Delta Apparel, Inc. Net sales for the three months ended December 30, 2006 increased 26.4% to a second quarter record of $72.9 million compared to $57.7 million in the prior year’s second quarter. Net income for the second quarter was $0.6 million, or seven cents per diluted share, compared to the prior year’s level of $2.4 million, or 27 cents per diluted share.

The Company’s results for the fiscal 2007 second quarter include the operations of FunTees, which was acquired on October 2, 2006. The Company’s results are in-line with the preliminary results announced on January 8, 2007.

The increase in net sales was primarily due to the addition of FunTees and strong sales in the Soffe business, offset by lower sales in the Delta catalog and Junkfood businesses.

Gross margins for the fiscal second quarter were 22.1% as compared to 31.7% in the prior year second quarter principally as a result of higher raw material prices, lower sales in the higher margin Junkfood business and additional costs incurred from FunTees’ integration into Delta’s textile operations. The inclusion of FunTees also reduced overall gross margins for the second quarter as sales from its private label business carry lower margins than the Company’s branded businesses. Margins are expected to increase in the FunTees business as the transition to Delta’s textile facility is completed in the current fiscal year. SG&A expenses for the fiscal 2007 second quarter decreased to 18.7% of sales compared to 23.9% of sales in the prior year period due to the lower selling, general and administrative costs associated with FunTees and lower management incentive costs.

Robert W. Humphreys, President and CEO, commented, “As we discussed in early January, we did not achieve our plan for the second quarter as a weaker than expected retail environment reduced customer reorders at Junkfood and impacted the sales volume in our activewear business. We believe FunTees will contribute to the performance of our activewear segment in the fiscal second half through its expanded private label programs and earnings contribution upon completion of the textile integration. Junkfood continues to focus on its licenses, artwork and product offerings, which continue to receive positive responses in the apparel marketplace. We also remain focused on our opportunities to increase Junkfood’s presence in the mid-tier channel and increase our distribution opportunities abroad. The Soffe business continues to grow across each of its distribution channels and is expected to achieve double-digit sales growth during the year.”

Mr. Humphreys concluded, “We have built a strong platform for the continued growth of our business and enjoy a diverse base of customers across most major apparel distribution channels. Our manufacturing operations are focused on continued cost savings and completing the FunTees manufacturing integration. Our Honduran textile initiative is on schedule and we anticipate beginning production during the first half of fiscal 2008. The lower cost structure associated with offshore textiles should improve our profitability and lower working capital requirements. We believe these initiatives will provide us with a strong platform for sales and profitability growth in the future.”

Fiscal 2007 Guidance

For the third fiscal quarter ending March 31, 2007, the Company expects sales to be in the range of $84 to $88 million and diluted earnings to be in the range of $0.31 to $0.35 per share. This compares to sales of $69.4 million and diluted earnings of $0.31 per share in the prior year third fiscal quarter. For the full fiscal year, the Company continues to expect net sales to be in the range of $315 to $330 million and diluted earnings per share to be in the range of $1.33 to $1.46.

Retail-Ready Apparel

This segment, which includes the Soffe and Junkfood businesses, reported a sales decline of 11.5% to $25.9 million for the second quarter of fiscal year 2007 compared to $29.2 million in the prior year quarter. The sales decline was driven by lower sales in the licensed t-shirt business, offset slightly by increased sales in the Soffe business. While Junkfood sales improved from the first quarter of fiscal 2007, it was lower than its second quarter prior year level. In the prior year second quarter, Junkfood achieved a dramatic sales increase, selling at almost twice its historical levels. The Soffe business continued to increase its sales, achieving a 22.3% increase in sales from its prior year second quarter. Operating income in the Retail-Ready segment for the second fiscal quarter of 2007 decreased $1.5 million from the prior year quarter to $1.1 million due primarily to lower sales and margin pressures in the Junkfood business, offset by the increased gross profit associated with the higher sales in the Soffe business.

Activewear Apparel

The activewear segment, which includes the Delta Apparel business and the newly acquired FunTees business, reported sales of $47.1 million for the three months ended December 30, 2006, a 65.2% increase from the prior year second quarter. The increase in sales was primarily a result of the inclusion of FunTees, offset by a 9.3% decline in sales of the Delta business. In the Delta business, average selling prices increased approximately 4% from the prior year second quarter and increased approximately 2% from the 2007 first fiscal quarter. The increased selling prices were offset by a decline in unit volume, primarily in the core basic t-shirt products. More expensive raw material prices, higher transportation costs, and costs associated with the transition of the FunTees textiles all contributed to lower gross margins in the activewear segment. Operating income declined $0.5 million to $1.3 million compared to $1.8 million in the prior year second quarter due to these factors.