Delta Apparel, Inc.'s fiscal first quarter ended September 30, 2006. net sales increased 3.5% to $62.7 million compared to $60.6 million in the prior year's first quarter. The increase was primarily driven by strong sales in the Soffe business, offset slightly by lower sales in the Junkfood business. Gross margins declined 320 basis points to 27.7% compared to 30.9% in the prior year first quarter primarily as a result of lower sales in the Junkfood business and higher raw material prices.

Net income for the first quarter was $2.2 million, or 26 cents per diluted share, compared to the prior year's level of $3.4 million, or 39 cents per diluted share. During the first quarter of 2007, the Company recorded an extraordinary gain associated with the final earn-out payment made to the former M. J. Soffe shareholders. This extraordinary gain, net of taxes, was $0.7 million, or $0.08 per diluted share.

On October 2, 2006, the Company completed the acquisition of FunTees, Inc. for a total purchase price of $20 million in cash, subject to certain post-closing adjustments, including an adjustment based on the actual working capital purchased. The Company funded the acquisition through draws under its revolving credit facility. After the $20 million payment for the purchase of FunTees, the Company had an aggregate of approximately $69 million outstanding under its revolving line of credit with approximately $16 million of aggregate credit availability.

Robert W. Humphreys, President and CEO, commented, “While we were disappointed with our results for the first fiscal quarter, we feel good about the outlook for the year. Based on open orders, the Junkfood business should be stronger in the second fiscal quarter than the first quarter of this year, and we have received a good response to our spring offerings. The Soffe business continues to increase sales in all of its distribution channels, and we expect the growth to continue throughout the year. In the activewear business, we are seeing prices stabilize and freight promotions decline, and have focused our marketing strategies to drive sales of higher margin goods. We are already seeing cost savings in raw materials and transportation costs associated with FunTees, and are underway in the process of integrating FunTees into our Delta manufacturing operations. Additional savings should be realized when we complete the manufacturing integration in the second half of this fiscal year.”

Mr. Humphreys concluded, “We remain focused on increasing product demand across all of our distribution channels and believe we will continue to gain sales and earnings momentum as we progress through the fiscal year. We are looking forward to realizing the full potential of our FunTees acquisition and believe it will help drive sales and earning growth during the year. We are also spending a considerable amount of time on our Honduran textile initiative and believe it will provide a lower cost manufacturing platform in the future. We remain committed to enhancing shareholder value and believe our initiatives will improve our prospects for growth in the years ahead.”

Fiscal 2007 Guidance

For the second fiscal quarter ended December 30, 2006, the Company expects sales to be in the range of $74 to $78 million and diluted earnings to be in the range of $0.14 to $0.18 per share. For the full fiscal year, the Company expects net sales to be in the range of $325 to $340 million and diluted earnings per share to be in the range of $1.81 to $2.00.

Retail-Ready Apparel

This segment, which includes the Soffe and Junkfood businesses, reported a sales increase of 4.4% to $32.4 million for the first quarter of fiscal year 2007 compared to $31.0 million in the prior year quarter. The sales increase was driven by record sales in the Soffe business, offset slightly by lower sales in the Junkfood business. Operating income in the first fiscal quarter of 2007 decreased $1.2 million from the prior year quarter due primarily to the lower sales and increased general and administrative expenses in the Junkfood business.

Activewear Apparel

The activewear segment, which includes the Delta Apparel business, reported sales of $30.3 million for the three months ended September 30, 2006, a 2.6% increase from the prior year quarter. The increase in sales was primarily due to an increase in private label volume, offset partially by lower prices across the basic tee shirt categories. More expensive raw material prices and higher transportation costs, offset partially by improved manufacturing efficiencies, drove a decrease in operating income to $0.2 million compared to $2.1 million in the prior year quarter. The activewear segment will include the operations of FunTees beginning on October 2, 2006.

(In thousands, except per share amounts)

                                                   Three Months Ended
                                                   Sept 30,   Oct 1,
                                                      2006      2005
                                                   --------- ---------

Net Sales                                           $62,680   $60,573
Cost of Goods Sold                                   45,344    41,879
                                                   --------- ---------
Gross Profit                                         17,336    18,694

Selling, General and Administrative                  13,898    12,700
                                                   --------- ---------
Operating Income                                      3,438     5,994

Other Income (Expense), net                              51       (29)
Interest Expense, net                                   947       685
                                                   --------- ---------
Income Before Income Taxes                            2,542     5,280

Provision for Income Taxes                              967     1,903

                                                   --------- ---------
Net Income, before Extraordinary Gain                $1,575    $3,377
                                                   --------- ---------

Extraordinary Gain, Net of Taxes                        672         -

                                                   --------- ---------
Net Income, after Extraordinary Gain                 $2,247    $3,377
                                                   ========= =========

Weighted Average Shares Outstanding
Basic                                                 8,546     8,532
Diluted                                               8,690     8,559

Net Income per Common Share , before
 Extraordinary Gain
Basic                                                 $0.18     $0.40
Diluted                                               $0.18     $0.39

Net Income per Common Share, after
 Extraordinary Gain
Basic                                                 $0.26     $0.40
Diluted                                               $0.26     $0.39