requirements for use in our manufacturing operations, excluding yarns that Parkdale does not manufacture or cannot manufacture due to temporary capacity constraints. The purchase price of yarn is based upon the cost of cotton plus a fixed conversion cost. Thus, we are subject to the commodity risk of cotton prices and cotton price movements, which could result in unfavorable yarn pricing for us. We fix the cotton prices as a component of the purchase price of yarn, pursuant to the supply agreement, in advance of the shipment of finished yarn from Parkdale. Prices are set according to prevailing prices, as reported by the New York Cotton Exchange, at the time we elect to fix specific cotton prices.
(y) Derivatives: From time to time we enter into forward contracts, option agreements or other instruments to limit our exposure to fluctuations in interest rates and raw material prices with respect to long-term debt and cotton purchases, respectively. We determine at inception whether the derivative instruments will be accounted for as hedges.
We account for derivatives and hedging activities in accordance with FASB Codification No. 815, Derivatives and Hedging (“ASC 815”), as amended. ASC 815 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts and hedging activities. It requires the recognition of all derivative instruments as either assets or liabilities in the Consolidated Balance Sheets and measurement of those instruments at fair value. The accounting treatment of changes in fair value depends upon whether or not a derivative instrument is designated as a hedge and, if so, the type of hedge. We include all derivative instruments at fair value in our Consolidated Balance Sheets. For derivative financial instruments related to the production of our products that are not designated as a hedge, we recognize the changes in fair value in cost of sales. For derivatives designated as cash flow hedges, to the extent effective, we recognize the changes in fair value in accumulated other comprehensive income (loss) until the hedged item is recognized in income. Any ineffectiveness in the hedge is recognized immediately in income in the line item that is consistent with the nature of the hedged risk. We formally document all relationships between hedging instruments and hedged items, as well as risk management objectives and strategies for undertaking various hedge transactions, at the inception of the transactions.
We are exposed to counterparty credit risks on all derivatives. Because these amounts are recorded at fair value, the full amount of our exposure is the carrying value of these instruments. We only enter into derivative transactions with well established institutions and therefore we believe the counterparty credit risk is minimal.
There were no significant raw material option agreements that were purchased during fiscal year 2013, 2012 or 2011. On September 1, 2011, we entered into three interest rate swap agreements, as follows:
 
Effective Date
 
Notational
Amount
 
LIBOR Rate
 
Maturity Date
Interest Rate Swap
9/1/2011
 
$10 million
 
0.7650
%
 
9/1/2013
Interest Rate Swap
9/1/2011
 
$10 million
 
0.9025
%
 
3/1/2014
Interest Rate Swap
9/1/2011
 
$10 million
 
1.0700
%
 
9/1/2014

We assessed these agreements and concluded that the swap agreements match the exact terms of the underlying debt except for a slight timing difference. We use a hypothetical derivative method to assess and measure ineffectiveness associated with the hedge each reporting period. During fiscal years 2013 and 2012, the interest rate swap agreements had minimal ineffectiveness and were considered highly-effective hedges.
The changes in fair value of the interest rate swap agreements resulted in an AOCI gain, net of taxes, of $47 thousand for the year ended June 29, 2013 and an AOCI loss, net of taxes, of $0.1 million the year ended June 30, 2012. See Note 15(d) - Derivatives for further details.
(z) Recently Adopted Accounting Pronouncements:
In June 2011, the FASB issued Accounting Standards Update ("ASU") No. 2011-05, Comprehensive Income (Topic 220) - Presentation of Comprehensive Income ("ASU 2011-05"). This new guidance gives companies two choices on how to present items of net income, items of other comprehensive income and total comprehensive income: companies can create one continuous statement of comprehensive income or two separate consecutive statements. Other comprehensive income will no longer be allowed to be presented solely in the statement of stockholders' equity. Earnings per share continues to be based on net income. ASU 2011-05 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 and applied on a retrospective basis. ASU 2011-05 was adopted on July 1, 2012, and the Consolidated Statements of Comprehensive Income (Loss) herein comply with this guidance.
In December 2011, the FASB issued ASU 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05 ("ASU 2011-12"). ASU 2011-12 indefinitely defers the new provisions under ASU 2011-05, which required entities to present reclassification adjustments out of accumulated other comprehensive income by component in both the statement in which net income is presented and the statement in which other comprehensive income is presented for both interim and annual financial statements. ASU 2011-12 is effective for the years beginning after December 15, 2011. ASU 2011-12 was adopted on July 1, 2012, and the Consolidated Statements of Comprehensive Income (Loss) herein comply with this guidance.
In September 2011, the FASB issued ASU No. 2011-08, Intangibles - Goodwill and Other (Topic 350), Testing Goodwill for Impairment ("ASU 2011-08") . The FASB decided to simplify how companies are required to test goodwill for impairment. Companies now have the option to first assess qualitative factors to determine whether it is more likely than not (likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount. If after considering the totality of events and circumstances a company determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, it will not have to perform the two-step impairment test. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. ASU 2011-08 was adopted on July 1, 2012, and did not have a material effect on our financial statements.
(aa) Recently Issued Accounting Pronouncements Not Yet Adopted:
In July 2012, FASB issued ASU No. 2012-02, Intangibles - Goodwill and Other (Topic 350), Testing Indefinite-Lived Intangible Assets for Impairment, ("ASU 2012-02"). This new guidance adds an optional qualitative assessment for determining whether an indefinite-lived intangible asset is impaired. Companies have the option to first perform a qualitative assessment to determine whether it is more likely than not (likelihood of more than 50%) that an indefinite-lived intangible is impaired. If a company determines that it is more likely than not that the fair value of such an asset exceeds its carrying amount, it would not need to calculate whether the fair value of such an asset exceeds its carrying amount and it would not need to calculate the fair value of the asset in that year. The company must, however, make a positive assertion about the conclusion and the circumstances taken into account to reach that conclusion. However, if the company determines otherwise, it must calculate the fair value of the asset and compare that value with its carrying amount. If the carrying amount of the company's intangible asset exceeds its fair value, the company must record an impairment charge for the amount of that excess, if any. ASU 2011-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. ASU 2012-02 is therefore effective for our fiscal year 2014.
In February 2013, FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220), Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (ASU 2013-02). This guidance requires companies to report information about reclassifications out of accumulated other comprehensive income in one place. These reclassifications must be presented by component. If these items are significant and are reclassified in their entirety in the period, companies must report the effect of the reclassifications on the respective line items in the statement where net income is presented. If the items are not reclassified in their entirety to net income in the period, companies must cross-reference in a note. ASU 2013-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2012. ASU 2013-02 is therefore effective for our fiscal year 2014.
Acquisitions
Acquisitions
ACQUISITIONS
On June 11, 2010, we formed a new North Carolina limited liability company, TCX, LLC ("TCX") as a wholly-owned subsidiary of M.J. Soffe, LLC. Pursuant to an Asset Purchase Agreement dated July 5, 2010, on July 12, 2010, TCX acquired substantially all of the net assets of HPM Apparel, Inc. d/b/a The Cotton Exchange, including accounts receivable, inventory, and fixed assets, and assumed certain liabilities. The total purchase price, which included a post-closing working capital adjustment, was $9.9 million. We accounted for the acquisition of The Cotton Exchange pursuant to ASC 805 with the purchase price being allocated based upon fair values. We determined fair values using one or more of the following valuation techniques, all of which are considered level 2 inputs based on the fair value hierarchy: (a) market approach using prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities; or (b) cost approach using amounts that would be required to replace the service capacity of an asset. No goodwill or other intangible assets were recorded in conjunction with the acquisition of The Cotton Exchange. We financed the acquisition completed in fiscal years 2011 using our U.S. asset-based secured credit facility. The acquisition is included in the Consolidated Financial Statements in our branded segment since the acquisition date. Effective January 1, 2012, TCX was merged into its parent entity, M.J. Soffe, LLC, for reasons of corporate simplification and as such, TCX no longer exists as a separate entity.
Inventories
Inventories
Inventories, net of reserves of $6.8 million and $5.2 million in fiscal years 2013 and 2012, respectively, consist of the following (in thousands):
 
June 29,
2013
 
June 30,
2012
Raw materials
$
12,443

 
$
11,759

Work in process
16,407

 
18,986

Finished goods
130,664

 
130,888

 
$
159,514

 
$
161,633


Raw materials include finished yarn and direct materials for the basics segment and include direct embellishment materials and undecorated garments and headwear for the branded segment.
Property, Plant and Equipment
Property, Plant and Equipment
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following (in thousands):
 
Estimated
Useful Life
 
June 29,
2013
 
June 30,
2012
Land and land improvements
25 years
 
$
993

 
$
993

Buildings
20 years
 
7,882

 
7,893

Machinery and equipment
10 years
 
69,094

 
65,404

Computers and software
3-10 years
 
20,386

 
19,256

Furniture and fixtures
7 years
 
5,290

 
4,973

Leasehold improvements
3-10 years
 
2,335

 
2,626

Automobiles
5 years
 
797

 
752

Construction in progress
N/A
 
2,430

 
2,053

 
 
 
109,207

 
103,950

Less accumulated depreciation and amortization
 
 
(69,761
)
 
(64,525
)
 
 
 
$
39,446

 
$
39,425

Goodwill and Intangible Assets
Goodwill and Intangible Assets
GOODWILL AND INTANGIBLE ASSETS
Components of intangible assets consist of the following (in thousands):
 
June 29, 2013
 
June 30, 2012
 
 
 
Cost
Accumulated Amortization
Net Value
 
Cost
Accumulated Amortization
Net Value
 
Economic Life
 
 
 
 
 
 
 
 
 
 
Goodwill
$
16,812

$

$
16,812

 
$
16,812

$

$
16,812

 
N/A
 
 
 
 
 
 
 
 
 
 
Intangibles:
 
 
 
 
 
 
 
 
 
Tradename/trademarks
$
1,530

$
(603
)
$
927

 
$
1,530

$
(526
)
$
1,004

 
20 yrs
Customer relationships
7,220

(2,847
)
4,373

 
7,220

(2,486
)
4,734

 
20 yrs
Technology
1,220

(428
)
792

 
1,220

(307
)
913

 
10 yrs
Non-compete agreements
517

(419
)
98

 
517

(371
)
146

 
4 – 8.5 yrs
Total intangibles
$
10,487

$
(4,297
)
$
6,190

 
$
10,487

$
(3,690
)
$
6,797

 
 


The goodwill cost represents the acquired goodwill net of the cumulative impairment losses of $0.6 million. Amortization expense for intangible assets was $0.6 million for each of the years ended June 29, 2013, June 30, 2012 and July 2, 2011. Amortization expense is estimated to be approximately $0.6 million each for fiscal years 2014, 2015, 2016, 2017 and 2018.
Accrued Expenses
Accrued Expenses
ACCRUED EXPENSES
Accrued expenses consist of the following (in thousands):
 
June 29,
2013
 
June 30,
2012
Accrued employee compensation and benefits
$
9,762

 
$
7,645

Taxes accrued and withheld
1,199

 
1,133

Accrued insurance
568

 
889

Accrued advertising
363

 
626

Accrued royalties
3,001

 
2,868

Accrued commissions
677

 
725

Derivative liability
49

 

Other
2,807

 
2,722

 
$
18,426

 
$
16,608

Long-term Debt
Long-term Debt
LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
 
June 29,
2013
 
June 30,
2012
Revolving U.S. credit facility, interest at base rate or adjusted LIBOR rate plus an applicable margin (interest at 2.6% on June 29, 2013) due May 2016
$
88,753

 
$
103,965

Revolving credit facility with Banco Ficohsa, a Honduran bank, interest at 7% due March 2019 (denominated in U.S. dollars)
5,000

 
5,000

Term loan with Banco Ficohsa, a Honduran bank, interest at 7%, interest only payments thru March 2012, principal payments began April 2012, payable monthly with a seven-year term (denominated in U.S. dollars)
4,539

 
5,513

 
98,292

 
114,478

Less current installments
(3,529
)
 
(3,529
)
Long-term debt, excluding current installments
$
94,763

 
$
110,949


On May 27, 2011, Delta Apparel, Soffe (successor by merger to TCX, LLC), Junkfood, To The Game and Art Gun entered into a Fourth Amended and Restated Loan and Security Agreement (the “Amended Loan Agreement”) with the financial institutions named in the Amended Loan Agreement as Lenders, 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.
Pursuant to the Amended Loan Agreement, the line of credit is $145 million (subject to borrowing base limitations), and matures on May 26, 2016. 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 Agent's ability to secure additional commitments and customary closing conditions. In fiscal year 2011, we paid $1.4 million in financing costs in conjunction with the Amended Loan Agreement.
The credit facility is secured by a first-priority lien on substantially all of the real and personal property of Delta Apparel, Junkfood, Soffe, To The Game, and Art Gun. All loans bear interest at rates, at the Company's option, based on either (a) an adjusted LIBOR rate plus an applicable margin or (b) a base rate plus an applicable margin, with the base rate equal to the greatest of (i) the federal funds rate plus 0.5%, (ii) the LIBOR rate plus 1.0%, or (iii) the prime rate announced by Wells Fargo, National Association. The facility requires monthly installment payments of approximately $0.2 million in connection with fixed asset amortizations, and these amounts reduce the amount of availability under the facility. Annual facility fees are 0.25% or 0.375% (subject to average excess availability) of the amount by which $145 million exceeds the average daily principal balance of the outstanding loans and letters of credit accommodations. The annual facility fees are charged monthly based on the principal balances during the immediately preceding month.
At June 29, 2013, we had $88.8 million outstanding under our U.S. revolving credit facility at an average interest rate of 2.6%, and had the ability to borrow an additional $42.0 million. Our credit facility includes the financial covenant that if the amount of availability falls below an amount equal to 12.5% of the lesser of the borrowing base or $145 million, 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. As availability was above the minimum, we were not subject to the FCCR covenant at June 29, 2013. In addition, the credit facility includes customary conditions to funding, representations and warranties, covenants, and events of default. The covenants include, among other things, limitations on asset sales, consolidations, mergers, liens, indebtedness, loans, investments, guaranties, acquisitions, dividends, stock repurchases, and transactions with affiliates.
Proceeds of the loans may be used for permitted acquisitions (as defined in the Amended Loan Agreement), general operating expenses, working capital, other corporate purposes, and to finance credit facility fees and expenses. We are allowed to make cash dividends and stock repurchases if (i) as of the date of the payment or repurchase and after giving effect to the payment or repurchase, we have availability on that date of not less than $15 million and average availability for the 30 day period immediately preceding that date of not less than $15 million; and (ii) the aggregate amount of dividends and stock repurchases after May 27, 2011 does not exceed $19 million plus 50% of our cumulative net income (as defined in the Amended Loan Agreement) from the first day of fiscal year 2012 to the date of determination. At June 29, 2013 and July 30, 2012, there was $11.6 million and $14.8 million, respectively, of retained earnings free of restrictions to make cash dividends or stock repurchases.
The U.S. revolving credit facility 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 facility as long-term debt.
In March 2011, we extinguished our existing debt with Banco Ficohsa, a Honduran bank, and entered into a new credit facility with them. Proceeds from the new loan agreement were used to extinguish the existing loan indebtedness and resulted in no gain or loss being recorded upon extinguishment. The debt facility is secured by a first-priority lien on the assets of our Honduran operations and the loan is not guaranteed by the U.S. entity. The installment loan portion of the agreement carries a fixed interest rate of 7% for a term of seven years and is denominated in U.S. dollars. During the first 12 months of the term, the loan required only monthly interest payments with no principal payments. Beginning in April 2012, ratable monthly principal and interest payments are due through the end of the term. As of June 29, 2013, we had $4.5 million outstanding on this loan. The revolving credit portion of the loan has a 7% fixed interest rate with an ongoing 18-month term (expiring March 2019) and is denominated in U.S. dollars. The revolving credit facility requires minimum payments during each 6 month period of the 18-month term; however, the agreement permits additional drawdowns to the extent payments are made, if certain objective covenants are met. The new revolving Honduran debt, by its nature, is not long-term as it requires scheduled payments each six months. However, as the 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 criteria, the amounts have been classified as long-term debt. As of June 29, 2013, we had $5 million outstanding on this loan.
The aggregate maturities of debt at June 29, 2013 are as follows (in thousands):
Fiscal Year
Amount
2014
$
3,529

2015
3,529

2016
84,614

2017
973

2018
5,647

 
$
98,292

Income Taxes
Income Taxes
INCOME TAXES
The provision for income taxes consists of the following (in thousands):
 
Year ended
 
June 29,
2013
 
June 30,
2012
 
July 2,
2011
Current:
 
 
 
 
 
Federal
$
40

 
$
(6,795
)
 
$
3,936

State
35

 

 
315

Foreign
145

 
157

 
167

Total current
$
220

 
$
(6,638
)
 
$
4,418

Deferred:
 
 
 
 
 
Federal
$
499

 
$
(284
)
 
$
562

State
3

 
(985
)
 
373

Total deferred
502

 
(1,269
)
 
935

Provision for (benefit from) income taxes
$
722

 
$
(7,907
)
 
$
5,353


For financial reporting purposes, income (loss) before provision for (benefit from) income taxes includes the following components (in thousands):
 
Year ended
 
June 29,
2013
 
June 30,
2012
 
July 2,
2011
United States
$
1,468

 
$
(21,660
)
 
$
12,814

Foreign
8,438

 
11,306

 
9,866

 
$
9,906

 
$
(10,354
)
 
$
22,680


In fiscal year 2012, we generated federal net operating losses of $20.0 million. These net operating losses were classified in income tax receivable at June 30, 2012 as we fully intended to carry these losses back to prior years where we had the taxable income. When we filed our fiscal year 2012 tax return, we carried back the net operating losses against the taxable income from fiscal years 2011 and 2010. The remaining $0.9 million in net operating loss carryforwards is classified in the income tax receivable at June 29, 2013 as it will be applied against our fiscal year 2013 taxable income.
A reconciliation between actual provision for (benefit from) income taxes and the provision for income taxes computed using the federal statutory income tax rate of 34.0% is as follows (in thousands):
 
Year ended
 
June 29,
2013
 
June 30,
2012
 
July 2,
2011
Income tax expense at the statutory rate
$
3,371

 
$
(3,520
)
 
$
7,712

State income tax expense, net of federal income tax effect
(11
)
 
(975
)
 
561

Rate difference and nondeductible items in foreign jurisdictions
(16
)
 
(47
)
 
(20
)
Impact of foreign earnings in tax-free zone
(2,754
)
 
(3,683
)
 
(3,223
)
Valuation allowance adjustments
75

 
14

 

Nondeductible compensation

 
193

 
157

Nondeductible amortization and other permanent differences
100

 
91

 
86

Other
(43
)
 
20

 
80

Provision for (benefit from) income taxes
$
722

 
$
(7,907
)
 
$
5,353


Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. We have not provided deferred taxes on the $44.1 million of undistributed earnings of our foreign subsidiaries where the earnings are considered to be permanently reinvested. The undistributed earnings would become taxable in the United States if we decided to repatriate earnings for business, tax or foreign exchange reasons. If we made that decision, U.S. income taxes would be provided for net of foreign taxes already paid. The determination of the unrecognized deferred tax liability associated with these unremitted earnings is not practical at this time.
Significant components of our deferred tax assets and liabilities are as follows (in thousands):
 
June 29,
2013
 
June 30,
2012
Deferred tax assets:
 
 
 
State net operating loss carryforwards
$
1,416

 
$
1,406

Charitable donation carryforward
50

 
373

Derivative — interest rate contracts
51

 
81

Alternative minimum tax credit carryforward
49

 

Currently nondeductible accruals
6,665

 
5,555

Gross deferred tax assets
8,231

 
7,415

Less valuation allowance — state net operating loss
(197
)
 
(122
)
Net deferred tax assets
8,034

 
7,293

 
 
 
 
Deferred tax liabilities:
 
 
 
Depreciation
(3,164
)
 
(2,704
)
Goodwill and intangibles
(3,762
)
 
(3,319
)
Other
(123
)
 
(109
)
Gross deferred tax liabilities
(7,049
)
 
(6,132
)
Net deferred tax asset
985

 
1,161

Less non-current net deferred tax liabilities
3,571

 
3,803

Current deferred tax asset
$
4,556

 
$
4,964


As of June 29, 2013, and June 30, 2012, we had operating loss carryforwards of approximately $31.6 million and $31.1 million, respectively, for state purposes, resulting in deferred tax assets of $1.4 million and $1.4 million, respectively. These carryforwards expire at various intervals through 2032. Our deferred tax asset related to state net operating loss carryforwards is reduced by a valuation allowance to result in deferred tax assets we consider more likely than not to be realized. There was a $75 thousand net change in the total valuation allowance for the year ended June 29, 2013. The ultimate realization of deferred tax assets depends upon the generation of future taxable income during the periods in which those temporary differences become deductible.
FASB Codification No. 740, Income Taxes (“ASC 740”) requires that a position taken or expected to be taken in a tax return be recognized in the financial statements when it is more likely than not (i.e., a likelihood of more than fifty percent) that the position would be sustained upon examination by tax authorities. A recognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Upon adoption of ASC 740, we did not have any material unrecognized tax benefits, nor did we have any material unrecognized tax benefits as of June 29, 2013. We recognize accrued interest and penalties related to unrecognized tax benefits as components of our income tax provision. We did not have any interest and penalties accrued related to unrecognized tax benefits as of June 29, 2013.
In the second quarter of fiscal year 2013, the Internal Revenue Service commenced an examination of our U.S. income tax returns for our fiscal year 2010. Upon filing the carryback of our net operating losses from fiscal year 2012 to our fiscal years 2011 and 2010 and receiving a cash refund of the taxes previously paid, the Internal Revenue Service expanded the examination to included our U.S. income tax returns for our 2011 and 2012 fiscal years. This examination is anticipated to be completed during the first half of fiscal year 2014. As of June 29, 2013, the Internal Revenue Service has not proposed any significant adjustments to any tax positions. The tax years 2009 to 2012, according to statute, remain open to examination by the major taxing jurisdictions to which we are subject.
Leases
Leases
LEASES
We have several non-cancelable operating leases primarily related to buildings, office equipment and computer systems. Certain land and building leases have renewal options generally for periods ranging from 5 to 10 years.
Future minimum lease payments under non-cancelable operating leases as of June 29, 2013 were as follows (in thousands):
Fiscal Year
Amount
2014
$
8,353

2015
7,470

2016
5,180

2017
2,654

2018
294

Thereafter

 
$
23,951


Rent expense for all operating leases was $9.8 million, $10.0 million and $9.7 million for fiscal years 2013, 2012, and 2011, respectively.
Employee Benefit Plans
Employee Benefit Plans
EMPLOYEE BENEFIT PLANS
We sponsor and maintain a 401(k) retirement savings plan (the “401(k) Plan”) for our employees who meet certain service and age requirements. The 401(k) Plan permits participants to make pre-tax contributions by salary reduction pursuant to Section 401(k) of the Internal Revenue Code. The 401(k) Plan provides for us to make a guaranteed match of the employee’s contributions. We contributed approximately $1.3 million, $1.3 million and $1.2 million to the 401(k) Plan during fiscal years 2013, 2012, and 2011, respectively.
We provide post-retirement life insurance benefits for certain retired employees. The plan is noncontributory and is unfunded, and therefore, benefits and expenses are paid from our general assets as they are incurred. All of the employees in the plan are fully vested and the plan was closed to new employees in 1990. The discount rate used in determining the liability was 6.0% for fiscal years 2013 and 2012. The following table presents the benefit obligation for these benefits, which is included in accrued expenses in the accompanying balance sheets (in thousands).
 
June 29,
2013
 
June 30,
2012
Balance at beginning of year
$
526

 
$
580

Interest expense
6

 
6

Benefits paid
(62
)
 
(61
)
Actuarial adjustment
1

 
1

Balance at end of year
$
471

 
$
526

Stock-based Compensation
Stock-based Compensation
STOCK-BASED COMPENSATION
On November 11, 2010, the Delta Apparel, Inc. shareholders approved the Delta Apparel, Inc. 2010 Stock Plan ("2010 Stock Plan"). Upon shareholder approval of the 2010 Stock Plan, 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 and will be granted under the 2010 Stock Plan. We account for these plans pursuant to ASC 718, SAB 107 and SAB 110. Shares are generally issued from treasury stock upon exercise of the options or the vesting of the restricted stock units and performance units. ASC 718 requires that cash flows from tax benefits attributable to tax deductions in excess of the compensation cost recognized for those options (excess tax benefits) be classified as financing cash flows. Total stock-based compensation expense was $1.2 million, $1.6 million and $2.1 million in 2013, 2012, and 2011, respectively. Associated with the compensation cost are income tax benefits recognized of $0.5 million, $0.6 million and $0.8 million in fiscal years 2013, 2012 and 2011, respectively.
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 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 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.
Compensation expense is recorded on the cost of sales and selling, general and administrative expense line items in our Statements of Operations over the vesting periods.
Stock Options
Stock options were granted with an average exercise price of $13.47. All outstanding options granted by us have vested and are exercisable.
A summary of the stock option activity during fiscal years 2013, 2012 and 2011 is presented below:
 
Fiscal Year 2013
 
Fiscal Year 2012
 
Fiscal Year 2011
 
Shares
Weighted Average Exercise Price
 
Shares
Weighted Average Exercise Price
 
Shares
Weighted Average Exercise Price
Stock options outstanding, beginning of fiscal year
50,000

$
13.47

 
50,000

$
13.47

 


Stock options granted


 


 
50,000

$
13.47

Stock options exercised


 


 


Stock options forfeited


 


 


Stock options outstanding, end of fiscal year
50,000

$
13.47

 
50,000

$
13.47

 
50,000

$
13.47

Stock options outstanding and exercisable, end of fiscal year
50,000

$
13.47

 
50,000

$
13.47

 
25,000

$
13.47


The following table summarizes the weighted average grant date fair values and assumptions that were used to estimate the grant date fair values using the Black-Scholes option-pricing model of the options granted during fiscal year 2011:
 
 
 
 
 
2011
Risk-free interest rate
 
 
 
 
2
%
Expected life
 
 
 
 
4.0 yrs

Expected volatility
 
 
 
 
63
%
Expected dividend yield
 
 
 
 
%
Weighted-average per share fair value of options granted
 
 
 
 
$
6.25


The risk-free interest rate for the periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Due to minimal exercising of stock options historically, in 2011 we estimated the expected life of options granted to be the midpoint between the average vesting term and the contractual term as permitted under SAB 107 and SAB 110. The expected volatility for the periods of the expected life of the option is determined using historical volatilities based on historical stock prices. The expected dividend yield is based on our expected annual dividend in relation to our historical average stock price.
The aggregate intrinsic value for options outstanding and exercisable as of June 29, 2013 was approximately $1.2 million. The following table summarizes information about our stock options outstanding, all of which are exercisable as of June 29, 2013:
Date of Option Grant
Number of Options Outstanding and Exercisable
Exercise Price
Grant-Date Fair Value
Expiration Date
February 2, 2011
25,000

$
13.86

$
6.15

February 18, 2018
February 2, 2011
25,000

$
13.07

$
6.35

February 18, 2018
 
50,000

 
 
 

Restricted Stock Units and Performance Units
The following table summarizes the restricted stock units and performance units award activity during fiscal years 2013, 2012 and 2011:
 
Fiscal Year 2013
 
Fiscal Year 2012
 
Fiscal Year 2011
 
Number of Units
Weighted average grant date fair value
 
Number of Units
Weighted average grant date fair value
 
Number of Units
Weighted average grant date fair value
Units outstanding, beginning of fiscal year
337,700

$
16.05

 


 


Units granted
10,000

$
13.66

 
390,900

$
16.04

 


Units forfeited
(122,830
)
$
17.10

 
(53,200
)
$
(16.00
)
 


Units outstanding, end of fiscal year
224,870

$
15.37

 
337,700

$
16.05

 



During fiscal years 2013 and 2012, restricted stock units representing 5,000 and 91,450 shares of our common stock, respectively, were granted. These restricted stock units are service-based and vest upon the filing of our Annual Report on Form 10-K for the fiscal year ended June 29, 2013. The restricted stock units are payable in the common stock of Delta Apparel, Inc. and are therefore accounted for under the equity method pursuant to ASC 718.
During fiscal year 2013 and 2012, performance units representing 5,000 and 91,450 shares of our common stock, respectively, were granted. The performance units are based on the achievement of certain performance criteria for the two-year period ended June 29, 2013, payable in the common stock of Delta Apparel, Inc. and vest with the filing of our Annual Report on Form 10-K for the fiscal year ended June 29, 2013, subject to the achievement of the performance goals. We accounted for these performance units under the equity method pursuant to ASC 718. During the second quarter of fiscal year 2013, we determined that the ability to achieve the performance criteria was not probable. As a result, we reversed the $0.4 million of related share-based expense previously recognized. The performance criteria was not met and the performance units were forfeited on June 29, 2013.
During fiscal year 2012, performance units representing 52,000 shares of our common stock were also granted. These performance units were based on the achievement of certain performance criteria for the fiscal year ended June 30, 2012, and would have vested upon the filing of our Annual Report on Form 10-K for fiscal year 2012; however, the performance criteria was not met and the performance units were forfeited on June 30, 2012.
In addition, during fiscal year 2012, performance units representing 156,000 shares of our common stock were granted. These units are based on the achievement of one-year performance criteria for each of the fiscal years 2013, 2014 and 2015, with one third of such units eligible to vest with the filing of our Annual Report on Form 10-K for each of the fiscal years. Upon achievement of the performance goals, one-half are payable in the common stock of Delta Apparel, Inc. and are therefore accounted for under the equity method pursuant to ASC 718 and one-half are payable in cash and are therefore accounted for under the liability method pursuant to ASC 718. Based upon the performance achieved during fiscal year 2013, 39,520 units of the 52,000 units granted vest upon the filing of our Annual Report on Form 10-K for the fiscal year ended June 29, 2013 and 12,480 units were forfeited on June 29, 2013.
As of June 29, 2013, there was $1.1 million of total unrecognized compensation cost related to non-vested restricted stock units and performance units under the 2010 Stock Plan. This cost is expected to be recognized over a period of 2.3 years.
The following table summarizes information about the unvested restricted stock units and performance units as of June 29, 2013.
Restricted Stock Units/Performance Units
Number of Units
Average Market Price on Date of Grant
Vesting Date
Fiscal year 2012 Restricted Stock Units
76,350

$
17.60

August 2013
Fiscal year 2012 Performance Units
39,520

$
14.25

August 2013
Fiscal year 2012 Performance Units
52,000

$
14.25

August 2014
Fiscal year 2012 Performance Units
52,000

$
14.25

August 2015
Fiscal year 2013 Restricted Stock Units
5,000

$
13.66

August 2013
 
224,870

 
 

Option Plan
Prior to expiration of the Option Plan, the Compensation Committee of our Board of Directors had the discretion to grant options for up to 2,000,000 shares of common stock to officers and key and middle level executives for the purchase of our stock at prices not less than fifty percent of the fair market value of the shares on the dates of grant, with an exercise term (as determined by the Compensation Committee) not to exceed 10 years. The Compensation Committee determined the vesting period for the stock options, which generally became exercisable over three to four years. Certain option awards in the Option Plan provided for accelerated vesting upon meeting specific retirement, death or disability criteria.
Compensation expense was recorded on the cost of sales and selling, general and administrative expense line items in our Statements of Operations on a straight-line basis over the vesting periods.
A summary of our stock option activity during fiscal years 2013, 2012 and 2011 is presented below:
 
Fiscal Year 2013
 
Fiscal Year 2012
 
Fiscal Year 2011
 
Shares
Weighted Average Exercise Price
 
Shares
Weighted Average Exercise Price
 
Shares
Weighted Average Exercise Price
Stock options outstanding, beginning of fiscal year
799,834

$
12.22

 
851,167

$
12.16

 
1,024,500

11.89

Stock options exercised
(139,334
)
11.14

 
(25,333
)
8.11

 
(118,667
)
11.64

Stock options forfeited
(60,000
)
15.91

 
(26,000
)
14.48

 
(54,666
)
8.16

Stock options outstanding, end of fiscal year
600,500

$
12.09

 
799,834

$
12.22

 
851,167

$
12.16

Stock options outstanding and exercisable, end of fiscal year
600,500

$
12.09

 
799,834

$
12.22

 
777,168

$
12.55


The total intrinsic value of options exercised during fiscal years 2013, 2012 and 2011 was $0.7 million, $0.2 million and $0.6 million respectively. During fiscal years 2013, 2012 and 2011, exercised options resulted in excess tax benefits of $34 thousand, $529 thousand and $84 thousand, respectively. All outstanding options were vested as of June 30, 2012.
The following table summarizes information about our stock options outstanding, all of which are exercisable as of June 29, 2013:
Date of Option Grant
Number of Options Outstanding and Exercisable
Exercise Price
Grant-Date Fair Value
Expiration Date
June 28, 2004
82,500

$
11.28

$
4.23

June 28, 2014
July 4, 2005
358,000

$
13.35

$
5.18

July 4, 2015
July 27, 2006
30,000

$
17.24

$
6.20

July 27, 2016
February 8, 2008
120,000

$
8.30

$
2.95

February 8, 2018
March 16, 2009
10,000

$
4.01

$
2.00

February 18, 2018
 
600,500

 
 
 

Award Plan
Under the Award Plan, the Compensation Committee of our Board of Directors had the discretion to grant awards for up to an aggregate maximum of 800,000 shares of our common stock. The Award Plan authorized the Compensation Committee to grant to our officers and key and middle level executives rights to acquire shares at a cash purchase price of $0.01 per share. The Award Plan contained provisions for cash payments equal to the taxes due when the shares vest. Therefore, pursuant to ASC 718, the underlying stock grant was accounted for as an equity award and the associated cash payment as a liability award.
In fiscal year 2011, prior to the adoption of the 2010 Stock Plan, awards for up to 7,000 shares of our common stock were granted. The award was comprised of 4,200 shares which were service-based and vested upon the filing on our Annual Report of Form 10-K for the fiscal year ended July 2, 2011. The remaining 2,800 shares were performance awards and were based on the achievement of performance criteria for the two-year period ended July 2, 2011 and vested upon the filing of our Annual Report of Form 10-K for the fiscal year ended July 2, 2011, subject to the performance criteria.
Compensation expense was recorded on the cost of sales and selling, general and administrative expense line items in our Statements of Operations over the vesting period. There were no outstanding awards under the Award Plan as of June 29, 2013.
Business Segments
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.
The branded segment is comprised of our business units which are focused on specialized apparel garments and headwear to meet consumer preferences and fashion trends, and includes Soffe, Junkfood, To The Game and Art Gun. These branded embellished and unembellished products are sold through specialty and boutique shops, upscale and traditional department stores, mid-tier retailers, sporting goods stores, college bookstores and the U.S. military. Products in this segment are marketed under our lifestyle brands of Soffe®, Intensity Athletics®, Junk Food®, The Game®, American Threads™, Salt Life® and Realtree Outfitters® as well as other labels. The results of The Cotton Exchange have been included in the branded segment since its acquisition on July 12, 2010.
The basics segment is comprised of our business units primarily focused on garment styles that are characterized by low fashion risk, and includes our Delta Catalog and FunTees businesses. We market, distribute and manufacture for sale unembellished 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, and sports licensed apparel marketers. Typically these products are sold with value-added services such as hangtags, ticketing, hangers, and embellishment so that they are fully ready for retail.
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 income (loss)”). Our segment operating income (loss) may not be comparable to similarly titled measures used by other companies. The accounting policies of our reportable segments are the same as those described in Note 2. Intercompany transfers between operating segments are transacted at cost and have been eliminated within the segment amounts shown in the following table (in thousands). We expensed a one-time charge of $1.2 million in the fiscal 2013 first quarter for legal and professional fees related to the previously disclosed Audit Committee internal investigation that was completed during that quarter. This one time charge is included in the basics segment.
 
Basics
 
Branded
 
Consolidated
Fiscal Year 2013:
 
 
 
 
 
Net sales
$
270,876

 
$
219,647

 
$
490,523

Segment operating income (loss)
15,771

 
(1,868
)
 
13,903

Segment assets **
161,716

 
150,194

 
311,910

Equity investment in joint venture
2,909

 

 
2,909

Purchases of property and equipment
3,477

 
4,445

 
7,922

Depreciation and amortization
5,149

 
2,866

 
8,015

 
 
 
 
 
 
Fiscal Year 2012:
 
 
 
 
 
Net sales
$
254,718

 
$
235,205

 
$
489,923

Segment operating (loss) income
(12,484
)
 
6,262

 
(6,222
)
Segment assets **
168,492

 
151,902

 
320,394

Equity investment in joint venture
2,818

 

 
2,818

Purchases of property and equipment
3,828

 
2,798

 
6,626

Depreciation and amortization
5,547

 
1,945

 
7,492

 
 
 
 
 
 
Fiscal Year 2011:
 
 
 
 
 
Net sales
$
253,494

 
$
221,742

 
$
475,236

Gain on contingent consideration, net of impairment charges *

 
918

 
918

Segment operating income
16,889

 
8,407

 
25,296

Segment assets **
162,932

 
148,933

 
311,865

Equity investment in joint venture
2,664

 

 
2,664

Purchases of property and equipment
4,164

 
3,802

 
7,966

Depreciation and amortization
4,912

 
2,345

 
7,257

______________________
*
 
See Note 2(m) for further information regarding the remeasurement of contingent consideration and impairment testing of goodwill and intangibles.

**
 
All goodwill and intangibles on our balance sheet is included in the branded segment.


The following reconciles the segment operating income (loss) to the consolidated income (loss) before provision for (benefit from) income taxes (in thousands):
 
Year Ended
 
June 29,
2013
 
June 30,
2012

 
July 2,
2011

Segment operating income (loss)
$
13,903

 
$
(6,222
)
 
$
25,296

Unallocated interest expense
3,997

 
4,132

 
2,616

Consolidated income (loss) before provision for (benefit from) income taxes
$
9,906

 
$
(10,354
)
 
$
22,680



Our revenues include sales to domestic and foreign customers. Foreign customers are composed of companies whose headquarters are located outside of the United States. Supplemental information regarding our revenues by geographic area based on the location of the customer is as follows (in thousands):
 
Year Ended
 
June 29,
2013
 
June 30,
2012

 
July 2,
2011

United States
$
480,981

 
$
484,419

 
$
470,909

Foreign
9,542

 
5,504

 
4,327

Total net sales
$
490,523

 
$
489,923

 
$
475,236


Our long-lived assets, excluding goodwill and intangible assets, consist of property, plant and equipment for all locations. We attribute our property, plant and equipment to a particular country based on the location of the long-lived assets. Summarized financial information by geographic area is as follows (in thousands):
 
June 29, 2013
 
June 30, 2012
United States
$
23,011

 
$
22,146

 
 
 
 
Honduras
12,144

 
13,220

El Salvador
3,163

 
2,979

Mexico
1,128

 
1,080

All foreign countries
16,435

 
17,279

 
 
 
 
Total long-lived assets, excluding goodwill and intangibles
$
39,446

 
$
39,425

Repurchase of Common Stock
Repurchase of Common Stock
REPURCHASE OF COMMON STOCK
As of June 30, 2012, our Board of Directors had authorized management to use up to $20.0 million to repurchase stock in open market transactions under our Stock Repurchase Program. On January 23, 2013, the Board of Directors authorized an additional $10.0 million for share repurchases, bringing the aggregate total authorized to $30.0 million.
During fiscal years 2013, 2012 and 2011, we purchased 544,576 shares, 168,120 shares and 176,756 shares, respectively, of our common stock for a total cost of $7.8 million, $2.6 million and $2.5 million, respectively. As of June 29, 2013, we have purchased 1,914,223 shares of common stock for an aggregate of $22.0 million since the inception of the 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 June 29, 2013, $8.0 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 June 29, 2013:
Period
 
Total Number of Shares Purchased
 
Average Price Paid per Share
 
Total Number of Shares Purchased as Part of Publicly Announced Plans
 
Dollar Value of Shares that May Yet Be Purchased Under the Plans
March 31 to May 5, 2013
 
29,470

 
$14.41
 
29,470

 

$10.8
 million
May 6 to June 1, 2013
 
89,582

 
$14.05
 
89,582

 

$9.6
 million
June 2 to June 29, 2013
 
109,302

 
$14.73
 
109,302

 

$8.0
 million
Total
 
228,354

 
$14.42
 
228,354

 

$8.0
 million*
* As of June 29, 2013
Commitments and Contingencies
Commitments and Contingencies
COMMITMENTS AND CONTINGENCIES
(a) Litigation
We previously received an inquiry from the U.S. Consumer Product Safety Commission (“Commission”) regarding a children's drawstring hoodie product sourced, distributed and sold by our Junkfood division and its compliance with applicable product safety standards. The Commission subsequently investigated the matter, including whether Junkfood complied with the reporting requirements of the Consumer Product Safety Act (“CPSA”), and the garments in question were ultimately recalled. On or about July 25, 2012, Junkfood received notification from the Commission staff alleging that Junkfood knowingly violated CPSA Section 15(b) and that it will recommend to the Commission a $900,000 civil penalty. We contend that the Commission's allegations are without merit.
Junkfood has subsequently responded to the Commission staff regarding its recommended penalty, setting forth a number of defenses and mitigating factors that could result in a much lower penalty, if any, ultimately imposed by a court should the matter proceed to litigation. Since then the Commission has requested additional information from Junkfood regarding the matter. While we will continue to defend against these allegations, we believe it is probable that a liability has been incurred. Based upon the terms of previously published CPSC settlements and related product recall notices, we believe if we settle the matter the minimum settlement amount would be $25,000. Should the Commission seek enforcement of the recommended civil penalty and ultimately prevail on its claims at trial, we could be required to pay amounts exceeding $900,000, along with interest and the Commission's costs and fees. During the quarter ended June 30, 2012, we recorded a liability for the most likely outcome within this range and this liability remains recorded as of June 29, 2013.
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.
(b) Purchase Contracts
We have entered into agreements, and have fixed prices, to purchase yarn, natural gas, finished fabric, and finished apparel and headwear products. At June 29, 2013, minimum payments under these contracts were as follows (in thousands):
Yarn
$
14,408

Natural Gas
1,507

Finished fabric
1,445

Finished products
26,256

 
$
43,616


(c) Letters of Credit
As of June 29, 2013, we had outstanding standby letters of credit totaling $0.4 million and outstanding commercial letters of credit totaling $1.0 million.
(d) Derivatives
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. The following financial instruments were outstanding as of June 29, 2013:
 
Effective Date
 
Notational
Amount
 
LIBOR Rate
 
Maturity Date
Interest Rate Swap
9/1/2011
 
$10 million
 
0.7650
%
 
9/1/2013
Interest Rate Swap
9/1/2011
 
$10 million
 
0.9025
%
 
3/1/2014
Interest Rate Swap
9/1/2011
 
$10 million
 
1.0700
%
 
9/1/2014

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 market 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 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 Swap
 
 
 
 
 
 
 
June 29, 2013
$
133

 

 
$
133

 

June 30, 2012
$
209

 

 
$
209

 

July 2, 2011
$
22

 

 
$
22

 

 
 
 
 
 
 
 
 
Contingent Consideration
 
 
 
 
 
 
 
June 29, 2013

 

 

 

June 30, 2012

 

 

 

July 2, 2011

 

 

 


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 curve adjusted for our credit risk, which fall in level 2 of the fair value hierarchy. We 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 Art Gun. Accordingly, the fair value measurement for contingent consideration falls in level 3 of the fair value hierarchy. The contingent consideration for Art Gun is remeasured at the end of each reporting period. Additionally, we remeasured the Art Gun goodwill to fair value in the period ended January 1, 2011. See Note 2(m) - Impairment of Goodwill for further discussion.
The following table summarizes the fair value and presentation in the Consolidated Balance Sheets for derivatives as of June 29, 2013 and June 30, 2012.
 
June 29,
2013
 
June 30,
2012
Accrued expenses
$
49

 
$

Deferred tax liabilities
(51
)
 
(80
)
Other liabilities
84

 
209

Accumulated other comprehensive loss
$
82

 
$
129


(e) License Agreements
We have entered into license agreements that provide for royalty payments of 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 selling, general and administrative expenses) of approximately $15.7 million, $15.2 million and $12.4 million during fiscal years 2013, 2012, and 2011, respectively.
At June 29, 2013, based on minimum sales requirements, future minimum royalty payments required under these license agreements were as follows (in thousands):
Fiscal Year
Amount
2014
$
3,100

2015
2,204

2016
882

2017 and thereafter

 
$
6,186

Quarterly Financial Information (Unaudited)
Quarterly Financial Information
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Presented below is a summary of our unaudited consolidated quarterly financial information for the fiscal years ended June 29, 2013 and June 30, 2012 (in thousands):
 
2013 Quarter Ended
 
2012 Quarter Ended
 
September 29
 
December 29
 
March 30
 
June 29
 
September 29
 
December 29
 
March 31
 
June 30
Net sales
$
130,114

 
$
106,750

 
$
120,092

 
$
133,567

 
$
123,523

 
$
105,486

 
$
125,541

 
$
135,373

Gross profit
31,853

 
22,755

 
26,415

 
28,486

 
31,253

 
141

 
25,191

 
27,138

Operating income (loss)
5,836

 
846

 
2,564

 
4,657

 
6,698

 
(19,989
)
 
2,856

 
4,213

Net earnings (loss)
3,564

 
46

 
1,608

 
3,966

 
4,412

 
(13,592
)
 
1,919

 
4,814

 
 
 


 


 


 
 
 
 
 
 
 
 
Basic EPS
$
0.42

 
$
0.01

 
$
0.20

 
$
0.49

 
$
0.52

 
$
(1.61
)
 
$
0.23

 
$
0.57

Diluted EPS
$
0.41

 
$
0.01

 
$
0.19

 
$
0.48

 
$
0.50

 
$
(1.61
)
 
$
0.22

 
$
0.55

Subsequent Events
Subsequent Events
SUBSEQUENT EVENTS
Acquisition of Salt Life Assets
On August 27, 2013, To The Game, LLC, our wholly-owned subsidiary, purchased substantially all of the assets of Salt Life Holdings, LLC, including all of its domestic and international trademark rights in the Salt Life brand (the "Salt Life Acquisition"), pursuant to an agreement entered into as of the same date (the "Asset Purchase Agreement"). The Salt Life Acquisition continues our strategy of building lifestyle brands. The purchase price for the Salt Life Transaction consists of $15.0 million in cash, $3.0 million of which was deposited into an escrow account to be held to secure indemnification obligations under the Asset Purchase Agreement, two promissory notes in the aggregate principal amount of $22 million, and a payment contingent on certain performance targets being met with respect to the sale of Salt Life products in calendar 2019. Due to the timing of the acquisition and the issuance of financial statements, management is still in the process of gathering information for the completion of the valuation of the acquired assets for the purchase price allocation and related disclosures. The next quarterly report will have all relevant information. We financed the cash portion of the purchase price through the below-referenced Amended Loan Agreement.

The foregoing summary of the Salt Life Acquisition is qualified in its entirety by reference to the text of the Asset Purchase Agreement, which was filed as Exhibit 2.1 to the Current Report on Form 8-K filed on August 29, 2013.
Amended Loan Agreement
On August 27, 2013, Delta Apparel, To The Game, Junkfood, Soffe, and Art Gun entered into a Consent and First Amendment to the Fourth Amended and Restated Loan and Security Agreement with Wells Fargo Bank, National Association and the other lenders set forth therein (the “Amended Loan Agreement”). The Fourth Amended and Restated Loan and Security Agreement dated as of May 27, 2011, which was amended by the Amended Loan Agreement, was filed as Exhibit 10.1 to a Current Report on Form 8-K filed with the SEC on June 3, 2011.
Pursuant to the Amended Loan Agreement, in general and among other things, (1) the lenders and agent parties consented to the Salt Life Acquisition, (2) the maturity of the loans (other than the FILO Tranche B, as defined below) under the Amended Loan Agreement was extended one year to May 27, 2017, (3) the lenders consented to Delta Apparel's Honduran subsidiaries borrowing up to $10,000,000 from a certain Honduran bank in connection with the purchase of certain equipment, and (4) a first in last out Tranche B (“FILO Tranche B”) was added to provide Delta Apparel and its affiliate parties to the Amended Loan Agreement an additional 5% borrowing availability with respect to eligible accounts receivable and eligible inventory. The FILO Tranche B, and only the FILO Tranche B, will terminate by August 27, 2015 (subject to earlier cancellation by Delta Apparel), has a maximum borrowing amount of $10,000,000, and includes interest rates between 150 and 200 basis points higher than the rates applicable to the other loans available under the Amended Loan Agreement.

The foregoing summary of the Amended Loan Agreement is qualified in its entirety by reference to the text of the Amended Loan Agreement, which was filed as Exhibit 10.1 to the Current Report on Form 8-K filed on August 29, 2013.
Change in Fiscal Year End
On August 26, 2013, our Board of Directors determined that the Company's fiscal year will begin on the Sunday closest to September 30th of each year and end on the Saturday closest to September 30th of each year. The change is intended to better align our planning, financial and reporting functions with the seasonality of our  business. Under the applicable rules of the Securities and Exchange Commission, we intend to file a transition report on Form 10-QT for the quarter ended September 28, 2013.
Wendell Closing
During the fourth quarter of fiscal year 2013, the decision was made to consolidate our domestic screen print operations, resulting in the closure of the Wendell, North Carolina decorating facility operated by our Soffe business unit and the consolidation of those operations with Soffe's Fayetteville, North Carolina facility. This closure is expected to take place in September 2013, with associated costs of approximately $1.1 million recorded in the three-month period ending September 28, 2013.
Schedule II - Consolidated Valuation and Qualifying Accounts
Schedule II - Consolidated Valuation and Qualifying Accounts
SCHEDULE II — CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
DELTA APPAREL, INC. AND SUBSIDIARIES
(In thousands)

ALLOWANCE FOR DOUBTFUL ACCOUNTS
 
Beginning
Balance
 
Acquisition
Accounting *
 
Expense
 
Write-Offs/
Credits Issued
 
Ending
Balance
2013
$
750

 
$

 
$
62

 
$
(156
)
 
$
656

2012
658

 

 
280

 
(188
)
 
750

2011
761

 

 
711

 
(814
)
 
658

RETURNS AND ALLOWANCES
 
Beginning
Balance
 
Acquisition
Accounting *
 
Expense
 
Write-Offs/
Credits Issued
 
Ending
Balance
2013
$
1,562

 
$

 
$
8,154

 
$
(8,573
)
 
$
1,143

2012
1,124

 

 
9,864

 
(9,426
)
 
1,562

2011
1,375

 

 
8,205

 
(8,456
)
 
1,124

TOTAL RESERVES FOR ALLOWANCES
 
Beginning
Balance
 
Acquisition
Accounting *
 
Expense
 
Write-Offs/
Credits Issued
 
Ending
Balance
2013
$
2,312

 
$

 
$
8,216

 
$
(8,729
)
 
$
1,799

2012
1,782

 

 
10,144

 
(9,614
)
 
2,312

2011
2,136

 

 
8,916

 
(9,270
)
 
1,782

MARKET AND OBSOLESCENCE RESERVE
 
Beginning
Balance
 
Acquisition
Accounting *
 
Expense **
 
Deductions **
 
Ending
Balance
2013
$
5,151

 
$

 
$
1,616

 
$

 
$
6,767

2012
3,717

 

 
1,434

 

 
5,151

2011
3,782

 

 
(65
)
 

 
3,717

SELF INSURANCE RESERVE
 
Beginning
Balance
 
Acquisition
Accounting *
 
Expense **
 
Deductions **
 
Ending
Balance
2013
$
655

 
$

 
$
(160
)
 
$

 
$
495

2012
589

 

 
66

 

 
655

2011
777

 
39

 
(227
)
 

 
589

DEFERRED TAX ASSET VALUATION ALLOWANCE
 
Beginning
Balance
 
Acquisition
Accounting *
 
Expense **
 
Deductions **
 
Ending
Balance
2013
$
122

 
$

 
$
75

 
$

 
$
197

2012
108

 

 
14

 

 
122

2011
108

 

 

 

 
108

______________________
*
 
Represents the reserves provided for as a result of the acquisition of The Cotton Exchange.

**
 
Net change in the reserves and allowance are shown in the expense column.
Significant Accounting Policies (Policies)
Basis of Presentation: Our consolidated financial statements include the accounts of Delta Apparel and its wholly-owned domestic and foreign subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. We apply the equity method of accounting for investments in companies where we have less than a 50% ownership interest and over which we exert significant influence. We do not exercise control over these companies and do not have substantive participating rights. As such, these are not considered variable interest entities.
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.
Fiscal Year: We operate on a 52-53 week fiscal year ending on the Saturday closest to June 30. The 2013, 2012 and 2011 fiscal years were 52-week years and ended on June 29, 2013, June 30, 2012 and July 2, 2011, respectively.
Use of Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make certain estimates and assumptions that affect the reported amounts and disclosures of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are adjusted to reflect actual experience when necessary. Significant estimates and assumptions affect many items in our financial statements, for example: allowance for doubtful trade receivables, sales returns and allowances, inventory obsolescence, the carrying value of goodwill, and income tax assets and related valuation allowance. Our actual results may differ from our estimates.
Revenue Recognition: Revenues from product sales are recognized when ownership is transfered to the customer, which includes not only the passage of title, but also the transfer of the risk of loss related to the product. At this point, the sales price is fixed and determinable, and we are reasonably assured of the collectibility of the sale. The majority of our sales are shipped FOB shipping point and revenue is therefore recognized when the goods are shipped to the customer. For sales that are shipped FOB destination point, we do not recognize the revenue until the goods are received by the customer. Shipping and handling charges billed to our customers are included in net revenue and the related costs are included in cost of goods sold. Revenues are reported on net sales basis, which is computed by deducting product returns, discounts and estimated returns and allowances. We estimate returns and allowances on an ongoing basis by considering historical and current trends.
Royalty revenue is primarily derived from royalties paid to us by licensees of our intellectual property rights, which include, among other things, trademarks and copyrights. We execute license agreements with our licensees detailing the terms of the licensing arrangement. Royalties are generally recognized upon receipt of the licensees' royalty report, in accordance with the terms of the executed license agreement, and when all other revenue recognition criteria have been met.
Sales Tax: Sales tax collected from customers and remitted to various government agencies are presented on a net basis (excluded from revenues) in the Consolidated Statements of Operations.
Cash and Cash Equivalents: Cash and cash equivalents consists of cash and temporary investments with original maturities of three months or less.
Accounts Receivable: Accounts receivable consists primarily of receivables from our customers arising from the sale of our products, and we generally do not require collateral from our customers. We actively monitor our exposure to credit risk through the use of credit approvals and credit limits. At June 29, 2013, our net accounts receivable was $74.4 million, consisting of $76.2 million in accounts receivable and $1.8 million in reserves. At June 30, 2012, our net accounts receivable was $73.3 million, consisting of $75.6 million  in accounts receivable and $2.3 million in reserves.
We estimate the net collectibility of our accounts receivable and establish an allowance for doubtful accounts based upon this assessment. In situations where we are aware of a specific customer’s inability to meet its financial obligation, such as in the case of a bankruptcy filing, a specific reserve for bad debts is recorded against amounts due to reduce the net recognized receivable to the amount reasonably expected to be collected. For all other customers, reserves are determined through analysis of the aging of accounts receivable balances, historical bad debts, customer concentrations, customer credit-worthiness, current economic trends and changes in customer payment terms. In addition, reserves are established for other concessions that have been extended to customers, including advertising, markdowns and other accommodations, net of historical recoveries.
Inventories: We state inventories at the lower of cost or market using the first-in, first-out method. Inventory cost includes materials, labor and manufacturing overhead on manufactured inventory, and all direct and associated costs, including inbound freight, to acquire sourced products. We regularly review inventory quantities on hand and record reserves for obsolescence, excess quantities, irregulars and slow moving inventory based on historical selling prices, current market conditions, and forecasted product demand to reduce inventory to its net realizable value. See Note 2(x) for further information regarding yarn procurements.
During the second quarter of fiscal year 2012, we recorded a $16.2 million lower of cost or market write-down on the inventory in the basics segment and its firm purchase commitments for yarn resulting from historically high cotton prices in its inventory costs combined with declining selling prices. The estimation of the total write-down involved management judgments and assumptions including assumptions regarding future selling price forecasts, the allocation of raw materials between business units, the estimated costs to complete, disposal costs and a normal profit margin. The inventory and yarn firm purchase commitments associated with this inventory write-down was sold during our fiscal year 2012.
Property, Plant and Equipment: Property, plant and equipment are stated at cost. We depreciate and amortize our assets on a straight-line method over the estimated useful lives of the assets, which range from three to twenty-five years. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the improvements. Assets that we acquire under non-cancelable leases that meet the criteria of capital leases are capitalized in property, plant and equipment and amortized over the useful lives of the related assets. When we retire or dispose of assets, the costs and accumulated depreciation or amortization are removed from the respective accounts and we recognize any related gain or loss. Repairs and maintenance costs are charged to expense when incurred. Major replacements that substantially extend the useful life of an asset are capitalized and depreciated.
Internally Developed Software Costs. We account for internally developed software in accordance with FASB Codification No. 350-40, Intangibles-Goodwill and Other, Internal-Use Software. After technical feasibility has been established, we capitalize the cost of our software development process, including payroll and payroll benefits, by tracking the software development hours invested in the software projects. We amortize our software development costs in accordance with the estimated economic life of the software, which is generally three to ten years.
Impairment of Goodwill: We evaluate the carrying value of goodwill annually or more frequently if events or circumstances indicate that an impairment loss may have occurred. Such circumstances could include, but are not limited to, a significant adverse change in business climate, increased competition or other economic conditions. Under FASB Codification No. 350, Intangibles — Goodwill and Other ("ASC 350"), goodwill is tested at a reporting unit level. As of the beginning of fiscal year 2012, Junkfood was the only reporting unit with recorded goodwill.
The Company adopted ASU No. 2011-08, Intangibles - Goodwill and Other (Topic 350), Testing for Goodwill Impairment ("ASU 2011-08") on July 1, 2012. ASU 2011-08 simplifies how companies are required to test goodwill for impairment. Companies now have the option to first assess qualitative factors to determine whether it is more likely than not (likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount. If after considering the totality of events and circumstances a company determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, it will not have to perform the two-step impairment test.
If the company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or it chooses to not take the simplified approach, the company will have to perform the two-step impairment test. The first step involves comparing the fair value of the reporting unit to which the goodwill is assigned to its carrying amount. If this comparison indicates that a reporting unit’s estimated fair value is less than its carrying value, a second step is required. If applicable, the second step requires a company to allocate the estimated fair value of the reporting unit to the estimated fair value of the reporting unit’s net assets, with any fair value in excess of amounts allocated to such net assets representing the implied fair value of goodwill for that reporting unit. If the carrying value of the goodwill exceeds its implied fair value, the carrying value is written down by an amount equal to such excess.
We complete our annual impairment test of goodwill on the first day of our third fiscal quarter. We estimate fair value of the applicable reporting unit or units using a discounted cash flow methodology. This represents a level 3 fair value measurement as defined under ASC 820, Fair Value Measurements and Disclosures, since the inputs are not readily observable in the marketplace. The goodwill impairment testing process involves the use of significant assumptions, estimates and judgments with respect to a variety of factors, including sales, gross margins, selling, general and administrative expenses, capital expenditures, cash flows and the selection of an appropriate discount rate, all of which are subject to inherent uncertainties and subjectivity. When we perform goodwill impairment testing, our assumptions are based on annual business plans and other forecasted results, which we believe represent those of a market participant. We select a discount rate, which is used to reflect market-based estimates of the risks associated with the projected cash flows, based on the best information available as of the date of the impairment assessment. Based on the valuation, there is not an impairment on the goodwill associated with Junkfood, the only goodwill recorded on our financial statements.
At the end of each reporting period, we are required to remeasure the fair value of the contingent consideration related to the Art Gun acquisition in accordance with FASB Codification No. 805, Business Combinations (“ASC 805”). Based on the operating results and projections for Art Gun, we analyzed and concluded that the fair value of the contingent consideration was de minimis, resulting in a $1.5 million favorable adjustment recorded in the second fiscal quarter of 2011. The change in fair value of the contingent consideration created an indicator of impairment for the goodwill associated with Art Gun.  In accordance with ASC 350, we performed an interim impairment test of goodwill as of the end of the second quarter of fiscal year 2011.  Under the first step of the impairment analysis for Art Gun, we considered both the income approach, which estimates the fair value based on the future discounted cash flows, and the market approach, which estimates the fair value based on comparable market prices, both of which fall in level 3 of the fair value hierarchy.  The results of step one of the impairment test indicated that the carrying value of the Art Gun reporting unit exceeded its fair value.  The second step of the impairment test required us to allocate the estimated fair value of Art Gun to the estimated fair value of Art Gun's net assets, with any fair value in excess of amounts allocated to such net assets representing the implied fair value of goodwill. The result indicated that the goodwill at Art Gun was fully impaired, resulting in a $0.6 million impairment charge recorded in the second quarter of fiscal 2011. The change in contingent consideration and goodwill impairment charge resulted in a net favorable adjustment of $0.9 million, which is included in the branded segment in fiscal year 2011.   At June 29, 2013, the fair value of the contingent consideration was remeasured based on Art Gun's historical and current operating results and projections, remained de minimis, and no amounts are expected to be paid under the terms of the arrangements.
Given the current macro-economic environment and the uncertainties regarding its potential impact on our business, there can be no assurance that our estimates and assumptions used in our impairment tests will prove to be accurate predictions of the future. If our assumptions regarding forecasted cash flows are not achieved, it is possible that an impairment review may be triggered and goodwill may be determined to be impaired.
Impairment of Long-Lived Assets (Including Amortizable Intangible Assets): In accordance with FASB Codification No. 360, Property, Plant, and Equipment, our long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. When evaluating assets for potential impairment, we compare the carrying amount of the asset to the undiscounted future net cash flows expected to be generated by the asset. If impairment is indicated, the asset is permanently written down to its estimated fair market value (based upon future discounted cash flows) and an impairment loss is recognized.
Goodwill and Intangibles: We recorded goodwill and intangibles with definite lives, including trade names and trademarks, customer relationships, technology, and non-compete agreements, in conjunction with the acquisitions of Junkfood Clothing Company and Art Gun. Intangible assets are amortized based on their estimated economic lives, ranging from four to twenty years. Goodwill represents the excess of the purchase price over the fair value of net identified tangible and intangible assets and liabilities acquired, and is not amortized. The total amount of goodwill is expected to be deductible for tax purposes. See Note 6 — Goodwill and Intangible Assets for further details.
Self-Insurance Reserves: Our medical, prescription and dental care benefits are primarily self-insured. Our self-insurance accruals are based on claims filed and estimates of claims incurred but not reported. We develop estimates of claims incurred but not reported based upon the historical time it takes for a claim to be reported and paid and historical claim amounts. We had self-insurance reserves of approximately $0.5 million and $0.7 million at June 29, 2013 and June 30, 2012, respectively.
Income Taxes: We account for income taxes under the liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Cost of Goods Sold: We include in cost of goods sold all manufacturing and sourcing costs incurred prior to the receipt of finished goods at our distribution facilities. The cost of goods sold principally includes product cost, purchasing costs, inbound freight charges, insurance, and inventory write-downs. Our gross margins may not be comparable to other companies, since some entities include costs related to their distribution network in cost of goods sold and we exclude them from gross margin, including them instead in selling, general and administrative expenses.
Selling, General and Administrative Expense: We include in selling, general and administrative expenses costs incurred subsequent to the receipt of finished goods at our distribution facilities, such as the cost of stocking, warehousing, picking and packing, and shipping goods for delivery to our customers. Distribution costs included in selling, general and administrative expenses totaled $17.5 million, $16.4 million  and $14.3 million in fiscal years 2013, 2012 and 2011, respectively. In addition, selling, general and administrative expenses include costs related to sales associates, administrative personnel cost, advertising and marketing expenses, royalty payments on licensed products, and other general and administrative expenses.
Advertising Costs: All costs associated with advertising and promoting our products are expensed during the year in which they are incurred and are included in selling, general and administrative expenses in the Consolidated Statements of Operations. We participate in cooperative advertising programs with our customers. Depending on the customer, our defined cooperative programs allow the customer to use from 1% to 5% of its net purchases from us towards advertisements of our products. Because our products are being specifically advertised, we are receiving an identifiable benefit resulting from the consideration for cooperative advertising. Therefore, pursuant to FASB Codification No. 605-50, Revenue Recognition, Customers Payments and Incentives, we record cooperative advertising costs as a selling expense and the related cooperative advertising reserve as an accrued liability. Advertising costs totaled $3.8 million, $4.3 million  and $6.7 million in fiscal years 2013, 2012 and 2011, respectively. Included in these costs were $1.5 million, $2.0 million and $1.9 million in fiscal years 2013, 2012 and 2011, respectively, related to our cooperative advertising programs.
Stock-Based Compensation: Stock-based compensation cost is accounted for under the provisions of FASB Codification No. 718, Compensation – Stock Compensation (“ASC 718”), the Securities and Exchange Commission Staff Accounting bulletin No. 107 ("SAB 107"), and the Securities and Exchange Commission Staff Accounting Bulletin No. 110 ("SAB 110"). ASC 718 requires all stock-based payments to employees, including grants of employee stock options, to be recognized as expense over the vesting period using a fair value method. We estimate the fair value of stock options using the Black-Scholes options pricing model. The fair value of our restricted stock awards is the quoted market value of Delta Apparel's stock on the grant date.  For performance-based stock awards, in the event we determine it is no longer probable that we will achieve the minimum performance criteria specified in the award, we reverse all of the previously recognized compensation expense in the period such a determination is made. We recognize the fair value, net of estimated forfeitures, as a component of cost of sales and selling, general and administrative expense in the Consolidated Statements of Operations over the vesting period.
Earnings per Share: We compute basic earnings per share ("EPS") by dividing net income by the weighted average number of common shares outstanding during the year pursuant to FASB Codification No. 260, Earnings Per Share (“ASC 260”). Basic EPS includes no dilution. Diluted EPS is calculated, as set forth in ASC 260, by dividing net income by the weighted average number of common shares outstanding adjusted for the issuance of potentially dilutive shares. Potential dilutive shares consist of common stock issuable under the assumed exercise of outstanding stock options and awards using the treasury stock method. This method, as required by ASC 718, assumes that the potential common shares are issued and the proceeds from the exercise, along with the amount of compensation expense attributable to future services, are used to purchase common stock at the exercise date. The difference between the number of potential shares issued and the number of shares purchased is added as incremental shares to the actual number of shares outstanding to compute diluted EPS. Outstanding stock options and awards that result in lower potential shares issued than shares purchased under the treasury stock method are not included in the computation of diluted EPS since their inclusion would have an anti-dilutive effect on EPS.
Foreign Currency Translation: Our functional currency for our foreign operated manufacturing facilities is the United States dollar. We remeasure those assets and liabilities denominated in foreign currencies using exchange rates in effect at each balance sheet date. Fixed assets and the related accumulated depreciation or amortization are recorded at the exchange rates in effect on the date we acquired the assets. Revenues and expenses denominated in foreign currencies are remeasured using average exchange rates for all periods presented. We recognize the resulting foreign exchange gains and losses as a component of other income and expense in the Consolidated Statements of Operations. These gains and losses are immaterial for all periods presented.
Fair Value of Financial Instruments: We use financial instruments in the normal course of our business. The carrying values approximate fair values for financial instruments that are short-term in nature, such as cash, accounts receivable and accounts payable. We estimate that the carrying value of our long-term debt approximates fair value based on the current rates offered to us for debt of the same remaining maturities.
Other Comprehensive Income (Loss): Other Comprehensive Income (Loss) consists of net earnings and unrealized gains (losses) from cash flow hedges, net of tax, and is presented in the Consolidated Statements of Shareholders’ Equity. Accumulated other comprehensive loss contained in the shareholders’ equity section of the Consolidated Balance Sheets in fiscal years 2013 and 2012 consisted of $82 thousand and $129 thousand, respectively, related to interest rate swap agreements.
Derivatives: From time to time we enter into forward contracts, option agreements or other instruments to limit our exposure to fluctuations in interest rates and raw material prices with respect to long-term debt and cotton purchases, respectively. We determine at inception whether the derivative instruments will be accounted for as hedges.
We account for derivatives and hedging activities in accordance with FASB Codification No. 815, Derivatives and Hedging (“ASC 815”), as amended. ASC 815 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts and hedging activities. It requires the recognition of all derivative instruments as either assets or liabilities in the Consolidated Balance Sheets and measurement of those instruments at fair value. The accounting treatment of changes in fair value depends upon whether or not a derivative instrument is designated as a hedge and, if so, the type of hedge. We include all derivative instruments at fair value in our Consolidated Balance Sheets. For derivative financial instruments related to the production of our products that are not designated as a hedge, we recognize the changes in fair value in cost of sales. For derivatives designated as cash flow hedges, to the extent effective, we recognize the changes in fair value in accumulated other comprehensive income (loss) until the hedged item is recognized in income. Any ineffectiveness in the hedge is recognized immediately in income in the line item that is consistent with the nature of the hedged risk. We formally document all relationships between hedging instruments and hedged items, as well as risk management objectives and strategies for undertaking various hedge transactions, at the inception of the transactions.
We are exposed to counterparty credit risks on all derivatives. Because these amounts are recorded at fair value, the full amount of our exposure is the carrying value of these instruments. We only enter into derivative transactions with well established institutions and therefore we believe the counterparty credit risk is minimal.
Recently Adopted Accounting Pronouncements:
In June 2011, the FASB issued Accounting Standards Update ("ASU") No. 2011-05, Comprehensive Income (Topic 220) - Presentation of Comprehensive Income ("ASU 2011-05"). This new guidance gives companies two choices on how to present items of net income, items of other comprehensive income and total comprehensive income: companies can create one continuous statement of comprehensive income or two separate consecutive statements. Other comprehensive income will no longer be allowed to be presented solely in the statement of stockholders' equity. Earnings per share continues to be based on net income. ASU 2011-05 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 and applied on a retrospective basis. ASU 2011-05 was adopted on July 1, 2012, and the Consolidated Statements of Comprehensive Income (Loss) herein comply with this guidance.
In December 2011, the FASB issued ASU 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05 ("ASU 2011-12"). ASU 2011-12 indefinitely defers the new provisions under ASU 2011-05, which required entities to present reclassification adjustments out of accumulated other comprehensive income by component in both the statement in which net income is presented and the statement in which other comprehensive income is presented for both interim and annual financial statements. ASU 2011-12 is effective for the years beginning after December 15, 2011. ASU 2011-12 was adopted on July 1, 2012, and the Consolidated Statements of Comprehensive Income (Loss) herein comply with this guidance.
In September 2011, the FASB issued ASU No. 2011-08, Intangibles - Goodwill and Other (Topic 350), Testing Goodwill for Impairment ("ASU 2011-08") . The FASB decided to simplify how companies are required to test goodwill for impairment. Companies now have the option to first assess qualitative factors to determine whether it is more likely than not (likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount. If after considering the totality of events and circumstances a company determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, it will not have to perform the two-step impairment test. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. ASU 2011-08 was adopted on July 1, 2012, and did not have a material effect on our financial statements.
Significant Accounting Policies (Tables)
Schedule of Interest Rate Derivatives
On September 1, 2011, we entered into three interest rate swap agreements, as follows:
 
Effective Date
 
Notational
Amount
 
LIBOR Rate
 
Maturity Date
Interest Rate Swap
9/1/2011
 
$10 million
 
0.7650
%
 
9/1/2013
Interest Rate Swap
9/1/2011
 
$10 million
 
0.9025
%
 
3/1/2014
Interest Rate Swap
9/1/2011
 
$10 million
 
1.0700
%
 
9/1/2014
Inventories (Tables)
Schedule of Inventories, Net of Reserves
Inventories, net of reserves of $6.8 million and $5.2 million in fiscal years 2013 and 2012, respectively, consist of the following (in thousands):
 
June 29,
2013
 
June 30,
2012
Raw materials
$
12,443

 
$
11,759

Work in process
16,407

 
18,986

Finished goods
130,664

 
130,888

 
$
159,514

 
$
161,633

Property, Plant and Equipment (Tables)
Schedule of Property, Plant and Equipment
Property, plant and equipment consist of the following (in thousands):
 
Estimated
Useful Life
 
June 29,
2013
 
June 30,
2012
Land and land improvements
25 years
 
$
993

 
$
993

Buildings
20 years
 
7,882

 
7,893

Machinery and equipment
10 years
 
69,094

 
65,404

Computers and software
3-10 years
 
20,386

 
19,256

Furniture and fixtures
7 years
 
5,290

 
4,973

Leasehold improvements
3-10 years
 
2,335

 
2,626

Automobiles
5 years
 
797

 
752

Construction in progress
N/A
 
2,430

 
2,053

 
 
 
109,207

 
103,950

Less accumulated depreciation and amortization
 
 
(69,761
)
 
(64,525
)
 
 
 
$
39,446

 
$
39,425

Goodwill and Intangible Assets (Tables)
Components of Intangible Assets
Components of intangible assets consist of the following (in thousands):
 
June 29, 2013
 
June 30, 2012
 
 
 
Cost
Accumulated Amortization
Net Value
 
Cost
Accumulated Amortization
Net Value
 
Economic Life
 
 
 
 
 
 
 
 
 
 
Goodwill
$
16,812

$

$
16,812

 
$
16,812

$

$
16,812

 
N/A
 
 
 
 
 
 
 
 
 
 
Intangibles:
 
 
 
 
 
 
 
 
 
Tradename/trademarks
$
1,530

$
(603
)
$
927

 
$
1,530

$
(526
)
$
1,004

 
20 yrs
Customer relationships
7,220

(2,847
)
4,373

 
7,220

(2,486
)
4,734

 
20 yrs
Technology
1,220

(428
)
792

 
1,220

(307
)
913

 
10 yrs
Non-compete agreements
517

(419
)
98

 
517

(371
)
146

 
4 – 8.5 yrs
Total intangibles
$
10,487

$
(4,297
)
$
6,190

 
$
10,487

$
(3,690
)
$
6,797

 
 
Accrued Expenses (Tables)
Schedule of Accrued Expenses
Accrued expenses consist of the following (in thousands):
 
June 29,
2013
 
June 30,
2012
Accrued employee compensation and benefits
$
9,762

 
$
7,645

Taxes accrued and withheld
1,199

 
1,133

Accrued insurance
568

 
889

Accrued advertising
363

 
626

Accrued royalties
3,001

 
2,868

Accrued commissions
677

 
725

Derivative liability
49

 

Other
2,807

 
2,722

 
$
18,426

 
$
16,608

Long-term Debt (Tables)
Long-term debt consists of the following (in thousands):
 
June 29,
2013
 
June 30,
2012
Revolving U.S. credit facility, interest at base rate or adjusted LIBOR rate plus an applicable margin (interest at 2.6% on June 29, 2013) due May 2016
$
88,753

 
$
103,965

Revolving credit facility with Banco Ficohsa, a Honduran bank, interest at 7% due March 2019 (denominated in U.S. dollars)
5,000

 
5,000

Term loan with Banco Ficohsa, a Honduran bank, interest at 7%, interest only payments thru March 2012, principal payments began April 2012, payable monthly with a seven-year term (denominated in U.S. dollars)
4,539

 
5,513

 
98,292

 
114,478

Less current installments
(3,529
)
 
(3,529
)
Long-term debt, excluding current installments
$
94,763

 
$
110,949

The aggregate maturities of debt at June 29, 2013 are as follows (in thousands):
Fiscal Year
Amount
2014
$
3,529

2015
3,529

2016
84,614

2017
973

2018
5,647

 
$
98,292

Income Taxes (Tables)
The provision for income taxes consists of the following (in thousands):
 
Year ended
 
June 29,
2013
 
June 30,
2012
 
July 2,
2011
Current:
 
 
 
 
 
Federal
$
40

 
$
(6,795
)
 
$
3,936

State
35

 

 
315

Foreign
145

 
157

 
167

Total current
$
220

 
$
(6,638
)
 
$
4,418

Deferred:
 
 
 
 
 
Federal
$
499

 
$
(284
)
 
$
562

State
3

 
(985
)
 
373

Total deferred
502

 
(1,269
)
 
935

Provision for (benefit from) income taxes
$
722

 
$
(7,907
)
 
$
5,353

For financial reporting purposes, income (loss) before provision for (benefit from) income taxes includes the following components (in thousands):
 
Year ended
 
June 29,
2013
 
June 30,
2012
 
July 2,
2011
United States
$
1,468

 
$
(21,660
)
 
$
12,814

Foreign
8,438

 
11,306

 
9,866

 
$
9,906

 
$
(10,354
)
 
$
22,680

A reconciliation between actual provision for (benefit from) income taxes and the provision for income taxes computed using the federal statutory income tax rate of 34.0% is as follows (in thousands):
 
Year ended
 
June 29,
2013
 
June 30,
2012
 
July 2,
2011
Income tax expense at the statutory rate
$
3,371

 
$
(3,520
)
 
$
7,712

State income tax expense, net of federal income tax effect
(11
)
 
(975
)
 
561

Rate difference and nondeductible items in foreign jurisdictions
(16
)
 
(47
)
 
(20
)
Impact of foreign earnings in tax-free zone
(2,754
)
 
(3,683
)
 
(3,223
)
Valuation allowance adjustments
75

 
14

 

Nondeductible compensation

 
193

 
157

Nondeductible amortization and other permanent differences
100

 
91

 
86

Other
(43
)
 
20

 
80

Provision for (benefit from) income taxes
$
722

 
$
(7,907
)
 
$
5,353

Significant components of our deferred tax assets and liabilities are as follows (in thousands):
 
June 29,
2013
 
June 30,
2012
Deferred tax assets:
 
 
 
State net operating loss carryforwards
$
1,416

 
$
1,406

Charitable donation carryforward
50

 
373

Derivative — interest rate contracts
51

 
81

Alternative minimum tax credit carryforward
49

 

Currently nondeductible accruals
6,665

 
5,555

Gross deferred tax assets
8,231

 
7,415

Less valuation allowance — state net operating loss
(197
)
 
(122
)
Net deferred tax assets
8,034

 
7,293

 
 
 
 
Deferred tax liabilities:
 
 
 
Depreciation
(3,164
)
 
(2,704
)
Goodwill and intangibles
(3,762
)
 
(3,319
)
Other
(123
)
 
(109
)
Gross deferred tax liabilities
(7,049
)
 
(6,132
)
Net deferred tax asset
985

 
1,161

Less non-current net deferred tax liabilities
3,571

 
3,803

Current deferred tax asset
$
4,556

 
$
4,964

Leases (Tables)
Schedule of Future Minimum Payments
Future minimum lease payments under non-cancelable operating leases as of June 29, 2013 were as follows (in thousands):
Fiscal Year
Amount
2014
$
8,353

2015
7,470

2016
5,180

2017
2,654

2018
294

Thereafter

 
$
23,951

ased on minimum sales requirements, future minimum royalty payments required under these license agreements were as follows (in thousands):
Fiscal Year
Amount
2014
$
3,100

2015
2,204

2016
882

2017 and thereafter

 
$
6,186

Employee Benefit Plans (Tables)
Schedule of benefit obligations
The following table presents the benefit obligation for these benefits, which is included in accrued expenses in the accompanying balance sheets (in thousands).
 
June 29,
2013
 
June 30,
2012
Balance at beginning of year
$
526

 
$
580

Interest expense
6

 
6

Benefits paid
(62
)
 
(61
)
Actuarial adjustment
1

 
1

Balance at end of year
$
471

 
$
526

Stock-based Compensation (Tables)
The following table summarizes information about the unvested restricted stock units and performance units as of June 29, 2013.
Restricted Stock Units/Performance Units
Number of Units
Average Market Price on Date of Grant
Vesting Date
Fiscal year 2012 Restricted Stock Units
76,350

$
17.60

August 2013
Fiscal year 2012 Performance Units
39,520

$
14.25

August 2013
Fiscal year 2012 Performance Units
52,000

$
14.25

August 2014
Fiscal year 2012 Performance Units
52,000

$
14.25

August 2015
Fiscal year 2013 Restricted Stock Units
5,000

$
13.66

August 2013
 
224,870

 
 
The following table summarizes the restricted stock units and performance units award activity during fiscal years 2013, 2012 and 2011:
 
Fiscal Year 2013
 
Fiscal Year 2012
 
Fiscal Year 2011
 
Number of Units
Weighted average grant date fair value
 
Number of Units
Weighted average grant date fair value
 
Number of Units
Weighted average grant date fair value
Units outstanding, beginning of fiscal year
337,700

$
16.05

 


 


Units granted
10,000

$
13.66

 
390,900

$
16.04

 


Units forfeited
(122,830
)
$
17.10

 
(53,200
)
$
(16.00
)
 


Units outstanding, end of fiscal year
224,870

$
15.37

 
337,700

$
16.05

 


A summary of the stock option activity during fiscal years 2013, 2012 and 2011 is presented below:
 
Fiscal Year 2013
 
Fiscal Year 2012
 
Fiscal Year 2011
 
Shares
Weighted Average Exercise Price
 
Shares
Weighted Average Exercise Price
 
Shares
Weighted Average Exercise Price
Stock options outstanding, beginning of fiscal year
50,000

$
13.47

 
50,000

$
13.47

 


Stock options granted


 


 
50,000

$
13.47

Stock options exercised


 


 


Stock options forfeited


 


 


Stock options outstanding, end of fiscal year
50,000

$
13.47

 
50,000

$
13.47

 
50,000

$
13.47

Stock options outstanding and exercisable, end of fiscal year
50,000

$
13.47

 
50,000

$
13.47

 
25,000

$
13.47

The following table summarizes the weighted average grant date fair values and assumptions that were used to estimate the grant date fair values using the Black-Scholes option-pricing model of the options granted during fiscal year 2011:
 
 
 
 
 
2011
Risk-free interest rate
 
 
 
 
2
%
Expected life
 
 
 
 
4.0 yrs

Expected volatility
 
 
 
 
63
%
Expected dividend yield
 
 
 
 
%
Weighted-average per share fair value of options granted
 
 
 
 
$
6.25

The aggregate intrinsic value for options outstanding and exercisable as of June 29, 2013 was approximately $1.2 million. The following table summarizes information about our stock options outstanding, all of which are exercisable as of June 29, 2013:
Date of Option Grant
Number of Options Outstanding and Exercisable
Exercise Price
Grant-Date Fair Value
Expiration Date
February 2, 2011
25,000

$
13.86

$
6.15

February 18, 2018
February 2, 2011
25,000

$
13.07

$
6.35

February 18, 2018
 
50,000

 
 
 
A summary of our stock option activity during fiscal years 2013, 2012 and 2011 is presented below:
 
Fiscal Year 2013
 
Fiscal Year 2012
 
Fiscal Year 2011
 
Shares
Weighted Average Exercise Price
 
Shares
Weighted Average Exercise Price
 
Shares
Weighted Average Exercise Price
Stock options outstanding, beginning of fiscal year
799,834

$
12.22

 
851,167

$
12.16

 
1,024,500

11.89

Stock options exercised
(139,334
)
11.14

 
(25,333
)
8.11

 
(118,667
)
11.64

Stock options forfeited
(60,000
)
15.91

 
(26,000
)
14.48

 
(54,666
)
8.16

Stock options outstanding, end of fiscal year
600,500

$
12.09

 
799,834

$
12.22

 
851,167

$
12.16

Stock options outstanding and exercisable, end of fiscal year
600,500

$
12.09

 
799,834

$
12.22

 
777,168

$
12.55

The following table summarizes information about our stock options outstanding, all of which are exercisable as of June 29, 2013:
Date of Option Grant
Number of Options Outstanding and Exercisable
Exercise Price
Grant-Date Fair Value
Expiration Date
June 28, 2004
82,500

$
11.28

$
4.23

June 28, 2014
July 4, 2005
358,000

$
13.35

$
5.18

July 4, 2015
July 27, 2006
30,000

$
17.24

$
6.20

July 27, 2016
February 8, 2008
120,000

$
8.30

$
2.95

February 8, 2018
March 16, 2009
10,000

$
4.01

$
2.00

February 18, 2018
 
600,500

 
 
 
Business Segments (Tables)
Intercompany transfers between operating segments are transacted at cost and have been eliminated within the segment amounts shown in the following table (in thousands). We expensed a one-time charge of $1.2 million in the fiscal 2013 first quarter for legal and professional fees related to the previously disclosed Audit Committee internal investigation that was completed during that quarter. This one time charge is included in the basics segment.
 
Basics
 
Branded
 
Consolidated
Fiscal Year 2013:
 
 
 
 
 
Net sales
$
270,876

 
$
219,647

 
$
490,523

Segment operating income (loss)
15,771

 
(1,868
)
 
13,903

Segment assets **
161,716

 
150,194

 
311,910

Equity investment in joint venture
2,909

 

 
2,909

Purchases of property and equipment
3,477

 
4,445

 
7,922

Depreciation and amortization
5,149

 
2,866

 
8,015

 
 
 
 
 
 
Fiscal Year 2012:
 
 
 
 
 
Net sales
$
254,718

 
$
235,205

 
$
489,923

Segment operating (loss) income
(12,484
)
 
6,262

 
(6,222
)
Segment assets **
168,492

 
151,902

 
320,394

Equity investment in joint venture
2,818

 

 
2,818

Purchases of property and equipment
3,828

 
2,798

 
6,626

Depreciation and amortization
5,547

 
1,945

 
7,492

 
 
 
 
 
 
Fiscal Year 2011:
 
 
 
 
 
Net sales
$
253,494

 
$
221,742

 
$
475,236

Gain on contingent consideration, net of impairment charges *

 
918

 
918

Segment operating income
16,889

 
8,407

 
25,296

Segment assets **
162,932

 
148,933

 
311,865

Equity investment in joint venture
2,664

 

 
2,664

Purchases of property and equipment
4,164

 
3,802

 
7,966

Depreciation and amortization
4,912

 
2,345

 
7,257

______________________
*
 
See Note 2(m) for further information regarding the remeasurement of contingent consideration and impairment testing of goodwill and intangibles.

**
 
All goodwill and intangibles on our balance sheet is included in the branded segment.
The following reconciles the segment operating income (loss) to the consolidated income (loss) before provision for (benefit from) income taxes (in thousands):
 
Year Ended
 
June 29,
2013
 
June 30,
2012

 
July 2,
2011

Segment operating income (loss)
$
13,903

 
$
(6,222
)
 
$
25,296

Unallocated interest expense
3,997

 
4,132

 
2,616

Consolidated income (loss) before provision for (benefit from) income taxes
$
9,906

 
$
(10,354
)
 
$
22,680

Supplemental information regarding our revenues by geographic area based on the location of the customer is as follows (in thousands):
 
Year Ended
 
June 29,
2013
 
June 30,
2012

 
July 2,
2011

United States
$
480,981

 
$
484,419

 
$
470,909

Foreign
9,542

 
5,504

 
4,327

Total net sales
$
490,523

 
$
489,923

 
$
475,236


Summarized financial information by geographic area is as follows (in thousands):
 
June 29, 2013
 
June 30, 2012
United States
$
23,011

 
$
22,146

 
 
 
 
Honduras
12,144

 
13,220

El Salvador
3,163

 
2,979

Mexico
1,128

 
1,080

All foreign countries
16,435

 
17,279

 
 
 
 
Total long-lived assets, excluding goodwill and intangibles
$
39,446

 
$
39,425

Repurchase of Common Stock (Tables)
Schedule of Repurchase of Common Stock
The following table summarizes the purchases of our common stock for the quarter ended June 29, 2013:
Period
 
Total Number of Shares Purchased
 
Average Price Paid per Share
 
Total Number of Shares Purchased as Part of Publicly Announced Plans
 
Dollar Value of Shares that May Yet Be Purchased Under the Plans
March 31 to May 5, 2013
 
29,470

 
$14.41
 
29,470

 

$10.8
 million
May 6 to June 1, 2013
 
89,582

 
$14.05
 
89,582

 

$9.6
 million
June 2 to June 29, 2013
 
109,302

 
$14.73
 
109,302

 

$8.0
 million
Total
 
228,354

 
$14.42
 
228,354

 

$8.0
 million*
* As of June 29, 2013
Commitments and Contingencies (Tables)
At June 29, 2013, minimum payments under these contracts were as follows (in thousands):
Yarn
$
14,408

Natural Gas
1,507

Finished fabric
1,445

Finished products
26,256

 
$
43,616

The following financial instruments were outstanding as of June 29, 2013:
 
Effective Date
 
Notational
Amount
 
LIBOR Rate
 
Maturity Date
Interest Rate Swap
9/1/2011
 
$10 million
 
0.7650
%
 
9/1/2013
Interest Rate Swap
9/1/2011
 
$10 million
 
0.9025
%
 
3/1/2014
Interest Rate Swap
9/1/2011
 
$10 million
 
1.0700
%
 
9/1/2014
The following financial 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 Swap
 
 
 
 
 
 
 
June 29, 2013
$
133

 

 
$
133

 

June 30, 2012
$
209

 

 
$
209

 

July 2, 2011
$
22

 

 
$
22

 

 
 
 
 
 
 
 
 
Contingent Consideration
 
 
 
 
 
 
 
June 29, 2013

 

 

 

June 30, 2012

 

 

 

July 2, 2011

 

 

 

The following table summarizes the fair value and presentation in the Consolidated Balance Sheets for derivatives as of June 29, 2013 and June 30, 2012.
 
June 29,
2013
 
June 30,
2012
Accrued expenses
$
49

 
$

Deferred tax liabilities
(51
)
 
(80
)
Other liabilities
84

 
209

Accumulated other comprehensive loss
$
82

 
$
129

Future minimum lease payments under non-cancelable operating leases as of June 29, 2013 were as follows (in thousands):
Fiscal Year
Amount
2014
$
8,353

2015
7,470

2016
5,180

2017
2,654

2018
294

Thereafter

 
$
23,951

ased on minimum sales requirements, future minimum royalty payments required under these license agreements were as follows (in thousands):
Fiscal Year
Amount
2014
$
3,100

2015
2,204

2016
882

2017 and thereafter

 
$
6,186

Quarterly Financial Information (Unaudited) (Tables)
Schedule of Quarterly Financial Information
Presented below is a summary of our unaudited consolidated quarterly financial information for the fiscal years ended June 29, 2013 and June 30, 2012 (in thousands):
 
2013 Quarter Ended
 
2012 Quarter Ended
 
September 29
 
December 29
 
March 30
 
June 29
 
September 29
 
December 29
 
March 31
 
June 30
Net sales
$
130,114

 
$
106,750

 
$
120,092

 
$
133,567

 
$
123,523

 
$
105,486

 
$
125,541

 
$
135,373

Gross profit
31,853

 
22,755

 
26,415

 
28,486

 
31,253

 
141

 
25,191

 
27,138

Operating income (loss)
5,836

 
846

 
2,564

 
4,657

 
6,698

 
(19,989
)
 
2,856

 
4,213

Net earnings (loss)
3,564

 
46

 
1,608

 
3,966

 
4,412

 
(13,592
)
 
1,919

 
4,814

 
 
 


 


 


 
 
 
 
 
 
 
 
Basic EPS
$
0.42

 
$
0.01

 
$
0.20

 
$
0.49

 
$
0.52

 
$
(1.61
)
 
$
0.23

 
$
0.57

Diluted EPS
$
0.41

 
$
0.01

 
$
0.19

 
$
0.48

 
$
0.50

 
$
(1.61
)
 
$
0.22

 
$
0.55

Significant Accounting Policies (Details) (USD $)
3 Months Ended 12 Months Ended 3 Months Ended 12 Months Ended 0 Months Ended 12 Months Ended 12 Months Ended 0 Months Ended
Jun. 29, 2013
Dec. 31, 2011
Jan. 1, 2011
Jun. 29, 2013
operating_segment
Jun. 29, 2013
Jun. 30, 2012
Jul. 2, 2011
Jun. 27, 2009
Jan. 1, 2011
Art Gun [Member]
Jun. 29, 2013
Selling, General and Administrative Expenses [Member]
Jun. 30, 2012
Selling, General and Administrative Expenses [Member]
Jul. 2, 2011
Selling, General and Administrative Expenses [Member]
Jun. 29, 2013
Interest Rate Swap [Member]
Jun. 30, 2012
Interest Rate Swap [Member]
Mar. 1, 2010
Line of Credit [Member]
Interest Rate Swap [Member]
Variable Rate to Fixed Rate Conversion [Member]
Apr. 1, 2009
Line of Credit [Member]
Interest Rate Swap [Member]
Variable Rate to Fixed Rate Conversion [Member]
Jun. 29, 2013
Minimum [Member]
Jun. 29, 2013
Maximum [Member]
Jun. 29, 2013
Revolving Credit Facility, due May 2016 [Member]
Revolving Credit Facility [Member]
Jun. 30, 2012
Revolving Credit Facility, due May 2016 [Member]
Revolving Credit Facility [Member]
Jun. 29, 2013
Revolving Credit Facility, due May 2016 [Member]
Federal Funds [Member]
Revolving Credit Facility [Member]
Jun. 29, 2013
Revolving Credit Facility, due May 2016 [Member]
LIBOR [Member]
Revolving Credit Facility [Member]
Jun. 29, 2013
Internally Developed Software [Member]
Minimum [Member]
Jun. 29, 2013
Internally Developed Software [Member]
Maximum [Member]
Sep. 2, 2011
Interest Rate Swap [Member]
agreement
Jun. 29, 2013
Interest Rate Swap [Member]
Jun. 30, 2012
Interest Rate Swap [Member]
Jun. 29, 2013
Maturity Date 9/1/2013 [Member]
Jun. 29, 2013
Maturity Date 3/1/2014 [Member]
Jun. 29, 2013
Maturity Date 9/1/2014 [Member]
Significant Accounting Policies [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated other comprehensive loss
$ (82,000)
 
 
$ (82,000)
$ (82,000)
$ (129,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 82,000 
$ 129,000 
 
 
 
Ownership percentage (percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
50.00% 
 
 
 
 
 
 
 
 
 
 
 
 
Number of business segments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of weeks in fiscal year
 
 
 
 
 
P52W 
P52W 
P52W 
 
 
 
 
 
 
 
 
P52W 
P53W 
 
 
 
 
 
 
 
 
 
 
 
 
Inventory write down
 
16,200,000 
 
 
16,195,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, estimated useful life
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
P3Y 
P25Y 
 
 
 
 
 
 
 
 
 
 
 
 
Intangibles, economic life
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3 years 
10 years 
 
 
 
 
 
 
Impairment of long-lived assets
300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill, estimated economic life
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4 years 
20 years 
 
 
 
 
 
 
 
 
 
 
 
 
Accounts Receivable
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net accounts receivable
74,415,000 
 
 
74,415,000 
74,415,000 
73,349,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accounts receivable
76,200,000 
 
 
76,200,000 
76,200,000 
75,600,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reserves
1,800,000 
 
 
1,800,000 
1,800,000 
2,300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bad debt expense to net sales (percent)
 
 
 
0.10% 
0.10% 
0.10% 
0.10% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Impairment of Goodwill
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Favorable adjustment to contingent consideration
 
 
 
 
 
 
 
 
1,500,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill impairment charge
 
 
600,000 
 
612,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net favorable adjustment
 
 
900,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Self-insurance reserves
500,000 
 
 
500,000 
500,000 
700,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distribution costs
 
 
 
 
 
 
 
 
 
17,500,000 
16,400,000 
14,300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advertising Costs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percent of net purchases allowable for advertisement of products, low range
1.00% 
 
 
1.00% 
1.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percent of net purchases allowable for advertisement of products, high range
5.00% 
 
 
5.00% 
5.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advertising costs
 
 
 
 
3,800,000 
4,300,000 
6,700,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cooperative advertising programs costs
 
 
 
 
1,500,000 
2,000,000 
1,900,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt conversion amount
98,292,000 
 
 
98,292,000 
98,292,000 
114,478,000 
 
 
 
 
 
 
 
 
15,000,000 
15,000,000 
 
 
88,753,000 
103,965,000 
 
 
 
 
 
 
 
 
 
 
Debt instrument, basis
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LIBOR 
LIBOR 
 
 
LIBOR 
 
federal funds 
LIBOR 
 
 
 
 
 
 
 
 
Debt instrument, percent spread on basis
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.11% 
1.57% 
 
 
 
 
0.50% 
1.00% 
 
 
 
 
 
 
 
 
New interest rate swap agreements (agreements)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notional amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10,000,000 
10,000,000 
10,000,000 
LIBOR Rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.765% 
0.9025% 
1.07% 
Unrealized gain (loss) on derivatives, net
 
 
 
 
 
100,000 
500,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, Net of Tax
 
 
 
 
 
 
 
 
 
 
 
 
$ 47,000 
$ 100,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisitions (Details) (The Cotton Exchange [Member], USD $)
In Millions, unless otherwise specified
Jul. 12, 2010
The Cotton Exchange [Member]
 
Business Acquisition [Line Items]
 
Total purchase price
$ 9.9 
Inventories (Details) (USD $)
Jun. 29, 2013
Jun. 30, 2012
Inventory [Line Items]
 
 
Inventory reserves
$ 6,800,000 
$ 5,200,000 
Inventories, net of reserves:
 
 
Raw materials
12,443,000 
11,759,000 
Work in process
16,407,000 
18,986,000 
Finished goods
130,664,000 
130,888,000 
Inventories, net
$ 159,514,000 
$ 161,633,000 
Property, Plant and Equipment (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Jun. 29, 2013
Jun. 30, 2012
Property, Plant and Equipment [Line Items]
 
 
Property, plant and equipment, gross
$ 109,207 
$ 103,950 
Less accumulated depreciation and amortization
(69,761)
(64,525)
Property, plant and equipment, net
39,446 
39,425 
Land and Land Improvements [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Estimated useful life
25 years 
 
Property, plant and equipment, gross
993 
993 
Buildings [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Estimated useful life
20 years 
 
Property, plant and equipment, gross
7,882 
7,893 
Machinery and Equipment [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Estimated useful life
10 years 
 
Property, plant and equipment, gross
69,094 
65,404 
Computers and Software [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property, plant and equipment, gross
20,386 
19,256 
Computers and Software [Member] |
Minimum [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Estimated useful life
3 years 
 
Computers and Software [Member] |
Maximum [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Estimated useful life
10 years 
 
Furniture and Fixtures [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Estimated useful life
7 years 
 
Property, plant and equipment, gross
5,290 
4,973 
Leasehold Improvements [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property, plant and equipment, gross
2,335 
2,626 
Leasehold Improvements [Member] |
Minimum [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Estimated useful life
3 years 
 
Leasehold Improvements [Member] |
Maximum [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Estimated useful life
10 years 
 
Automobiles [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Estimated useful life
5 years 
 
Property, plant and equipment, gross
797 
752 
Construction in Progress [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property, plant and equipment, gross
$ 2,430 
$ 2,053 
Goodwill and Intangible Assets (Details) (USD $)
12 Months Ended
Jun. 29, 2013
Jun. 30, 2012
Jul. 2, 2011
Goodwill and Finite-Lived Intangible Assets [Line Items]
 
 
 
Goodwill, Cost
$ 16,812,000 
$ 16,812,000 
 
Goodwill, Net Value
16,812,000 
16,812,000 
 
Intangibles, Cost
10,487,000 
10,487,000 
 
Intangibles, Accumulated Amortization
(4,297,000)
(3,690,000)
 
Intangibles, Net Value
6,190,000 
6,797,000 
 
Goodwill, Cumulative impairment loss
(600,000)
 
 
Amortization of intangible assets
607,000 
608,000 
613,000 
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
 
 
 
Amortization expense estimate for 2014
600,000 
 
 
Amortization expense estimate for 2015
600,000 
 
 
Amortization expense estimate for 2016
600,000 
 
 
Amortization expense estimate for 2017
600,000 
 
 
Amortization expense estimate for 2018
600,000 
 
 
Tradename/Trademarks [Member]
 
 
 
Goodwill and Finite-Lived Intangible Assets [Line Items]
 
 
 
Intangibles, Cost
1,530,000 
1,530,000 
 
Intangibles, Accumulated Amortization
(603,000)
(526,000)
 
Intangibles, Net Value
927,000 
1,004,000 
 
Intangibles, economic life
20 years 
 
 
Customer Relationships [Member]
 
 
 
Goodwill and Finite-Lived Intangible Assets [Line Items]
 
 
 
Intangibles, Cost
7,220,000 
7,220,000 
 
Intangibles, Accumulated Amortization
(2,847,000)
(2,486,000)
 
Intangibles, Net Value
4,373,000 
4,734,000 
 
Intangibles, economic life
20 years 
 
 
Technology [Member]
 
 
 
Goodwill and Finite-Lived Intangible Assets [Line Items]
 
 
 
Intangibles, Cost
1,220,000 
1,220,000 
 
Intangibles, Accumulated Amortization
(428,000)
(307,000)
 
Intangibles, Net Value
792,000 
913,000 
 
Intangibles, economic life
10 years 
 
 
Non-compete Agreements [Member]
 
 
 
Goodwill and Finite-Lived Intangible Assets [Line Items]
 
 
 
Intangibles, Cost
517,000 
517,000 
 
Intangibles, Accumulated Amortization
(419,000)
(371,000)
 
Intangibles, Net Value
$ 98,000 
$ 146,000 
 
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 
 
 
Accrued Expenses (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 29, 2013
Jun. 30, 2012
Payables and Accruals [Abstract]
 
 
Accrued employee compensation and benefits
$ 9,762 
$ 7,645 
Taxes accrued and withheld
1,199 
1,133 
Accrued insurance
568 
889 
Accrued advertising
363 
626 
Accrued royalties
3,001 
2,868 
Accrued commissions
677 
725 
Derivative liability
49 
Other
2,807 
2,722 
Total accrued expenses
$ 18,426 
$ 16,608 
Long-term Debt (Schedule of Debt Instruments) (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended
Jun. 29, 2013
Jun. 30, 2012
Jun. 29, 2013
Revolving Credit Facility [Member]
Revolving Credit Facility, due May 2016 [Member]
Jun. 30, 2012
Revolving Credit Facility [Member]
Revolving Credit Facility, due May 2016 [Member]
Jun. 29, 2013
Revolving Credit Facility [Member]
Revolving Credit Facility, due March 2019 [Member]
Jun. 30, 2012
Revolving Credit Facility [Member]
Revolving Credit Facility, due March 2019 [Member]
Jun. 29, 2013
Loans Payable [Member]
Term Loan [Member]
Jun. 30, 2012
Loans Payable [Member]
Term Loan [Member]
Jun. 29, 2013
Loans Payable [Member]
Capital Expansion Loan [Member]
Jun. 30, 2010
Loans Payable [Member]
Capital Expansion Loan [Member]
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
Long-term Debt
$ 98,292 
$ 114,478 
$ 88,753 
$ 103,965 
$ 5,000 
$ 5,000 
$ 4,539 
$ 5,513 
 
 
Less current installments
(3,529)
(3,529)
 
 
 
 
 
 
 
 
Long-term debt, excluding current installments
$ 94,763 
$ 110,949 
 
 
 
 
 
 
 
 
Variable rate basis
 
 
LIBOR 
 
 
 
 
 
 
 
Interest rate at period end
 
 
2.60% 
 
 
 
 
 
 
 
Interest rate
 
 
 
 
7.00% 
 
7.00% 
 
6.50% 
6.00% 
Payment term (in years)
 
 
 
 
18 months 
 
7 years 
 
5 years 
 
Long-term Debt (Narrative) (Details) (USD $)
0 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended
May 27, 2011
Jun. 29, 2013
Jun. 30, 2012
Jun. 29, 2013
Banco Ficohsa [Member]
Mar. 31, 2011
Loans Payable [Member]
Term Loan [Member]
Jun. 29, 2013
Loans Payable [Member]
Term Loan [Member]
Jun. 30, 2012
Loans Payable [Member]
Term Loan [Member]
Jun. 29, 2013
Revolving Credit Facility [Member]
Revolving Credit Facility, due May 2016 [Member]
Jul. 2, 2011
Revolving Credit Facility [Member]
Revolving Credit Facility, due May 2016 [Member]
Jun. 30, 2012
Revolving Credit Facility [Member]
Revolving Credit Facility, due May 2016 [Member]
Jun. 29, 2013
Revolving Credit Facility [Member]
Revolving Credit Facility, due May 2016 [Member]
Minimum [Member]
Jun. 29, 2013
Revolving Credit Facility [Member]
Revolving Credit Facility, due May 2016 [Member]
Maximum [Member]
Jun. 29, 2013
Revolving Credit Facility [Member]
Revolving Credit Facility, due May 2016 [Member]
Federal Funds [Member]
Jun. 29, 2013
Revolving Credit Facility [Member]
Revolving Credit Facility, due May 2016 [Member]
LIBOR [Member]
Jun. 29, 2013
Revolving Credit Facility [Member]
Revolving Credit Facility, due May 2016 [Member]
Prime Rate [Member]
Jun. 29, 2013
Revolving Credit Facility [Member]
Revolving Credit Facility, due March 2019 [Member]
Jun. 30, 2012
Revolving Credit Facility [Member]
Revolving Credit Facility, due March 2019 [Member]
Jun. 29, 2013
Amended Loan Agreement [Member]
Revolving Credit Facility [Member]
Revolving Credit Facility, due May 2016 [Member]
Jun. 30, 2012
Amended Loan Agreement [Member]
Revolving Credit Facility [Member]
Revolving Credit Facility, due May 2016 [Member]
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Variable rate basis
 
 
 
 
 
 
 
LIBOR 
 
 
 
 
federal funds 
LIBOR 
prime rate 
 
 
 
 
Basis spread on variable rate (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
0.50% 
1.00% 
 
 
 
 
 
Line of credit, capacity after increase during period
$ 145,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Line of credit, increase in amount previously available
35,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Line of credit, maximum credit available
200,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Payments of financing costs
 
 
 
 
 
 
 
 
1,400,000 
 
 
 
 
 
 
 
 
 
 
Monthly installment payment
 
 
 
 
 
 
 
200,000 
 
 
 
 
 
 
 
 
 
 
 
Payment term (in years)
 
 
 
 
 
7 years 
 
 
 
 
 
 
 
 
 
18 months 
 
 
 
Annual facility fee (as a percentage)
 
 
 
 
 
 
 
 
 
 
0.25% 
0.375% 
 
 
 
 
 
 
 
Amount in excess of average daily principal
 
 
 
 
 
 
 
145,000,000 
 
 
 
 
 
 
 
 
 
 
 
Outstanding under credit facility
 
 
 
 
 
 
 
88,800,000 
 
 
 
 
 
 
 
 
 
 
 
Average interest rate (as a percentage)
 
 
 
 
 
 
 
2.60% 
 
 
 
 
 
 
 
 
 
 
 
Remaining borrowing capacity
 
 
 
 
 
 
 
42,000,000 
 
 
 
 
 
 
 
 
 
 
 
Fixed charge coverage ratio
 
 
 
 
 
 
 
12 months 
 
 
 
 
 
 
 
 
 
 
 
Amount of availability, percent of borrowing base
 
 
 
 
 
 
 
 
 
12.50% 
 
 
 
 
 
 
 
 
 
Amount of availability, benchmark
 
 
 
 
 
 
 
 
 
145,000,000 
 
 
 
 
 
 
 
 
 
Fixed charge coverage ratio (FCCR)
 
 
 
 
 
 
 
 
 
 
1.1 
 
 
 
 
 
 
 
 
Availablility requirement, for dividends and stock repurchases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15,000,000 
 
Average availablility requirement, for dividends and stock repurchases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15,000,000 
 
Average period for availablility requirement, for dividends and stock repurchases (in days)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30 days 
 
Aggregate amount of dividends and stock repurchases, benchmark
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
19,000,000 
 
Aggregate amount of dividends and stock repurchases, benchmark basis spread based on cumulative net income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
50.00% 
 
Retained earnings, amount available for dividends and stock repuchases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11,600,000 
14,800,000 
Gains (losses) on extinguishment of debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate
 
 
 
 
 
7.00% 
 
 
 
 
 
 
 
 
 
7.00% 
 
 
 
Term of debt instrument
 
 
 
18 months 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Frequency of required minimum payments
 
 
 
6 months 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Installment loan, term (in years)
 
 
 
 
7 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding borrowings
 
$ 98,292,000 
$ 114,478,000 
 
 
$ 4,539,000 
$ 5,513,000 
$ 88,753,000 
 
$ 103,965,000 
 
 
 
 
 
$ 5,000,000 
$ 5,000,000 
 
 
Long-term Debt (Schedule of Aggregate Maturities) (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 29, 2013
Jun. 30, 2012
Maturities of Long-term Debt [Abstract]
 
 
2014
$ 3,529 
 
2015
3,529 
 
2016
84,614 
 
2017
973 
 
2018
5,647 
 
Long-term Debt
$ 98,292 
$ 114,478 
Income Taxes (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Jun. 29, 2013
Jun. 30, 2012
Jul. 2, 2011
Current:
 
 
 
Federal
$ 40 
$ (6,795)
$ 3,936 
State
35 
315 
Foreign
145 
157 
167 
Total current
220 
(6,638)
4,418 
Deferred:
 
 
 
Federal
499 
(284)
562 
State
(985)
373 
Total deferred
502 
(1,269)
935 
(Benefit from) Provision for income taxes
722 
(7,907)
5,353 
Income (Loss) from Continuing Operations, Before Income Taxes [Abstract]
 
 
 
Income (Loss) from Continuing Operations before Income Taxes, Domestic
1,468 
(21,660)
12,814 
Income (Loss) from Continuing Operations before Income Taxes, Foreign
8,438 
11,306 
9,866 
Income before provision for income taxes
9,906 
(10,354)
22,680 
Income Tax Expense (Benefit), Continuing Operations, Income Tax Reconciliation [Abstract]
 
 
 
Income tax expense at the statutory rate
3,371 
(3,520)
7,712 
State income tax expense, net of federal income tax effect
(11)
(975)
561 
Rate difference and nondeductible items in foreign jurisdictions
(16)
(47)
(20)
Impact of foreign earnings in tax-free zone
(2,754)
(3,683)
(3,223)
Valuation allowance adjustment
75 
14 
Nondeductible compensation
193 
157 
Nondeductible amortization and other permanent differences
100 
91 
86 
Other
(43)
20 
80 
Provision for income taxes
722 
(7,907)
5,353 
Deferred tax assets:
 
 
 
State net operating loss carryforward
1,416 
1,406 
 
Charitable donation carryforward
50 
373 
 
Derivative - interest rate contract
51 
81 
 
Alternative minimum tax credit carryforward
49 
 
Currently nondeductible accruals
6,665 
5,555 
 
Gross deferred tax assets
8,231 
7,415 
 
Less valuation allowance - state net operating loss
(197)
(122)
 
Net deferred tax assets
8,034 
7,293 
 
Deferred tax liabilities:
 
 
 
Depreciation
(3,164)
(2,704)
 
Goodwill and intangible
(3,762)
(3,319)
 
Other
(123)
(109)
 
Gross deferred tax liabilities
(7,049)
(6,132)
 
Net deferred tax asset
985 
1,161 
 
Less non-current net deferred tax liabilities
3,571 
3,803 
 
Current deferred tax asset
$ 4,556 
$ 4,964 
 
Income Taxes Textuals (Details) (USD $)
12 Months Ended
Jun. 29, 2013
Jun. 30, 2012
Jul. 2, 2011
Operating Loss Carryforwards [Line Items]
 
 
 
Federal statutory income tax rate
34.00% 
 
 
Undistributed earnings of foreign subsidiaries
$ 44,100,000 
 
 
Gross deferred tax assets
8,231,000 
7,415,000 
 
Change in deferred tax assets valuation allowance
75,000 
14,000 
State and Local Jurisdiction [Member]
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
Operating loss carryforwards
31,600,000 
31,100,000 
 
Gross deferred tax assets
1,400,000 
1,400,000 
 
Income Taxes Receivable [Member] |
Internal Revenue Service (IRS) [Member]
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
Operating loss carryforwards
$ 900,000 
$ 20,000,000 
 
Leases (Details) (USD $)
12 Months Ended
Jun. 29, 2013
Jun. 30, 2012
Jul. 2, 2011
Operating Leased Assets [Line Items]
 
 
 
Rent expense
$ 9,800,000 
$ 10,000,000 
$ 9,700,000 
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
 
 
 
2014
8,353,000 
 
 
2015
7,470,000 
 
 
2016
5,180,000 
 
 
2017
2,654,000 
 
 
2018
294,000 
 
 
Thereafter
 
 
Total future minimum due
$ 23,951,000 
 
 
Land and Building [Member] |
Minimum [Member]
 
 
 
Operating Leased Assets [Line Items]
 
 
 
Renewal period, years
5 years 
 
 
Land and Building [Member] |
Maximum [Member]
 
 
 
Operating Leased Assets [Line Items]
 
 
 
Renewal period, years
10 years 
 
 
Employee Benefit Plans (Details) (USD $)
12 Months Ended
Jun. 29, 2013
Jun. 30, 2012
Jul. 2, 2011
Compensation and Retirement Disclosure [Abstract]
 
 
 
Contributions to 401(k) Plan
$ 1,300,000 
$ 1,300,000 
$ 1,200,000 
Discount rate used in determining the liability
6.00% 
6.00% 
 
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward]
 
 
 
Balance at beginning of year
526,000 
580,000 
 
Interest expense
6,000 
6,000 
 
Benefits paid
(62,000)
(61,000)
 
Actuarial adjustment
1,000 
1,000 
 
Balance at end of year
$ 471,000 
$ 526,000 
$ 580,000 
Stock-based Compensation (Narrative) (Details) (USD $)
12 Months Ended 3 Months Ended 12 Months Ended 12 Months Ended
Jun. 29, 2013
Jun. 30, 2012
Jul. 2, 2011
Jun. 29, 2013
2010 Stock Plan [Member]
Jun. 30, 2012
2010 Stock Plan [Member]
Jul. 2, 2011
2010 Stock Plan [Member]
Jun. 29, 2013
2010 Stock Plan [Member]
Restricted Stock Units (RSUs) [Member]
Jun. 30, 2012
2010 Stock Plan [Member]
Restricted Stock Units (RSUs) [Member]
Dec. 29, 2012
2010 Stock Plan [Member]
Performance Stock Units [Member]
Jun. 29, 2013
2010 Stock Plan [Member]
Performance Stock Units [Member]
Jun. 30, 2012
2010 Stock Plan [Member]
Performance Stock Units [Member]
Jun. 30, 2012
2010 Stock Plan [Member]
Stock Options [Member]
Jul. 2, 2011
2010 Stock Plan [Member]
Stock Options [Member]
Jun. 29, 2013
2010 Stock Plan [Member]
One year vesting period [Member]
Jun. 30, 2012
2010 Stock Plan [Member]
One year vesting period [Member]
Jun. 29, 2013
2010 Stock Plan [Member]
Two year vesting period [Member]
Jun. 30, 2012
2010 Stock Plan [Member]
Two year vesting period [Member]
Jun. 29, 2013
2010 Stock Plan [Member]
Upon Filing of Annual Report in 2013 [Member]
Jun. 29, 2013
2010 Stock Plan [Member]
Upon Filing of Annual Report in 2014 [Member]
Jun. 29, 2013
2010 Stock Plan [Member]
Upon Filing of Annual Report in 2015 [Member]
Jun. 29, 2013
2010 Stock Plan [Member]
Subsequent vesting periods [Member]
Jun. 29, 2013
Option Plan [Member]
Jun. 30, 2012
Option Plan [Member]
Jul. 2, 2011
Option Plan [Member]
Jun. 29, 2013
Management [Member]
Option Plan [Member]
Jun. 27, 2009
Management [Member]
Option Plan [Member]
Jun. 29, 2013
Management [Member]
Option Plan [Member]
Minimum [Member]
Jun. 30, 2012
Management [Member]
Option Plan [Member]
Minimum [Member]
Jul. 2, 2011
Management [Member]
Option Plan [Member]
Minimum [Member]
Jun. 29, 2013
Management [Member]
Option Plan [Member]
Maximum [Member]
Jun. 29, 2013
Management [Member]
Award Plan [Member]
Service and Performance Awards [Member]
Jun. 30, 2012
Management [Member]
Award Plan [Member]
Service and Performance Awards [Member]
Jun. 30, 2012
Management [Member]
Award Plan [Member]
Performance Awards [Member]
Jul. 2, 2011
Management [Member]
Award Plan [Member]
Performance Awards [Member]
Jun. 30, 2012
Management [Member]
Award Plan [Member]
Service Based [Member]
Jun. 29, 2013
Upon Filing of Annual Report in 2015 [Member]
2010 Stock Plan [Member]
One year vesting period [Member]
Jun. 29, 2013
Upon Filing of Annual Report in 2014 [Member]
2010 Stock Plan [Member]
One year vesting period [Member]
Jun. 29, 2013
Upon Filing of Annual Report in 2013 [Member]
2010 Stock Plan [Member]
One year vesting period [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Compensation expense recorded
$ 1,200,000 
$ 1,600,000 
$ 2,100,000 
 
 
 
 
 
$ (400,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tax benefits associated with compensation costs
500,000 
600,000 
800,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
34,000 
529,000 
84,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aggregate number of shares that may be delivered
 
 
 
500,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,000,000 
 
 
 
 
 
800,000 
 
 
 
 
 
 
 
Granted, Weighted Average Exercise Price (usd per share)
 
 
 
$ 0.00 
$ 0.00 
$ 13.47 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding at end of year, Aggregate Intrinsic Value
 
 
 
1,200,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity instruments granted in the period (shares)
 
 
 
50,000 
5,000 
91,450 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
28,000 
 
 
 
 
 
 
 
 
 
Awards granted in the period (shares)
 
 
 
 
 
 
 
 
 
 
 
 
 
52,000 
156,000 
5,000 
91,450 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7,000 
2,800 
 
4,200 
 
 
 
Equity instruments forfeited (shares)
 
 
 
 
 
 
 
 
 
 
52,000 
 
 
12,480 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Performance criteria period
 
 
 
 
 
 
 
 
 
2 years 
 
 
 
1 year 
 
 
 
1 year 
1 year 
1 year 
 
 
 
 
 
 
 
 
 
 
 
 
 
2 years 
2 years 
 
 
 
Options accounted for under the equity method (percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
50.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options accounted for under the liability method (percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
50.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Awards vested in period (shares)
 
 
 
 
 
 
 
 
 
 
 
 
 
39,520 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unrecognized compensation cost related to non-vested awards
 
 
 
1,100,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unrecognized compensation cost related to non-vested awards (period of recognition)
 
 
 
 
 
 
 
 
 
 
 
2 years 3 months 18 days 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2 months 12 days 
 
 
 
 
 
 
 
Exercise term, from dates of grant
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
Award vesting period
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3 years 
 
 
4 years 
 
 
 
 
 
 
 
 
Intrinsic value of options exercised
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 700,000 
$ 200,000 
$ 600,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash purchase price, per share (usd per share)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 0.01 
 
 
 
 
 
 
 
Shares eligible to vest
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
33.33% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
33.33% 
33.33% 
33.33% 
Weighted-average per share grant date fair value of options granted
 
 
 
$ 13.47 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock options exercised
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
139,334 
25,333 
118,667 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expected life
 
 
 
 
 
 
 
 
 
 
 
 
4 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Minimum percentage of fair value of stock price, options may be bought at
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
50.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
Period in which stock options become exercisable
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3 years 
 
 
4 years 
 
 
 
 
 
 
 
 
Stock-based Compensation Weighted Average Grant Date Fair Values and Assumptions (Details) (2010 Stock Plan [Member], Stock Options [Member], USD $)
12 Months Ended
Jul. 2, 2011
2010 Stock Plan [Member] |
Stock Options [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
 
Risk-free interest rate (percent)
2.00% 
Expected life
4 years 
Expected volatility (percent)
63.00% 
Expected dividend yield (percent)
0.00% 
Weighted-average per share fair value of options granted (usd per share)
$ 6.25 
Stock-based Compensation Summary of Stock Option Activity (Details) (USD $)
12 Months Ended
Jun. 29, 2013
Jun. 30, 2012
Jul. 2, 2011
2010 Stock Plan [Member]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
 
 
 
Outstanding at end of period, Shares
50,000 
50,000 
Granted, Shares
50,000 
Exercised, Shares
Forfeited, Shares
Outstanding at end of period, Shares
50,000 
50,000 
50,000 
Excercisable at end of year, Shares
50,000 
50,000 
25,000 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
 
 
 
Outstanding at beginning of year, Weighted Average Exercise Price
$ 13.47 
$ 13.47 
$ 0.00 
Granted, Weighted Average Exercise Price (usd per share)
$ 0.00 
$ 0.00 
$ 13.47 
Exercised, Weighted Average Exercise Price
$ 0.00 
$ 0.00 
$ 0.00 
Forfeited, Weighted Average Exercise Price
$ 0.00 
$ 0.00 
$ 0.00 
Outstanding at end of year, Weighted Average Exercise Price
$ 13.47 
$ 13.47 
$ 13.47 
Exercisable at end of year, Weighted Average Exercise Price
$ 13.47 
$ 13.47 
$ 13.47 
Option Plan [Member]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
 
 
 
Outstanding at end of period, Shares
799,834 
851,167 
1,024,500 
Exercised, Shares
(139,334)
(25,333)
(118,667)
Forfeited, Shares
(60,000)
(26,000)
(54,666)
Outstanding at end of period, Shares
600,500 
799,834 
851,167 
Excercisable at end of year, Shares
600,500 
799,834 
777,168 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
 
 
 
Outstanding at beginning of year, Weighted Average Exercise Price
$ 12.22 
$ 12.16 
$ 11.89 
Exercised, Weighted Average Exercise Price
$ 11.14 
$ 8.11 
$ 11.64 
Forfeited, Weighted Average Exercise Price
$ 15.91 
$ 14.48 
$ 8.16 
Outstanding at end of year, Weighted Average Exercise Price
$ 12.09 
$ 12.22 
$ 12.16 
Exercisable at end of year, Weighted Average Exercise Price
$ 12.09 
$ 12.22 
$ 12.55 
Stock-based Compensation Summary of Nonvested Options (Details) (Restricted Stock Units and Performance Stock Units [Member], 2010 Stock Plan [Member], USD $)
12 Months Ended
Jun. 29, 2013
Jun. 30, 2012
Jul. 2, 2011
Restricted Stock Units and Performance Stock Units [Member] |
2010 Stock Plan [Member]
 
 
 
Number of Units
 
 
 
Units outstanding, beginning of fiscal year (shares)
337,700 
Units granted (shares)
10,000 
390,900 
Units forfeited (shares)
(122,830)
(53,200)
Units outstanding, end of fiscal year (shares)
224,870 
337,700 
Weighted average grant date fair value
 
 
 
Units outstanding, beginning of fiscal year (usd per share)
$ 16.05 
$ 0.00 
$ 0.00 
Units granted (usd per share)
$ 13.66 
$ 16.04 
$ 0.00 
Units forfeited (usd per share)
$ 17.10 
$ (16.00)
$ 0.00 
Units outstanding, end of fiscal year (usd per share)
$ 15.37 
$ 16.05 
$ 0.00 
Stock-based Compensation-Exercise Price Range (Details) (USD $)
Jun. 29, 2013
Restricted Stock Units and Performance Stock Units [Member] |
2010 Stock Plan [Member]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Number of Options Outstanding and Exercisable (shares)
224,870 
Restricted Stock Units and Performance Stock Units [Member] |
2010 Stock Plan [Member] |
Exercise Price Range One [Member]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Number of Options Outstanding and Exercisable (shares)
76,350 
Grant-Date Fair Value (usd per share)
$ 17.60 
Restricted Stock Units and Performance Stock Units [Member] |
2010 Stock Plan [Member] |
Exercise Price Range Two [Member]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Number of Options Outstanding and Exercisable (shares)
39,520 
Grant-Date Fair Value (usd per share)
$ 14.25 
Restricted Stock Units and Performance Stock Units [Member] |
2010 Stock Plan [Member] |
Exercise Price Range Three [Member]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Number of Options Outstanding and Exercisable (shares)
52,000 
Grant-Date Fair Value (usd per share)
$ 14.25 
Restricted Stock Units and Performance Stock Units [Member] |
2010 Stock Plan [Member] |
Exercise Price Range Four [Member]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Number of Options Outstanding and Exercisable (shares)
52,000 
Grant-Date Fair Value (usd per share)
$ 14.25 
Restricted Stock Units and Performance Stock Units [Member] |
2010 Stock Plan [Member] |
Exercise Price Range Five [Member]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Number of Options Outstanding and Exercisable (shares)
5,000 
Grant-Date Fair Value (usd per share)
$ 13.66 
Stock Options [Member] |
2010 Stock Plan [Member]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Number of Options Outstanding and Exercisable (shares)
50,000 
Stock Options [Member] |
2010 Stock Plan [Member] |
Exercise Price Range One [Member]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Number of Options Outstanding and Exercisable (shares)
25,000 
Exercise Price (usd per share)
$ 13.86 
Grant-Date Fair Value (usd per share)
$ 6.15 
Stock Options [Member] |
2010 Stock Plan [Member] |
Exercise Price Range Two [Member]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Number of Options Outstanding and Exercisable (shares)
25,000 
Exercise Price (usd per share)
$ 13.07 
Grant-Date Fair Value (usd per share)
$ 6.35 
Stock Options [Member] |
Option Plan [Member]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Number of Options Outstanding and Exercisable (shares)
600,500 
Stock Options [Member] |
Option Plan [Member] |
Exercise Price Range One [Member]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Number of Options Outstanding and Exercisable (shares)
82,500 
Exercise Price (usd per share)
$ 11.28 
Grant-Date Fair Value (usd per share)
$ 4.23 
Stock Options [Member] |
Option Plan [Member] |
Exercise Price Range Two [Member]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Number of Options Outstanding and Exercisable (shares)
358,000 
Exercise Price (usd per share)
$ 13.35 
Grant-Date Fair Value (usd per share)
$ 5.18 
Stock Options [Member] |
Option Plan [Member] |
Exercise Price Range Three [Member]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Number of Options Outstanding and Exercisable (shares)
30,000 
Exercise Price (usd per share)
$ 17.24 
Grant-Date Fair Value (usd per share)
$ 6.20 
Stock Options [Member] |
Option Plan [Member] |
Exercise Price Range Four [Member]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Number of Options Outstanding and Exercisable (shares)
120,000 
Exercise Price (usd per share)
$ 8.30 
Grant-Date Fair Value (usd per share)
$ 2.95 
Stock Options [Member] |
Option Plan [Member] |
Exercise Price Range Five [Member]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Number of Options Outstanding and Exercisable (shares)
10,000 
Exercise Price (usd per share)
$ 4.01 
Grant-Date Fair Value (usd per share)
$ 2.00 
Business Segments (Details) (USD $)
3 Months Ended 12 Months Ended
Jun. 29, 2013
Mar. 30, 2013
Dec. 29, 2012
Sep. 29, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2011
Oct. 1, 2011
Jun. 29, 2013
operating_segment
Jun. 30, 2012
Jul. 2, 2011
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Number of business segments
 
 
 
 
 
 
 
 
 
 
Net sales
$ 133,567,000 
$ 120,092,000 
$ 106,750,000 
$ 130,114,000 
$ 135,373,000 
$ 125,541,000 
$ 105,486,000 
$ 123,523,000 
$ 490,523,000 
$ 489,923,000 
$ 475,236,000 
Gain on contingent consideration, net of impairment charges
 
 
 
 
 
 
 
 
 
 
918,000 
Segment operating income
4,657,000 
2,564,000 
846,000 
5,836,000 
4,213,000 
2,856,000 
(19,989,000)
6,698,000 
13,903,000 
(6,222,000)
25,296,000 
Segment assets
311,910,000 1
 
 
 
320,394,000 1
 
 
 
311,910,000 1
320,394,000 1
311,865,000 1
Equity investment in joint venture
 
 
 
 
 
 
 
 
2,909,000 
2,818,000 
2,664,000 
Purchases of property and equipment
 
 
 
 
 
 
 
 
7,922,000 
6,626,000 
7,966,000 
Depreciation and amortization
 
 
 
 
 
 
 
 
8,015,000 
7,492,000 
7,257,000 
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Segment operating income
4,657,000 
2,564,000 
846,000 
5,836,000 
4,213,000 
2,856,000 
(19,989,000)
6,698,000 
13,903,000 
(6,222,000)
25,296,000 
Unallocated interest expense
 
 
 
 
 
 
 
 
3,997,000 
4,132,000 
2,616,000 
Income before provision for income taxes
 
 
 
 
 
 
 
 
9,906,000 
(10,354,000)
22,680,000 
Geographic Areas, Long-Lived Assets [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Total long-lived assets, excluding goodwill and intangibles
39,446,000 
 
 
 
39,425,000 
 
 
 
39,446,000 
39,425,000 
 
UNITED STATES
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
 
 
 
 
 
 
 
480,981,000 
484,419,000 
470,909,000 
Geographic Areas, Long-Lived Assets [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Total long-lived assets, excluding goodwill and intangibles
23,011,000 
 
 
 
22,146,000 
 
 
 
23,011,000 
22,146,000 
 
Foreign [Member]
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
 
 
 
 
 
 
 
9,542,000 
5,504,000 
4,327,000 
Geographic Areas, Long-Lived Assets [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Total long-lived assets, excluding goodwill and intangibles
16,435,000 
 
 
 
17,279,000 
 
 
 
16,435,000 
17,279,000 
 
Honduras [Member]
 
 
 
 
 
 
 
 
 
 
 
Geographic Areas, Long-Lived Assets [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Total long-lived assets, excluding goodwill and intangibles
12,144,000 
 
 
 
13,220,000 
 
 
 
12,144,000 
13,220,000 
 
El Salvador [Member]
 
 
 
 
 
 
 
 
 
 
 
Geographic Areas, Long-Lived Assets [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Total long-lived assets, excluding goodwill and intangibles
3,163,000 
 
 
 
2,979,000 
 
 
 
3,163,000 
2,979,000 
 
Mexico [Member]
 
 
 
 
 
 
 
 
 
 
 
Geographic Areas, Long-Lived Assets [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Total long-lived assets, excluding goodwill and intangibles
1,128,000 
 
 
 
1,080,000 
 
 
 
1,128,000 
1,080,000 
 
Basics [Member]
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Legal and professional fees
 
 
 
1,200,000 
 
 
 
 
 
 
 
Net sales
 
 
 
 
 
 
 
 
270,876,000 
254,718,000 
253,494,000 
Gain on contingent consideration, net of impairment charges
 
 
 
 
 
 
 
 
 
 
Segment operating income
 
 
 
 
 
 
 
 
15,771,000 
(12,484,000)
16,889,000 
Segment assets
161,716,000 1
 
 
 
168,492,000 1
 
 
 
161,716,000 1
168,492,000 1
162,932,000 1
Equity investment in joint venture
 
 
 
 
 
 
 
 
2,909,000 
2,818,000 
2,664,000 
Purchases of property and equipment
 
 
 
 
 
 
 
 
3,477,000 
3,828,000 
4,164,000 
Depreciation and amortization
 
 
 
 
 
 
 
 
5,149,000 
5,547,000 
4,912,000 
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Segment operating income
 
 
 
 
 
 
 
 
15,771,000 
(12,484,000)
16,889,000 
Branded [Member]
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
 
 
 
 
 
 
 
219,647,000 
235,205,000 
221,742,000 
Gain on contingent consideration, net of impairment charges
 
 
 
 
 
 
 
 
 
 
918,000 
Segment operating income
 
 
 
 
 
 
 
 
(1,868,000)
6,262,000 
8,407,000 
Segment assets
150,194,000 1
 
 
 
151,902,000 1
 
 
 
150,194,000 1
151,902,000 1
148,933,000 1
Equity investment in joint venture
 
 
 
 
 
 
 
 
Purchases of property and equipment
 
 
 
 
 
 
 
 
4,445,000 
2,798,000 
3,802,000 
Depreciation and amortization
 
 
 
 
 
 
 
 
2,866,000 
1,945,000 
2,345,000 
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Segment operating income
 
 
 
 
 
 
 
 
(1,868,000)
6,262,000 
8,407,000 
Operating segments [Member]
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Segment operating income
 
 
 
 
 
 
 
 
13,903,000 
(6,222,000)
25,296,000 
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Segment operating income
 
 
 
 
 
 
 
 
13,903,000 
(6,222,000)
25,296,000 
Unallocated amount to segment [Member]
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Unallocated interest expense
 
 
 
 
 
 
 
 
$ 3,997,000 
$ 4,132,000 
$ 2,616,000 
Repurchase of Common Stock (Details) (USD $)
In Millions, except Share data, unless otherwise specified
0 Months Ended 1 Months Ended 3 Months Ended 12 Months Ended
Jan. 23, 2013
Jun. 29, 2013
Jun. 1, 2013
May 4, 2013
Jun. 29, 2013
Jun. 29, 2013
Jun. 30, 2012
Jul. 2, 2011
Equity [Abstract]
 
 
 
 
 
 
 
 
Shares authorized for repurchase
 
 
 
 
 
$ 30.0 
$ 20.0 
 
Number of additional shares authorized
10,000,000 
 
 
 
 
 
 
 
Shares repurchased
 
 
 
 
 
544,576 
168,120 
176,756,000 
Aggregated number of shares repurchased
 
1,914,223 
 
 
1,914,223 
1,914,223 
 
 
Shares repurchased, value
 
 
 
 
 
7.8 
2.6 
2.5 
Aggregated shares repurchased, value
 
22.0 
 
 
22.0 
22.0 
 
 
Remaining authorized amount
 
8.0 1
9.6 1
10.8 1
8.0 1
8.0 
 
 
Shares of common stock purchased
 
109,302 
89,582 
29,470 
228,354 
 
 
 
Average price paid per share
 
$ 14.73 
$ 14.05 
$ 14.41 
$ 14.42 
 
 
 
Total number of shares purchased as part of publicly announced plans
 
109,302 
89,582 
29,470 
228,354 
 
 
 
Dollar value of shares that may yet be purchased under the plans
 
$ 8.0 1
$ 9.6 1
$ 10.8 1
$ 8.0 1
$ 8.0 
 
 
Commitments and Contingencies Litigation (Details) (Pending litigation [Member], USD $)
In Thousands, unless otherwise specified
Jun. 29, 2013
Pending litigation [Member]
 
Loss Contingencies [Line Items]
 
Recommended civil penalty
$ 900 
Minimum possible loss
$ 25 
Commitments and Contingencies (Purchase Contracts) (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 29, 2013
Long-term Purchase Commitment [Line Items]
 
Minimum payments
$ 43,616 
Yarn [Member]
 
Long-term Purchase Commitment [Line Items]
 
Minimum payments
14,408 
Natural Gas [Member]
 
Long-term Purchase Commitment [Line Items]
 
Minimum payments
1,507 
Finished Fabric [Member]
 
Long-term Purchase Commitment [Line Items]
 
Minimum payments
1,445 
Finished Products [Member]
 
Long-term Purchase Commitment [Line Items]
 
Minimum payments
$ 26,256 
Commitments and Contingencies (Letters of Credit) (Details) (USD $)
In Millions, unless otherwise specified
Jun. 29, 2013
Standby Letters of Credit [Member]
 
Line of Credit Facility [Line Items]
 
Letters of credit
$ 0.4 
Commercial Letters of Credit [Member]
 
Line of Credit Facility [Line Items]
 
Letters of credit
$ 1.0 
Commitments and Contingencies (Derivatives) (Details) (USD $)
Jun. 29, 2013
Jun. 30, 2012
Jul. 2, 2011
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract]
 
 
 
Interest Rate Swap
$ 133,000 
$ 209,000 
$ 22,000 
Contingent Consideration
Accrued Expenses [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract]
 
 
 
Derivative liabilities, fair value
49,000 
 
Deferred Tax Liabilities [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract]
 
 
 
Derivative liabilities, fair value
(51,000)
(80,000)
 
Other Liabilities [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract]
 
 
 
Derivative liabilities, fair value
84,000 
209,000 
 
Accumulated Other Comprehensive Loss [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract]
 
 
 
Derivative liabilities, fair value
82,000 
129,000 
 
Fair Value, Inputs, Level 1 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract]
 
 
 
Interest Rate Swap
Contingent Consideration
Fair Value, Inputs, Level 2 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract]
 
 
 
Interest Rate Swap
133,000 
209,000 
22,000 
Contingent Consideration
Fair Value, Inputs, Level 3 [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract]
 
 
 
Interest Rate Swap
Contingent Consideration
Maturity Date 9/1/2014 [Member]
 
 
 
Interest Rate Derivatives [Abstract]
 
 
 
Notional amount
10,000,000 
 
 
LIBOR Rate
1.07% 
 
 
Maturity Date 9/1/2013 [Member]
 
 
 
Interest Rate Derivatives [Abstract]
 
 
 
Notional amount
10,000,000 
 
 
LIBOR Rate
0.765% 
 
 
Maturity Date 3/1/2014 [Member]
 
 
 
Interest Rate Derivatives [Abstract]
 
 
 
Notional amount
$ 10,000,000 
 
 
LIBOR Rate
0.9025% 
 
 
Commitments and Contingencies (License Agreements) (Details) (USD $)
12 Months Ended
Jun. 29, 2013
Jun. 30, 2012
Jul. 2, 2011
Commitments and Contingencies Disclosure [Abstract]
 
 
 
Royalty expense
$ 15,700,000 
$ 15,200,000 
$ 12,400,000 
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
 
 
 
2014
3,100,000 
 
 
2015
2,204,000 
 
 
2016
882,000 
 
 
2017 and thereafter
 
 
Total future minimum due
$ 6,186,000 
 
 
Quarterly Financial Information (Unaudited) (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Jun. 29, 2013
Mar. 30, 2013
Dec. 29, 2012
Sep. 29, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2011
Oct. 1, 2011
Jun. 29, 2013
Jun. 30, 2012
Jul. 2, 2011
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Net sales
$ 133,567 
$ 120,092 
$ 106,750 
$ 130,114 
$ 135,373 
$ 125,541 
$ 105,486 
$ 123,523 
$ 490,523 
$ 489,923 
$ 475,236 
Gross profit
28,486 
26,415 
22,755 
31,853 
27,138 
25,191 
141 
31,253 
109,509 
83,723 
116,235 
Operating income
4,657 
2,564 
846 
5,836 
4,213 
2,856 
(19,989)
6,698 
13,903 
(6,222)
25,296 
Net earnings (loss)
$ 3,966 
$ 1,608 
$ 46 
$ 3,564 
$ 4,814 
$ 1,919 
$ (13,592)
$ 4,412 
$ 9,184 
$ (2,447)
$ 17,327 
Basic EPS
$ 0.49 
$ 0.20 
$ 0.01 
$ 0.42 
$ 0.57 
$ 0.23 
$ (1.61)
$ 0.52 
$ 1.12 
$ (0.29)
$ 2.04 
Diluted EPS
$ 0.48 
$ 0.19 
$ 0.01 
$ 0.41 
$ 0.55 
$ 0.22 
$ (1.61)
$ 0.50 
$ 1.08 
$ (0.29)
$ 1.98 
Subsequent Events (Details) (USD $)
3 Months Ended 0 Months Ended
Jun. 29, 2013
Facility Closing [Member]
Aug. 28, 2013
Salt Life Acquisition [Member]
Subsequent Event [Member]
debt_instrument
Aug. 27, 2013
Honduran Bank [Member]
Subsidiaries [Member]
Amended Loan Agreement [Member]
Salt Life Acquisition [Member]
Subsequent Event [Member]
Aug. 27, 2013
First In Last Out Tranche B [Member]
Amended Loan Agreement [Member]
Salt Life Acquisition [Member]
Subsequent Event [Member]
Aug. 27, 2013
Minimum [Member]
First In Last Out Tranche B [Member]
Amended Loan Agreement [Member]
Salt Life Acquisition [Member]
Subsequent Event [Member]
Aug. 27, 2013
Maximum [Member]
First In Last Out Tranche B [Member]
Amended Loan Agreement [Member]
Salt Life Acquisition [Member]
Subsequent Event [Member]
Subsequent Event [Line Items]
 
 
 
 
 
 
Cash paid for Salt Life Acquisition
 
$ 15,000,000 
 
 
 
 
Cash Paid to escrow account
 
3,000,000 
 
 
 
 
Number of promissory notes held (debt instruments)
 
 
 
 
 
Seller note for Salt Life Acquisition
 
22,000,000 
 
 
 
 
Term of contract
 
 
1 year 
 
 
 
Current borrowing capacity
 
 
10,000,000 
 
 
 
Additional borrowing availability (percent)
 
 
 
5.00% 
 
 
Maximum borrowing capacity
 
 
 
10,000,000 
 
 
Basis spread on variable rate (as a percent)
 
 
 
 
1.50% 
2.00% 
Estimated business exit costs
$ 1,100,000 
 
 
 
 
 
Schedule II - Consolidated Valuation and Qualifying Accounts (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Jun. 29, 2013
Jun. 30, 2012
Jul. 2, 2011
Allowance For Doubtful Accounts [Member]
 
 
 
Movement in Valuation Allowances and Reserves [Roll Forward]
 
 
 
Beginning Balance
$ 750 
$ 658 
$ 761 
Acquisition Accounting
1
1
Expense
62 
280 
711 
Deductions
(156)
(188)
(814)
Ending Balance
656 
750 
658 
Returns and Allowances [Member]
 
 
 
Movement in Valuation Allowances and Reserves [Roll Forward]
 
 
 
Beginning Balance
1,562 
1,124 
1,375 
Acquisition Accounting
Expense
8,154 
9,864 
8,205 
Deductions
(8,573)
(9,426)
(8,456)
Ending Balance
1,143 
1,562 
1,124 
Total Reserves For Allowances [Member]
 
 
 
Movement in Valuation Allowances and Reserves [Roll Forward]
 
 
 
Beginning Balance
2,312 
1,782 
2,136 
Acquisition Accounting
Expense
8,216 
10,144 
8,916 
Deductions
(8,729)
(9,614)
(9,270)
Ending Balance
1,799 
2,312 
1,782 
Market and Obsolescence Reserve [Member]
 
 
 
Movement in Valuation Allowances and Reserves [Roll Forward]
 
 
 
Beginning Balance
5,151 
3,717 
3,782 
Acquisition Accounting
Expense
1,616 
1,434 
(65)
Deductions
Ending Balance
6,767 
5,151 
3,717 
Self Insurance Reserve [Member]
 
 
 
Movement in Valuation Allowances and Reserves [Roll Forward]
 
 
 
Beginning Balance
655 
589 
777 
Acquisition Accounting
1
1
39 1
Expense
(160)2
66 2
(227)2
Deductions
2
2
2
Ending Balance
495 
655 
589 
Deferred Tax Assets Valuation Allowance [Member]
 
 
 
Movement in Valuation Allowances and Reserves [Roll Forward]
 
 
 
Beginning Balance
122 
108 
108 
Acquisition Accounting
1
1
1
Expense
75 2
14 2
2
Deductions
2
2
2
Ending Balance
$ 197 
$ 122 
$ 108